KRISHNA DEVELOPERS P. LTD, MUMBAI V. DCIT CIR 2(2), MUMBAI

ITA 3017/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7625 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 22-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Additional evidence; Set aside; Audi alteram partem
• Section: 80IA; 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G , MUMBAI BEFORE SHRI R.S. SYAL, A.M. AND SHRI D.K. AGARWAL, J.M. I.T.A. NO.3016/MUM/2009 ASSESSMENT YEAR : 2004-2005 AND I.T.A. NO.3017/MUM/2009 ASSESSMENT YEAR : 2005-2006 KRISHNA DEVELOPERS P. LTD. 508, GUNDECHA CHAMBERS, NAGINDAS MASTGER ROAD, FORT, MUMBAI 400 001. PAN : AABCK5678G ADDL.C.I.T. RANGE 2(2) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. (APPELLANT) VS. (RESPONDENT) DATE OF HEARING : 22.12.2011 DATE OF PRONOUNCEMENT : 04.01.2012 APPELLANT BY : SHRI RAKESH JOSHI RESPONDENT BY : SHRI PAVAN VED (CIT DR) ORDER PER D.K. AGARWAL (JM ) : THESE TWO APPEALS PREFERRED BY THE ASSESSEE ARE DI RECTED AGAINST THE SEPARATE ORDERS DATED 23.03.2009 PASSED BY THE LD CIT FOR THE A.YS 2004-05 AND 2005-06. SINCE FACTS ARE IDENTICAL AN D ISSUE INVOLVED IS COMMON, BOTH THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE EXTRACTED FROM ITA NO.3016/M/09 FOR A.Y.2004-05 ARE THAT THE ASSESSEE COMPANY IS EN GAGED IN THE BUSINESS AS BUILDERS AND DEVELOPERS. HE FILED THE RETURN DECLARING TOTAL INCOME AT RS.NIL AFTER CLAIMING DEDUCTION U/S.80IA UNDER NORMAL I.T.A. NO.3016/MUM/2009 I.T.A. NO.3017/MUM/2009 2 PROVISIONS OF THE I.T. ACT,1961 (THE ACT) AND BOOK PROFIT FOR THE PURPOSE OF MAT U/S.115JB AT RS.21,36,160/-. THE ASSESSMENT WA S ALSO COMPLETED AT THE SAME INCOME I.E. AT THE BOOK PROFIT OF RS. 21,36,160/- VIDE ASSESSMENT ORDER DATED 18.12.2006 PASSED U/S.143(3) OF THE ACT. SUBSEQUENTLY, THE LD CIT ON EXAMINATION OF THE ASSE SSMENT RECORDS NOTICED THAT THE ORDER PASSED U/S.143(3) DATED 30.0 3.2007 (ACTUAL DATE 18.12.2006) IS ERRONEOUS IN SO FAR AS PREJUDICIAL T O THE INTERESTS OF THE REVENUE AND ACCORDINGLY HE ISSUED A NOTICE U/S.263 OF THE ACT TO SHOW CAUSE AS TO WHY THE ORDER PASSED U/S.143(3) DATED 1 8.12.2006 AND SHOULD NOT REVISED. IN RESPONSE, THE ASSESSEE FIL ED WRITTEN REPLY. THE LD CIT AFTER CONSIDERING THE SAME, HOWEVER, SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO THE AO TO REDO THE SAME AFTER E XAMINING WHETHER THE ASSESSEE SATISFIED THE THREE REQUIREMENTS AS STATED IN PARA 3 OF HIS ORDER AND IF IT IS FOUND THAT ANY OF THESE REQUIREMENTS A RE NOT SATISFIED, THE DEDUCTION ALREADY ALLOWED MAY BE WITHDRAWN AFTER GI VING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE LD CIT THE A SSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THAT THE L D CIT HAS ERRED IN PASSING ORDER U/S.263 AND IN SETTING ASIDE THE ASSE SSMENT ORDER PASSED BY THE AO. 4. AT THE TIME OF HEARING THE LD COUNSEL FOR THE AS SESSEE, AT THE OUT SET, SUBMITS THAT THE NOTICE U/S.263 OF THE ACT WAS ISSUED ONLY ON TWO GROUNDS I.E. (I) THE ASSESSEE DID NOT FULFILL THE CONDITIONS LAID DOWN IN SUB-SECTION (7) OF SECTION 80IA OF THE ACT FOR CLA IMING SUCH DEDUCTION AND (II) THE AO ALLOWED THE DEDUCTION WITHOUT EXAMI NING AS TO WHETHER THE ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN IN THE APPROVAL GRANTED BY THE GOVERNMENT OF INDIA FOR SETTING UP OF THE INDUSTRIAL PARK IN TERMS OF INDUSTRIAL PARK SCHEME 2002 ACCORDING T O WHICH THE DEDUCTION WAS ONLY AVAILABLE WHEN 46 INDUSTRIAL UNI TS ARE LOCATED IN THE I.T.A. NO.3016/MUM/2009 I.T.A. NO.3017/MUM/2009 3 INDUSTRIAL PARK. HE FURTHER SUBMITS THAT ON BOTH T HE ISSUES THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS BEFORE THE LD. CIT I NTERALIA STATING THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS FOR THE D EDUCTION U/S 80IA AND THE AO AFTER EXAMINING THE SAME HAS ALLOWED SUCH DE DUCTION. HE FURTHER SUBMITS THAT THE LD. CIT IN HIS IMPUGNED ORDER PASSED U/S 263 HAS ADJUDICATED THE NEW ISSUE ALSO I.E. WHETHER T HE ASSESSEES CASE HAS BEEN NOTIFIED BY THE CBDT FOR THE PURPOSE OF DEDUC TION U/S 80IA(4)(III). HE FURTHER SUBMITS THAT THE LAST ISSUE HAS BEEN CON SIDERED BY THE LD.CIT WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HE FURTHER SUBMITS THAT IN THIS REGARD THE ASSESSEE HA S FILED ADDITIONAL EVIDENCE APPEARING AT PAGE 1 TO 9 OF THE SEPARATE P APER BOOK WITH THE REQUEST THAT THE SAME BE ADMITTED. ON MERITS HE SU BMITS THAT THE AO AFTER EXAMINING THE ISSUE OF CLAIM OF DEDUCTION U/S .80IA VIDE NOTICE DATED 21.09.2006 AND THE ASSESSEES EXPLANATION APP EARING IN THE ASSESSEES PAPER BOOK HAS ALLOWED THE CLAIM OF THE ASSESSEE. HE THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD CIT BE CANCELLED AND THAT OF AO BE RESTORED. IN ALTERNATIVE, HE SUBMITS THAT SINCE THE ADDITIONAL EVIDENCE WAS NOT FILED BEFORE THE LD CIT THEREFORE, IN THE INTEREST OF JUSTICE THE ISSUE MAY BE SET ASIDE TO T HE FILE OF LD CIT FOR HIS CONSIDERATION AFRESH. 5. ON THE OTHER HAND, THE LD D.R. WHILE RELYING ON THE ORDER OF THE LD CIT SUBMITS THAT HE HAS NO OBJECTION IF THE MATTER IS SET ASIDE TO THE FILE OF THE LD CIT TO EXAMINE THE SAME AFRESH IN THE LIG HT OF THE EVIDENCE FILED BY THE ASSESSEE. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE F IND THAT THERE IS NO DISPUTE THAT THE LD CIT IN THE NOTICE U/S.263 DATED 25.02.2009 HAS POINTED OUT TWO ISSUES NAMELY I.T.A. NO.3016/MUM/2009 I.T.A. NO.3017/MUM/2009 4 I) THE AO ALLOWED THE DEDUCTION U/S.80-IA OF RS.14,77, 002/- IGNORING THE FACT THAT THE ASSESSEE DID NOT CLAIM THE DEDUCTION IN THE ORIGINAL RETURN OF INCOME FILED ON 28.12.2004. FURTHER, IN THE RE VISED RETURN OF INCOME FILED ON 11.04.2005, THE ASSESSEE CLAIMED DEDUCTION U/S.80-IA(4)(III). HOWEVER, THE AUDIT REPORT IN FORM 10CCB DT.06.09.20 04 AVAILABLE IN THE RECORD INDICATES THAT THE REPORT WAS NOT FOR CL AIMING THE DEDUCTION U/S.80-IA(4)(III) BUT FOR CLAIMING DEDUCTION U/S.80 IB. THEREFORE, THE ASSESSEE DID NOT FULFILL THE CONDITIONS LAID DOWN I N SUB-SECTION (7) OF SECTION 80-IA OF THE INCOME TAX ACT. II) PERUSAL OF THE RECORDS ALSO REVEALS THAT THE AO ALL OWED THE DEDUCTION WITHOUT EXAMINATION AS TO WHETHER THE ASSESSEE HAS FULFILLED THE CONDITIONS LAID DOWN IN THE APPROVAL GRANTED BY THE GOVERNMENT OF INDIA FOR SETTING UP OF THE INDUSTRIAL PARK IN TERM S OF INDUSTRIAL PARK SCHEME 2002, ACCORDING TO WHICH THE DEDUCTION WAS O NLY AVAILABLE WHEN 46 INDUSTRIAL UNITS ARE LOCATED IN THE INDUSTR IAL PARK. HOWEVER, IN THE ORDER PASSED U/S.263 DATED 23.03.20 09, HE HAS ALSO ADJUDICATED ONE MORE ISSUE IN PARA 2.2 OF HIS ORDER WHICH IS REPRODUCED AS UNDER: 2.2 CLAUSE (III) OF SUB-SECTION 4 OF SECTION 80IA STIPU LATES THAT INDUSTRIAL PARK IS TO BE NOTIFIED BY THE CENTRAL GOVERNMENT IN ACCO RDANCE WITH THE SCHEME FRAMED AND ALSO BE NOTIFIED BY THE GOVERNMENT FOR A VAILING OF THE BENEFIT UNDER THIS CLAUSE. RULE 18C OF THE I.T. RULES, 196 2, STIPULATES THAT THIS NOTIFICATION HAS TO BE ISSUED BY THE CBDT. THE REC ORDS DO NOT INDICATE THAT ANY SUCH NOTIFICATION HAS BEEN ISSUED BY THE CBDT A ND THE SAME WAS PRODUCED BEFORE THE AO FOR HIS VERIFICATION. THE AO SEEMS TO HAVE FAILED TO APPLY HIS MIND TO THIS ASPECT BEFORE GRANTING TH E DEDUCTION CLAIMED. ACCORDINGLY, THE LD CIT HAS SET ASIDE THE ASSESSMEN T WITH THE DIRECTION TO REDO THE SAME AFTER EXAMINING AS TO WHETHER THE ASS ESSEE HAS SATISFIED THE FOLLOWING THREE REQUIREMENTS: I) WHETHER THE ASSESSEE HAS SATISFIED THE REQUIREMENTS U/S.80IA(7) OF FURNISHING A VALID AUDIT REPORT OF THE ACCOUNTANT I N THE PRESCRIBED FORM NO.10CCB IN SUPPORT OF THE DEDUCTION CLAIMED UNDER SECTION 80IA(4)(III)? II) WHETHER THE ASSESSEE HAS SATISFIED THE CONDITIONS P RESCRIBED IN THE APPROVAL LETTER DATED 05.01.2005, REFERRED TO ABOVE , SO AS TO BE ENTITLED FOR THE DEDUCTION CLAIMED? III) WHETHER THE ASSESSEES CASE HAS BEEN NOTIFIED BY TH E CBDT FOR THE PURPOSE OF DEDUCTION U/S. 80IA(4)(III)? I.T.A. NO.3016/MUM/2009 I.T.A. NO.3017/MUM/2009 5 7. SINCE NO PROPER AND DUE OPPORTUNITY WAS PROVIDED TO THE ASSESSEE IN RESPECT OF CBDT NOTIFICATION AS PROVIDED U/S. 80IA(4)(III) FOR WHICH THE ASSESSEE HAS NOW FILED MATERIAL AS AN ADDITIONAL E VIDENCE AND KEEPING IN VIEW THE MAXIM OF AUDI ALTERAM PARTEM I.E. RULE OF NATURAL JUSTICE REQUIRES NOT ONLY THAT A PERSON BE HEARD BUT THAT H E BE GIVEN A FAIR HEARING, WE AFTER ADMITTING THE ADDITIONAL EVIDENC E FILED BY THE ASSESSEE CONSIDER IT FAIR AND REASONABLE THAT, IN THE INTERE ST OF JUSTICE, THE MATTER SHOULD GO BACK TO THE FILE OF THE LD CIT AND ACCORD INGLY WE SET ASIDE THE ORDER PASSED BY THE LD CIT AND RESTORE THE ISSUE TO HIS FILE TO DECIDE THE SAME AFRESH AND IN ACCORDANCE WITH LAW AFTER PROVID ING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE G ROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, PARTLY ALLOWED FOR THE STA TISTICAL PURPOSES. ITA NO.3017/M/09 (A.Y. 2005-2006) 8. AT THE TIME OF HEARING BOTH THE PARTIES HAVE AGR EED THAT THE FACTS OF THE ABOVE CASE AND THE GROUNDS ARE THE SAME AS IN T HE CASE OF THE ASSESSEE FOR THE A.Y.2004-05, THEREFORE, THE PLEA T AKEN BY THEM IN THAT APPEAL MAY BE CONSIDERED WHILE DECIDING THE APPEAL IN THE YEAR UNDER CONSIDERATION. 9. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF T HE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE K EEPING IN VIEW OF OUR FINDING RECORDED IN PARA 7 OF THIS ORDER SET ASIDE THE ORDER PASSED BY THE LD CIT TO HIS FILE TO DECIDE THE SAME AFRESH AND AC CORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE ASSESSEE THEREFORE, PARTLY ALL OWED FOR STATISTICAL PURPOSES. I.T.A. NO.3016/MUM/2009 I.T.A. NO.3017/MUM/2009 6 10. IN THE RESULT, ASSESSEES APPEALS STAND PARTLY ALLO WED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 4TH JANUARY, 20 12. SD SD (R.S. SYAL) (D.K. AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, ON THIS 4TH DAY OF JANUARY, 2012. JANHAVI COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, G- BENCH, ITAT, MUMBAI 6. GUARD FILE. BY ORDER TRUE COPY ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI