M/S. NARESH BUILD & HOMES, Vidisha V. The CIT, Bhopal

ITA 322/IND/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5736 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHNEY
• Assessee Lawyers: N D PATWA S
• Keywords: Revision of order; Competent authority
• Section: 143(3); 80IB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUTANT MEMBER I.T.A. NO. 322/IND/2014 ASSESSMENT YEAR: 2009-10 M/S. NARESH BUILD HOMES MADHAVGANJ STATION ROAD VIDISHA PAN:AAFN8288C VS . COMMISSIONER OF INCOME TAX, BHOPAL APPELLANT RESPONDENT APPELLANT BY SHRI ASHISH GOYAL & SHRI N D PATWA, ADVOCATES RESPONDENT BY SHRI RAJEEV VARSHNEY, CIT (DR) DATE OF HEARING 22.08.2016 DATE OF PRONOUNCEMENT 21.09.2016 ORDER PER O.P.MEENA, ACCOUTANT MEMBER. THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 FILED AGAINST THE ORDER UNDER SECTION 263 OF THE IN COME-TAX ACT, 1961, DATED 26.03.2014, PASSED BY THE LD. COMM ISSIONER OF INCOME-TAX-BHOPAL (HEREINAFTER REFERRED AS THE L D. CIT) I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 2 OF 11 2. GROUND NOS. 1 TO 9 : WHILE THE ASSESSEE, HAS RAISE D AS MANY AS NINE NUMBER OF GROUNDS OF APPEAL, BUT THE M AIN GRIEVANCE OF THE ASSESSEE IS THAT THE REVISION ORDE R, HOLDING THAT NO INFORMATION REGARDING NUMBER OF HOUSES CON STRUCTED, CONSTRUCTION COMPLETION CERTIFICATE, WHETHER 15 MOR TGAGED PLOT WERE CONSTRUCTED, COPY OF REGISTRY OF LAND PUR CHASED AND COPY OF SALE DEEDS OF HOUSES WAS AVAILABLE ON RECORD , THEREFORE ORDER U/S. 263 DATED 26.03.2014 IS BAD IN LAW, CON TRARY TO FACTS ON RECORD, AGAINST THE PROVISIONS OF LAW, WITH OUT JURISDICTION AND VOID AB-INITIO HENCE, LIABLE TO B E QUASHED. THE ORDER U/S 143(3)/147 IS AFTER EXAMINATION ALL T HE ISSUES RAISED AND, THEREFORE, THE ASSESSMENT ORDER IS NEIT HER ERRONEOUS NOR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM HAS SHOWN INCOME UNDER THE HEAD OF BUSINESS FOR CONSTRUCTION OF HOUSES. THE RETURN OF INCOME FILED ON 24.09.2009 DECLARING THE TOTAL INCOME AT RS. NIL, WH ICH WAS ASSESSED U/S. 143(3) AT RS.1,04,000/- ON 27.12.2001 . SUBSEQUENTLY, ON EXAMINATION OF ASSESSMENT RECOR DS AND FACTS OF THE CASE, THE LD. CIT FOUND THAT THE ASSES SMENT ORDER I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 3 OF 11 PASSED BY THE ASSESSING OFFICER, IS ERRONEOUS IN AS MUCH AS PREJUDICIAL TO THE INTEREST OF REVENUE AS NO INFORM ATION OF NUMBER OF HOUSES CONSTRUCTED, CONSTRUCTION COMPLETI ON CERTIFICATE, DOES NOT GIVE NUMBER OF HOUSES CONSTRU CTED, NO INFORMATION WHETHER 15 MORTGAGED PLOT WERE CONSTRUCT ED, COPY OF REGISTRY OF LAND PURCHASED WAS NOT AVAILABLE AND COPY OF SALE DEEDS OF HOUSES NOT ON RECORD 4. AGGRIEVED WITH THE ORDER, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THIS TRIBUNAL. 5. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U /S 80IB AT RS. 14,74,295/-. THIS CLAIM WAS SUBSTANTIATED BY SUBMITTING REPORT IN FORM NO. 10CCB. THIS CLAIM WAS VERIFIED BY THE AO AND WHO WAS SATISFIED. THEREFORE, DEDUCTION U/S 80IB WAS ALLOWED. THE ASSESSEE ALSO SUBMITTED COPY O F BUILDING CONSTRUCTION AND COMPLETION CERTIFICATE FR OM THE COMPETENT AUTHORITY. REFERENCE WAS ALSO MADE TO THE REGISTERED VALUER FOR TECHNICAL EVALUATION OF THE P ROJECT FOR DETERMINING THE ELIGIBILITY OF THE ASSESSEE FOR CLA IMING DEDUCTION U/S 80IB OF THE ACT. AS PER THE LD. CIT, APPROVAL OF I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 4 OF 11 37 HOUSES WAS GIVEN BY MUNICIPAL AUTHORITIES, VIDISH A IS CONTRARY TO THE FACT THAT APPROVAL WAS GIVEN FOR OVE R ALL 58 HOUSES, WHICH IS EVIDENCED FROM THE APPROVAL MAP CLE ARLY SHOWING THE APPROVAL OF 58 HOUSES. THIS MAP IS AVAI LABLE AT PAGE 50 OF THE PAPER BOOK. AS REGARDS CONTENTION OF THE LD. CIT THAT VALUERS REPORT DOES NOT MAKE IT CLEAR AS TO H OW MANY HOUSES WERE BUILT UP AND HOW MANY PLOTS WERE VACANT. IN REGARD TO THIS OBSERVATION, THE LD. AUTHORIZED REPR ESENTATIVE OF THE ASSESSEE SUBMITTED THAT THE REPORT OF DVO WAS T AKEN BY THE DEPARTMENT, COPY OF WHICH WAS NOT GIVEN TO THE ASSESSEE. WHAT WAS REQUIRED TO REPORT TO THE AO AND WHAT IS THE REPORTED IS NOT KNOWN TO THE ASSESSEE. THEREFORE, TH E ASSESSEE CANNOT BE MADE TO SUFFER IF THE DDO DID NOT MENTION ANY SPECIFIC DETAILS IN THE REPORT. WITH REGARD TO THE COMPLETION CERTIFICATE DATED 18.3.2008, 15 MORTGAGED PLOTS WER E RELEASED AND THE STATUS OF CONSTRUCTION OF THESE PLOTS WAS NO T AVAILABLE. WITH REGARD TO THIS CONTENTION OF THE CIT, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE CONTENDED THAT THE C OMPLETION CERTIFICATE MENTIONED THAT ALL THE 58 HOUSES, ARE C OMPLETE AND EVEN THE LD. CIT HAS ACCEPTED THIS FACT. THE DVO HA S VISITED I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 5 OF 11 THE SITE AND HE DID NOT FIND ANY OF THE HOUSES TO B E INCOMPLETE. FURTHER, ALL THE HOUSES WERE SOLD BEFORE THE COMPLETION. WITH REGARD TO QUERY OF THE LD. CIT THA T COPY OF REGISTRY OF LAND PURCHASED WAS NOT AVAILABLE ON REC ORD, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT COPY OF THE REGISTRY OF THE PURCHASE OF THE LAND WAS ALRE ADY SUBMITTED DURING THE ASSESSMENT AND IT WAS FURTHER S UBMITTED TO THE LD. CIT. SIMILARLY, TWO SALE DEEDS WITH THE AG REEMENT WERE FILED ILLUSTRATIVELY AS NO SALE DEEDS WERE CALL ED FOR. AS REGARDS TO COMPLETION CERTIFICATE, THE OBSERVATION OF THE LD. CIT IS THAT THE SAME SHOULD HAVE ISSUED BY THE LOCAL A UTHORITIES. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE C ONTENDED THAT IN THE VIDISHA REGULATION OF THE APPLICATIONS ARE MADE TO SDM. ACCORDINGLY, THE ASSESSEE HAS APPLIED TO THE S DM FOR COMPLETION CERTIFICATE. ACCORDINGLY, THE COMPLETION CERTIFICATE WAS ISSUED BY THE SDO AT THE INSTANCE OF CHIEF MUNI CIPALITY OFFICER. THE LD. AUTHORIZED REPRESENTATIVE OF THE A SSESSEE ALSO FILED THE COMPLETION CERTIFICATE DATED 18.03.2008 A LONWITH VIDISHA COLONIZATION REGULATION, WHICH SHOWS THAT THE COMPETENT AUTHORITY IS THE SDO (REVENUE), WHO ISSUES THE I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 6 OF 11 CERTIFICATE ON THE RECOMMENDATIONS OF THE LOCAL OFF ICER OF MUNICIPAL CORPORATION. IT WAS ALSO CONTENDED THAT T HE AO HAS OBSERVED THAT THE CERTIFICATE FROM THE COMPETENT AU THORITY WAS FILED. THEREFORE, IT WAS CONTENDED THAT ALL THE O BSERVATIONS OF THE LD. CIT ARE COMPLIED WITH. THEREFORE, JURISDI CTION ASSUMED U/S 263 BY THE LD. CIT IS WITHOUT ANY BASI S. 6. ON THE OTHER HAND, THE LD. CIT DR REPEATED THE OBSERVATIONS MADE BY THE LD. CIT AND SUBMITTED THA T THE AO HAS MADE THE ASSESSMENT IN UNDUE HASTE WITHOUT MAKIN G ANY INQUIRY. IN SUPPORT OF THIS, THE LD. CIT DR HAS PLA CED RELIANCE IN THE CASE OF RAMPYARI DEVI SARAOGI VS. CIT, 67 IT R 84, GEE VEE ENTERPRISES VS. ADDL. CIT & ORS., 99 ITR 375, A ND MALABAR INDUSTRIAL COMPANY, 243 ITR 83 ( S. C. ) AND CIT VS . DAGA ENTRADE (P) LIMITED & ORS., 327 ITR 0467. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. AS PER THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL COMPANY VS. CIT, 243 ITR 83, THE COMMISSIONER CAN E XERCISE REVISIONAL JURISDICTION U/S 263 IF HE IS SATISFIED WITH THE ORDER OF THE AO SOUGHT TO BE REVISED (I) ERRONEOUS AND AL SO (II) I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 7 OF 11 PREJUDICIAL TO THE INTERESTS OF REVENUE. THE WORD E RRONEOUS HAS NOT BEEN DEFINED IN THE INCOME-TAX ACT, 1961. I T HAS BEEN DEFINED AT PAGE 562 IN BLACKS LAW DICTIONARY, 7 TH EDITION, WHICH SAY THAT ERRONEOUS IS ADJECTIVE INVOLVING ER ROR, DEVIATING FROM THE LAW. ERROR MEANS MISTAKEN JUDGMEN T OR DEVIATION FROM THE TRUTH IN MATTERS OF FACT AND FR OM THE LAW IN THE MATTERS OF JUDGMENT, ERROR IS A FAULT IN JUDGME NT OR IN THE PROCESS OR PROCESSING TO JUDGMENT OR IN THE EXECUTI ON UPON THE SAME IN A COURT OF RECORD, WHICH IS IN THE CIVI L LAW IS CALLED ( NULLITY TERMESDE LA LEY ) SOMETHING INCO RRECTLY DONE THROUGH IGNORANCE OR INADVERTENCE. THEREFORE, IN OU R VIEW, THE ORDER SOUGHT TO BE REVISED U/S 263 WOULD BE ERRONEO US AND FALL IN THE AFORESAID CATEGORIES OF ERROR, IF THI S, INTER ALIA, BASED ON AN INCORRECT ASSUMPTION OF FACTS FOR AN IN CORRECT APPLICATION OF LAW OR NON APPLICATION OF MIND TO SOM ETHING, WHICH WAS OBVIOUS AND REQUIRED APPLICATION OF MIND OR BASED ON OR INSUFFICIENT MATERIAL SO AS TO EFFECT THE MER ITS OF THE CASE AND THEREBY CAUSES PREJUDICE TO THE INTEREST OF THE REVENUE. IN THE CONTEXT OF THE PRESENT CASE, THE PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO HAS EXAMINED THE CLAIM OF DE DUCTION I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 8 OF 11 U/S 80IB WITH CONSCIOUS MIND AND AFTER ANALYZING THE FACTS OF THE CASE AND LAW ALLOWED THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT. TO SUPPORT OUR VIEW, IT WOULD BE RELEVANT TO REPRODUCE THE OBSERVATIONS RECORDED BY THE AO, WHICH READS AS UNDER :- 4. THE ASSESSEE DERIVES INCOME FROM CONSTRUCTION OF RESIDENTIAL DUPEX/COMPLEX AT VIDISHA. DURING THE CURRENT FINANCIAL YEAR THE ASSESSEE HAS SHOWN GROSS PROFIT AND NET PROFIT RATIO OF 11.61 % AND 7. 13 % RESPECTIVELY AS COMPARED TO 12.81 % & 4.16 RESPECTIVELY IN THE PRECEDING FINANCIAL YEAR. THE ASSESSEE HAS ALSO CLAIMED DEDUCTION U/S 80IB OF RS. 14,74,295/-. THE ASSESSEE FURNISHED REPORT IN FORM 10CCB TO SUBSTANTIATE HIS CLAIM OF DEDUCTION U/S 80IB IS SATISFIED. THE ASSESSEE ALSO SUBMITTED COPY OF BUILDING CONSTRUCTION PERMISSION AND COMPLETION CERTIFICATE FORM THE COMPETENT AUTHORITY. ALSO. A REFERENCE WAS MADE TO THE REGISTERED VALUER FOR TECHNICAL EVALUATION OF THE PROJECT FOR DETERMINING THE ELIGIBILITY OF THE ASSESSEE FOR CLAIMING DEDUCT ION I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 9 OF 11 U/S 80IB). THE VALUER SUBMITTED HIS REPORT WHICH IS PLACED ON RECORD. 8. THE ABOVE EXAMINATION OF THE AO SHOWS THAT THE AO HAS EXAMINED THE FORM NO. 10CCB AND RELEVANT CONDIT IONS FOR CLAIMING DEDUCTION U/S 80IB. THE AO HAS ALSO OBTAIN ED COPY OF BUILDING CONSTRUCTION PERMISSION AND COMPLETION CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY. THE AO HAS NOT ONLY SATISFIED WITH THIS AS ALSO OBTAINED REPORT FORM THE REGISTERED VALUER FOR TECHNICAL EVALUATION. THUS, IT IS SEEN T HAT THE AO HAS ACCEPTED THE CLAIM OF THE ASSESSEE, AFTER DUE D ILIGENCE AND CAUSING NECESSARY ENQUIRY AS DEEMED FIT. AS REGARD S OBSERVATION OF THE LD. CIT THAT COMPLETION CERTIFIC ATE SHOULD HAVE BEEN ISSUED BY THE LOCAL AUTHORITY, WHO HAS GI VEN THE PERMISSION. WE FIND THAT AS PER VIDISHA COLONIZES R ULES AND REGULATIONS, THE APPLICATION FOR OBTAINING COMPLETI ON CERTIFICATE IS MADE TO SDM (REVENUE) WHO IN TURN OBT AIN SUCH CERTIFICATE FROM THE LOCAL MUNICIPAL AUTHORITIES AN D BASED ON THEIR RECOMMENDATIONS, THE SDO ISSUED THE COMPLETIO N CERTIFICATES. WE FIND FROM THE PAPER BOOK PAGE 50 T HAT COMPLETION CERTIFICATE HAS BEEN ISSUED ON THE BASIS OF LETTER I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 10 OF 11 ISSUED BY CHIEF MUNICIPALITY OFFICER VIDE HIS LETTE R DATED 04.03.2008, WHICH HAS BEEN INCORPORATED IN THE CERTI FICATE ITSELF AND THIS CERTIFICATE IS ISSUED IN RESPECT OF 58 PLOTS. WE ALSO NOTED THAT PERMISSION WAS OBTAINED FOR CONSTRUC TION OF 58 PLOTS, AS EVIDENCED FROM PAGE 16 SHOWING THE MAP PLA N OF 58 PLOTS. SIMILARLY, TWO ILLUSTRATIVE SALE DEEDS WERE P RODUCED BEFORE THE LD. CIT IN SUPPORT OF THE SALE OF PLOTS. THE PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ORDER WAS NOT PA SSED IN HASTE, AS IT HAS BEEN PASSED AFTER MAKING THE NECES SARY ENQUIRIES FOR ASSESSING THE INCOME OF THE ASSESSEE. THE AO HAS ALSO MADE SOME ADDITIONS. THEREFORE, IT CANNOT BE S AID THAT THE ASSESSMENT ORDER SO MADE WAS ERRONEOUS AND PREJU DICIAL TO THE INTERESTS OF REVENUE AND IT CANNOT BE SAID T HAT THE AO HAS NOT APPLIED HIS MIND. WE ARE, THEREFORE, OF THE VIEW THAT THE AO HAS ADOPTED A PERMISSIBLE COURSE OF LAW AND T AKEN A POSSIBLE VIEW, WHICH HIS ASSESSMENT ORDER SPEAKS CLEA RLY. THEREFORE, IN THE LIGHT OF THE ABOVE DISCUSSION, WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS MADE PROPER ENQUIRY AND AFTER SATISFACTION HAS PASSED THE ASSESSMENT ORDER, WHEREAS THE LD. CIT HAS INCORRECTLY ASSUMED THE JURISDICTIO N U/S 263, I.T.A.NO.322/IND/2014/A.Y.09-10/M/S.NARESH BUILD HO MES, VIDISHA PAGE 11 OF 11 WHICH, IN OUR OPINION, IS NOT SUSTAINABLE ON FACTS A ND LAW. THEREFORE, WE SET-ASIDE THE ASSESSMENT ORDER PASSED BY THE LD. CIT U/S 263 OF THE INCOME-TAX ACT, 1961. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 21 ST SEPTEMBER, 2016. SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED: 21 ST SEPTEMBER, 2016. CPU* COPY FORWARDED TO-THE ASSESSEE/AO/PCIT/CIT (A)/DR/G UARD FILE BY ORDER A.R. ITAT, INDORE