ITO 25(2)(3), MUMBAI V. SHAILESH S SHAH, MUMBAI

ITA 3629/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8891 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 10-09-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 05-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V KRISHNMOORTHY
• Assessee Lawyers: JIGNESH P SHAH
• Keywords: Reopening of assessment; Tangible material; Difference of opinion; Change of opinion
• Section: 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 3629/MUM/2011 ASSESSMENT YEAR- 2004-05 THE ITO 25(2)(3), PRATYAKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 VS. SHRI SHAILESH S. SHAH, B-61 & 63, SHANTIVAN, NEAR CLUB AQUIRA, DEVIDAS LANE, BORIVALI(W), MUMBAI-400 092 PAN-AMKPS 8718F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI V. KRISHNMOORTHY RESPONDENT BY: SHRI JIGNESH P. SHAH DATE OF HEARING :10.09.2012 DATE OF PRONOUNCEMENT: 12.09.2012 O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)- 35, MUMBAI DT.28.2.2011 PERTAINING TO ASSESSMENT YE AR 2004-05. 2. THE REVENUE HAS RAISED FOLLOWING TWO SUBSTANTIVE GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN CANCELLING THE REOPENE D ASSESSMENT PROCEEDINGS AND HOLDING THAT THERE WAS N O VALID GROUND FOR REOPENING OF ASSESSMENT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 18,45,693/- MADE BY THE AO ON ACCOUNT OF DISALLOWAN CE U/S. 80IB(10 OF THE I.T. ACT INSPITE OF THE FACT THA T THE ASSESSEE FAILED TO FULFILL THE CONDITIONS LAID DOWN THEREIN. ITA NO. 3629/M/2011 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT FO R THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS. NIL ON 29.10.2004. THE SAID RETURN WAS SELECTE D FOR SCRUTINY ASSESSMENT AND AFTER CONSIDERING THE SUBMISSIONS MADE BY THE A SSESSEE IN RESPECT TO THE QUERIES RAISED DURING THE ASSESSMENT PROCEEDINGS, T HE ASSESSMENT WAS COMPLETED ON 10.2.2006 ACCEPTING RETURNED INCOME FI LED BY THE ASSESSEE. THE CLAIM OF DEDUCTION U/S. 80IB(10) TO THE TUNE OF RS. 18,45,693/- WAS ALLOWED BY THE AO. SUBSEQUENTLY, ON THE BASIS OF THE INFOR MATION RECEIVED FROM THE OFFICE OF THE ITO, CIB-1(4) BY WHICH THE AO CAME TO KNOW THAT THE ASSESSEE HAS NOT OBTAINED THE COMPLETION CERTIFICATE BEFORE 31.3.2008. AS PER THE LETTER RECEIVED FROM THE OFFICE OF MIRA BHAYANDER M UNICIPAL CORPORATION, THE AO REOPENED THE ASSESSMENT AFTER RECORDING THE REAS ONS AND OBTAINING THE PRIOR APPROVAL BY ISSUING NOTICE U/S. 148 OF THE AC T ON 30.3.2009. THE ASSESSEE SOUGHT REASONS FOR REOPENING FROM THE AO W HICH WERE DULY PROVIDED TO THE ASSESSEE ON 23.4.2009. THEREAFTER NOTICE U/ S. 143(2) OF THE ACT WAS ISSUED AND SERVED ALONGWITH QUESTIONNAIRE. 4. THE ASSESSEE IS A BUILDER AND DEVELOPER BEING PR OPRIETOR OF M/S. SUNDER DEVELOPERS. DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE HAS CONSTRUCTED NINE BUILDINGS KNOWN AS SUNDER SAROVAR. THE AO WAS OF THE OPINION THAT AS THE PROJECT OF THE ASSESSEE WAS COM MENCED ON OR AFTER 1.10.1998, THE PROJECT SHOULD HAVE BEEN COMPLETED B EFORE 31.3.2008. THE ASSESSEE COMMENCED ITS OPERATION ON 8.12.2000 THERE FORE, IT SHOULD HAVE OBTAINED OCCUPATION CERTIFICATE PRIOR TO 1.4.2008, AS THE ASSESSEE HAS NOT FILED ANY OCCUPATION CERTIFICATE NOR IT HAS RECEIVED THE COMPLETION CERTIFICATE FROM THE MUNICIPAL AUTHORITIES , THE AO CONCLUDED THAT THE ASSESSEE IS NOT ENTITLED FOR THE CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT. THE AO WENT ON TO REJECT THE CLAIM OF THE ASSESSEE AND COMPLETED THE REASSES SMENT PROCEEDINGS. 5. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE AO HAS REOPENED THE ASSESSMENT MERELY ON T HE BASIS OF CHANGE OF OPINION AS NO NEW MATERIAL WAS BROUGHT ON RECORD. THE ASSESSEE FURTHER CONTENDED THAT THE RELIANCE ON THE AMENDED PROVISIO NS OF SEC. 80IB(10) WAS ITA NO. 3629/M/2011 3 MISPLACED AS THE SAME WAS APPLICABLE FROM 1.4.2005 I.E. PERTAINING TO ASSESSMENT YEAR 2005-06. THE SAID AMENDMENT IS NOT APPLICABLE ON THE FACTS OF THE CASE AS THE ASSESSMENT YEAR UNDER CONSIDERAT ION IS 2004-05. 6. AFTER CONSIDERING THE FACTS AND SUBMISSIONS OF T HE ASSESSEE, THE LD. CIT(A) WAS OF THE OPINION THAT THE ASSESSMENT WAS R EOPENED PURELY ON THE BASIS OF CHANGE OF OPINION. THE LD. CIT(A) FURTHER OBSERVED THAT IN THE INSTANT CASE, THE INFORMATION THAT THE ASSESSEE DID NOT RECEIVE THE COMPLETION CERTIFICATE ON OR BEFORE 31.3.2008 IS NOT RELEVANT AS THERE WAS NO CONDITION OF OBTAINING COMPLETION CERTIFICATE UPTO A.Y. 2004-05. ACCEPTING THE SUBMISSIONS MADE BY THE ASSESSEE, THE LD. CIT(A) HE LD THAT THERE WAS NO VALID GROUND FOR REOPENING THE ASSESSMENT AND CONCL UDED THAT REOPENING OF ASSESSMENT IS BAD IN LAW AND CANCELLED THE REOPENED ASSESSMENT PROCEEDINGS. THEREAFTER, THE LD. CIT(A) WENT ON TO DECIDE THE ISSUE ON MERIT. EVEN ON MERIT, THE LD. CIT(A) RELYING UPON THE DECI SION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (2011) 333 ITR 289 (BOM) DIRECTED THE AO TO ALLOW THE CLAIM OF DEDUCTI ON U/S. 80IB(10) OF THE ACT. 7. THE REVENUE IS AGGRIEVED BY THE FINDINGS OF LD. CIT(A) AND IS IN APPEAL BEFORE US. THE LD. DEPARTMENTAL REPRESENTATIVE REL IED UPON THE ASSESSMENT ORDER AND SUBMITTED THAT THE REOPENING WAS MADE ON THE BASIS OF INFORMATION RECEIVED FROM THE ITO CIB-1(4) AND THEREFORE THE AO HAD MATERIAL EVIDENCE FOR REOPENING OF THE ASSESSMENT. THE LD. COUNSEL F OR THE ASSESSEE REITERATED THE SUBMISSION MADE BEFORE THE LD. CIT(A). THE LD. COUNSEL ARGUED THAT PRE-AMENDED PROVISIONS OF SEC. 80IB DOES NOT REQUIRE THE COMPLETION OF THE PROJECT ON OR BEFORE THE SPECIFIED DATE. THE AMEND MENT HAS BEEN BROUGHT W.E.F. 1.4.2005 AND THEREFORE IT IS APPLICABLE FROM A.Y. 2005-06. THE SAME IS NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS WE AR E IN ASSESSMENT YEAR 2004- 05. THE LD. COUNSEL RELIED UPON THE FINDINGS OF LD . CIT(A). 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES. WE HAVE ALSO THE BENEFIT OF GOING THR OUGH THE ORIGINAL ITA NO. 3629/M/2011 4 ASSESSMENT ORDER EXHIBITED AT PAGES 31 TO 34 OF THE PAPER BOOK. WE FIND THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS, THE CL AIM OF DEDUCTION U/S. 80IB(10) OF THE ACT MADE BY THE ASSESSEE WAS THOROU GHLY EXAMINED BY THE AO. WE FIND THAT THE AO HAS CONSIDERED THE DATE OF COMMENCEMENT OF THE PROJECT, THE SIZE OF THE PLOT OF THE LAND ON WHICH THE PROJECT HAS BEEN CONSTRUCTED AND THE BUILT UP AREA OF THE RESIDENTIA L UNIT WERE FOUND TO BE AS PER THE PLAN APPROVED AND REPORT SUBMITTED BY THE W ARD INSPECTOR. AFTER COMPLETELY SCRUTINIZING THE CASE , THE AO OBSERVED THAT VERIFICATION OF THE DETAILS FILED BY THE ASSESSEE IN THIS REGARD REVEAL THAT THE ASSESSEE HAS FULFILLED ALL THE CONDITIONS LAID DOWN IN SEC. 80IB( 10) OF THE ACT AND HENCE PROFIT DERIVED FROM HOUSING PROJECT IS CONSIDERED F OR DEDUCTION U/S. 80IB(10) OF THE I.T. ACT, 1961. 9. A PERUSAL OF THE REASSESSMENT ORDER SHOW THAT T HE AO HAS HEAVILY RELIED UPON THE AMENDMENT BROUGHT ON THE STATUTE IN RESPECT OF PROVISIONS OF SEC. 80IB(10). WE FIND THAT THE AO HAS RELIED UPON THE FOLLOWING AMENDMENT: THE AMOUNT OF DEDUCTION IN THE CASE OF AN UNDERTAKI NG DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE 31ST DAY OF MARCH, [2008] BY A LOCAL AUTHORITY SHALL BE HUNDRED PER CENT OF T HE PROFITS DERIVED IN THE PREVIOUS YEAR RELEVANT TO ANY ASSESSMENT YEAR F ROM SUCH HOUSING PROJECT IF, (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1ST DAY OF OCTOBER, 1998 AND COMPLETES SU CH CONSTRUCTION, (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN A PPROVED BY THE LOCAL AUTHORITY BEFORE THE 1ST DAY OF APRIL, 2004, ON OR BEFORE THE 31ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR, IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1ST DAY OF APRI L, 2004 [BUT NOT LATER THAN THE 31ST DAY OF MARCH, 2005], WITHIN FOU R YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY; EXPLANATION.FOR THE PURPOSES OF THIS CLAUSE, ITA NO. 3629/M/2011 5 (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF T HE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUIL DING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHORITY; (II) THE DATE OF COMPLETION OF CONSTRUCTION OF TH E HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETI ON CERTIFICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORITY; HOWEVER, WE FIND THAT PRIOR TO THIS AMENDMENT , OT HER THAN THE SIZE OF A PLOT AND THE MAXIMUM BUILT UP AREA, THE ONLY OTHE R CONDITION WAS THAT SUCH UNDERTAKING SHOULD COMMENCE DEVELOPMENT AND CONSTRU CTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998. THE CONDITION FOR COMPLETIN G SUCH CONSTRUCTION ON OR BEFORE 31.3.2008 WAS NOT TH ERE WHICH MEANS THAT THE CONDITIONS HAVE BEEN BROUGHT ON STATUTE W.E.F. 1.4. 2005 PERTAINING TO A.Y. 2005-06. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES [SUPRA] HAS HELD THAT THE AMENDMENT TO S EC. 80IB(10) IS PROSPECTIVE AND NOT RETROSPECTIVE. WE ALSO FIND TH AT THE ORIGINAL ASSESSMENT WAS COMPLETED ON 10.2.2006 WHICH MEANS THAT ALL THE SE AMENDMENTS WERE BEFORE THE AO WHEN HE WAS FINALIZING THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WHICH ALSO MEANS THAT THE AO MUST HAV E DULY CONSIDERED THE AMENDMENTS BROUGHT IN THE PROVISIONS OF SEC. 80IB(1 0). WE AGREE WITH THE LD. CIT(A) THAT NO NEW MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO WHICH WOULD JUSTIFY THE REOPENING U/S. 147 OF THE ACT. T HIS IS A CLEAR CASE OF CHANGE OF OPINION WHICH CANNOT BE MADE A BASIS FOR REOPENI NG OF THE ASSESSMENT IN THE ABSENCE OF ANY TANGIBLE MATERIAL BROUGHT ON REC ORD. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD. 320 ITR 561. CO NSIDERING ALL THE FACTS AND CIRCUMSTANCES AND THE LEGAL POSITION, WE DO NOT FIN D ANY REASON TO TINKER WITH THE FINDINGS OF LD. CIT(A). WE ACCORDINGLY CONFIRM THAT REOPENING OF THE ASSESSMENT IS BAD IN LAW. GROUND NO. 1 IS ACCORDI NGLY DISMISSED. 10. AS WE HAVE DECIDED THAT REOPENING OF ASSESSMENT IS BAD IN LAW, WE DO NOT PROPOSE TO DECIDE THE ISSUE ON MERIT. GROUND N O. 2 IS ACCORDINGLY DISMISSED. ITA NO. 3629/M/2011 6 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON THIS 12 TH DAY OF SEPTEMBER, 2012 SD/- SD/- (D.K. AGARWAL) (N.K. BILLAIYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 12 TH SEPTEMBER, 2012 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI