Appeal details
Counselvise Citation
[2024] 101 COUNSELVISE.COM (IT) 6937 (ITAT-AMRITSAR)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 9 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-05-2024
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
16-04-2024
Assessment Year
2017-2018
Appeal Filed On
20-12-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. UDAYAN DASGUPTA, JUDICIAL MEMBER I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 Chief Administrator Jalandhar Development Authority SCO- 41, PUDA Complex Ladowali Road, Jalandhar, Punjab. [PAN:-AAALC04545G] (Appellant) Vs. Dy. Commissioner of Income Tax, Circle-3, Jalandhar, Punjab. (Respondent) Appellant by Sh. Sudhir Sehgal, Adv. Respondent by Smt. Vandana Vijay Mohite, CIT DR and Sh. Davinder Pal Singh, Sr. DR Date of Hearing 17.04.2024 Date of Pronouncement 30.05.2024 ORDER Per: Bench: All these appeals for four Assessment years, being Asst. years 2012-13 to 2014-15 and for the Asst. year 2017-18, are preferred by the Chief Administrator Jalandhar Development Authority, Punjab (henceforth referred to as the assessee) the appellant, in these cases, the details of which are as follows: I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 2 i). ITA No: 377/Asr/2023, Asst year: 2012-13 against CIT(A) NFAC order dated 30/10/2023, ii). ITA No: 378 /Asr / 2023, Asst year: 2013-14 against CIT(A) NFAC order dated 30/10/2023, iii) ITA No: 3/Asr / 2024, Asst year: 2014-15 against CIT(A) NFAC order dated 24/11/2023, iv) ITA No: 379 /Asr / 2023, Asst year: 2017-18 against CIT(A) NFAC order dated 30/10/2023, The assessee has filed a paperbook consisting of 102 pages containing documents already filed before the lower authorities and a compilation of various notifications issued by the Punjab Government (with running page number 103 to 127) which also certified to have been filed before the AO, and the notifications being directly linked to the nature of work carried out by the assessee as per direction of the State Government. Moreover, the Ld AR has filed a judgment set containing 267 pages, consisting of judgments of the Hon’ble Apex Court , various High Courts , and Tribunals , relating to the issue of reopening of cases u/s 148 of the Act 61 , the matter challenged in these appeals. The AR , has further filed a synopsis containing 26 pages , retreating his arguments and submissions relating to the grounds of appeal . 2. There is common issue involved in all the years, regarding reopening of already completed assessment u/s 143(3) in Asstt.Years 2012, -13, 2013-14 and I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 3 2014-15 and on merits also , the issue is almost same in all the assessment years under consideration and, thus, for the sake of convenience , all the above appeals are being decided by way of common order for the sake of convenience . 3. The year wise grounds of appeals taken by the assessee are reproduced below: Asstt Year 2012-13 (Grounds of the appellant) “1. That the Ld. CIT(A) has erred in confirming the finding of the Assessing Officer with regard to reopening of the assessment as framed by the Ld. Assessing officer by issuance of notice u/s 148 for the year under consideration. 2. That the Ld. CIT(A) has failed to appreciate that the original assessment had been framed u/s 143(3) vide order, dated 17.10.2014 and, thus, there was due application of mind by the Assessing Officer regarding the claim of ‘External Development Charges’ as claimed by the assessee and, thus, without any tangible material on record, the reopening of assessment u/s 148 is devoid of any valid consideration. 3. That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer in reopening of the case u/s 148 on the basis of judgment of Hon’ble Punjab & Haryana High Court in the case of Greater Mohali Area Development Authority (GMADA) as quoted by him, at page 22 of the order and which, judgment did not find favour with the Hon’ble Apex Court and I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 4 rather in the case of GMADA, the proceedings u/s 148 have been quashed after considering the judgment of Hon’ble ITAT. 4. That the Ld. CIT(A) has failed to appreciate that the change of opinion on the same issue, is not permitted by way of numerous judgments of different High Courts/Apex Court. 5. Notwithstanding the above said ground of appeal, the Ld. CIT(A) has erred in confirming the addition of Rs.10,12,67,002/- on account of ‘External Development Charges’, which amount, in fact, was to be spent for development of colonies only. 6. That the Ld.CIT(A) has also erred in confirming the addition of Rs. 58,13,596/- on account of License fee as claimed in the profit and loss account by the assessee. 7. That the addition has been made against the facts and circumstances of the case and without any application of mind. 8. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.” Assessment Year 2013-14 (Grounds of the appellant) “1. That the Ld. CIT(A) has erred in confirming the finding of the Assessing Officer with regard to reopening of the assessment as framed by the Ld. Assessing Officer by issuance of notice u/s 148 for the year under consideration. 2. That the Ld. CIT(A) has failed to appreciate that the original assessment had been framed u/s 143(3) vide order, dated 29.2.2016 and, thus, there was due application of mind I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 5 by the Assessing Officer regarding the claim of ‘External Development Charges’ as claimed by the assessee and, thus, without any tangible material on record, the reopening of assessment u/s 148 is devoid of any valid consideration. 3. That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer in reopening of the case u/s 148 on the basis of judgment of Hon’ble Punjab & Haryana High Court in the case of Greater Mohali Area Development Authority (GMADA) as quoted by him, at page 22 of the order and which, judgment did not find favour with the Hon’ble Apex Court and rather in the case of GMADA, the proceedings u/s 148 have been quashed after considering the judgment of Hon’ble ITAT. 4. That the Ld. CIT(A) has failed to appreciate that the change of opinion on the same issue, is not permitted by way of numerous judgments of different High Courts/Apex Court. 5. Notwithstanding the above said ground of appeal, the Ld. CIT(A) has erred in confirming the addition of Rs.8,55,34,125/- on account of ‘External Development Charges’, which amount, in fact, was to be spent for development of colonies only. 6. That the addition has been made against the facts and circumstances of the case and without any application of mind. 7. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.” Assessment Year 2014-15 ( Grounds of the appellant ) I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 6 “1. That the Ld. CIT(A) has erred in confirming the finding of the Assessing Officer with regard to reopening of the assessment as framed by the Ld. Assessing Officer by issuance of notice u/s 148 for the year under consideration. 2. That the Ld. CIT(A) has failed to appreciate that the original assessment had been framed u/s 143(3) vide order, dated 29.07.2016 and, thus, there was due application of mind by the Assessing Officer regarding the claim of ‘External Development Charges’ as claimed by the assessee and, thus, without any tangible material on record, the reopening of assessment u/s 148 is devoid of any valid consideration. 3. That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer in reopening of the case u/s 148 on the basis of judgment of Hon’ble Punjab & Haryana High Court in the case of “Greater Mohali Area Development Authority” (GMADA) as quoted by him, at page 22 of the order and which, judgment did not find favour with the Hon’ble Apex Court and rather in the case of GMADA, the proceedings u/s 148 have been quashed after considering the judgment of Hon’ble ITAT. 4. That the Ld. CIT(A) has failed to appreciate that the change of opinion on the same issue, is not permitted by way of numerous judgments of different High Courts/Apex Court. 5. Notwithstanding the above said ground of appeal, the Ld. CIT(A) has erred in confirming the addition of Rs.1,12,91,931/- on account of ‘External Development Charges’, which amount, in fact, was to be spent for development of colonies only. I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 7 6. That the Ld.CIT(A) has also erred in confirming the addition of Rs. 1,79,15,221/- on account of License fee as claimed in the profit and loss account by the assessee. 7. That the Ld.CIT(A) has also erred in confirming the addition of Rs. 37,44,11,087/- on account of Regularization fee as claimed in the profit and loss account by the assessee. 8. That the Ld.CIT(A) has also erred in confirming the addition of Rs. 1,01,68,500/- on account of EWS/Flat Charges as claimed in the profit and loss account by the assessee. 9. That the addition has been made against the facts and circumstances of the case and without any application of mind. 10. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.” 4. Brief facts of the case are that, the assessee is a development authority, a Government Body established by the State of Punjab, on 16.07.2007 as per notification of Government of Punjab, for the development and maintenance of the areas of Jalandhar, and surrounding places, such as Kapurthala, Phagwara and others, under the name of “Jalandhar Development Authority” (in short JDA). The source of income of the authority are mainly on account of receipts of the proceeds from the sale of land, which are acquired by them through capital receipts, instalment collections, interest income, etc. The expenditure incurred are mainly on account of the development of basic infrastructure and maintenance of I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 8 the areas along with the administration and establishment expenditures. The JDA is again governed by the provisions of the “Punjab Apartment and Property Regulation Act, 1995, and as per the said PAPR Act ‘95, the assessee is a competent authority to receive such funds. 4.1 The main issue of difference from the revenue point of view is that the funds so collected or received by the JDA ( assessee ) , as EDC and License fees, etc, are revenue in nature and should have been disclosed as revenue receipts and the argument from the assessee point of view , is that the said collection are receipts collected on the strength of various notifications issued by the Government of Punjab from time to time and the assessee has no control over such charges as received under the direction and guidelines of the Government and these charges are collected from the developers and kept separately and are being utilised as per the direction of Government for further development of the city or for building super structures or making further improvements to the already existing infrastructure in the allotted area. These amounts are in the nature of liability and, these amounts are collected by the assessee ( JDA ) on behalf of Ministry of Housing & Development and the assessee is only collecting agency on their behalf as per the policies notified from time to time and the assessee is not free to use these funds without the permission of Ministry of Housing & Development , and as such these are liability in nature and as such has been rightly disclosed in the liability side of the balance sheet, because the funds do not belong to the assessee and they have no authority to spend the same , and the assessee is just the custodian of the funds on behalf of the Government. Arguments of the Assessee : I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 9 5. The Ld. Counsel of the assessee has argued on the issue of assumption of jurisdiction u/s 148 of the Act 61 , by the Assessing Officer , being a common issue , for all the three assessment years , and prayed that the arguments for Asst year 2012-13 may also be considered for Asstt. Year 2013-14 and 2014-15 , since the facts are common, for these three years. 6. For the Assessment year 2012-13, it has been argued that the return had been filed declaring a loss of ( Rs. 1,25,38,280/-) and the same was assessed u/s 143(3) vide order, dated 17.10.2014, after due application of mind by the Assessing Officer, who completed the assessment by accepting the loss of ( Rs. 1,25,38,280/- ) . It was further brought to our notice, that the “extra development charges” ( EDC ) and the “license fees” , both received ( collected ) by the assessee , were duly disclosed and reflected in the liability side of the audited balance sheet , which subsequently, was the subject matter of issuance of notice u/s 148 by the assessing Officer , on the ground , that these are revenue receipts and there was failure on the part of the assessee to disclose all the material facts. The CIT (A) has reproduced the recorded reasons in his appeal order for the Asst year 2012-13 which is being reproduced as follows : “On perusal of the assessment records, it has been noticed that the assessee had received External Development Charges amounting to Rs. 10,12,67,004/- and License Fee to the tune of Rs.58,13,596/-, and the said receipts had been shown as Capital receipt in its balance sheet. However, the nature of these receipts, which are collected from allottees / colonisers, is required to be treated as revenue receipts. I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 10 During the course of assessment proceedings, the assessee failed to file information in this regard. On 04.08.2018, notice u/s 154 was issued to the assessee to show cause as to why these receipts be not treated as revenue receipts. In response, the assessee stated that these receipts are treated as capital receipts because the same were collected by “Jalandhar Development Authority”, on behalf of the Department of Housing and Urban Development, Govt. of Punjab. On 15.02.2019, the assessee was asked to file supporting evidence, along with confirmation from Department of Housing and Urban Development, in this regard. However, the assessee has not filed any documentary evidence in support of its claim, which may show that the said receipts/remittance had been transferred to the Department of Housing and Urban Development, Govt. of Punjab. I have perused the Assessment Record and the information filed by the assessee, during the course of assessment proceedings u/s 143(3). It is noticed that the assessee had not disclosed material facts in this regard. Therefore, total receipts of Rs. 10,70,80,600/-(External Development Charges Rs.10,12,67,004/- and licence fee Rs.58,13,596/-), which are its Revenue receipts, have escaped assessment. I, therefore, have reasons to believe that the income of the assessee to be tune of Rs. 10,70,80,600/- and also any other income chargeable to tax, which comes into notice subsequently in the course of assessment proceedings, has escaped assessment, in the hands of the assessee, by the reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 11 Assessment Year 2012-13, within the meaning of section 147 of the Income Tax Act, 1961.” 7. The contention of the Ld. Counsel of the assessee, is that from the bare perusal of reasons as recorded by Assessing Officer, it is very much clear that no tangible material or any information has come into the possession of the Assessing Officer for assuming the jurisdiction u/s 148 of the Act 61, as is clear from the reasons as recorded and reproduced above, wherein, it has been mentioned “ on the perusal of the assessment records” and even again, it has been mentioned in the reasons that “ the Assessing Officer on perusal of the assessment record ” during the course of original assessment proceedings u/s 143(3) and, further, as per the reasons, it has been stated that the assessee had not disclosed material facts with regard to External Development charges ( EDC ) to the tune of Rs. 10,12,67,004/- and license fee at Rs. 58,13,596/- , which ought to have been disclosed as revenue receipts. The Ld.Counsel has stated that the said external development charges ( EDC ) and license fee, had been duly disclosed in the audited balance sheet of the assessee, wherein, under the head current liabilities ( placed in page 16 of the paper book ), such amount of EDC and License fee had duly been reflected and, thus, there is neither any omission or failure on the part of the assessee to disclose fully/truly all material facts, nor the Assessing Officer has in his possession any material , for formation of belief, that income of the assessee has escaped assessment. 8. The first four grounds of appeal of the assessee ( Ground No 1 to 4 of the appeal memorandum ) , relates to the reopening of the case u/s 148 of the Act 61 . I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 12 The Ld. AR has filed a written submission on this aspect of the matter , and only the relevant portion of same is being reproduced below : “Written submission of the assessee : 1. At the outset it is submitted that the re-opening of the case U/s 148 is bad in law due to the following facts: Change of Opinion by successor AO on same facts. All facts regarding the External Development Charges and License Fees were already in the knowledge of the department at the time of framing the assessment u/s 143(3) of the Act and the balance sheet and its schedule depicts separately EDC under the head ‘Current Liabilities’ as per balance sheet ( placed in page 16 of Paper Book ). It is worth to mention here that the amount of EDC and License fees are reflected on the face of the Balance Sheet. Thus, there is neither any omission/failure on the part of the assessee to disclose fully/truly all material facts and nor the Assessing Officer has in his possession some material for formation of belief that income of the assessee has escaped assessment. 2. The details which were filed during the course of original assessment are as follows: Copy of Balance Sheet of the Assessee, wherein the External Development Charges to the tune of Rs. 25,37,32,472.70/- and License Fees to the tune of I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 13 Rs. 7,09,93,953.50/-were clearly reflected.(PB at Page-16 i.e relevant page of Balance Sheet) Copy of assessment order u/sec 143(3) of the Act which was passed after due application of mind. ( PB Pg-45-46.) Assessment Order u/s 143(3) dated 17.10.2014 (placed in Paper Book Pg- 45- 46) wherein the AO has specifically mentioned as follows: “In response, Shri V M Arora, CA the authorized representative of the assessee attended the assessment proceedings and furnished the requisite information, which is placed on record. The case has been discussed with him.” 9. After the proceedings u/s 143(3) of the Act, notice u/sec 154 of the Act was issued to the Assessee on the issue of EDC and License Fees. Copy of notice u/sec 154 of the Act along-with the detailed reply to the same is enclosed in the PB at Pages-47-53. 10. Copy of reasons for the re-opening of the case are placed in the PB at Page- 55-57. From the reasons as recorded by the AO, it is clear that the only reason for the re-opening of the case is with regard to treatment of EDC and License fees in the books of accounts of the Assessee. 11. From a bare perusal of the reasons, it is very clear that there is no fresh material with the Assessing Officer to justify the reopening of the assessment and which is evident from the copy of the reasons and following few salient points need your kind consideration:- I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 14 a). In the reasons at page 56, it has been mentioned in first paragraph (On perusal of the assessment records), meaning thereby that no new material or information has been received but it is reappraisal from the information already in the file. b). In the same para, there is detail with regard to EDC and how, they are collected, which was in the knowledge of the earlier Assessing Officer also, have been mentioned and, as such, everything is borne out from the records only. c). Then again certain observations have been made that how that liability of EDC has been reflected in the balance sheet and, thus, everything is borne out from the records. d). It has been mentioned in the last para that there is failure on the part of the assessee to fully and truly disclose all the material facts relating to its income. It is submitted that there is no failure on the party of the assessee and each and everything is borne out from the balance sheet, which was with Ld A.O. at the time of original assessment. 12 . From the above facts, it is very much clear that the re-opening of the case is merely the change of opinion on the part of the AO as the matter has already been considered during the course of original assessment proceedings. 13. The case has been re-opened after four years and it has been clearly laid down in the Act itself that the case cannot be re-opened beyond four years, unless there is any failure on the part of the Assessee. I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 15 14. In this case there is no failure on the part of the Assessee as the Assessee has filed the Balance sheet with A.O wherein the EDC and License Fees are shown on the FACE of the Balance Sheet ( and not even in Annexures). The AO only after detailed discussion and his satisfaction has passed the assessment order. 15. We rely on the Judgment of the Hon’ble Chandigarh Bench in the case of GMADA for the AY 2010-11 and AY 2011-12 in ITA No. 1177/Chd/2019 and 1237/Chd/2019 order dated 12.11.2021 (Relevant para 10-13 pg-9-13 of Judgment set) and also for 2008-09 and AY 2009-10 in ITA No. 410/Chd/2013 order dated 28.12.2017 (Para-22 onwards pg-33 of Judgment set) and ITA No. 1560/Chd/2017 order dated 22.05.2018 (para-11, pg-57 onwards of Judgment set) respectively, wherein on similar issue the re- assessment proceedings have been quashed by the Hon’ble Chandigarh Bench. 16. We also rely upon the latest Judgment of the Apex Court in the case of ACIT vs Marico Ltd. In SLP No. 7367/2020 dated 01.06.2020 117 taxmann.com 244 (SC) wherein the SLP as filed by the Department has been dismissed by holding that the specific replies were filed by the Assessee during I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 16 the original assessment proceedings to the query raised by the department and thus the Hon’ble Bombay HC has rightly held it as a change of opinion. 17. Further Reliance in this regard is also being placed upon the Judgment of the Apex Court in the case of NDTV vs DCIT in Civil Appeal No. 1008 of 2020 order dated 03.04.2020 (116 taxmann.com 151), wherein it has been held as under: i) NDTV had disclosed all the facts it was bound to disclose. If the revenue wanted to investigate the matter further at that stage it could have easily directed the assessee to furnish more facts. ii) The Hon’ble Supreme Court rightly held that NDTV had disclosed all primary facts before the AO and it was not required to give any further assistance to the AO by disclosure of other facts. It was for the AO at this stage to decide what inference should be drawn from the facts of the case. In the present case, the AO on the basis of the facts disclosed to him did not doubt the genuineness of the transaction set up by NDTV.This the AO could have done even at that stage on the basis of the facts which he already knew. However, that cannot lead to the conclusion that there is nondisclosure of true and material facts by the assessee.The duty of an assessee is limited and restricted to disclosing all the “primary facts” before the AO. And the same may be treated as a “full and true disclosure” made by an assessee. iii) The Hon’ble Supreme Court held that the assessee must be put to notice of all the provisions on which the Revenue relies upon. The notice and reasons given thereafter do not conform to the principles of natural justice and NDTV did not get a proper and adequate opportunity to reply to the allegations which are now being relied upon by the revenue. If the revenue is to rely upon the second proviso and wanted to urge that the limitation of 16 I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 17 years would apply, then in our opinion in the notice or at least in the reasons in support of the notice, the assessee should have been put to notice that the revenue relies upon the second proviso. The assessee could not be taken by surprise at the stage of rejection of its objections or at the stage of proceedings before the High Court that the notice is to be treated as a notice invoking provisions of the second proviso of Section 147 of the Act. 18. In the case of the Assessee also, the Assessee has duly disclosed and submitted the primary facts in the form of information as called for the AO and it was for the AO to decide so as to what inference should be drawn from the facts of the case. Further, even in the case of the Assessee, the AO has not mentioned or given any reference of First Proviso to sec 147 of the Act, since the case of the Assessee has been re-opened after the expiry of four years. 19. The CIT(A) as well as the AO has only stated that no specific query was raised by the then AO with regard to the issue of EDC, due to the reasons, the Assessing Officer is well aware of the procedure of EDC and clearly states that from the same papers, he has formed an opinion. 20. It is not the case that the AO would discuss each and every item of the Balance Sheet and Profit & Loss A/c in his order. The AO once gets I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 18 satisfied is not bound to mention each aspect in his order. Reliance in this regard is being placed upon the following Judgment: - (i) CIT vs ICICI Bank Ltd. As reported in 31 taxmann.com 53 (Bom HC) wherein it has held as under: “The mere fact that an assessment order does not deal with a particular claim cannot lead to the conclusion that while allowing the claim the AO had not applied his mind.” (ii) Reliance is being placed on the judgement of Punjab & Haryana High Court in the case of PCIT-I, Ludhiana Vs. Baldev Singh Prop. Nankana Sahib Road Lines, Ludhiana in which it was held as under: “6. As we noted earlier the details in respect of transactions were called for by the Assessing Officer and the assessee furnished the same. On the basis thereof the Assessing Officer accepted the return in this respect. The Tribunal on this basis and after following the judgments of Delhi High Court in Madhukar Khosla v. Assistant Commissioner of Income Tax (2014) 90CCH 0023 Delhi High Court and Orient Crafts Ltd. 354 ITR 536 (Delhi) rightly allowed the appeal on the ground that the Assessing Officer was not entitled to assume jurisdiction under section 147 of the Act in the absence of any new information or material. We are unable to state that the finding is perverse or irrational. I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 19 (iii) State Bank Of India vs ACIT (Bom HC) 96 taxmann.com 77 “Therefore, where he accepts the claim made, the occasion to ask questions on it will not arise nor does it have to be indicated in the order passed in the regular assessment proceedings. Thus, issuing the impugned notices on the above ground would, prima-facie, amount to a change of opinion.” iv) Hon'ble Bombay High Court in the case of Idea Cellular Ltd. v/s DCIT reported in 301 ITR 407 wherein it was held as under; "Where the assessee's assessment was reopened on the ground that since the assessee had failed to disclose the income accruing on amalgamation, provisions of section 147 were applicable. Held that this was not a case where it could be said that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment in the relevant assessment year. The accounting entry for the amount of Rs. 9,984.15 lakhs was mentioned in the returns for the relevant year. The queries raised were replied to by the assessee. There was a full true disclosure of all material facts placed before the Assessing Officer and thus there was no suppression of any material from the assessment officer. Therefore, all materials were placed before the Assessing Officer when he passed the order. Therefore, the pre-requisite condition contained in the proviso to section 147 to enable the reassessment to be opened after period of I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 20 4 years had elapsed had not been met. This was a case in which the Assessing Officer raised specific queries on several occasions and all the queries were answered. Once all the material was before the Assessing Officer and he chose not to deal with the several contentions raised by the petitioner in his final assessment order, it could not be said that he had not applied his mind." (v) Judgment of Hon’ble High Court of Orrisa in the case of Sri Jagannath Promoters & Builders Vs. DCIT reported in (2022) 209 DTR (Ori) 188. vi) Copy of the Hon’ble Bombay High Court as reported in [2023] 458 ITR 585 in the case of Tahnee Heights CHS Ltd., quashing the reopening notice u/s 148. vii) Copy of the Hon’ble Bombay High Court as reported in [2023] 355 CTR 492 in the case of Hashmukh Estate (P) Ltd, ACIT. viii) Judgement of Hon’ble Orissa High Court in the case of Anil Raj Tuli Vs ITO as reported in [2023] 454 ITR 411 (Orissa). Dhirender Hansraj Singh vs ACIT 94 taxmann.com 372 (GUJ HC) “Where after expiry of four years from end of relevant year, Assessing Officer sought to reopen assessment on ground that deduction under section 80-IB(11A) was wrongly claimed as assessee was engaged in manufacturing and processing of fruit juices and did not derive profits from processing, preservation and packaging of fruits, since there was no failure on part of assessee to disclose fully and truly any material facts I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 21 which were necessary for assessment, in view of proviso to section 147, impugned reassessment proceedings deserved to be set aside” 21. The judgement of ‘Kelvinator of India’ of the Hon’ble Apex Court is on the change of opinion and in that case also, the assessment was sought to be reopened within four years. Similar are the judgments as under where the reassessment proceedings u/s 148 have been quashed, on change of opinion even if the notice u/s 148 had been issued within four years. The case of the Assessee is even more stronger wherein the reassessment has been initiated after a period of four years and there is no tangible material in possession of the AO and thus, there is no failure on the part of assessee to disclose truly and fully all material facts . 22. Apart from the above cases relied upon by the assessee , the Ld. AR has referred to various other judgments of various courts , all leading to the same conclusion, and he concluded his arguments by submitting that , there is no failure on the part of the Assessee and hence provisions of sec 148 of the Act are not applicable ( as per the Ld AR ) , because of the fact that: (i) the Assessee has properly disclosed the EDC and License fees in the face of the BalanceSheet (Pg-16 of PB-1), I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 22 (ii) the original Assessment has been framed u/sec 143(3) of the Act after due application of mind, (iii) the proceedings u/sec 154 of the Act were initiated on same grounds, (iv) the AO at the time of re-opening has duly relied upon the “assessment record” only and there was no new tangible material with the Assessing Officer, on the basis of which reason to believe has been formed, (v) it is a clear case of change of opinion. (vi) there is no failure on the part of the Assessee as there is proper disclosure of EDC and License Fees in the Balance Sheet, (vi) the assessments in the case of the Assessee has been completed u/sec 143(3) of the Act year after year.” 9. The Ld AR further retreated that the Ld. CIT(A) as well as the AO has laid emphasis on the dismissal of writ petition as filed by the GMADA against the re- opening of the case u/sec 148 of the Act. But, the department has not referred to order of the Apex Court in the said case. It is also relevant to mention here that the Apex Court in its order has duly made it clear that the Assessee has right to challenge the 148 proceedings and the appellate authorities should remain uninfluenced by the observations as given by the Hon’ble Punjab and Haryana High Court , in their order. Even, the Department has sought review of the decision of the Apex Court , but as the issue stands, there is no review application filed and case has to be decided independently on the basis of latest judgement of the Hon’ble Apex Court. The Hon’ble Chandigarh Bench in the case of GMADA I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 23 itself has quashed the notice/proceedings u/s 148 of the Act for the AY 2010-11 and 2011-12 after referred to all these facts in ITA No. 1177/Chd/2019 and 1237/Chd/2019 order dated 12.11.2021. (Relevant para-10-page-8-9 of Judgment set) 10. Thus, it is prayed that the Assessing Officer had duly considered and applied his mind and, thus, the reopening is bad in law based on judgements of the Hon’ble Apex Court and other courts. 11. It was further argued by the Ld. Counsel that after completion of assessment u/s 143(3), the notice u/s 154 was issued subsequently only in Asstt.Year 2012-13 on the same issue and to which, the reply was submitted by the assessee and, thereafter, the proceedings were filed. 12. The Ld.CIT(A) in his order has discussed this issue with regard to 148 and has reproduced the finding of the Assessing Officer ( from page 3 to page 8 of his order) and submissions of the assessee have been reproduced ( from page 17 to 20 ) of his order and then, the CIT(A) has given his finding from ( page 20, para 7 to page 23 ) of his order and has dismissed the ground of appeal with regard to assumption of jurisdiction by the Assessing Officer u/s 148. It has been argued that the finding of the CIT(A) are totally based on the Civil Writ Petition filed by the “Greater Mohali Area Development Authority” ( in short GMADA ) on the identical issue before the Hon’ble Punjab and Haryana High Court, where the same issue of 147/148 was involved and the Hon’ble Punjab & Haryana High Court , had dismissed the Writ Petition of the assessee, and in that case also, the Assessing Officer I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 24 had reopened the already completed assessment u/s 143(3) on the issue of EDC and License fee. 13. The Ld. Counsel of the assessee, has brought to our notice the judgment of GMADA ( Greater Mohali Area Development Authority ) for Asstt. Year 2010-11 & 2011-12 in ITA Nos. 1177 & 122/Chd/2019 , a copy of which has been placed before us. It is brought to our notice from that judgement, that after the writ petition of GMADA was dismissed by the Hon’ble Punjab & Haryana High Court, the petitioner in that case , GMADA had filed the SLP before the Hon’ble Apex Court and the Hon’ble Supreme Court, though, had dismissed the ‘SLP’, but the Hon’ble Apex Court had clarified that it is open to the assessee to challenge the order of Assessing Officer in regular appeal and the Appellate Authority would adjudicate the issue uninfluenced by the observation made by the Hon’ble High Court, referred to page 6 of the judgment of GMADA as stated above and read out the finding of the Hon’ble Apex Court in SLP (C) No. 15102/2018 dated 20- 07-2018 as reproduced in the order of GMADA by the Chandigarh Bench as mentioned above, as under:- "Since the reassessment is already complete and the assessing officer has passed the assessment order, we do not find any reason to interfere with the impugned order passed by the High Court in exercise of our power under Article 136 of the Constitution of India. The special leave petitions are accordingly dismissed. However, we make it clear that it will be open to the petitioner-Authority to challenge the order of the assessing officer by fling statutory appeal and in the said appeal the petitioner would also be permitted to challenge the correctness of notice under Section 147/148 of the Income Tax Act, 1961. The appellate authority may go into the said I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 25 question uninfluenced by the observations which are made in the impugned order. Pending applications, if any, shall also stand disposed of." 14. It was further brought to our knowledge that even the review petition filed by the Revenue against the order of Hon’ble Apex Court had been dismissed vide order, dated 24.07.2019 in RPC No.1026/2019. We also find that for the Asstt. Year 2008-09 and 2009-10, where the reopening u/s 147 was made in the case of GMADA on the identical fact of EDC, the same was also decided by the coordinate Chandigarh Bench in favour of GMADA in ITA No. 410/Chd/2013, for which, copy has been placed at pages 15 to 35 for Asstt. Year 2008-09 and at pages 36 to 59 of the for Asstt. Year 2009-10 in ITA No.1560/Chd/2017 and the reopening u/s 148 had been quashed. 15. From the above said order of the GMADA on identical issue, a view has been taken by the Co-ordinate Bench and the facts and circumstances with regard to the reasons as recorded for reopening of the case are also the same in case before us, as much as, no tangible material has come to the notice of the Assessing Officer or any information which led to the reopening of the Assessment for assessment years 2012-13, 2013-14 and 2014-15. 16. We have also gone through the audited balance sheet of the assessee as filed before us and particularly, the page 16 of the Paper Book, from which, it is very clear that the EDC and License fee has been reflected on the face of the balance sheet and, thus, everything has been borne out from the record of the Assessing Officer and, as such, how, there is failure on the part of the Assessee to fully and truly disclose all material facts, relating to income has not been substantiated by I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 26 the Assessing Officer and CIT(A) and particularly when the assessment has been reopened beyond four years u/s 143(3) for all the years and there is a settled law on this aspect that the case cannot be subjected to 148 beyond four years unless, there is failure on the part of the assessee and in the present facts and circumstances of the case, we have no hesitation in holding that there is no failure on the part of the assessee to disclose all facts material to the computation of income for all the three years. 17. The reliance by the Ld. Counsel on other judgments are also on similar facts and thus, we have no hesitation in holding that the reopening was made by the Assessing Officer only on the basis of facts already on record and there was no tangible material with the Assessing Officer or failure on the part of the assessee to disclose fully and truly the particulars of income and, as such, based on the number of cases relied upon by the Ld. Counsel of the assessee, particularly the case of GMADA for Asstt. Year 2010-11 and 2011-12 by the Co-ordinate Bench of Chandigarh ITAT, we hold that the reopening u/s 148 for all the three years is merely on the change of opinion and is not permitted as per law. 18. The Ld DR , has not filed any written submissions , but relied upon the arguments of order of the assessing officer and relied on the arguments contained in the CIT(A) order , and argued that since the Punjab and Haryana High Court had dismissed the writ petition in the case of GAMADA he prayed that the order of CIT(A) be confirmed. 19. We have carefully gone through the reasons recorded u/s 148, arguments of Ld. Counsel of the assessee and the arguments of the Ld. DR, and after examining the reasons as recorded by the Assessing Officer, where there is no reference to any tangible material or any other information and rather everything is borne out I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 27 from the record, as is evident from the reasons itself as reproduced above, wherein, it has been mentioned “On perusal of assessment record, it has been noticed that the assessee has received External Development Charges and License Fee”, and further in pagraph-2 at page 56 of Paper Book, it has again been stated in the reasons, that “I have perused the assessment record and information filed by the assessee during the course of assessment proceedings u/s 143(3)” and this finding is contrary to the finding given in the reasons that there is failure on the part of the assessee to dislcose fully and truly all material facts necessary for his assessment and, as such, it is apparent and quite visible from the reasons, so recorded, that there was no tangible material or any information, but everything has been available in the records and on the basis of which, the Assessing Officer had framed the original assessment u/s 143(3) and, thus, in view of above facts, we have no hesitation in holding that there is no material fact, relating to escapement of income, which the assessee could be said to have not disclosed truly and fully and rather the assessee had not concealed any material fact relating to EDC and License fee etc., which has duly been disclosed in the balance sheet as per page 16 of the Paper Book and as per balance sheet of other years i.e. Asstt. Years 2013-14 & 2014-15 and, thus, the assessments as framed by the Assessing Officer for Asstt.Years 2012-13, 2013-14 & 2014-15 consequent to the issuance of notice u/s 148 and confirmed by the CIT(A) are liable to be set aside. At this stage we would like to refer to the judgment of the Co-ordinate Bench of the ITAT, Chandigarh for the Asstt. Years 2010-11 & 2011-12 in ITA Nos. 1177 & 1202/Chd/2019, in the case of GAMADA , where the facts are absolutely identical and the Hon’ble Bench has given a finding to which, we also agree as under:- I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 28 “11. Clearly the reopening was resorted to beyond four years from the relevant assessment year and law stipulates that reopening can be resorted to beyond four years only if any income chargeable to tax has escaped assessment by reason of failure of the assessee, amongst other things, to disclose fully and truly all material facts necessary for his assessment for that year. There is no dispute vis-a-vis this requirement of law. 12. Going forward from here & exam1n1ng and perusing the contents of the reasons recorded we find that there is no material fact, relating to the escapement of income, which the assessee could be said to have not disclosed truly and fully. The reasons recorded escapement of income on account of EDC, not being taxed. The assessee ought to have been found by the AO to have concealed some material fact relating to the same for him to validly assume jurisdiction to reopen the case of the assessee u/s 147 of the Act, and the reasons recorded should have mentioned this act of concealment. But on the contrary we find, the reasons note that the EDC charges were shown by the assessee as a liability in its Balance Sheet under the head "other liabilities" (1st para of the reasons). The rest of the reasons is only the interpretation of the AO regarding the nature of the receipts of EDC being revenue in nature. In the last para of the reasons the AO again reiterates the disclosure of the EDC received by the assessee as a liability in its Balance Sheet. Except for the fact that the assessee received EDC during the year, no other fact has come to the knowledge of the AO and this fact as per his own admission, was disclosed by the assessee in his Balance Sheet as liability. Further it is I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 29 a fact on record, which was brought to the notice of the CIT(A) also and has remained uncontroverted before us, that during assessment proceedings the assessee was asked to submit details of other liabilities, 1n response to which the assessee submitted the said details disclosing therein the fact of EDC received from land developers. Therefore, to say that the assessee had concealed any material fact relating to EDC, is not correct. That he had reflected it is as a liability in the Balance Sheet and not shown it as revenue receipt in its Profit & Loss Account, is not a matter of fact but on the contrary it is an interpretation of the fact of receipt of EDC regarding its nature and the reasons do not bring out any material /information with the AO leading him to form this opinion of the EDC charges being Revenue in nature. The Ld. DR has been unable to enlighten us as to what material fact relating to EDC was concealed by the assessee so as to empower the AO to assume jurisdiction to reopen the case of the assessee beyond four years from the relevant assessment year. 13. In view of the above, we have no hesitation in holding that since the AO has failed to point out concealment of any material fact relating to income escaping assessment, being EDC, the reopening of the case of the assessee resorted to beyond four years from the assessment years, is against the provisions of law. The jurisdiction assumed by the AO therefore, to frame the assessment u/s 147 of the Act is, therefore, not as per law. The order passed, by the AO as a consequential is not sustainable in law and is, therefore, set aside.” I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 30 20. Respectfully following the decision of the coordinate bench (referred to above) , we set aside the assessments for Asstt. Years 2012-13, 2013-14 and 2014- 15 on the issue of reopening of the case u/s 148, without going into the merits of the case (which are merely academic in nature ) and, as such, the appeal filed by the assessee raising various grounds on the merits of the case become infructuous. In the result, appeal filed by the assessee in ITA No.377/Asr/2023, for Asstt. Year 2012-13, ITA No.378/Asr/2023 for Asstt. Year 2013-14 and ITA No.3/Asr/2024 for Asstt. Year 2014-15 are allowed. ITA No 379/ASR/2023 for Assessment year 2017-18 21. The grounds of appeal taken by the assessee in this year is as follows : Assessment Year 2017-18 ( Grounds of the Appellant ) “1. That the Ld. CIT(A) has erred in confirming the EWS House/Flat/charges amounting to Rs.1,25,96,475/-, ignoring the fact that the same has already been assessed in previous years and that the said receipts are not the income of Assessee on behalf of Ministry of Housing and Urban Development. 2. That the confirmation of addition has been made against the facts and circumstances of the case and ignoring the submissions filed by the assessee. 3. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 31 21.1 Briefly, the facts are that the assessee, a development authority, a Govt. Body established by the State of Punjab on 16.07.2007 as per notification of Govt. of Punjab, for the development and maintenance of the areas of Jalandhar and surrounding areas such as Kapurthala, Phagwara etc. The source of income of the authority are mainly on account of the proceeds from the sale of land acquired by them through capital receipts, instalment collected, interest etc. The expenditure are mainly on account of the development and maintenance of the areas along with the administration and establishment expenditures. 22. Further, the charges of External Development, License fee, EDS House/Flat/ charges are also collected by the assessee on the basis of various notifications issued by the Govt. of Punjab from time to time and copies of such notifications have been placed in the common Paper Book for all the years as filed before us and these charges as collected cannot be utilized for any other purpose and further to that, the assessee had no control over such charges as received under the direction and guidelines of the Govt.of Punjab and these charges are collected from the Developers and kept separately and being utilized as per the direction of Govt.of Punjab for further development of City or building the new super structure or making further improvements to the already existing infrastructure in the allotted area. Similarly, the EWS charges also in the nature of liability and, these amounts are collected by the assessee on behalf of Ministry of Housing & Development and the assessee is only collecting agency on their behalf as per the policies notified from time to time. Further, the assessee is not free to use these funds without the permission of Ministry of Housing & Development or other funds like EDC etc. and it was further argued that relevant notifications in this regard are quite clear. 23. Further to that, it has been argued by the Ld. Counsel that these EWS Housing and Flat/Charges or EDC ,License fee, etc have been shown separately towards the liability side of the balance sheet and, later on, as and when, the I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 32 necessary expenditure is to be made as per directions of State Govt. or Housing Development Department, they are spent out of such sum as lying with the assessee and, as such, neither it is claimed as an expense in the profit and loss account nor it is disclosed as an income, since the said amount does not belong to the assessee and neither it has any authority to spend the same. 24. Further, the assessee has by way of submissions as made on merits for Asstt. Year 2012-13, has given detailed submissions on this issue and since the facts and circumstances in Asstt. Year 2012-13 & 2017-18 remains the same on merits, the same being reproduced as under and are being considered for decision on merits for Asstt. Year 2017-18 bearing ITA No. 379/2023:- Argument on Merits : “1. The Assessee is governed by the provisions of Punjab Apartment and Property Regulation Act, 1995 (PAPR Act) and as per the said Act, JDA is a competent authority to receive such funds. 2. In the said Act, it has also been clearly stated that external development works to be carried out by the government or a local authority. Regarding the nature of the EDC it is submitted that the said charges are collected from the promoters/developers of colonies as per the stipulated rates and are meant to be spent on the external development of the said colonies. These charges are for providing infrastructure facilities like roads, water supply and sewerage system etc. The amount is collected as per the Punjab Apartment and Property Regulation Act, 1995. I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 33 3. Further the notifications as issued by the State Government in the year 2005, 2006, 2007 and 2010 also throws light on the external development charges wherein it has been made clear that the EDC charges are not at par with the other fees such as License fees and conversions charges collected by the JDA. Since as per notification dt. 19.09.2007, it has been clarified that License fees shall be retained by the Assessee and the conversion charges shall be paid to the Government. Thus, the nature of these receipts has been clearly identified and nothing has been said for EDC receipts. Had it been the income of the Assessee, it must have been clarified by the Government. The copies of the notifications are placed in the paper book-II at pages-103-120 and also at PG-75-78 of PB-I. i. Notification of 2005: (Pg-103-106-PB-II) The notification of 2005 is enclosed herewith for your goodself’s reference. From the perusal of the notification of 2005, it is clear that the notification has been issued by Government of Punjab wherein the rates of External Development Charges have been revised. The said notification has been issued in exercise of powers conferred by section 34 of the Punjab Apartment Regulation Act, 1995. So, it is clear that any notification issued by the Government of Punjab has to be read with the main Act which governs it. There is no clause in the said notification which can prove that the EDC charges are in the nature of income of the Assessee as the said notification only states the EDC rates. But from the said notification, one thing which is very much clear that, any change in the EDC rates or any change in the policy with regard to EDC is governed only by the Government of Punjab and the Assessee has no control over the same. I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 34 ii) Notification of 2007: (Pg-107-112-PB-II) (specific reference Pg-111) It is again reiterated that the notification has been issued by the Government of Punjab and the Assessee has to abide by the same. The purpose of notification is only with regard to change in the rates of EDC, License Fees and Conversion charges. The Government of Punjab (Pg-111) have even held that the EDC Charges are the charges for utilization of existing infrastructure/proposed infrastructure. The said notification cannot be read in isolation and it has to read along with the PAPR Act, wherein it is already clear that the amount collected as EDC has to be spent by the Government or the Local Authority. The AO has laid stress on the point that EDC will be utilized by the concerned local planning and urban development authorities and if the concerned authority feels that connectivity is required from any local body or any work is to be got executed from a local body, the proportionate amount may be deposited by the authority with the local body on case to case basis. In this regard it is submitted that it is clear from the said wording that the amount cannot be spent by the Assessee in isolation. The area of work which can be done by the Assessee can be done by it but that too with the approval of the Government of the Punjab as the Assessee is merely the custodian of the said amount. It is also submitted that in the future years, the amount has been transferred to the various local authorities for development of the infrastructure. The detail of amount spent from the said EDC A/c has already been filed with the department. The AO has not doubted that the amount has been spent for the purposes for which it was collected. Further, the important point which needs to be mentioned here is that, in the said notification, the treatment of conversion charges and License fees has been specifically stated as conversion charges to be transferred to the Government and License fees to be retained by the Assessee. Had the intention of the Notification been to treat EDC as income of the Assessee, then there was no need to specifically mention the treatment of Conversion charges and License fees. It has also been made clear by the Government of Punjab that License fees is the one time fees and the EDC Charges would be collected in installments. I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 35 iii) Notification of 2010: (Pg-113-122-PB-II) (specific reference Pg-115 and 117) The wording of the said notification is similar to that of the earlier notification. The Government of the Punjab has only changed the rates with respect to EDC and other charges. Further, the Government of Punjab has also levied new charges which are to levied on the basis of EDC, but the utilization of the same is only with the prior permission of the Chief Minister of Punjab. Thus it is very much clear that these charges are totally managed and regulated by the Government of Punjab. The change in rates from time to time. Any kind of concession or any levy of fine is also regulated by the Government of Punjab. The Assessee cannot of its own collect and spend such EDC charges, but as stated, it has to seek permission from the State Government. 4. The EDC charges are collected by the Assessee and are used as per the specific directions of the State Government. Generally, EDC is used in order to provide the basic necessities of the colonies such as building the approach roads till the colonies, laying of sewerage systems etc. It is worth to mention that the whenever the new colonies are built, the infrastructure is required like roads, sewerage systems, water supply etc. 5. The Assessee has been acting only as a custodian of the amount which is collected by it. In the case of “ Greater Ludhiana Area Development Authority ” ( in short GLADA ), letter was issued by the GLADA for use of funds lying with them as EDC (Copy placed in PB-II pg-121) but the said request was rejected by the Govt of Punjab. (Copy placed in PB-II Pg-126). Further on similar footing, a notification has also been issued by the Principal Secretary, Housing & Urban Development that EDC amount cannot be used without obtaining order from Govt and it has also been clearly stated that State Urban Development Authorities are only the custodians. (Copy placed in PB-II Pg-127) I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 36 6. The Assessee has even given the details of amount spent year wise from the EDC account to the Assessing Officer from which it is clear that the major amount has been spent for the construction of the connectivity roads, laying down the water supply and for building drainage system etc. The department has not even doubted the expenditure as incurred by the Assessee out of the EDC funds available with the Assessee. Thus, the expenditure has been incurred for those years which ultimately benefits the Assessee’s existing and upcoming projects. 7. The Assessee has to incur the expenditure even after so many years as and when required. The amount as collected from the colonizers has to be kept in a separate bank account. It has to be spent when ever required. The number of persons living in a particular colony will increase year after year and there is always a need to expand the basic infrastructure facilities after a span of time. 8. If the Assessee had not spent any amount then the colonizers would stand against the Assessee. It is a matter of fact that no case have been filed against the assessee for not providing the infrastructural facilities. 39. The said amount has been transferred from time to time only as per the directions of the State Government. JDA has no freedom to use the said charges at its own level and these are to be used for specific purpose only as mentioned in section 2(p) of PAPRA Act 1995 and from time to time the necessary permissions are being taken from the Govt. of Punjab, where the I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 37 Government representative attend the meetings and grant the necessary permission for the same. a) Your goodself’s kind attention is invited towards the order of the Jurisdictional Punjab & Haryana HC in the case of Pr CIT vs Punjab Police Housing Corporation Ltd. as reported in 195 DTR 150 (P& H HC) dated 03.02.2020 wherein it has been held as under: “Income-Chargeability-Interest on bank deposits made out of unutilized Government grants- Assesse is regularly given grants by the State Government for various purposes including the construction of house for police officials-When in a particular year the grant remains unutilized, the money which is parked in bank earns interest-Fact that there is no stipulation in the letter releasing the grant that the interest income is to be returned to the Government does not lead to the automatic conclusion that the interest is income of the assesse-it is not the case of the Revenue that the books of the assesse ever revealed diversion of any interest income-Tribunal arrived at finding of facts that the income which accrued to the assesse from the funds of the Government which were released to it were not diverted by it and could not be diverted to any other purpose and had to be used only for the purposes which the Government directed and in case the funds were not I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 38 used the Government had the right to recall them-Therefore, the interest on such bank deposits was not liable to tax.” The facts of the above said case are very much similar to that of the Assessee, as even in the above said case, the Government grant as received by Punjab Police Housing Corporation Ltd. is kept separately as in the case of the Assessee, wherein EDC is kept separately and the Assessee merely act as custodian of the same. In the above said case law even the interest as earned by the Punjab Police Housing Corporation Ltd. on account of unutilized Government grant (lying with the Assessee on behalf of the Government) has been held to be not liable to tax and not the grant. So, on the similar footing the EDC amount as lying with the Assessee belongs to the Punjab Government and the Assessee has not control over the same. So under such circumstances, the same cannot be taxed in the hands of the Assessee. b) Further Reliance in this regard is also being placed upon the Judgment of the Delhi Bench in the case of M/s Perfect Constech Pvt Ltd. vs Addl CIT in ITA No. 6907/Del/2019 order dated 29.12.2020, wherein it has been held as iunder: “It is also not in dispute that HUDA has shown EDC as current liability in the balance sheet, but in the ‘Notes’ to the Accounts I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 39 Forming part of the Balance Sheet, it has been shown that EDC has been received for execution of various external development works and as and when the development works are carried out, the EDC’s liabilities are reduced accordingly. It is also not in dispute that HUDA is engaged in acquiring land, developing it and finally handing it over for a price. It is also not in dispute that EDC is fixed by HUDA from time to time................ Thus, the payment of EDC is not for carrying out any specific work to be done by HUDA for and on behalf of the assessee but rather DTCP which is a Government Department which levies these charges for carrying out external development and engages the services of HUDA for execution of the work. Therefore, it is our considered view that the assessee was not required to deduct tax at source at the time of payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and, therefore, the impugned penalty was not leviable.” Though the above case law is on the issue of levy of penalty u/sec 271C of the Act on account of non deduction of TDS, but the facts are very much similar to that of the Assessee. In the above case law, the Hon’ble Bench has duly acknowledged that HUDA has shown EDC as current liability and the said liability is reduced from time to time whenever expenditure is incurred I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 40 from the same. Further the Hon’ble Bench has also clearly held that there is no requirement of any deduction of TDS from the payment of EDC as made by M/s Perfect Constech Pvt Ltd. Had, the amount of EDC being the income of HUDA, then the Hon’ble Bench would have definitely levied the penalty for non deduction of TDS. 40. Further reliance is placed on the judgment in the case of “Belgaum Urban Development Authority”, as reported in 122 Taxman.com 76, placed at pages 152 to 157 of Common Paper Book/Judgement Set, of Karnataka High Court and the said authority had also been carried out the same obligation as being carried out by the assessee and have been held to be charitable organization with the following remarks:- “Income Tax: Where assessee, a statutory Authority, was established under provisions of Karnataka Urban Development Authorities Act, 1987 to establish urban areas in Belgaum in a planned manner, activity carried on by assessee did not amount to an activity in nature of trade, commerce or business and it was entitled for registration under Section 12A.” 41. Judgment of Hon’ble ITAT Agra Bench in the case of Jhansi Development Authority Vs. DCIT, Circle-4, Agra reported in [2021] 123 I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 41 Taxmann.Com 247 (Agra- Trib.) (Development Authority in an extended arm of State Govt. and thus entitled for exemption u/s 11). 42. Judgment of Hon’ble ITAT Agra Bench in the case of Agra Development Authority Vs. DCIT, reported in (2021) 127 Taxmann. Com 387 (Agra-Trib) (Development Authority in an extended arm of State Govt. and thus entitled for exemption u/s 11). 43. Judgment of Hon’ble ITAT Delhi Bench C, Delhi in the case of Hapur Pikhuwa Development Authority Vs. ACIT, in ITA No. 4125/Del/2017 for AY 2012-13 (Development Authority in an extended arm of State Govt. and thus entitled for exemption u/s 11). 44. We rely on these judgments only for the preposition that all the receipts of EDC and utilization are being utilized for the purposes of development of Urban areas for the welfare of General Public and not for any personal use and, therefore, the “EDC” having been utilized for the purpose of development of “Urban Area” the same is not taxable at all. 15. The AO as well as CIT(A) has merely stated that the EDC amount is collected by the Assessee of its own and it has full control over the sad funds. The AO as well as CIT(A) has not supported it by any evidence. But on the other side, the Assessee has filed sufficient documents like a notification issued by the Principal Secretary, Housing & Urban Development that EDC amount cannot be used without obtaining order from Govt and it has also been clearly stated that State Urban Development Authorities are only the custodians. (Copy placed in PB-II Pg-127). Further I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 42 the fact that the funds are kept separately and its use being governed by the State Government duly proves that the Assessee has no dominion over the funds.” 25. Further to that the assessee has placed the correspondence from the State Govt. that the EDC cannot be used for any other purpose, except for existing or proposed infrastructure that too with the permission of Govt. of Punjab. This is as per the notification issued by the Govt.of Punjab and Department of Housing & Urban Development in July, 2022. All these documents are placed in the common Paper Book filed before us. 26. It has further been argued that EWS/Flat charges also similar to the EDC as they are collected on behalf of the scheme for Economically weaker section of society by the “Ministry of Housing and Development” and during the year under consideration, it was brought to our notice that no fresh EWS Housing charges had been received as per copy of account placed at page 45 of the “Paper Book” for Asstt. Year 2017-18 and even the Assessee in his submissions before the CIT(A), had stated that these receipts are not revenue receipts and the assessee has no control over the said receipts and further to that, it has been argued that as per the copy of account of EWS Charges placed at page 45 of the Paper Book, no fresh charges have been received during the year under consideration and, as such, the same was not even liable to be considered as revenue receipts in the year under consideration. 27. Further, the assessee has relied upon the arguments on merits that in the Assessment years 2012-13, 2013-14 & 2014-15, the mode and manner of making the addition of the EDC and License fee, had been the ‘net inflow’ after considering the outflow, for which, the addition has been made by the Assessing Officer in various years and for the year under consideration, since the outflow is I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 43 much more than the inflow, no separate addition of External Development Charges and License fee has been made in these years and, these charts are placed at pages 79 and 94 in the Paper Book for Asstt. Year 2012-13 and copy of the same filed before us for Asstt. Year 2017-18. 28. Further, we have gone also through the judgment of Hon’ble Punjab & Haryana High Court, in the case of “Punjab Police Housing Corpn.” as relied upon by the assessee (supra) and in that case also, certain funds were received from the State Govt. for various purposes, including construction of houses for Police officials, and certain grants had remained unutilized and the money was parked in the bank and the issue was with regard to the interest income on such deposit out of unutilized funds as accrued to Punjab Police Housing Corpn., and it was held by the Jurisdictional Punjab & Haryana High Court, that since the funds were not diverted and could not be diverted to any other purpose and, therefore, even the interest on such bank deposits was not liable to be taxed. Thus, having gone through the argument and documents as furnished by the assessee’s counsel, we have no hesitation in holding that the assessee was only custodian of funds of EDC and other similar nature of receipts, as the assessee has neither any control, regarding the rates of EDC charges as being collected from the various developers nor has the control over such funds or its utilization, as per various notifications of the State of Punjab on the directions of the state government and the same is the case with EWS charges and, thus, such receipts are capital in nature and cannot be taxed in the hands of assessee and it is just liability of the assessee and neither in the year of utilization as made by the assessee, the same is claimed in the profit and loss account and, thus, there was no justification of making the addition of such charges of EWS as made by the Assessing Officer and which have been confirmed by the Ld. CIT(A). Further, even as per copy of account of EWS charges, no I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 44 charges were received during the year as well and thus, in anyway, the addition as made by the AO/ CIT(A) is not sustainable. 29. Further that, the assessee has relied upon certain judgments in the case of “Belgaum Urban Development Authority”, of Karnatka High Court, ITAT, Agra Bench in the case of ‘Jhansi Development Authority’, ‘Agra Development Authority’ and Delhi Bench in the case of Hapur Pikhuwa Development Authority (as cited supra) in which, it has been held that the development authority is an extended arm of State Govt. and, thus, even entitled to exemption u/s 11 and the Ld. Counsel has placed reliance on the above said judgments for the preposition that such types of Development Authorities, as in the case of assessee, are for the welfare of the general public and further, these types of charges having been utilized for the purpose of development of urban areas, the same is not taxable at all. Hon’ble ‘Apex Court’ in the case of CIT (Exemptions) Vs Gandhinagar Urban Development Authority, 148 Taxmann.com 339 (SC), in which, the Hon’ble Apex Court, has held that the ‘Urban Development Authority’, executing works in connection with supply of water, disposal of sewerage and provision of other services and amenities, could be said to be providing general public utility service within meaning of section 2(15) and hence eligible for benefit of section 11 and same is the case of Ahmedabad Urban Development Authority, as reported in (2022) 144 Taxmann.com 78 (SC) 30. Our attention was also drawn to the judgement of ITAT, Ahmedabad “D” Bench in the case of ‘Vadodara Urban Development Authority in ITA Nos. 333 to 335/Ahd/2023 vide order, dated 29.02.2024, have discussed the Finance bill 2023, by way of which new section 10 (46A) has been inserted as stated above and in I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 45 this judgment also, the reliance has been placed on the judgment of Apex Court in the case of JCIT (Exemptions) Vs Ahmedabad Development Authority, reported in 449 ITR 1 and after relying upon number of judgments, on the similar issue of various High Courts and Co-ordinate Benches of the ITAT, the exemption of income have been allowed to the Development Authority. 31. We have carefully gone through the arguments of the Ld. Counsel and the order of the CIT(A), Assessing Officer and contention of the Ld Departmental Representative and have also carefully gone through the various case laws as relied upon by both the sides and hold that as the assessee is only collecting agency on behalf of State Govt. or Ministry of Housing & Development and they have neither any control over the fixation of the charges and nor have any independent authority to utilize the funds of their own and, as such, they have rightly treated such receipts as capital receipts by the assessee and shown as liabilities in the balance sheet as the amount shall be utilized as per guidelines of the State Govt./Ministry of Housing & Development and, thus, such charges cannot be treated as revenue receipts and the various judgements as relied upon by the Ld.Counsel of the “Urban Development Authorities” of Hon’ble Apex Court, Judgements of “co- ordinate Benches” as cited above, the addition as confirmed by the CIT is not sustainable and is hereby deleted. I.T.A. Nos.377 to 379/Asr/2023 And ITA No.3/Asr/2024 Assessment Years: 2012-13 to 2014-15 46 32. In the result, the appeals of the assessee for the Asst year 2012-13 to AY 2014-15 and for AY 2017-18 are allowed. Order pronounced in the open court on 30.05.2024 Sd/- Sd/- (Dr. M. L. Meena) (UDAYAN DASGUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order
