ACIT 31(1), MUMBAI V. GUNDECHA BUILDERS, MUMBAI

ITA 4266/MUM/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5461 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 29-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 09-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT PATANKAR
• Keywords: Reopening of assessment; Audit objection; Wrong claim; Difference of opinion; Change of opinion
• Section: 143(3); 142(1); 80IB; 147; 148

Judgement Text

1 ITA 4266/MUM/2015 & CO 74/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI JOGINDER SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.4266/MUM/2015 (ASSESSMENT YEAR: 2007-08) ACIT-31(1), MUMBAI VS M/S GUNDECHA BUILDERS, 141, GUNDECHA HOUSE, JAWAHAR NAGAR, GOREGAON (W),MUMBAI-400 062 PAN : AAAFG0848E APPELLANT RESPONDENT C.O. 74/MUM/2017 (ARISING OUT OF I.T.A NO.4266/MUM/2015) (ASSESSMENT YEAR: 2007-08) M/S GUNDECHA BUILDERS, 141, GUNDECHA HOUSE, JAWAHAR NAGAR, GOREGAON (W),MUMBAI-400 062 VS ACIT-31(1), MUMBAI CROSS OBJECTOR RESPONDENT ASSESSEE BY SHRI VIMAL PUNMIYA REVENUE BY SHRI ABHIJIT PATANKAR DATE OF HEARING 02-05-2018 DATE OF PRONOUNCEMENT 18-07-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE REVENUE, AND CROSS OBJEC TION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT( A)-42, MUMBAI DATED 29-04-2015 AND IT PERTAINS TO AY 2007-08. SINCE, F ACTS ARE IDENTICAL AND 2 ITA 4266/MUM/2015 & CO 74/MUM/2017 ISSUES ARE COMMON, THIS APPEAL AND THE CROSS OBJECT ION WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS TAKEN A LEGAL PLEA, CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT U/S 147 IN ITS CROSS OBJECT ION. THEREFORE, WE ARE OF THE VIEW THAT WE MAY FIRST DEAL WITH THE CRO SS OBJECTION FILED BY THE ASSESSEE SINCE IT GOES TO CHALLENGE THE JURISDICTIO N OF THE AO TO PASS RE- ASSESSMENT ORDER U/S 147 OF THE INCOME-TAX ACT, 196 1. 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THE CROSS OBJECTION:- 1) ON THE FACTS AND CIRCUMSTANCES OF THE LAW, TH E LD. CIT(A) HAS ERRED IN CONFIRMING INITIATING OF REASSESSMENT PROCEEDING U/ S 147 OF THE I.T. ACT, 1961. 2) ON THE FACTS AND CIRCUMSTANCES OF THE LAW, THE LD. CIT(A) HAS FAILED TO CONSIDER THAT: A) REASSESSMENT PROCEEDING CANNOT BE INITIATE AFT ER FOUR YEARS WHEN ASSESSEE HAS DISCLOSED ALL THE PARTICULARS FULLY AND TRULY AND O RDER IS PASSED BY AO U/S 143(3) OF THE I.T. ACT, 1961. B) REASSESSMENT PROCEEDING CAN BE INITIATE ONLY W HEN INCOME ESCAPING ASSESSMENT BUT IN PRESENT CASE SURVEY WAS CONDUCTED AND AFTER DETAIL INVESTIGATION DEDUCTION U/S 80IB(10) WAS PARTLY ALLOWED TO ASSESSEE. HENCE, NO INCOME ESCAPE ASSESSMENT. THEREFORE, PROCEEDING INITIATE U/S 147 IS BAD IN LA W. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DEVELOP MENT AND CONSTRUCTION OF HOUSING PROJECTS, FILED ITS RETURN OF INCOME FOR AY 2007-08 DECLARING TOTAL INCOME OF RS.20,85,90,920. THE ASS ESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT, ON 29-12-2009, DET ERMINING THE TOTAL INCOME AT RS.22,22,00,290 BY RE-WORKING DEDUCTION C LAIMED U/S 80IB(10) OF THE INCOME-TAX ACT, 1961 IN RESPECT OF PROFITS D ERIVED FROM HOUSING 3 ITA 4266/MUM/2015 & CO 74/MUM/2017 PROJECTS AND MADE ADDITION OF RS.46,26,650. SUBSEQ UENTLY, THE CASE HAS BEEN REOPENED U/S 147 OF THE INCOME-TAX ACT, 19 61 AFTER RECORDING REASONS FOR REOPENING OF ASSESSMENT FOR THE REASON THAT INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT WITHI N THE MEANING OF SECTION 147 OF THE ACT IN RESPECT OF DEDUCTION CLAI MED U/S 80IB(10) TOWARDS HOUSING PROJECTS AND ACCORDINGLY, NOTICE U/ S 148 DATED 28-03- 2014 WAS ISSUED. IN RESPONSE TO NOTICES, THE ASSES SEE, VIDE LETTER DATED 31-03-2014 SUBMITTED THAT THE RETURN OF INCOME ORIG INALLY FILED ON 27-10- 2007 MAY BE TREATED AS RETURN OF INCOME FILED IN RE SPONSE TO NOTICE U/S 148 OF THE ACT. THEREAFTER, A COPY OF THE REASONS RECORDED FOR REOPENING OF THE CASE WAS PROVIDED TO THE ASSESSEE, AS REQUIR ED. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) A ND 142(1) OF THE ACT, ALONGWITH A DETAILED QUESTIONNAIRE WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEA RED FROM TIME TO TIME AND FILED VARIOUS DETAILS, AS CALLED FOR. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10 ) OF THE ACT, IN RESPECT OF PROFIT DERIVED FROM A HOUSING PROJECT WH ICH WAS OTHERWISE NOT ELIGIBLE AND ACCORDINGLY, CALLED UPON THE ASSESSEE TO EXPLAIN AS TO WHY DEDUCTION CLAIMED SHALL NOT BE DISALLOWED. IN RESP ONSE TO NOTICE, THE ASSESSEE HAS FILED VARIOUS DETAILS AS CALLED FOR BY THE AO AND ALSO FILED 4 ITA 4266/MUM/2015 & CO 74/MUM/2017 NECESSARY AUDIT REPORT ALONGWITH COPIES OF APPROVAL S, ETC. TO PROVE THE CLAIM OF DEDUCTION U/S 80IB(10). THE AO, AFTER CON SIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE HELD THAT THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) AS THE LAND ON WHICH THE PRO JECT HAS BEEN DEVELOPED IS NOT IN THE NAME OF THE ASSESSEE, THERE FORE, HE OPINED THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB (10). THE AO FURTHER OBSERVED THAT THERE IS NUMEROUS MISTAKES IN AUDIT R EPORT FILED IN FORM 10CCB DATED 23-10-2006 WHEREIN THE DATE OF COMMENC EMENT OF THE PROJECT AND DATE OF COMPLETION ARE NOT MATCHING EAC H OTHER. ACCORDINGLY HE OPINED THAT THE CLAIM OF THE ASSESSEE U/S 80IB(1 0) IS NOT ALLOWABLE AND HENCE, DISALLOWED DEDUCTION CLAIMED U/S U/S 80I B(10) OF RS.11,06,73,239. 6. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS CHALLENGED REOPENING OF ASSESSMENT ON THE GROUND THAT THE AO H AS REOPENED THE ASSESSMENT MERELY ON CHANGE OF OPINION WITHOUT TH ERE BEING ANY MATERIALS WHICH SUGGEST ESCAPEMENT OF INCOME WHICH IS EVIDENT FROM THE FACT THAT THE AO HAS RECORDED REASONS FOR REOPENING OF ASSESSMENT ON THE BASIS OF SAME SET OF FINANCIAL STATEMENTS, WHIC H ARE PART OF ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3), WHERE THE AO HAS EXAMINED THE CLAIM OF DEDUCTION U/S 80IB(10) AND AFTER FULLY SAT ISFIED WITH THE CLAIM OF 5 ITA 4266/MUM/2015 & CO 74/MUM/2017 THE ASSESSEE WORKED OUT DEDUCTION CLAIM BY EXCLUDIN G CERTAIN AMOUNTS IN RESPECT OF CAR PARKING & OTHER AREAS. THE ASSES SEE FURTHER SUBMITTED THAT THE AO HAS REOPENED THE ASSESSMENT AFTER 4 YEA RS FROM THE END OF THE ASSESSMENT YEAR AND AS PER THE PROVISO PROVIDED TO SECTION 147 OF THE ACT WHERE THE ASSESSMENT HAS BEEN ORIGINALLY CO MPLETED U/S 143(3) OF THE ACT, NO ACTION SHALL BE TAKEN UNDER THIS SEC TION AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH A SSESSMENT YEAR BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. I N THIS CASE, THE ASSESSEE HAS DISCLOSED ALL FACTS NECESSARY FOR COMP LETION OF ASSESSMENT AT THE TIME OF ORIGINAL ASSESSMENT AND THE AO HAS E XAMINED THE CLAIM OF DEDUCTION CLAIMED U/S 80IB(10) WITH ALL RELEVANT MA TERIALS, THEREFORE, IT IS A CLASSIC CASE OF CHANGE OF OPINION, WHICH IS NOT P ERMISSIBLE UNDER LAW. THE ASSESSEE ALSO FILED ELABORATE WRITTEN SUBMISSIO NS ON THE ISSUE OF DEDUCTION CLAIMED U/S 80IB(10) AND NEGATED ALL OBSE RVATIONS MADE BY THE AO WITH REGARD TO THE OWNERSHIP OF LAND, DISCRE PANCIES IN ITS AUDIT REPORT AND ARGUED THAT THERE IS NO NEED TO OWN THE LAND TO CLAIM THE BENEFIT OF DEDUCTION U/S 80IB(10) AND WHAT IS REQUI RED TO BE SEEN IS WHETHER THE PROJECT UNDERTAKEN BY THE ASSESSEE FULF ILLED ALL THE CONDITIONS PRESCRIBED UNDER THE SAID PROVISION OR N OT. THE ASSESSEE ALSO 6 ITA 4266/MUM/2015 & CO 74/MUM/2017 CLARIFIED THE OBSERVATIONS OF THE AO WITH REGARD TO DISCREPANCIES IN AUDIT REPORT IN FORM 10CCB AND SUBMITTED THAT THESE ARE O NLY CLERICAL MISTAKES, BUT FACT REMAINS THAT THE ASSESSEES CLAI M OF DEDUCTION U/S 80IB(10) HAS BEEN ACCEPTED BY THE AO IN THE ORIGINA L ASSESSMENT. THE ASSESSEE ALSO FILED WRITTEN SUBMISSIONS ON THE ISSU E OF ASSESSMENT OF RENTAL INCOME DERIVED FROM PROPERTIES HELD AS STOCK IN TRADE AND ARGUED THAT ANY INCOME IN THE NATURE OF RENT IS ASSESSABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY IRRESPECTIVE OF THE FA CT THAT WHETHER SAID PROPERTY HAS BEEN HELD AS INVESTMENT OR STOCK IN TR ADE. 7. THE LD.CIT(A), AFTER CONSIDERING RELEVANT SUBMIS SIONS OF THE ASSESSEE AND ALSO ON ANALYSIS OF PROVISIONS OF SEC TION 147 OF THE IT ACT, REJECTED LEGAL GROUND TAKEN BY THE ASSESSEE CHALLEN GING VALIDITY OF REOPENING OF ASSESSMENT ON THE GROUND THAT DISCLOSU RE OF FACTS TO THE AO IS MUST FOR APPLICABILITY OF PROVISO TO SECTION 147 . INFORMATION PREPARED, BUT KEPT IN VAULT DOES NOT MEAN THAT ASSESSEE DISCL OSED FACTS TRULY BEFORE THE AO. FURTHER, THE RE-ASSESSMENT PROCEEDI NGS WERE INITIATED ON THE BASIS OF FINDING GIVEN FOR AY 2006-07 WHERE ALS O THE ISSUE OF REOPENING U/S 147 WAS DECIDED AGAINST THE ASSESSEE AND ACCORDINGLY THERE IS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT REOPENING IS BAD IN LAW AND LIABLE TO BE QUASHED. ACCORDINGLY REJECT ED LEGAL GROUND RAISED BY THE ASSESSEE. INSOFAR AS MERITS OF THE ISSUE IS CONCERNED, THE 7 ITA 4266/MUM/2015 & CO 74/MUM/2017 LD.CIT(A) OBSERVED THAT THE ASSESSEE IS ELIGIBLE FO R DEDUCTION U/S 80IB(10) IN RESPECT OF PROFIT DERIVED FROM HOUSING PROJECT AS THE ASSESSEE HAS FULFILLED ALL CONDITIONS INCLUDING OWN ERSHIP OF LAND WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSEE BECAME THE OWNER OF THE LAND IN VIEW OF THE DECISION OF HONBLE BOMBAY HIGH COURT W HEREIN THE PARTIES HAVE FILED COMPROMISE PETITION AS PER WHICH THE ASS ESSEE DERIVED OWNERSHIP ON THE LAND ON WHICH THE HOUSING PROJECT WAS DEVELOPED. THE CIT(A) FURTHER OBSERVED THAT THE AO WAS ERRED IN HO LDING THAT THE LAND SHOULD BE IN THE NAME OF THE DEVELOPER IGNORING THE FACT THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS RADHE DEVE LOPERS (2012) 17 TAXMAN.COM 156 MADE IT CLEAR THAT THE LAND NEED NOT BE IN THE NAME OF THE ASSESSEE FOR SEEKING DEDUCTION U/S 80IB(10) OF THE ACT. INSOFAR AS OTHER OBSERVATIONS OF THE AO ON CONTENTS OF AUDIT R EPORT, THE LD.CIT(A) OBSERVED THAT AO, ON TECHNICAL REQUIREMENT CANNOT D ENY DEDUCTION CLAIMED U/S 80IB(10), WHEN ALL THE CONDITIONS ARE F ULFILLED BY THE ASSESSEE. ACCORDINGLY, DELETED ADDITION MADE BY TH E AO TOWARDS DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB(10) OF T HE ACT. SIMILARLY, HELD AS STOCK IN TRADE, THE LD.CIT(A), BY FOLLOWING THE DECISION HONBLE SUPREME COURT IN THE CASE OF M/S SHAMBU INVESTMENTS (P) LTD VS CIT 263 ITR 143 (SC) AND ALSO BY FOLLOWING THE DECISION OF ITAT, MUMBAI IN ASSESSEES OWN CASE FOR AY 2008-09 DIRECTED THE AO TO ASSESS RENT 8 ITA 4266/MUM/2015 & CO 74/MUM/2017 DERIVED FROM PROPERTIES HELD AS STOCK IN TRADE UNDE R THE HEAD INCOME FROM HOUSE PROPERTY. AGGRIEVED BY THE ORDER OF CI T(A), THE REVENUE IS IN APPEAL BEFORE US AND THE ASSESSEE HAS FILED CROSS O BJECTION. 8. THE LD.AR FOR THE ASSESSEE, REFERRING TO THE COP IES OF REASONS RECORDED FOR REOPENING OF ASSESSMENT SUBMITTED THAT THE SOLE BASIS FOR REOPENING OF ASSESSMENT WAS REOPENING OF ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07 ON THE BASIS OF AUDIT OBJEC TION MEMO AS PER WHICH THE AUDIT PARTY HAS NOTICED THAT THE ASSESSEE IS NOT THE OWNER OF THE LAND TO CLAIM DEDUCTION U/S 80IB(10) WHICH REQU IRES TO BE DELETED, BUT NOT ON ANY NEW MATERIALS WHICH SUGGESTS ESCAPEMENT OF INCOME WITHIN THE MEANING OF SECTION 147 OF THE ACT. THEREFORE, HE SUBMITTED THAT IT IS A CLASSIC CASE OF MERE CHANGE OF OPINION WITHOUT TH ERE BEING ANY FRESH MATERIAL WHICH SUGGESTS ESCAPEMENT OF INCOME TO FOR M A REASONABLE BELIEF FOR ESCAPEMENT OF INCOME. THE LD.AR FURTHER SUBMITTED THAT THE ASSESSMENT FOR THE IMPUGNED ASSESSMENT YEAR WAS ORI GINALLY COMPLETED U/S 143(3) AND AO, DURING ASSESSMENT PROCEEDINGS HA S CAST NECESSARY ENQUIRIES WITH REGARD TO THE CLAIM OF DEDUCTION U/S 80IB(10) AND AFTER FULLY SATISFYING WITH THE CONDITIONS PRESCRIBED UND ER THE LAW, IN THE LIGHT OF THE FACTS OF ASSESSEES CASE HAS ALLOWED CLAIM WITH CERTAIN DISALLOWANCES WHICH IS EVIDENT FROM ORDER PASSED BY THE AO U/S 143(3), WHERE HE HAS ELABORATELY DISCUSSED THE ISSUE OF DED UCTION CLAIMED BY 9 ITA 4266/MUM/2015 & CO 74/MUM/2017 THE ASSESSEE. THE LD.AR FURTHER REFERRING TO THE P ROVISIONS OF SECTION 147, SUBMITTED THAT THE ASSESSMENT HAS BEEN REOPENE D AFTER 4 YEARS AND AS PER THE PROVISO TO SECTION 147, WHERE AN ASS ESSMENT HAS BEEN MADE U/S 143(3) OF THE ACT, NO ACTION SHALL BE TAKE N UNDER THIS SECTION AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVAN T ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAD ESCAPED ASS ESSMENT BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO DI SCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. WHEN, WE GO THROUGH THE REASONS RECORDED BY THE AO, IT IS ABUNDANTLY CLEAR THAT THE AO NEVER ALLEGED THAT THE ASSESSEE HAS FAILED TO DISCLOSE FU LLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT. THEREFORE, THERE I S NO REASON FOR THE AO TO REOPEN THE ASSESSMENT AFTER THE END OF 4 YEAR S WITHOUT ANY NEW MATERIAL AND ALSO WITHOUT ANY ALLEGATION ON THE PAR T OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR ASSESSMENT. IN THIS REGARD, RELIED UPON PLETHORA OF JUDGEMENTS INC LUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS KELVINA TOR OF INDIA LTD (2010) 320 ITR 561 (SC). THE ASSESSEE ALSO RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF JASHAN TEX TILE MILLS (P) LTD VS DCIT VS DCIT (2006) 284 ITR 542 AND ALSO IN THE CA SE OF MISTRY LALJI NARSI DEVELOPMENT CORPORATION VS ACIT (2010) 229 CT R 359. THE ASSESSEE ALSO RELIED UPON THE FOLLOWING JUDGEMENTS: - 10 ITA 4266/MUM/2015 & CO 74/MUM/2017 A) BHAGWATI SHANKARI KARKHANA (2004) 269 ITR 18 6 (BOM) B) WESTERN OUTDOOR INTERACTIVE (2006) 286 ITR 6 20 (BOM) C) HINDUSTAN LEVER LTD. (2004) 267 ITR 161 (BOM ) D) PRASHANT PROJECT LTD. VS. ASST. CIT (2011) 3 33 JTR 368 (BOM) E) HINDUSTAN PETROLEUM CORPORATION LTD. VS. DY. CIT (2010) 328 JTR 534 (BOM) F) ' NIHTTENT TECHNOLOGIES (P) LTD V DY CIT (2011) 59 DT R 281 (BOM) G) SHRLRSM FOUNDRY LTD V. DY.CJT(2012) 250 CTR 116 (BOM.) H) ' MONITOR INDIA (P) LTD V. UOI ( 2012) 68 DTR 313 (BOM) I) HCL CORPORATION LTD. V. ACIT (2012) 66 DTR 473 (DDHI) (HIGH COURT) J) KIMPLAS TRENTON FITTINGS LTD. V.ACJT(2012) 3 40 ITR 299'(BOM.) K) WEILNTERTRADE (P) LTD &ANR VS. JTO (2009) 30 8 ITR 22 7. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTED ORDER OF LD.CIT(A) AND SUBMITTED THAT THE AO HAS VALIDLY REO PENED THE ASSESSMENT ON THE BASIS OF AUDIT OBJECTION MEMO REC EIVED FOR EARLIER YEARS WHICH SUGGESTS ESCAPEMENT OF INCOME WITHIN TH E MEANING OF SECTION 147 OF THE ACT, ON ACCOUNT OF FAILURE ON TH E PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR ASSESSMENT WHICH IS EVIDENT FROM THE FACTS GATHERED BY THE AO IN RE-ASSESSMENT PROCEEDINGS WHERE THE AO HAS NARRATED DISCREPANCIES IN AUDIT REPORT AND ALSO INCONSISTENCIES IN DATE OF COMMENCEMENT AN D DATE OF COMPLETION OF THE PROJECT. THE ASSESSEE FAILS TO A NSWER THE ISSUES POINTED OUT BY THE AO WHICH MEANS THE ASSESSEE HAS NOT DISCLOSED ALL FACTS NECESSARY FOR COMPLETION OF ASSESSMENT AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3), THEREFORE, THERE IS FAILURE ON THE PART OF THE ASSESSEE AND HENCE, THE PROVISO PROVIDE D U/S 147 DOES NOT 11 ITA 4266/MUM/2015 & CO 74/MUM/2017 APPLY TO ASSESSEES CASE. THE LD.DR FURTHER SUBMIT TED THAT THE ASSESSEE ALSO FAILED TO FILE NECESSARY EVIDENCE REQ UIRED FOR COMPLETION OF ASSESSMENT WHICH IS THE REASON FOR REOPENING OF ASSESSMENT, THEREFORE, THERE IS NO MERIT IN THE ARGUMENTS OF TH E ASSESSEE THAT THE AO HAS REOPENED ASSESSMENT ON MERE CHANGE OF OPINION W ITHOUT ANY MATERIAL WHICH SUGGESTS ESCAPEMENT OF INCOME. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE AO REOPENED THE ASSESSMENT U/S 147, ON THE GROUND THAT INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSE SSMENT ON ACCOUNT OF WRONG CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT, IN RESPECT OF HOUSING PROJECT WHICH IS OTHERWISE NOT AVAILABLE TO THE ASSESSEE. THE AO HAS RECORDED REASONS FOR REOPENING OF THE ASSESS MENT. ON PERUSAL OF COPY OF REASONS RECORDED FOR REOPENING OF ASSESS MENT, WE FIND THAT THE AO HAS REFERRED TO THE FINANCIAL STATEMENT FILE D BY THE ASSESSEE FOR THE RELEVANT FINANCIAL YEAR TO FORM A REASONABLE BE LIEF OF ESCAPEMENT OF INCOME. EXCEPT THIS, THE AO NEVER REFERRED TO ANY MATERIAL WHICH SUGGESTS ESCAPEMENT OF INCOME. THEREFORE, FROM THE REASONS RECORDED BY THE AO, ONE THING IS VERY CLEAR THAT TO FORM A R EASONABLE BELIEF OF ESCAPEMENT OF INCOME THE AO RELIED UPON THE MATERIA LS, I.E. FINANCIAL STATEMENTS WHICH WERE ALREADY IN THE POSSESSION OF THE AO AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) OF TH E ACT. IN THIS LEGAL 12 ITA 4266/MUM/2015 & CO 74/MUM/2017 BACKGROUND, WHEN WE EXAMINE REOPENING OF ASSESSMENT ON THE GROUND OF ESCAPEMENT OF INCOME ON ACCOUNT OF WRONG CLAIM O F DEDUCTION U/S 80IB(10) IN RESPECT OF HOUSING PROJECT, ONE HAS TO SEE WHETHER THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL MATERIAL S NECESSARY FOR ASSESSMENT AT THE TIME OF ORIGINAL ASSESSMENT PROCE EDINGS U/S 143(3) OF THE ACT OR NOT. IT IS AN ADMITTED FACT THAT THE AS SESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE ACT. IT IS ALSO AN ADM ITTED FACT THAT THE ASSESSMENT HAS BEEN REOPENED AFTER 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. WHEN THESE TWO CONDITION S ARE FULFILLED THE PROVISO PROVIDED TO SECTION 147 COMES INTO OPERATIO N. AS PER THE SAID PROVISO, WHERE AN ASSESSMENT HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR U/S 143(3), NO ACTION SHALL BE TAKE N UNDER THIS SECTION AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE REL EVANT ASSESSMENT YEAR UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE T O DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT. IN THIS CASE, ADMITTEDLY, THE ASSESSMENT HAS BEEN COMPLETED U/S 1 43(3), WHERE THE AO HAS EXAMINED THE ISSUE OF DEDUCTION CLAIMED U/S 80IB(10) OF THE INCOME-TAX ACT, 1961 AND ALSO MADE DISALLOWANCE OF PART OF DEDUCTION CLAIMED UNDER THE SAID SECTION WHICH IS EVIDENT FRO M THE FACT THAT THE AO HAS ELABORATELY DISCUSSED THE ISSUE IN THE BODY OF THE ASSESSMENT ORDER 13 ITA 4266/MUM/2015 & CO 74/MUM/2017 AT PARA 2 ON PAGES 2 TO 4. FROM THIS, IT IS ABUNDA NTLY CLEAR THAT THE ASSESSEE HAS DISCLOSED FULLY AND TRULY ALL NECESSAR Y FACTS REQUIRED FOR HIS ASSESSMENT AND THE AO HAS EXAMINED THE CLAIM AT THE TIME OF ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) OF THE I.T. ACT, 1961. ONCE THE ISSUE HAS BEEN EXAMINED IN THE ORIGINAL ASSESSMENT PROCEEDINGS WITH NECESSARY EVIDENCES, THEN REOPENING OF ASSESSMENT O N THE SAME ISSUE AFTER EXPIRY OF 4 YEARS FROM THE END OF THE RELEVAN T ASSESSMENT YEAR IS PERMISSIBLE ONLY WHEN THE AO ALLEGES THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERI AL FACTS NECESSARY FOR COMPLETION OF ASSESSMENT. UNLESS, THE AO ALLEGES T HAT THE ASSESSEE HAS FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT, THEN NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSE SSMENT YEAR. THIS LEGAL POSITION IS STRENGTHENED BY THE DECISION OF H ONBLE BOMBAY HIGH COURT IN THE CASE OF JASHAN TEXTILE MILLS (P) LTD V S DCIT (SUPRA), GERMAN REMEDIES LTD VS DCIT 2006) 287 ITR 494, CIT VS FORMER FINANCE (2003) 264 ITR 566 WHERE IN ALL CASES, THE COURTS HAVE CLEARLY OBSERVED THAT THE ASSESSMENT CANNOT BE REOPENED UNL ESS THE AO ALLEGES THAT THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS AND IF THE AO DOES NOT RECORD SUCH A FAILURE, HE WOULD NOT BE ENTITLED TO PROCEED U/S 147. WE FU RTHER NOTICE THAT EVEN 14 ITA 4266/MUM/2015 & CO 74/MUM/2017 THIS IS A CLASSIC CASE OF CHANGE OF OPINION AS THE AO HAS EXAMINED THE ISSUE OF DEDUCTION CLAIMED U/S 80IB(10) IN ASSESSME NT PROCEEDINGS U/S 143(3) AND AFTER BEING SATISFIED WITH THE EXPLANATI ON FURNISHED BY THE ASSESSEE, ALLOWED THE CLAIM. THE AO REOPENED THE A SSESSMENT ON THE SAME ISSUE WITHOUT THERE BEING ANY CHANGE IN FACTS AND ALSO NO NEW MATERIAL CAME TO HIS POSSESSION SUBSEQUENT TO COMPL ETION OF ORIGINAL ASSESSMENT PROCEEDINGS U/S 143(3) TO FORM A REASONA BLE BELIEF OF ESCAPEMENT OF INCOME. THE SOLE REASON FOR THE AO T O REOPEN THE ASSESSMENT IS BASED ON THE REOPENING OF ASSESSMENT FOR AY 2006-07, WHICH IN TURN, IS BASED ON AUDIT OBJECTION. THEREF ORE, WE ARE OF THE CONSIDERED VIEW THAT THE AO HAS REOPENED THE ASSESS MENT MERELY ON CHANGE OF OPINION WITHOUT THERE BEING ANY MATERIAL IN HIS POSSESSION WHICH SUGGESTS ESCAPEMENT OF INCOME. THIS LEGAL PO SITION IS SUPPORTED BY THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CA SE OF CIT VS KELVINATOR OF INDIA LTD (SUPRA), WHERE THE HONBLE SUPREME COURT HAS CATEGORICALLY HELD THAT ASSESSMENT CANNOT BE REOPEN ED MERELY ON CHANGE OF OPINION. WE FURTHER OBSERVE THAT THE AO HAS ALLOWED DEDUCTION CLAIMED U/S 80IB(10) IN THE ORIGINAL ASSE SSMENT U/S 143(3) AND ONCE DEDUCTION CLAIMED U/S 80IB(10) HAS BEEN AL LOWED, THE SAME CANNOT BE WITHDRAWN IN RE-ASSESSMENT PROCEEDINGS UN LESS THERE IS MATERIAL CHANGES IN FACTS. IN THIS CASE, THE AO HA S FAILED TO BRING ON 15 ITA 4266/MUM/2015 & CO 74/MUM/2017 RECORD ANY CHANGE IN FACTS PREVAILED AT THE TIME OF ORIGINAL ASSESSMENT AND ASSESSMENT PROCEEDINGS U/S 147 OF THE ACT. THE REFORE, WE ARE OF THE VIEW THAT IT IS A CASE OF MERE CHANGE OF OPINI ON AND HENCE, THE REOPENING OF THE ASSESSMENT IS BAD IN LAW AND LIABL E TO BE QUASHED. ACCORDINGLY, WE QUASH RE-ASSESSMENT ORDER PASSED BY THE AO. 11. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ITA NO.4266/MUM/2015 12. THE REVENUE HAS FILED THIS APPEAL CHALLENGING O RDER OF THE CIT(A) DELETING THE ADDITION MADE BY THE AO TOWARDS DISALL OWANCE OF DEDUCTION CLAIMED U/S 80IB(10) OF THE INCOME-TAX ACT, 1961 AN D ASSESSMENT OF INCOME DERIVED FROM LETTING OUT OF PROPERTIES HELD AS STOCK IN TRADE. SINCE, WE HAVE ALREADY QUASHED RE-ASSESSMENT PROCEE DINGS, THE ISSUES CHALLENGED ON MERIT IN THE REVENUES APPEAL BECOME ACADEMIC IN NATURE, HENCE, THE SAME DO NOT REQUIRE ADJUDICATION. HENCE , THE APPEAL FILED BY THE REVENUE IN ITA NO.4266/MUM/2015 IS DISMISSED AS INFRUCTUOUS. 13. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED AND THE CO FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JULY, 2018. SD/- SD/- (JOGINDER SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 18 TH JULY, 2018 PK/- 16 ITA 4266/MUM/2015 & CO 74/MUM/2017 COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI