D.C.I.T. 24(3), MUMBAI V. KALPANA CONSTRUCTION, MUMBAI

ITA 4568/MUM/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0014 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-07-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 06-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V JUSTIN
• Assessee Lawyers: BHARAT P SHAH
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4129/MUM/2012( A.Y.2005-06) ITA NO.4130/MUM/2012( A.Y.2006-07) M/S. KALPANA CONSTRUCTIONS, 274/9, JETHA NIWAS, JAWAHARNAGAR, ROAD NO.12, GOREGAON (WEST), MUMBAI 400 062 PAN: AAAFK 2096A ...... APPELLANT VS. THE DCIT 24(3) MUMBAI. .... RESP ONDENT ITA NO.4568/MUM/2012( A.Y.2005-06) ITA NO.4569/MUM/2012( A.Y.2006-07) THE DCIT 24(3) MUMBAI. .... AP PELLANT VS . M/S. KALPANA CONSTRUCTIONS, 274/9, JETHA NIWAS, JAWAHARNAGAR, ROAD NO.12, GOREGAON (WEST), MUMBAI 400 062 PAN: AAAFK 2096A ... RESPODNENT ASSESSEE BY : SHRI BHARAT P. SHAH REVENUE BY : SHRI V.JUSTIN DATE OF HEARING : 28/06/2017 DATE OF PRONOUNCEMENT : 30/06/2017 2 M/S. KALPANA CONSTRUCTIONS, ORDER PER G.S.PANNU,A.M: THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE RE VENUE FOR ASSESSMENT YEARS 2005-06 AND 2006-07. SINCE THEY RE LATE TO THE SAME ASSESSEE, INVOLVING COMMON ISSUES, THEY HAVE BEEN C LUBBED AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED F OR THE SAKE OF CONVENIENCE AND BREVITY. 2. ONE COMMON ISSUE IN BOTH THE APPEALS IS WITH REG ARD TO THE VALIDITY OF THE PROCEEDINGS INITIATED BY THE ASSESSING OFFICER BY ISSUING NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). IN ORDER TO APPRECIATE THE CONTROVERSY WE MAY REFER TO THE APPE AL OF THE ASSESSEE FOR ASSESSMENT YEAR 2005-06, WHICH IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-34, MUMBAI DATED 30/04/2012, WHICH IN TURN , ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) R.W.S.147 OF THE ACT DATED 07/12/2010. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESS EE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF BUILDERS & DEVELOPERS AN D FOR THE ASSESSMENT YEAR 2005-06 IT FILED A RETURN OF INCOME ORIGINALL Y ON 31/10/2005 DECLARING A TOTAL INCOME OF RS.23,58,961/-, WHICH, INTER-ALIA, INCLUDED CLAIM OF DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT WITH RESPECT TO THE PROFITS OF CERTAIN PROJECTS. AN ASSESSMENT UNDER SECTION 143(3) OF TH E ACT WAS COMPLETED ON 30/04/2007 DETERMINING THE TOTAL INCOME AT RS.24,35 ,558/-, WHICH, INTER- ALIA, DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT OF RS.47,26,054/- AND SILENT PARK PROJECT RS.1,66,55,921/- WITH RESPECT T O SHIVAM APARTMENTS, NALASOPRA AND SILENT PARK, BHAYANDER PROJECTS RESP ECTIVELY. SUBSEQUENTLY, 3 M/S. KALPANA CONSTRUCTIONS, THE ASSESSING OFFICER RECORDED REASONS AND ISSUED N OTICE UNDER SECTION 148 OF THE ACT AND REOPENED THE ASSESSMENT. IN THE ENS UING ASSESSMENT, THE TOTAL INCOME HAS BEEN ASSESSED AT RS.71,61,610/- , WHICH, INTER-ALIA, INCLUDED THE DENIAL OF DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT WITH RESPECT TO PROFITS OF THE SHIVAM APARTMENTS, NALASOPARA PROJEC T. THE ASSESSEE APPEALED BEFORE THE CIT(A) ASSAILING THE ASSESSMENT ORDER IN LAW AND ALSO ON FACTS. IN SO FAR AS THE MERITS OF THEN CLAIM OF TH E ASSESSEE FOR DEDUCTION UNDER SECTION 80 IB(10) OF THE ACT IS CONCERNED, TH E CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE AND HELD THAT THE CLAIM WAS ALLOWAB LE. AGAINST SUCH STAND OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. BEFORE THE CIT(A) ASSESSEE HAD ALSO CHALLENGED THE VALIDITY OF THE NOTICE ISSUED U NDER SECTION 148 OF THE ACT, ON WHICH THE CIT(A) HAS DECIDED THE ISSUE AGAINST T HE ASSESSEE. NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A) ON THIS ASPE CT, ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, ASSESSEE HAS ASSAILED THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT BY POINTING OUT THE INFI RMITIES IN THE REASONS RECORDED BY THE ASSESSING OFFICER. IN THIS CONTEXT , OUR ATTENTION HAS BEEN INVITED TO THE REASONS RECORDED BY THE ASSESSING OF FICER ON 19/05/2009, PRIOR TO ISSUANCE OF NOTICE UNDER SECTION 148 OF TH E ACT, WHICH READS AS UNDER:- REASONS FOR ISSUE OF NOTICE U/S. 148 OF THE I.T.A CT. 19.5.2009 PERUSAL OF THE RECORD SHOW THAT ASSESSEE HAS CLAIM ED DEDUCTION U/S.80IB(10) TO THE TUNE OF RS.47,26,054/- FOR A.Y. 2005-06. THE SAID DEDUCTION HAS BEEN CLAIMED IN RESPECT OF PROJECT LOCATED AT VILLA GE ACHOLE,TAL VASAI, DIST.THANE (SHIVAM NALASOPARA). IT IS SEEN THAT ASSESSEE HAS CLAIMED DEDUCTION BY SUBMITTING A FALSE AND APPARENTLY INCORRECT DATE FO R COMMENCEMENT OF PROJECT AS 4 M/S. KALPANA CONSTRUCTIONS, ON 5.5.1999 IN FORM 10CCB ALTHOUGH ASSESSEE WAS FUL LY AWARE OF THE FACT THAT DEVELOPMENT PERMISSION WAS GIVEN BY CIDCO VIDE LETT ER DATED 4.6.1998 WHICH IS WELL BEFORE 1.10.1988. THUS, IT MAY BE SEEN THAT ASSESSEE HAS NOT FULFILLED ONE OF THE ELIGIBILITY CONDITION TO CLAIM DEDUCTION U/S.80 IB(10), BEING COMMENCEMENT OF PROJECT AFTER 1.10.1998 AND NOT BEFORE THIS DATE. AS THE ASSESSEES DATE OF COMMENCEMENT OF PROJECT IS BEFORE 1.10.1998, HENCE, PRIMA FACIE ASSESSEE IS NOT ELIGIBLE TO CLAIM THIS DEDUCTION. AS THIS DEDUCTIO N WAS WRONGLY CLAIMED AND ALLOWED, HENCE A NOTICE U/S.148 IS BEING ISSUED TO TAX THE INCOME ESCAPED FROM TAXATION. ACCORDINGLY, A NOTICE U/S.148 IS BEING I SSUED FOR A.Y.2005-06 TO BRING THIS INCOME ESCAPED FROM TAXATION WITHIN THE TAX NET. 5. A PERUSAL OF THE AFORESAID REASONS REVEAL THAT I N THE VIEW OF THE ASSESSING OFFICER CERTAIN INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT BECAUSE DEDUCTION UNDER SECTION 80 IB(10) OF THE A CT WITH RESPECT TO THE SHIVAM APARTMENTS, NALASOPARA WAS WRONGLY CLAIMED A ND ALLOWED. ACCORDING TO THE ASSESSING OFFICER THE DEDUCTION WA S WRONGLY ALLOWED BECAUSE ASSESSEE DID NOT FULFIL ONE OF THE ELIGIBIL ITY CONDITION TO CLAIM THE DEDUCTION, BEING COMMENCEMENT OF THE PROJECT AFTER 01/10/1998 AND NOT BEFORE THE SAID DATE. ACCORDING TO THE ASSESSING O FFICER, ASSESSEE HAD CLAIMED INCORRECT DATE FOR COMMENCEMENT OF PROJECT AS ON 05 /05/1999 IN FORM 10CCB . THE REASONS RECORDED ALSO REVEAL THAT AS PER TH E ASSESSING OFFICER THE ERROR WAS KNOWN TO THE ASSESSEE SINCE T HE DEVELOPMENT PERMISSION WAS GIVEN BY CIDCO ON 04/06/1998, WHICH IS WELL BEFORE 01/10/1998 . FOR THE SAID REASON, THE ASSESSING OFFICER FORME D A BELIEF THAT THE CLAIM OF DEDUCTION UNDER SECTION 80 IB(10) OF T HE ACT HAS BEEN WRONGLY ALLOWED IN THE ORIGINAL ASSESSMENT. OSTENSIBLY THE BELIEF OF THE ASSESSING OFFICER IS FOUNDED ON THE FACT THAT THE DATE OF CO MMENCEMENT OF PROJECT CANVASSED BY THE ASSESSEE AS 05/05/1999 IS WRONG BE CAUSE THE DEVELOPMENT PERMISSION WAS GIVEN BY CIDCO ON 04/06 /1998, WHICH IS PRE- 01/10/1998. 5 M/S. KALPANA CONSTRUCTIONS, 6. BEFORE WE PROCEED TO TEST THE EFFICACY OF THE RE ASON ENTERTAINED BY THE ASSESSING OFFICER TO FORM A BELIEF FOR ESCAPE MENT OF INCOME, WE MAY BRIEFLY TOUCH UPON THE RELEVANT LEGAL POSITION. SE CTION 80 IB(10) OF THE ACT, AS IT STOOD AT THE RELEVANT POINT OF TIME, PRESCRIB ED THAT A HOUSING PROJECT APPROVED BY THE LOCAL AUTHORITY BEFORE 31/03/2007 I S ELIGIBLE FOR THE PURPOSES OF THE CLAIM EXEMPTION PRESCRIBED IN SE CTION 80 IB(10) OF THE ACT. THE OTHER CONDITION, WHICH IS RELEVANT FOR THE PRES ENT CASE, IS THAT THE DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT OUGHT TO HAVE COMMENCED ON OR AFTER 01/10/1998. IN THE PRESENT C ASE, THE ASSESSMENT WAS FINALIZED, WHEREIN THE DEDUCTION UNDER SECTION 80 IB(10) WAS ALLOWED, CONSIDERING THE DATE OF COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF HOUSING PROJECT AS 05/05/1999. THE ASSESSING OFFIC ER HAS NOTED THAT THE SAID DATE IS AS PER FORM NO.10CCB FURNISHED BY THE ASSESSEE. IN THE REASONS RECORDED, THE ASSESSING OFFICER HAS FOUND FAULT WIT H THE DATE OF COMMENCEMENT OF THE DEVELOPMENT AND CONSTRUCTION OF THE PROJECT. AS PER THE ASSESSING OFFICER THE DATE OF 05/05/1999 IS INC ORRECT FOR THE REASON THAT THE DEVELOPMENT PERMISSION GIVEN BY CIDCO IS DATED 04/06/1998, WHICH IS BEFORE 01/10/1998 AND, THEREFORE, ASSESSEE IS INEL IGIBLE FOR THE BENEFIT OF SECTION 80IB(10) OF THE ACT. IN OUR CONSIDERED OPI NION, THE DATE OF SEEKING APPROVAL OR PERMISSION FOR DEVELOPMENT FROM THE LOC AL AUTHORITY IS OF NO RELEVANCE TO DECIDE ABOUT THE CORRECTNESS OR INCOR RECTNESS OF THE DATE OF COMMENCEMENT OF THE PROJECT, WHICH HAS BEEN TAKEN AT THE TIME OF ORIGINAL ASSESSMENT AS 05/05/1999 . EVEN IF THE DATE OF APPROVAL IS BEFORE 01/10/1998, IT DOES NOT DISENTITLE THE ASSESSEE B ECAUSE THE REQUIREMENT OF THE SECTION IS THAT THE ELIGIBLE HOUSING PROJECT HA S TO BE APPROVED BEFORE 31/03/2007. THE SIGNIFICANCE OF 01/10/1998 IS TO EXAMINE THE DATE OF 6 M/S. KALPANA CONSTRUCTIONS, COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF TH E HOUSING PROJECT, AND IN THE PRESENT CASE IT HAS BEEN CANVASSED AT 05/05/1999. THE REASONS RECORDED REFLECT THAT THE ASSESSING OFFICER HAS CO NFUSED THE DATE OF APPROVAL BY THE LOCAL AUTHORITY WITH THE DATE OF C OMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT WHICH ARE TWO DIFFERENT ASPECTS. IN ANY CASE, MERELY BECAUSE THE PERMISSION WAS GIVEN BY CIDCO ON 04/06/1998 CANNOT, BY ITSELF, BE A BASIS T O ENTERTAIN A BELIEF THAT THE DATE OF COMMENCEMENT OF PROJECT ADOPTED IN THE ORIGINAL ASSESSMENT PROCEEDINGS AS 05/05/1999 IS INCORRECT. IN OUR CON SIDERED OPINION, THERE IS NO INFORMATION OR MATERIAL REFERRED BY THE ASSESSIN G OFFICER IN THE REASONS RECORDED WHICH CAN, EVEN ON PRIMA-FACIE BASIS, ESTA BLISH THAT THE DATE OF COMMENCEMENT OF DEVELOPMENT AND CONSTRUCTION OF THE PROJECT TAKEN AS 05/05/1999 IS INCORRECT. THEREFORE, IN THIS CONTE XT IT HAS TO BE FACTUALLY INFERRED THAT THERE WAS NO MATERIAL WITH THE ASSESS ING OFFICER FORM A VALID BELIEF THAT INCOME HAD ESCAPED ASSESSMENT ON ACCO UNT OF INCORRECT ALLOWANCE OF DEDUCTION UNDER SECTION 80IB(10) OF TH E ACT. 7. IN THIS VIEW OF THE MATTER, WE THEREFORE, HOLD T HAT THE INITIATION OF PROCEEDINGS BY RECORDING REASONS UNDER SECTION DAT ED 09/05/2009 SUFFER FROM LEGAL INFIRMITY AND THE SAME IS ACCORDINGLY HE LD TO BE INVALID. CONSEQUENTLY, THE ASSESSMENT MADE THEREFROM IS UNTE NABLE IN THE EYES OF LAW AND IS HEREBY SET-ASIDE. 8. SINCE THE ASSESSMENT ITSELF HAS BEEN HELD TO BE UNSUSTAINABLE ON THE POINT OF JURISDICTION, THE ISSUE RAISED BY THE REVE NUE IN ITS CROSS-APPEAL, REGARDING THE MERITS OF THE ADDITION MADE THEREIN A RE RENDERED ACADEMIC AND ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMI SSED. 7 M/S. KALPANA CONSTRUCTIONS, 9. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOW ED AND THAT OF THE REVENUE IS DISMISSED FOR ASSESSMENT YEAR 2005-06. 10. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE ISSUES INVOLVED IN THE CROSS APPEALS FOR ASSESSMENT YEAR 2006-07 ARE PARI MATERIA TO THOSE CONSIDERED BY US IN FOR ASSESSMENT YEAR 2005-06; T HEREFORE, OUR DECISION THEREIN SHALL APPLY MUTATIS MUTANDIS TO THE CROSS APPEALS FOR ASSESSMENT YEAR 2004-05 ALSO. 11. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLO WED AND THAT OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/06/2017 SD/- SD/- (RAVISH SOOD) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 30/06/2017 VM , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI