ACIT 21(2), MUMBAI V. VAMAN ESTATE, MUMBAI

ITA 5584/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93203 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 07-01-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 04-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Difference of opinion; Change of opinion; Reassessment proceedings
• Section: 143(3); 147; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI . . , , , BEFORE SHRI A.D. JAIN , JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, A CCOUNTANT M EMBER / I .T.A. NO S . 5584, 5585, 5586 & 5587/MUM/2012 ( / ASSESSMENT YEAR S : 2004 - 05 TO 2007 - 08 THE ACIT - 21(2), C - 10, 5 TH FLOOR, B.K.C. BANDRA (E), MUMBAI - 400 051 / VS. M/S. VAMAN ESTATE, 501 - 503, TRADE AVENUE, 5 TH FLOOR, SUREN ROAD, OFF WESTERN EXPRESS HIGHWAY, ANDHERI (E), MUMBAI - 400 093 ./ ./ PAN/GIR NO. : AAAFV 5314L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI G.M. DOSS / RESPONDENT BY : SHRI VIJAY MEHTA / DATE OF HEARING : 08 . 0 7 .2015 / DATE OF PRONOUNCEMENT : 15 .0 7 .2015 / O R D E R PER N.K. BILLAIYA, AM: T H ESE FOUR APPEALS BY THE REVENUE RELATE TO 4 ASSESSMENT YEARS VIZ., 2004 - 05, 2005 - 06, 2006 - 07 AND 2007 - 08 DIRECTED AGAINST THE COMMON ORDER OF THE LD. CIT(A) - 32 , MUMBAI DT. 2 7 . 6 .201 2 . ALL THESE APPEALS HAVE COMMON GROUNDS OF APPEAL, THERE FORE, THEY WERE HEARD TOGETHER AND DISPOSE D OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. M/S. VAMAN ESTATE 2 2. THE GRIEVANCES OF THE REVENUE READ AS UNDER: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING THE APPEAL O F THE ASSESSEE IN RESPECT OF DISALLOWANCE OF DEDUCTION U/S. 80IB(10) RELATING TO TRANS RESIDENCY PROJECT.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS FAILED TO APPRECIATE THAT THE ASSESSEE DID NOT FULFILL THE CONDITIONS LAID DOWN IN SECTION 80IB( 10) OF THE LT. ACT AS THE TRANS RESIDENCY PROJECT HAD COMMENCED PRIOR TO 01.10.1998.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS FAILED TO APPRECIATE THAT EACH ASSESSMENT YEAR IS AN INDEPENDEN T PROCEEDINGS AND SUBMISSIONS MADE DURING THE COURSE OF ONE ASSESSMENT YEAR CANNOT BE CONSIDERED FOR ANOTHER ASSESSMENT YEAR.' 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS FAILED TO APPRECIATE THE PROVISIONS OF SECTION 80IB(10) THAT 'IN A CASE WHERE APPROVAL IN RESPECT OF HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDING PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTHO RITY.' 5. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN NOT CONSIDERING THAT THE ASSESSMENTS WERE REOPENED U/S. 147 OF THE I. T. ACT, 1961 FOR THE REASON THAT THE ASSESSEE HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT NECESSARY FOR ASSESSMENT AT THE TIME OF ASSESSMENT PROCEEDINGS AND FURNISHED INACCURATE PARTICULARS DURING THE COURSE OF ASSESSMENT PROCEEDINGS.' 3. VI DE GROUND NO. 5, THE REVENUE HAS CHALLENGED THE CORRECTNESS OF THE ORDER OF THE LD. CIT(A) WHO HAS HELD THAT THE REOPENING OF ASSESSMENT IS BASED ON MERE CHANGE OF OPINION WITHOUT ANY NEW MATERIAL AND THEREFORE, REOPENING CANNOT BE HELD AS A VALID REOPENIN G. SINCE THIS GRIEVANCE GOES TO THE ROOT OF THE MATTER, WE TAKE UP GROUND NO. 5. M/S. VAMAN ESTATE 3 4. IN THIS CASE, THE RETURN OF INCOME FOR A.Y. 2004 - 05 WAS FILED ON 31.10.2004 DECLARING TOTAL INCOME AT RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND ORDER U/S. 143(3) OF THE ACT WAS PASSED ON 27.12.2006 ASSESSING THE TOTAL INCOME AT RS. 3,80,31,350/ - . IN THE COMPLETED ASSESSMENT ORDER MADE U/S. 143(3) OF THE ACT, THE CLAIM OF DEDUCTION U/S. 80IB(10) IN RESPECT OF INCOME FROM TRANS APARTMENT PROJECT AMOUNTIN G TO RS.3,78,75,848/ - WAS REJECTED AND IN RESPECT OF INCOME FROM TRANS RESIDENCY PROJECT, THE CLAIM OF DEDUCTION U/S. 80IB(10) WAS RESTRICTED TO RS. 2,15,15,970/ - . THE ASSESSMENT ORDER WAS ASSAILED BEFORE THE LD. CIT(A) AND THE LD. CIT(A) VIDE HIS ORDER DT. 29.2.2008 DIRECTED THE AO TO ALLOW DEDUCTION U/S. 80IB(10) IN RESPECT OF PROFITS DERIVED FROM FLATS HAVING BUILT - UP AREA OF LESS THAN 1000 SQ. FT IN TRANS APARTMENT PROJECT. INCOME FROM CAR PARKING SPACE IN TRANS RESIDENCY PROJECT WAS ACCEPTED AS ELI GIBLE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. 5. THE REVENUE CARRIED THE MATTER BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER IN ITA NO. 3016/M/08 DT. 28.10.2009 SET ASIDE THE ISSUE OF DEDUCTION U/S. 80 - I B(10) IN RESPECT OF INCOME FROM TRANS APAR TMENT PROJECT TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE SURVEY RECORDS AS WELL AS APPROVED PLAN OF THE BMC AS TO WHETHER THE AREA OF THE FLATS EXCEEDS 1000 SQ. FT. THE ALLOWABILITY OF DEDUCTION IN RESPECT OF INCOME FROM CAR PARKING SPACE WAS C ONFIRMED BY THE TRIBUNAL. 5.1. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED AND A NOTICE U/S. 148 OF THE ACT WAS ISSUED AND SERVED ON THE ASSESSEE. REASONS FOR REOPENING THE ASSESSMENT WERE PROVIDED TO THE ASSESSEE. THE OBJECTIONS RAISED BY THE ASSESSEE CH ALLENGING THE REOPENING OF THE ASSESSMENT WERE DISMISSED BY THE AO. THE REASSESSMENT ORDER WAS COMPLETED BY HOLDING THAT THE M/S. VAMAN ESTATE 4 TRANS RESIDENCY PROJECT HAD COMMENCED PRIOR TO 1.10.1998 THEREFORE, THE DEDUCTION CLAIMED BY THE ASSESSEE AND ALLOWED BY THE THEN AO WAS OUTSIDE THE PURVIEW OF SEC. 80IB(10) OF THE ACT AND ACCORDINGLY THE DEDUCTION OF RS. 2,16,71,470/ - WAS WITHDRAWN. 6. AGGRIEVED BY THIS, THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) MAINLY ON THE GROUND OF REOPENING. BEFORE THE LD. CIT(A), IT WAS STRONGLY CONTENDED THAT IN THE ORIGINAL ASSESSMENT PROCEEDINGS THE CLAIM OF DEDUCTION U/S. 80IB(10) IN RESPECT OF THE IMPUGNED ELIGIBLE PROJECTS WAS THOROUGHLY EXAMINED BY THE AO AND AFTER INTENSIVE SCRUTINY THE CLAIM OF DEDUCTION WAS ALLOWED/ REJECTED. 6.1. THE MATTER TRAVELLED UPTO THE TRIBUNAL AND THE DISPUTE WAS FINALLY SETTLED BY THE TRIBUNAL BY ITS ORDER DT. 28.10.2009, THEREFORE, REOPENING OF THE COMPLETED ASSESSMENT BY THE AO IS NOTHING BUT MERE CHANGE OF OPINION. RELIANC E WAS PLACED ON THE VARIOUS JUDICIAL DECISIONS. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS AND AFTER DISCUSSING VARIOUS JUDICIAL DECISIONS, THE LD. CIT(A) FINALLY CONCLUDED BY HOLDING THAT HENCE THE REOPENING OF ASSESSMENT BASED ON MERE CHANGE OF OPINION WITHOUT ANY NEW MATERIAL CANNOT BE HELD AS A VALID REOPENING U/S. 147 FOR A.Y. 2004 - 05, 2005 - 06, 2006 - 07 & 2007 - 08 . THE LD. CIT(A) THEREAFTER PROCEEDED BY DECIDING THE ISSUE ON MERITS OF THE CASE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. AGGRIEVED BY THIS THE REVENUE IS BEFORE US. 8. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ASSESSMENT ORDER. IT IS THE SAY OF THE LD. DR THAT THE REOPENING PROCEEDINGS HAVE BEEN VALIDLY INITIATED BY THE AO AND THE ORDER OF THE LD. CIT(A) IS ERRONEOUS IN HOLDING THE REOPENING INVALID. M/S. VAMAN ESTATE 5 9. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE ADVANCED THE VERY SAME ARGUMENTS WHICH WERE MADE BEFORE THE LOWER AUTHORITIES. 10. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE RELEVANT MATERIAL EVIDENCE BROUGHT ON RECORD BEFORE US. WE HAVE ALSO GONE THROUGH THE REASONS GIVEN FOR THE REOPENING OF THE ASSESSMENT WHICH ARE PLACED BEFORE US AT P - 41 TO 43 OF THE PAPER BOOK. WE FIND THAT IN THE REAS ONS, THE AO HAS EXTRACTED THE RELEVANT PART OF THE ORDER DATED 24.12.2009 IN THE CASE OF ABODE BUILDERS FOR A.Y. 2007 - 08 AND CAME TO THE CONCLUSION THAT THE PROJECT HAS ALREADY STARTED BEFORE THE STATUTORY DATE OF 1.10.1998. SINCE THE AO HAD NOT LOOKED IN TO THESE VITAL FACTS NECESSARY FOR THE ASSESSMENT OF THE ASSESSEE, THE AO CONCLUDED BY STATING THAT HE HAS REASONS TO BELIEVE THAT INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 147 OF THE ACT. 10.1. AFTER CAREFULLY PERUSING THE REASONS RECORDED FOR THE REOPENING OF THE ASSESSMENT, IN OUR CONSIDERED OPINION, NO NEW MATERIAL HAS COME ON RECORD AND NO NEW INFORMATION HAS BEEN RECEIVED BETWEEN THE DATE OF ORDER OF ORIGINAL ASSESSMENT AND DATE OF FORMATION OF OPINION BY THE AO. WE FIND THAT THE AO IS SEEKING TO REOPEN THE ASSESSMENT ON THE GROUND THAT SOME MATERIAL WHICH WAS AVAILABLE ON RECORD WHILE THE ASSESSMENT WAS MADE WERE INADVERTENTLY EXCLUDED FROM CONSIDERATION. HERE IT WOULD BE PERTINENT TO MENT ION THE REMARKS MADE BY THE HONBLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF ASIAN PAINTS LTD. VS DCIT 308 ITR 195 WHEREIN THE HONBLE HIGH COURT HAS REMARKED: - WHEN A REGULAR ORDER OF ASSESSMENT IS PASSED IN TERMS OF SECTION 143(3) OF THE INCOME - TAX ACT, 1961, A PRESUMPTION CAN BE RAISED THAT SUCH AN ORDER HAS BEEN PASSED ON APPLICATION OF MIND. IF NON - APPLICATION OF MIND BY THE ASSESSING OFFICER IN PASSING AN ORDER M/S. VAMAN ESTATE 6 WOULD ITSELF CONFER JURISDICTION UPON THE ASSESSING OFFICER TO REOPEN THE PROCEEDING WITHOUT ANYTHING FURTHER, IT WOULD AMOUNT TO GIVING A PREMIUM TO AN AUTHORITY EXERCISING QUASI - JUDICIAL FUNCTION TO TAKE BENEFIT OF ITS OWN WRONG. THE LEGISLATURE HAS NOT CONFERRED POWER ON THE ASSESSING OFFICER TO REVIEW HIS OWN ORDER. 10.2. THE HONBLE HIGH COURT HAS FURTHER HELD AS UNDER: HELD, ALLOWING THE PETITION, THAT INITIATION OF REASSESSMENT PROCEEDINGS WOULD AMOUNT TO CHANGE OF OPINION OF THE ASSESSING OFFICER AS IT WAS MERELY A FRESH APPLICATION OF MIND BY THE ASSESSING OFFICER TO THE SAME SET OF FACTS. SINCE THE ASSESSING OFFICER HAD FAILED TO APPLY HIS MIND TO THE RELEVANT MATERIAL WHILE FRAMING THE ASSESSMENT ORDER, HE COULD NOT TAKE ADVANTAGE OF HIS OWN WRONG AND REOPEN THE ASSESSMENT UNDER SECTION 147 OF THE ACT. 11. A SIMILAR VIEW WAS TAKEN BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF KELVINATOR OF INDIA LTD. 256 ITR 01 WHICH WAS CONFIRMED BY THE HONBLE SUPREME COURT IN 320 ITR 561. RESPECTFULLY FOLLOWING THE DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT AND THE HONBLE SUPREME COURT (SUPRA), WE DECLINE TO INT ERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 5 IS ACCORDINGLY DISMISSED. 12. AS WE HAVE UPHELD THE INVALIDITY OF THE REOPENING OF THE ASSESSMENT, WE DO NOT FIND IT NECESSARY TO GO ON THE MERIT OF THE CASE. 13. IN THE RESULT, ALL THE APPEALS FILED BY THE REVENUE ARE DISMISSED. OR DER PRONOUNCED IN THE OPEN COURT ON 15 TH JU LY , 2015 SD/ - SD/ - ( A.D. JAIN ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 15 TH JU LY , 2015 . . ./ RJ , SR. PS M/S. VAMAN ESTATE 7 / 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