M/s. Nath Associates, Solapur V. ACIT, Cir.-1, Solapur

ITA 581/PUN/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67008 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-10-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 03-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANN KAPTHUAMA
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Tangible material; Difference of opinion; Assessment record; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 133A; 80IB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 576 TO 578/PN/2011 (ASSESSMENT YEARS : 2003-04 TO 2005-06) M/S. NATH DEVELOPERS 162/11, NATH HOUSE, RAILWAY LINES, SOLAPUR - 413 001 PAN : AADFN2990B . APPELLANT VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE 1, SOLAPUR . RESPONDENT ITA NOS. 579 TO 582/PN/2011 (ASSESSMENT YEARS : 2003-04 TO 2005-06 & 2007-08) M/S. NATH ASSOCIATES 162/11, NATH HOUSE, RAILWAY LINES, SOLAPUR - 413 001 PAN : AAAFN7892F . APPELLANT VS. ASST. COMMISSIONER OF INCOME TAX CIRCLE 1, SOLAPUR . RESPONDENT APPELLANT BY : MR. SUNIL PATHAK RESPONDENT BY : MS. ANN KAPTHUAMA DATE OF HEARING : 10-04-2013 DATE OF PRONOUNCEMENT : 31-05-2013 ORDER PER G. S. PANNU, AM THE CAPTIONED GROUP OF APPEALS RELATE TO TWO DIFFE RENT ASSESSEES BELONGING TO THE SAME GROUP AND INVOLVE CERTAIN COM MON ISSUES, THEREFORE THEY HAVE BEEN CLUBBED AND HEARD TOGETHER AND A CON SOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 2. FIRST, WE SHALL TAKE UP THE APPEALS IN THE CASE OF M/S NATH DEVELOPERS PERTAINING TO THE ASSESSMENT YEARS 2003-04 TO 2005- 06. 3. ITA NO. 577/PN/2011 IS AN APPEAL PERTAINING TO M /S. NATH DEVELOPERS FOR ASSESSMENT YEAR 2004-05 WHICH IS TAKEN AS THE L EAD CASE. THE FACTS, IN BRIEF, ARE AS FOLLOWS. THE ASSESSEE IS A PARTNERSHI P FIRM ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPERS AND FOR ALL THE YEARS UNDER CONSIDERATION IT HAD UNDERTAKEN DEVELOPMENT AND CONSTRUCTION OF A HO USING PROJECT NAMED AS NATH REGENCY AT SOLAPUR. FOR ALL THE CAPTIONED AS SESSMENT YEARS, ASSESSEE CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE INC OME TAX ACT, 1961 (IN SHORT THE ACT) IN RELATION TO THE PROFITS EAR NED FROM THE SAID PROJECT. FOR THE ASSESSMENT YEAR 2004-05 A RETURN OF INCOME WAS FILED BY THE ASSESSEE FIRM ON 01.11.2004 DECLARING TOTAL INCOME OF RS.6,0 8,610/- WHICH INTER-ALIA CONTAINED A CLAIM OF DEDUCTION UNDER SECTION 80IB(1 0) OF THE ACT IN RELATION TO THE PROFITS FROM THE HOUSING PROJECT NATH REGENCY AMOUNTING TO RS.40,84,721/-. THE RETURN OF INCOME WAS SUBJECT T O SCRUTINY ASSESSMENT UNDER SECTION 143(3) OF THE ACT DATED 13.09.2006 AN D THE INCOME RETURNED AT RS.6,08,610/- WAS ACCEPTED INTER-ALIA IMPLYING ACCEPTANCE OF ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AMOU NTING TO RS.40,84,721/-. 4. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PR OCEEDINGS UNDER SECTION 147/148 OF THE ACT BY ISSUANCE OF NOTICE ON 13.02.2009 INTENDING TO REOPEN THE ASSESSMENT AND ASSESS AN INCOME CHARGEAB LE TO TAX WHICH HAD ESCAPED ASSESSMENT. THE ESCAPEMENT OF INCOME, AS PE R THE ASSESSING WAS OFFICER ON ACCOUNT OF ALLOWANCE OF DEDUCTION CLAIME D UNDER SECTION 80IB(10) OF THE ACT AMOUNTING TO RS.40,84,721/-. IN THE CONS EQUENT RE-ASSESSMENT PROCEEDINGS FINALIZED UNDER SECTION 143(3) READ WIT H SECTION 147 OF THE ACT DATED 30.12.2009 THE TOTAL INCOME HAS BEEN DETERMIN ED AT RS.46,93,330/-, AFTER MAKING A DISALLOWANCE ON ACCOUNT OF ASSESSEE S CLAIM FOR DEDUCTION UNDER SECTION 80IB(10) OF THE ACT AMOUNTING TO RS.4 0,84,721/-. IN THE ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 PROCEEDINGS BEFORE US THE ACTION OF THE ASSESSING O FFICER IN INITIATING PROCEEDINGS UNDER SECTION 147/148 OF THE ACT AND TH E DENIAL OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ARE SUBJECT MATTE RS OF DISPUTE. 5. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SEE REFERRED TO GROUNDS OF APPEAL NO. 1 AND 1.1 WHICH READ AS UNDER :- 1 THE REASSESSMENT U/S 147 IS BAD IN LAW AS IT IS BASED ON A MERE CHANGE OF OPINION. 1.1 THE LEARNED A.O. HAD EXAMINED THE ISSUE OF ALLO WABILITY OF DEDUCTION U/S 80IB(10) IN RESPECT OF THE HOUSING PR OJECT, NATH REGENCY IN DETAILS IN THE ASSESSMENT U/S 143(3) FOR A.Y. 2004- 05 AND ALLOWED THE DEDUCTION. HENCE, IN THE ABOVE FACTUAL BACKGROUND, THE REOPENING OF THE ASSESSMENT U/S 147 FOR DISALLOWANCE OF THE CLAIM UN DER SECTION 80IB(10) IN RESPECT OF THIS PROJECT IS BAD IN LAW AND HENCE, TH E REASSESSMENT BE HELD NULL AND VOID. 6. ACCORDING TO THE APPELLANT, THE ISSUE RELATING TO THE VALIDITY OF THE PROCEEDINGS INITIATED UNDER SECTION 147/148 OF THE ACT GOES TO THE ROOT OF THE MATTER AND IT IS FURTHER CONTENDED THAT THE SAME BE ING A POINT OF LAW THE ASSESSEE IS ENTITLED TO RAISE THE SAME FOR THE FIRS T TIME BEFORE THE TRIBUNAL ALSO HAVING REGARD TO THE PARITY OF REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF NTPC 229 ITR 383 (SC). IT IS A LSO POINTED OUT THAT THE FACTS RELEVANT TO ADJUDICATE THE AFORESAID CONTROVE RSY ARE ON RECORD AND PRAYED THAT THE AFORESAID GROUND BE ADMITTED FOR AD JUDICATION. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT OPPOSED THE PRA YER OF THE ASSESSEE SEEKING ADJUDICATION OF THE AFORESAID GROUND OF APP EAL, WHICH HAS BEEN RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL AND WAS NOT RAISED BEFORE THE CIT(A). 7. WITH REGARD TO THE ADMISSION OF THE ADDITIONAL G ROUND OF APPEAL REFERRED TO AS GROUNDS OF APPEAL NO. 1 & 1.1 IN THE MEMO OF APPEAL FILED BY THE ASSESSEE, IT IS EVIDENT THAT THE SAME INVOLVES A POINT OF LAW AND IS EMERGING FROM RECORD. THE AFORESAID GROUND IS ALSO RELEVANT TO DETERMINE THE ULTIMATE TAX LIABILITY OF THE ASSESSEE, AND THEREFO RE FOLLOWING THE RATIO OF ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 HONBLE SUPREME COURT IN THE CASE NTPC LTD. (SUPRA) THE SAME IS ADMITTED FOR ADJUDICATION. THE AFORESAID DECISION WAS PRONOU NCED IN COURT AND THEREAFTER THE RIVAL COUNSELS HAVE MADE THEIR SUBMI SSIONS. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO FILED A PAPER BOOK WH ICH INTER-ALIA CONTAINS (I) COPIES OF SUBMISSIONS MADE BEFORE THE LOWER AUTHORI TIES, (II) CHART REGARDING THE DETAILS OF THE HOUSING PROJECT, (III) COPIES OF REASONS RECORDED BY THE ASSESSING OFFICER UNDER SECTION 147 FOR REOPENING O F ASSESSMENT, (IV) COPY OF STATEMENT ON OATH RECORDED OF ASSESSEES PARTNER SH RI PRADIP N. PIMPARKAR DURING SURVEY ACTION UNDER SECTION 133A OF THE ACT, (V) COPIES OF INCOME TAX RETURNS ALONG WITH THE RELEVANT ANNEXURES AND (VI) COPIES OF COMMENCEMENT CERTIFICATE AND SANCTIONED PLANS OF THE PROJECT, ET C.. THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO PRODUCED THE ASSESSMENT RECORD WITH REFERENCE TO THE PAPER BOOK FILED BY THE ASSESSEE. THE RIVAL COUNSEL S HAVE MADE THEIR SUBMISSIONS IN THE ABOVE BACKGROUND AND THE RELEVAN T RECORD AND MATERIAL HAVE BEEN PERUSED. 8. THE FIRST AND FOREMOST POINT MADE OUT BY THE ASS ESSEE IS TO THE EFFECT THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE ASSESSING OFFICER BY INVOKING SECTION 147 OF THE ACT ARE INVALID INASMUC H AS IT IS BASED ON A MERE CHANGE OF OPINION. IT IS CONTENDED THAT THE ASSESSI NG OFFICER EXAMINED THE ISSUE OF ALLOWABILITY OF DEDUCTION UNDER 80IB(10) O F THE ACT IN RESPECT OF THE HOUSING PROJECT NATH REGENCY IN THE COURSE OF THE SCRUTINY ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT ON 13.09.2006. IN T HIS CONNECTION REFERENCE HAS BEEN MADE TO THE RETURN OF INCOME FILED ALONG W ITH RELEVANT NOTES THEREON AND ALSO TO THE DISCUSSION MADE BY THE ASSESSING OF FICER IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT DATED 13.09.2006 IN ORDER TO SUPPORT THE PROPOSITION THAT THE ASSESSING OFFICER HAS FORMED THE BELIEF OF ESCAPEMENT OF INCOME QUA ASSESSEES CLAIM FOR DEDUC TION UNDER SECTION 80IB(10) OF THE ACT, MERELY ON THE BASIS OF A CHANG E OF OPINION AND THAT NO FRESH TANGIBLE MATERIAL OR EVIDENCE CAME TO THE NOT ICE OF THE ASSESSING OFFICER AFTER THE ASSESSMENT DATED 13.09.2006. AS PER THE A SSESSEE, REASSESSMENT ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 PROCEEDINGS INITIATED ON THE BASIS OF A MERE CHANGE OF OPINION, WITHOUT POSSESSING ANY FRESH TANGIBLE MATERIAL, DOES NOT ME ET WITH THE REQUIREMENTS OF SECTION 147 OF THE ACT. IN SUPPORT OF THE ABOVE PROPOSITION, RELIANCE HAS BEEN PLACED ON THE FOLLOWING JUDGEMENTS :- (I) CIT VS. KELVINATOR OF INDIA LTD. (2010) 320 I TR 561 (SC), (II) VIJAYKUMAR M. HIRAKHANWALA HUF VS. ITO 287 IT R 443 (BOM.) (III) CIT VS. ORIENT CRAFT LTD. IN ITA NO.555/2012 DATED 12.12.2012 (DELHI). 9. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE REFERRED TO THE COPY OF THE REASONS RECORDED BY THE ASSESSING OFFICER, TO POINT OUT THAT ON 28.05.2008 A SURVEY A CTION UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF T HE ASSESSEE IN ORDER TO VERIFY THE ASSESSEES CLAIM FOR DEDUCTION UNDER SEC TION 80IB(10) OF THE ACT. IN THE COURSE OF SURVEY, A STATEMENT OF SHRI PRADIP N. PIMPARKAR, PARTNER OF THE ASSESSEE, WAS ALSO RECORDED WHICH ESTABLISHED THAT THE PROJECT NATH REGENCY UNDERTAKEN BY THE ASSESSEE WAS NOT COMPLET ED AS PER THE PLANS APPROVED BY THE LOCAL AUTHORITY WITHIN THE PRESCRIB ED PERIOD AND THEREFORE THE ASSESSEE WAS FOUND TO BE INELIGIBLE FOR DEDUCTION U NDER SECTION 80IB(10) OF THE ACT. FOR THE AFORESAID REASON, IT IS SOUGHT TO BE MADE OUT THAT THERE WAS A JUSTIFIABLE REASON WITH THE ASSESSING OFFICER IN OR DER TO FORM A BELIEF THAT AN INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE CAPTIONED ASSESSMENT YEARS WITHIN THE MEANING OF SECTION 147 OF THE ACT INASMUCH AS IN THE ASSESSMENT ORDER DATED 13.09.2006 PASSED UNDER SECTION 143(3) OF THE ACT, EXCESSIVE CLAIM OF DEDUCTION UNDER SECTION 80I B(10) OF THE ACT WAS WRONGFULLY ALLOWED. IN THIS MANNER, INITIATION OF P ROCEEDINGS UNDER SECTION 147 OF THE ACT IS SOUGHT TO BE DEFENDED. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. SECTION 147 OF THE ACT EMPOWERS THE ASSESSING OFFICER TO ASSESS OR RE- ASSESS AN INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT IN T ERMS OF THE PRESCRIPTION CONTAINED THEREIN. SECTION 147 OF THE ACT POSTULATE S THAT WHERE THE ASSESSING ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARG EABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SECTIONS 148 TO 153 OF THE ACT, ASSESS OR RE-ASSESS SUCH INCOME FOR THE ASSESSMENT YEAR CONCERNED. A SIGNIFICANT EXPRESSION CONTAINED IN SECTION 147 OF THE ACT IS REASON TO BELIEVE. OSTENSIBLY, THE POWER OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT IS BASED ON HIS FORMING A B ELIEF THAT CERTAIN INCOME CHARGEABLE FOR TAX HAD ESCAPED ASSESSMENT. THE AFOR ESAID EXPRESSION HAS BEEN A SUBJECT-MATTER OF CONSIDERATION BY VARIOUS C OURTS AND IT IS QUITE WELL- SETTLED THAT SECTION 147 OF THE ACT DOES NOT ENVISA GE SWEEPING POWERS FOR THE ASSESSING OFFICER TO REOPEN THE CONCLUDED ASSESSMEN T. THE POWER TO REOPEN A CONCLUDED ASSESSMENT IS BASED ON THE ASSESSING OF FICER COMING IN POSSESSION OF SOME FRESH TANGIBLE MATERIAL IN ORDER TO FORM A BELIEF THAT CERTAIN INCOME HAS ESCAPED ASSESSMENT. BE THAT AS IT MAY, I N SO FAR AS THE PRESENT PROCEEDINGS ARE CONCERNED THE CHALLENGE MOUNTED BY THE ASSESSEE IS THAT AFTER COMPLETION OF ASSESSMENT ON 13.09.2006 ALLOWI NG ASSESSEES CLAIM DEDUCTION UNDER SECTION 80IB(10) OF THE ACT, THE AS SESSING OFFICER DID NOT POSSESS ANY TANGIBLE MATERIAL TO CONCLUDE THAT DEDU CTION UNDER SECTION 80IB(10) OF THE ACT WAS WRONGFULLY ALLOWED SO AS TO CONSTITUTE AN ESCAPEMENT OF INCOME FOR THE PURPOSE OF INVOKING SECTION 147 O F THE ACT. ACCORDING TO THE ASSESSEE, THE BELIEF OF ESCAPEMENT OF INCOME HAS BE EN FORMULATED BY THE ASSESSING OFFICER, IN THIS CASE MERELY ON A CHANGE OF OPINION AND IS NOT BASED ON ANY TANGIBLE MATERIAL. ON THE CONTRARY AS PER TH E REVENUE, SURVEY UNDER SECTION 133A OF THE ACT CONDUCTED ON 28.05.2008 REV EALED THAT THE ASSESSEE DID NOT COMPLETE THE CONSTRUCTION OF PROJECT AS PER THE PLANS APPROVED BY THE LOCAL AUTHORITY BEFORE THE SPECIFIED DATE AND ON THIS BASIS THE ASSESSING OFFICER FORMED A BELIEF THAT DEDUCTION UNDER SECTIO N 80IB(10) OF THE ACT WAS WRONGLY ALLOWED IN THE ASSESSMENT MADE UNDER SECTIO N 143(3) OF THE ACT. 11. OSTENSIBLY, THE INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT ARE SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS PR ESCRIBED THEREIN WHICH INTER- ALIA, REQUIRE THE ASSESSING OFFICER TO RECORD REASONS TO BELIEVE THAT CERTAIN ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN THE CONTEXT OF ASSESSEES PLEA THAT REASON TO BELIEVE CANNOT BE BASED ON A MERE CHANGE OF OPINION WITHOUT THERE BEING ANY TANGIBLE MATERIAL O R CHANGE IN LAW COMING TO THE NOTICE OF THE ASSESSING OFFICER AFTER COMPLETIO N OF THE ORIGINAL ASSESSMENT, THE FOLLOWING PRONOUNCEMENT BY THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) IS WORTHY OF NOTIC E : HOWEVER, ONE NEEDS TO GIVE A SCHEMATIC INTERPRETATI ON TO THE WORDS REASON TO BELIEVE FAILING WHICH, WE ARE AFR AID, SECTION 147 WOULD GIVE ARBITRARY POWERS TO THE ASSESSING OFFICE R TO REOPEN ASSESSMENTS ON THE BASIS OF MERE CHANGE OF OPINION , WHICH CANNOT BE PER SE REASON TO REOPEN. WE MUST ALSO KEEP IN MIND THE CONCEPTUAL DIFFERENCE BETWEEN POWER TO REVIEW AND POWER TO REA SSESS. THE ASSESSING OFFICER HAS NO POWER TO REVIEW; HE HAS TH E POWER TO REASSESS. BUT REASSESSMENT HAS TO BE BASED ON FULFI LLMENT OF CERTAIN PRE-CONDITIONS AND IF THE CONCEPT OF CHANGE OF OPI NION IS REMOVED, AS CONTENDED ON BEHALF OF THE DEPARTMENT, THEN, IN THE GARB OF REOPENING THE ASSESSMENT, REVIEW WOULD TAKE PLACE. ONE MUST T REAT THE CONCEPT OF CHANGE OF OPINION AS AN IN-BUILT TEST TO CHECK ABUSE OF POWER BY THE ASSESSING OFFICER. HENCE, AFTER 1 ST APRIL, 1989, THE ASSESSING OFFICER HAS POWER TO REOPEN, PROVIDED THERE IS TANGIBLE MA TERIAL TO COME TO THE CONCLUSION THAT THERE IS ESCAPEMENT OF INCOME F ROM ASSESSMENT. REASONS MUST HAVE A LIVE LINK WITH THE FORMATION OF THE BELIEF. 12. AS PER THE HONBLE SUPREME COURT, THE ASSESSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT PROVIDED THERE IS TANGIBLE MAT ERIAL TO INFER AN ESCAPEMENT OF INCOME AND MORE IMPORTANTLY IT HAS BE EN EMPHASIZED THAT IN THE GUISE REOPENING OF AN ASSESSMENT A REVIEW OF A SSESSMENT IS IMPERMISSIBLE. THE HONBLE DELHI HIGH COURT IN THE CASE OF ORIENT CRAFT LTD. (SUPRA) HAS ELABORATELY EXPLAINED THE EMPHASIS LAID BY THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPR A) ON TWO ASPECTS IN THE FOLLOWING WORDS :- THAT THERE CAN BE NO REVIEW OF AN ASSESSMENT IN TH E GUISE OF REOPENING AND THAT A BARE REVIEW WITHOUT ANY TANGIB LE MATERIAL WOULD AMOUNT TO ABUSE OF THE POWER. ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 13. IN THE ABOVE BACKGROUND, WE MAY EXAMINE THE RE ASONS RECORDED BY THE ASSESSING OFFICER IN ORDER TO INITIATE PROCEEDI NGS UNDER SECTION 147 OF THE ACT, WHICH READ AS UNDER :- THE POSITION OF RETURNS OF INCOME FILED BY THE ASS ESSEE FIRM AND ASSESSMENTS COMPLETED IS AS UNDER : - ASSTT. YEAR DATE OF RETURN FILED INCOME RETURNED DATE OF PROCESSING OF U/S 143(1) DATE OF ORDER U/S 143(3) /INCOME ASSESSED. 2003-04 28.11.2003 6,60,090/- 26.03.2004 -- 2004-05 01.11.2004 6,08,610/- 21.03.2005 143(3) COM PLETED ON 13.09.2006 ON INCOME OF RS.6,08,610/- 2005-06 31.10.2005 25,240/- 27.02.2006 143(3) COMPL ETED ON 27.07.2007 ON INCOME OF RS.25,240/-, 2. IN THE RETURNS OF INCOME, THE ASSESSEE HAS CLAIM ED DEDUCTION U/S 80IB(10) OF THE I.T. ACT, 1961. THE CLAIM U/S 80IB(10) FOR THE ABOVE YEARS IS AS UNDER :- ASSTT. YEAR DEDUCTION U/S 80IB(10) CLAIMED AND ALLO WED. 2003-04 RS.2,70,375/- 2004-05 RS.40,84,721/- 2005-06 RS.13,16,549/- 3. THE CLAUSE (A) OF SUB-SECTION (10) OF SEC. 80IB OF THE I.T. ACT, 1961 READS AS UNDER :- (A) SUCH UNDERTAKING HAS COMMENCED OR COMMENCES DEV ELOPMENT AND CONSTRUCTION OF THE HOUSING PROJECT ON OR AFTER THE 1 ST DAY OF OCTOBER, 1998 AND COMPLETES SUCH CONSTRUCTION (I) IN A CASE WHERE A HOUSING PROJECT HAS BEEN APPR OVED BY THE LOCAL AUTHORITY BEFORE THE 1 ST DAY OF APRIL, 2004, ON OR BEFORE THE 31 ST DAY OF MARCH, 2008; (II) IN A CASE WHERE A HOUSING PROJECT HAS BEEN, OR , IS APPROVED BY THE LOCAL AUTHORITY ON OR AFTER THE 1 ST DAY OF APRIL, 2004 WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WH ICH THE HOUSING PROJECT IS APPROVED BY THE LOCAL AUTHORITY. EXPLANATION : FOR THE PURPOSES OF THIS CLAUSE (I) IN A CASE WHERE THE APPROVAL IN RESPECT OF THE HOUSING PROJECT IS OBTAINED MORE THAN ONCE, SUCH HOUSING PROJECT SHALL BE DEEMED TO HAVE BEEN APPROVED ON THE DATE ON WHICH THE BUILDIN G PLAN OF SUCH HOUSING PROJECT IS FIRST APPROVED BY THE LOCAL AUTH ORITY; ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 (II) THE DATE OF COMPLETION OF CONSTRUCTION OF THE HOUSING PROJECT SHALL BE TAKEN TO BE THE DATE ON WHICH THE COMPLETION CERTIF ICATE IN RESPECT OF SUCH HOUSING PROJECT IS ISSUED BY THE LOCAL AUTHORI TY. 4. IN ORDER TO VERIFY THE CLAIM OF THE ASSESSEE, SU RVEY ACTION U/S 133A OF THE I.T. ACT, 1961 WAS CONDUCTED ON 28.05.2008. THE FOLLOWING ISSUES EMERGED AS FINDINGS OF SURVEY ACTION. 5. THE ASSESSEE FIRM HAS TAKEN APPROVAL FOR CONSTRU CTION OF 47 RESIDENTIAL UNITS AS PER SOLAPUR MUNICIPAL CORPORATION, SOLAPUR S LETTER NO. 89 DATED 24.01.2001, NO. 304 DATED 20.03.2001, NO. 1400 DATED 04.12.2001 , AND NO. 971 DATED 24.12.2002 IN RESPECT OF PROJECT CARRIED OUT IN THE GAT NO. 52/2, CITY SURVEY NO.2, BHAVANI PETH, SOLAPUR. THE PROJECT NAME IS NATH RE GENCY. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT THE ASSESSEE HAS COMPLE TED CONSTRUCTION OF 28 RESIDENTIAL UNITS OUT OF 47 UNITS FOR WHICH SANCTION WAS OBTAIN ED. NO CONSTRUCTION HAVE BEEN MADE ON BALANCE 19 PLOTS. 6. THE ASSESSEE ALSO OBTAINED COMPLETION CERTIFICAT E FOR THESE 28 UNITS VIDE LETTERS NO. 193 DATED 26.11.2002, NO. 21 DATED 23.04.2003, NO. 22 DATED 23.04.2003, NO. 173 DATED 15.01.2007 AND NO. 179 DA TED 26.03.2007 FROM SOLAPUR MUNICIPAL CORPORATION. A STATEMENT OF SHRI PRADIP N . PIMPARKAR PARTNER OF THE ASSESSEE FIRM WAS RECORDED ON 28.05.2008 AND HE WAS ASKED ABOUT DETAILS OF COMPLETION OF THE REMAINING 19 UNITS APPROVED IN TH E ORIGINAL SANCTIONED PLAN DATED 24.01.2001. SHRI PRADIP N. PIMPARKAR STATED ON OATH THAT THE REMAINING 19 UNITS HAVE NOT BEEN CONSTRUCTED TILL DATE. FROM THESE FACTS, I T EMERGED THAT THE PROJECT FOR WHICH THE ASSESSEE HAD CLAIMED DEDUCTION U/S 80IB(10) IS NOT COMPLETE AS PER THE PLAN AS APPROVED BY THE LOCAL AUTHORITY. HENCE, THE ASSESSE E DOES NOT QUALIFY FOR CLAIM OF DEDUCTION U/S 80IB(10) OF THE I.T. ACT, 1961. 7. I HAVE, THEREFORE, REASON TO BELIEVE THAT THE IN COME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR THE A.YRS. 2003-04 TO 20 05-06 WITHIN THE MEANING OF SEC. 147 AND EXPLANATIONS THERETO OF THE I.T. ACT, 1961. SD/- (DR. NITIN WAGHMODE) ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-1, SOLAPUR. 14. THE ASSESSING OFFICER HAS RECORDED THAT A SURVE Y ACTION WAS CONDUCTED ON 28.05.2008 TO VERIFY ASSESSEES CLAIM UNDER SECT ION 80IB(10) OF THE ACT. AS PER THE ASSESSING OFFICER, ASSESSEE FIRM HAD TAKEN APPROVAL FOR CONSTRUCTION OF 47 RESIDENTIAL UNITS FROM SOLAPUR MUNICIPAL CORP ORATION (I.E. LOCAL AUTHORITY) IN RESPECT OF THE HOUSING PROJECT NATH REGENCY. I T IS FURTHER NOTED THAT DURING THE COURSE OF SURVEY IT WAS NOTICED THAT ASSESSEE H AS COMPLETED CONSTRUCTION OF 28 RESIDENTIAL UNITS OUT OF 47 RESIDENTIAL UNITS FOR WHICH SANCTION WAS ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 OBTAINED AND NO CONSTRUCTION WAS MADE ON BALANCE 19 PLOTS. THE ASSESSING OFFICER FURTHER REFERS TO THE COMPLETION CERTIFICAT E FOR SUCH 28 CONSTRUCTED UNITS OBTAINED FROM THE LOCAL AUTHORITY AND BASED ON TH E STATEMENT OF SHRI PRADIP N. PIMPARKAR, PARTNER OF THE ASSESSEE FIRM, HE HAS NOTED THAT CONSTRUCTION OF THE 19 UNITS HAS NOT BEEN DONE TILL DATE. FOR ALL T HE ABOVE REASONS IT IS CONCLUDED THAT THE PROJECT FOR WHICH THE ASSESSEE H AD CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT IS NOT COMPLETE A S PER THE PLAN AS APPROVED BY THE LOCAL AUTHORITY AND HENCE THE ASSESSING OF FICER POSTULATES THAT ASSESSEE DOES NOT QUALIFY FOR THE CLAIM OF DEDUCTIO N UNDER SECTION 80IB(10) OF THE ACT. IN THE ABOVE MANNER, ASSESSING OFFICER FOR MED A BELIEF THAT AN INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT WIT HIN THE MEANING OF SECTION 147 OF THE ACT. 15. IN SUM AND SUBSTANCE, THE ASSESSING OFFICER FOR MULATED A BELIEF THAT THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT HAS BEEN WRONGFULLY ALLOWED IN THE ASSESSMENT ORDER DATED 13.09.2006, ON THE BA SIS OF THE SURVEY ACTION CARRIED OUT ON 28.05.2008, WHICH REVEALED THAT ASSE SSEE HAD COMPLETED CONSTRUCTION OF ONLY 28 RESIDENTIAL UNITS OUT OF 47 UNITS FOR WHICH THE SANCTION WAS OBTAINED AND THAT THE BALANCE PLOTS WERE SOLD W ITHOUT CONSTRUCTION, WHICH MADE THE ASSESSEE INELIGIBLE FOR DEDUCTION UNDER SE CTION 80IB(10) OF THE ACT. AS PER THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE NON-COMPLETION OF CONSTRUCTION OF COMPLETE 47 UNITS ON ACCOUNT OF SAL E OF PLOTS, CAME TO KNOWLEDGE OF THE ASSESSING OFFICER ONLY DURING THE SURVEY AND THUS THE SAME CONSTITUTED A TANGIBLE MATERIAL TO CONCLUDE THAT TH ERE IS AN ESCAPEMENT OF INCOME QUA WRONG ALLOWANCE OF DEDUCTION UNDER SECTI ON 80IB(10) OF THE ACT. 16. AT THIS STAGE, IT WOULD ALSO BE APPROPRIATE TO REFER TO THE ASSESSMENT MADE BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT. THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE ASSESSMENT YEA R 2004-05 AND THE ACCOMPANYING DOCUMENTS HAVE BEEN PLACED IN THE PAPE R BOOK AT PAGES 52 TO 56. IN THE COMPUTATION OF INCOME PLACED AT PAGE 51, ASSESSEE DECLARED A ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 GROSS TOTAL INCOME WITH REFERENCE TO THE P&L ACCOUN T AT RS.46,98,334/- AGAINST WHICH DEDUCTION UNDER SECTION 80IB(10) OF T HE ACT AMOUNTING TO RS.40,84,721/- WAS CLAIMED THEREBY DECLARING A TOTA L INCOME OF RS.6,08,610/-. THE FOLLOWING NOTE ANNEXED BELOW THE COMPUTATION OF INCOME IS SIGNIFICANT :- THE FIRM IS ENGAGED IN THE BUSINESS OF CONSTRUCTIO N OF FLATS, SHOPS AND OFFICES, ETC. AND ACTS AS DEVELOPERS AND PROMOTERS. THE FIRM HAS STARTED HOUSING PROJECT ON THE LAND BELONGING TO SHRI DEEPAK JAMBUK UMAR SHAH BEARING C.S. NO. TP-II, FINAL PLOT NO. 52/2, BHAVANI PETH, SOLAP UR. SAID PROJECT IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) AS IT COMPLIES WITH ALL THE CONDITIONS STIPULATED IN THE SAID SECTION AS UNDER : 1) THE APPROVAL IN THE FORM OF BUILDING PERMISSIO N HAS BEEN OBTAINED FROM LOCAL AUTHORITY ON 20/3/2001 VIZ. BEF ORE 31 ST MARCH, 2001. 2) DEVELOPMENT AND CONSTRUCTION OF THE HOUSING PR OJECT HAS COMMENCED ON 20 TH MARCH, 2001 VIZ. AFTER 1 ST OCTOBER, 1998. 3) THE PROJECT IS ON THE SIZE OF PLOT OF LAND HAV ING AN AREA OF ABOUT 2 ACRES, WHICH IS MORE THAN STIPULATED MINIMU M AREA OF 1 ACRE. 4) THE RESIDENTIAL UNIT HAS A MAXIMUM BUILD UP AR EA OF ABOUT 1058 SQ.FT. WHICH IS LESS THAN STIPULATED MAXIMUM A REA OF 1500 SQ.FT. PROFITS FROM THE SAID HOUSING PROJECT ARE THUS EL IGIBLE FOR DEDUCTING U/S. 80IB(10). DURING THE YEAR ASSESSEE HAS SOLD TWENTY HOUSES FROM THE SAID HOUSING PROJECT AND HAS CLAIMED DEDUCTION OF RS.4084721 U/S . 80IB OF THE INCOME TAX ACT, 1961. CERTIFICATE FROM CHARTERED ACCOUNTANT IN FORM 10CCB IN SUPPORT OF SAID DEDUCTION IS ENCLOSED HEREWITH. COPIES OF APPROVED PLANS AND PERMISSION ARE ALREAD Y FURNISHED ALONG WITH RETURN FOR A.Y. 2003-04. NO DE DUCTION HAS BEEN CLAIMED IN RESPECT OF PROFITS DERIVED FROM THE SALE OF OPEN PL OTS. [UNDERLINED FOR EMPHASIS BY US] 17. IN THE P&L ACCOUNT ACCOMPANYING THE COMPUTATION OF INCOME, ASSESSEE CREDITED THE SALE REVENUE ON ACCOUNT OF SA LE OF HOUSES AND SALE OF PLOTS SEPARATELY. THEREFORE, IN THE RETURN OF INCOM E AND THE ACCOMPANYING DOCUMENTS, WHICH INCLUDED A CERTIFICATE IN FORM NO. 10CCB IN SUPPORT OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ISSUED BY THE C.A., THE ASSESSEE HAD FULLY DISCLOSED THE FACT OF SALE PLOTS AND THE PROFITS FROM THE PROJECT ON WHICH DEDUCTION UNDER SECTION 80IB(10) OF THE ACT W AS CLAIMED, WHICH WAS EXCLUDING THE PROFIT ON SALE OF PLOTS. ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 18. NOW, WE MAY REFER TO THE ASSESSMENT ORDER PASSE D BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE ACT DATED 13.09 .2006, WHEREIN THE FOLLOWING DISCUSSION IS RELEVANT :- THE FALL-IN GROSS PROFIT WAS ATTRIBUTED BY THE A SSESSEE TO THE FACT THAT THE PROFIT IS MORE IN RESPECT OF SALE OF PLOTS AS A GAINST HOUSES. SINCE THE NUMBER OF PLOTS SOLD DURING THE RELEVANT ASSESSMENT YEAR WAS MUCH LESS THAN THE EARLIER YEAR, THERE WAS A FALL IN THE GROSS PROFIT. THE CLAIM OF THE ASSESSEE IS FOUND TRUE UPON VERIFICATION. AS AGAINST 10 PLOTS AND 2 HOUSES SOLD DURING THE EARLIER YEAR, THE ASSESSEE HAS SOLD 20 HOUSES AND 6 PLOTS DURING THE RELEVANT YEAR. IN VIEW OF THE ABOVE, THE BOOK RESULTS OF THE ASSESSEE ARE ACCEPTE D. THE ASSESSEE HAS EXECUTED ONLY ONE HOUSING PROJEC T DURING THE RELEVANT ASSESSMENT YEAR AND HAS CLAIMED DEDUCTION UNDER SECTION 80IB(10) ON THE ELIGIBLE PROFITS OF BUSINESS. UPON SCRUTINY IT WAS FOUND THAT THE ASSESSEE FULFILLS ALL CONDITIONS LAID DOWN FOR DEDUCTION UNDER SECTION 80 IB(10). THUS THE SAME IS ALLOWED. [UNDERLINED FOR EMPHASIS BY US] 19. NOTABLY, THE ASSESSING OFFICER ALLOWED THE CLAI M OF THE ASSESSEE UNDER SECTION 80IB(10) OF THE ACT UPON SCRUTINY . THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE SOLD HOUSES AS WELL AS PLOTS IN THE IN STANT YEAR AS WELL AS IN THE PAST YEAR; ASSESSEE HAD EXECUTED ONLY ONE HOUSING P ROJECT AND CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS WIT H RESPECT TO THE ELIGIBLE PROFITS OF BUSINESS. AS PER THE DISCUSSION MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ON THE BASIS OF THE COMPUTATIO N OF INCOME AND OTHER ACCOMPANYING DOCUMENTS FILED BY THE ASSESSEE, IT IS QUITE CLEAR THAT THE ASSESSING OFFICER WAS AWARE THAT IN THE HOUSING PRO JECT BEING EXECUTED, ASSESSEE HAD NOT ONLY SOLD HOUSES ON WHICH THE DEDU CTION UNDER SECTION 80IB(10) OF THE ACT WAS CLAIMED, BUT ALSO SOLD OPEN PLOTS ON WHICH NO DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS CLA IMED. WE SAY SO FOR THE REASON THAT IN THE NOTE ACCOMPANYING THE COMPUTATIO N OF INCOME, WHICH WE HAVE EXTRACTED IN THE EARLIER PART OF THIS ORDER, A SSESSEE CLEARLY BROUGHT OUT THAT IT HAD SOLD 20 HOUSES FROM THE PROJECT IN QUES TION AND HAD CLAIMED DEDUCTION OF RS.40,84,721/- THEREOF AND THAT THE PR OFITS DERIVED FROM THE SALE OF OPEN PLOTS WAS NOT CONSIDERED FOR THE CLAIM OF D EDUCTION UNDER SECTION 80IB(10) OF THE ACT. THE ASSESSING OFFICER NOTED TH AT ASSESSEE WAS EXECUTING ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 ONLY ONE HOUSING PROJECT DURING THE RELEVANT ASSESS MENT YEAR AND THE DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS CLA IMED ON THE ELIGIBLE PROFITS, AND THAT SUCH PROJECT ENTAILED SALE OF HOU SES AS WELL AS SALE OF PLOTS BUT SO FAR AS THE SALE OF PLOTS WAS CONCERNED, THER E WAS NO CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT. IT WAS UNDER THE SE CIRCUMSTANCES THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT WAS ALLOWED BY THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE FULFILLS ALL CONDITIONS LAID DOWN FOR DEDUCTION UNDER SECTION 80IB(10). 20. IN THIS BACKGROUND, THE ASSERTION OF THE ASSESS ING OFFICER IN THE REASONS RECORDED THAT THE SURVEY ACTION ON 28.05.20 08 REVEALED THAT ASSESSEE HAD SOLD CERTAIN PLOTS OUT OF THE PROJECT WHICH THEREFORE LED TO AN INFERENCE THAT ASSESSEE VIOLATED THE CONDITION OF S ECTION 80IB(10) OF THE ACT, IS SUSPECT. AS NOTED EARLIER, ASSESSING OFFICER WAS AWARE THAT ASSESSEE HAD SOLD OPEN PLOTS ALSO AND CONCLUDED THAT THE ASSESSE E WAS ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF THE AC T IN RELATION TO ELIGIBLE PROFITS OF BUSINESS OF NATH REGENCY PROJECT, THE RE WAS NO FRESH TANGIBLE MATERIAL WHICH CAME TO KNOWLEDGE OF THE ASSESSING O FFICER AFTER THE COMPLETION OF ASSESSMENT ON 13.09.2006, WHICH ESTAB LISHES INELIGIBILITY OF ASSESSEES CLAIM FOR DEDUCTION UNDER SECTION 80IB(1 0) OF THE ACT. THE SURVEY ACTION UNDER SECTION 133A OF THE ACT ON 28.05.2008 CANNOT BE SAID TO HAVE REVEALED A FACT SITUATION WHICH WAS NOT IN THE KNOW LEDGE OF THE ASSESSING OFFICER ON THE BASIS OF THE MATERIAL BEFORE HIM. IN FACT, THE ASSESSING OFFICER SPECIFICALLY NOTED IN THE ORIGINAL ASSESSMENT PROCE EDINGS THAT THE ASSESSEE HAS EXECUTED ONLY ONE HOUSING PROJECT DURING THE YE AR; THAT ASSESSEE HAD SOLD OPEN PLOTS AS WELL AS HOUSES AND WAS ALSO AWAR E THAT THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 80IB(10) OF THE ACT ONLY ON THE ELIGIBLE PROFITS OF BUSINESS, WHICH WAS EXPLAINED BY THE AS SESSEE IN THE COMPUTATION OF INCOME TO MEAN PROFITS FROM SALE OF RESIDENTIAL UNITS SOLD DURING THE YEAR. ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 21. IN VIEW OF THE AFORESAID FACTUAL CONTOURS OF TH E CONTROVERSY, IT IS CLEAR THAT THE ASSESSING OFFICER ENTERTAINED THE BELIEF O F ESCAPEMENT OF INCOME IN THE REASONS RECORDED IN THE ABSENCE OF ANY TANGIBLE MATERIAL AND MERELY REVIEWING THE SAME SET OF FACTS, WHICH EXISTED TO H IS KNOWLEDGE AT THE TIME OF ORIGINAL ASSESSMENT. FACTUALLY SPEAKING, IN THIS CA SE WHAT IS ATTEMPTED IS A BARE REVIEW WITHOUT ANY TANGIBLE MATERIAL, WHICH IS IMPERMISSIBLE KEEPING IN MIND THE RATIO OF THE JUDGEMENTS OF THE HONBLE SUP REME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA) AND THAT OF THE HO NBLE DELHI HIGH COURT IN THE CASE OF ORIENT CRAFT LTD. (SUPRA). THE AVERMENTS IN THE REASONS RECORDED THAT THE SURVEY PROCEEDINGS REVEALED SALE OF OPEN PLOTS AND NON-COMPLETION OF PROJECT, CANNOT BE CONSIDERED TO BE TANGIBLE MATERI AL WHICH CAME TO THE POSSESSION OF THE ASSESSING OFFICER SUBSEQUENT THE ORIGINAL ASSESSMENT ORDER DATED 13.09.2006 INASMUCH AS THE FACTUAL POSITION N OTED BY US SHOWS THAT THE SAME WAS VERY MUCH WITHIN THE KNOWLEDGE OF THE ASSE SSING OFFICER WHILE SCRUTINIZING THE CLAIM OF THE ASSESSEE FOR DEDUCTIO N UNDER SECTION 80IB(10) OF THE ACT. THUS, HAVING REGARD TO THE FACTS AND CIRCU MSTANCES OF THE CASE AND THE MATERIAL ON RECORD, THE ASSUMPTION OF JURISDICT ION BY THE ASSESSING OFFICER TO REOPEN THE ORIGINAL ASSESSMENT BY RECORDING OF I MPUGNED REASONS REFLECTS ONLY A BARE REVIEW OF AN EARLIER ASSESSMENT UNDER T HE GUISE OF REOPENING AND IS BASED ON A MERE CHANGE OF OPINION, WHICH IS IMPE RMISSIBLE IN THE LIGHT OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF KELVINATOR OF INDIA LTD. (SUPRA). 22. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT I N THE ABSENCE OF ANY TANGIBLE MATERIAL AVAILABLE WITH THE ASSESSING OFFI CER TO FORM THE REQUISITE BELIEF REGARDING ESCAPEMENT OF INCOME, THE REOPENIN G OF ORIGINAL ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT DATED 13.09.20 06 IS BAD IN LAW. CONSEQUENTLY, THE IMPUGNED ASSESSMENT MADE BY THE A SSESSING OFFICER IS UNSUSTAINABLE AND IS HEREBY QUASHED. 23. THUS, GROUNDS OF APPEAL NO. 1 & 1.1 ARE ALLOWED . ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 24. SINCE THE ASSESSEE HAS SUCCEEDED ON THE PRELIMI NARY ISSUE OF THE VALIDITY OF JURISDICTION, THE GROUNDS OF APPEAL RAI SED WITH RESPECT TO THE MERITS OF THE CLAIM ARE RENDERED ACADEMIC AND ARE NOT BEIN G ADJUDICATED FOR THE PRESENT. 25. ACCORDINGLY, THE APPEAL IN ITA NO. 577/PN/2011 PERTAINING TO M/S NATH DEVELOPERS FOR ASSESSMENT YEAR 2004-05 IS ALLOWED, AS ABOVE. 26. SIMILAR REASONS HAVE BEEN RECORDED FOR REOPENIN G THE ASSESSMENTS OF OTHER ASSESSMENT YEARS I.E. A.YS. 2003-04 & 2005-06 AND THEREFORE EVEN FOR THE OTHER TWO ASSESSMENT YEARS THE REOPENING OF ASS ESSMENT BY INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT IS LIA BLE TO BE TREATED AS UNSUSTAINABLE IN LAW. 27. BEFORE PARTING, WE MAY REFER TO THE ASSESSMENT YEAR 2003-04 WHEREIN NO ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS M ADE BUT THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(1) OF THE AC T. IN THIS YEAR, ASSESSEE CLAIMED A DEDUCTION UNDER SECTION 80IB(10) OF THE A CT WITH RESPECT TO THE SAME PROJECT I.E. NATH REGENCY OF RS.2,72,375/-. THE CLAIM OF DEDUCTION WAS MADE ON IDENTICAL FOOTING AS WAS MADE BY THE ASSESS EE FOR OTHER TWO ASSESSMENT YEARS I.E. A.YS. 2004-05 & 2005-06 WHERE IN THE ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) OF THE ACT. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2003-04, COPY OF WHICH HAS BEEN PLA CED IN THE PAPER BOOK AT PAGES 40 TO 49 SHOWS THAT THE CLAIM HAS BEEN MAD E IN AN IDENTICAL MANNER TO THAT MADE IN THE ASSESSMENT YEARS 2004-05 & 2005 -06. IN FACT, THE NOTE ANNEXED TO THE COMPUTATION OF INCOME EXPLAINS THE M ANNER OF CLAIMING OF DEDUCTION, WHICH IS ON THE SAME BASIS AS IN THE OTH ER YEARS. ONCE THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IB(10) O F THE ACT MADE UNDER SIMILAR CIRCUMSTANCES FOR ASSESSMENT YEARS 2004-05 & 2005-06 HAVE BEEN SCRUTINIZED UNDER SECTION 143(3) OF THE ACT AND UPH ELD THEN THE REOPENING OF ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 ASSESSMENT FOR ASSESSMENT YEAR 2003-04 ALSO SUFFERS FROM THE SAME INFIRMITY NAMELY, ABSENCE OF ANY TANGIBLE MATERIAL TO FORMULA TE REQUISITE BELIEF OF ESCAPEMENT OF INCOME. THE DIFFERENCE THAT ASSESSMEN T FOR ASSESSMENT YEAR 2003-04 WAS MADE UNDER SECTION 143(1) AND NOT UNDER SECTION 143(3) OF THE ACT IS NOT MATERIAL HAVING REGARD TO THE PARITY OF REASONING LAID DOWN IN THE JUDGEMENT OF THE HONBLE DELHI HIGH COURT IN THE CA SE OF ORIENT CRAFTS LTD. (SUPRA). IN THE CASE OF ORIENT CRAFT LTD. (SUPRA) A LSO THE ORIGINAL ASSESSMENT WAS COMPLETED BY WAY OF SECTION 143(1) AND NOT UNDE R SECTION 143(3) OF THE ACT, AND IN THE ABSENCE OF ANY TANGIBLE MATERIAL AV AILABLE WITH THE ASSESSING OFFICER, THE REOPENING OF THE ASSESSMENT MADE UNDER SECTION 143(3) OF THE ACT WAS HELD TO BE BAD IN LAW. THUS, ON THE BASIS O F DISCUSSION FOR ASSESSMENT YEAR 2004-05, IN THIS YEAR ALSO THE INITIATION OF P ROCEEDINGS UNDER SECTION 147 OF THE ACT ARE HELD TO BE UNSUSTAINABLE. 28. CONSEQUENTLY, ASSESSMENTS MADE UNDER SECTION 14 3(3) READ WITH SECTION 147 OF THE ACT FOR ASSESSMENT YEARS 2003-04 AND 2005-06 ARE HEREBY QUASHED ACCORDINGLY. SINCE THE ASSESSMENTS HAVE BEE N QUASHED, THE GROUNDS RAISED BY THE ASSESSEE ON MERITS OF THE CLA IM ARE RENDERED ACADEMIC AND ARE NOT ADJUDICATED FOR THE PRESENT. 29. THUS, THE APPEALS OF M/S NATH DEVELOPERS IN ITA NO. 576 & 578/PN/2011 FOR ASSESSMENT YEAR 2003-04 AND 2005-06 ARE DISPOSED OFF IN THE SAME MANNER AS ITA NO.577/PN/2011 FOR ASSESSMEN T YEAR 2004-05. 30. RESULTANTLY, THE APPEALS OF THE ASSESSEE IN ITA NOS. 576 TO 578/PN/2011 PERTAINING TO THE ASSESSMENT YEARS 2003 -04 TO 2005-06 ARE HEREBY ALLOWED AS ABOVE. 31. NOW, WE MAY TAKE UP THE APPEALS OF THE ASSESSEE IN THE CASE OF M/S NATH ASSOCIATES IN ITA NOS. 579 TO 582/PN/2011 PERT AINING TO THE ASSESSMENT YEARS 2003-04 TO 2005-06 & 2007-08, WHICH ARE DIREC TED AGAINST A COMMON ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I II, PUNE DATED 25.10.2010 WHICH, IN TURN, HAVE ARISEN FROM THE RES PECTIVE ORDERS DATED 30.12.2009 PASSED BY THE ASSESSING OFFICER, UNDER S ECTION 143(3) READ WITH SECTION 147 OF THE ACT. 32. IN SO FAR AS THE INITIATION OF PROCEEDINGS UNDE R SECTION 147/148 OF THE ACT FOR THE CAPTIONED YEARS IS CONCERNED, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE FACTS AND CIRCUMSTANCES AND THE RI VAL STANDS ARE IDENTICAL TO THOSE CONSIDERED BY US IN THE CASE OF NATH DEVELOP ERS (SUPRA) IN THE EARLIER PARAGRAPHS. THE ASSESSING OFFICER HAS RECORDED REAS ONS FOR FORMING A BELIEF FOR ESCAPEMENT OF INCOME IN AN IDENTICAL FASHION AS WAS DONE IN THE CASE OF NATH DEVELOPERS (SUPRA). RELEVANT MATERIAL HAS BE EN PLACED IN THE PAPER BOOK FILED. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT FOR ASSESSMENT YEAR 2003-04 WAS COMPLETED BY THE ASSESSING OFFICER ON 29.03.2005, WHEREIN THE CLAIM OF DEDUCTION UNDER SECTION 80IB(10) OF TH E ACT WAS ALLOWED AFTER SCRUTINIZING THE RELEVANT DETAILS. IN FACT, IN THE ASSESSMENT ORDER DATED 29.03.2005 IT IS ALSO NOTICED THAT THE ASSESSING OF FICER PERSONALLY VISITED THE PROJECT SITE OF THE ASSESSEE TO VERIFY THE GENUINEN ESS OF THE CLAIM. AFTER A DETAILED DISCUSSION AS PER PARAS 3 TO 6 OF THE ASSE SSMENT ORDER, THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 80IB(10) O F THE ACT WAS ALLOWED. SIMILARLY, THE RETURN OF INCOME FILED, THE COPIES O F COMPUTATION OF INCOME AND THE ACCOMPANYING DOCUMENTS FILED REVEALS THAT THE M ANNER OF CLAIMING DEDUCTION MADE UNDER SECTION 80IB(10) OF THE ACT IS SIMILAR TO THAT NOTICED BY US IN THE CASE OF NATH DEVELOPERS (SUPRA) IN THE EARLIER PARAGRAPHS, AND THE OBJECTIONS OF THE REVENUE ALSO REMAIN THE SAME. FOR ALL THE ABOVE REASONS, THE RIVAL PARTIES SUBMITTED THAT THE DECISION OF TH E TRIBUNAL ON THE ISSUE OF VALIDITY OF INITIATION OF PROCEEDINGS UNDER SECTION 147 OF THE ACT RENDERED IN THE CASE OF NATH ASSOCIATES IN THE EARLIER PARAGR APHS WOULD APPLY MUTATIS- MUTANDIS IN THESE APPEALS ALSO. ITA NOS. 576 TO 578/PN/2011 ITA NOS. 579 TO 582/PN/2011 33. THUS, FOLLOWING THE PARITY OF REASONING IN THE CASE OF NATH ASSOCIATES (SUPRA) IN THE EARLIER PARAGRAPHS IN THE PRESENT AP PEALS ALSO THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 OF THE ACT ARE HE LD TO BE INVALID AND THE CONSEQUENT ASSESSMENTS MADE ARE HEREBY QUASHED. 34. RESULTANTLY, THE APPEALS OF THE ASSESSEE IN NA TH ASSOCIATES VIDE ITA NOS. 579 TO 582/PN/2011 PERTAINING TO THE ASSESSMEN T YEARS 2003-04 TO 2005-06 & 2007-08 ARE HEREBY ALLOWED AS ABOVE. SINC E THE ASSESSMENTS HAVE BEEN QUASHED, THE GROUNDS RAISED BY THE ASSESS EE ON MERITS OF THE CLAIM UNDER SECTION 80IB(10) OF THE ACT ARE RENDERE D ACADEMIC AND ARE NOT BEING ADJUDICATED. 35. RESULTANTLY, THE CAPTIONED APPEALS RELATING TO THE TWO ASSESSEES ARE ALLOWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MAY, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 31 ST MAY, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III, PUNE; 4) THE CIT-III, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// PRIVATE SECRETARY I.T.A.T., PUNE