STERLING INFRASTRUCTURE PRIVATE LIMITED,DELHI V. ACIT, CENTRAL CIRCLE-15, DELHI

ITA 3982/DEL/2024

AI Insights

The case involves Sterling Infrastructure Private Limited, which appealed against the reassessment order for the assessment year 2014-15. The primary issue was the payment of External Development Charges (EDC) to HUDA without deducting TDS, under the belief that such payments were exempt as per Section 196 of the Income Tax Act. The Assessing Officer (AO) reopened the assessment under Section 148, treating the EDC as income and subject to TDS, which was upheld by the Commissioner of Income Tax (Appeals). The Tribunal, however, found the reassessment to be an illegal exercise of jurisdiction as it was based on a mere change of opinion and not on any new material facts.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713140 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2014-2015
• Other Referred Cases: CIT Vs Kelvinator of India Ltd. [2010] 320 ITR 561 (SC), Puri Constructions (P) Ltd. Versus ACIT [2024]159 taxmann.com 444 (Delhi), Suchitra Components Ltd. Vs CCE [2007] 208 ELT 321 (SC), CIT Vs SIL Investments Ltd. [2011] 9 taxmann.com 143 (Delhi), DLF Homes Panchkula (P) Ltd. Vs Jt. CIT (OSD) [2023] 149 taxmann.com176 (Delhi), BPTP Vs Pr. CIT [2020] 113 taxmann.com 587 (Delhi), PCIT Vs BPTP Ltd. [2021] 123 taxmann.com 394 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHESH KUMAR
• Assessee Lawyers: RANJAN CHOPRA; JASPAL SINGH SETHI
• Keywords: Difference of opinion; Change of opinion; Retrospective amendment; Reassessment proceedings; Principle of natural justice; TDS; Non-deduction of tax
• Section: 147; 148; 143(3); 194C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: G : NEW DELHI BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.3982/Del/2024 Assessment Years: 2014-15 Sterling Infrastructure Private Limited, 20A, Rajpur Road, Civil Lines, Delhi – 110 054. PAN: AAKCS7108Q Vs ACIT, Central Circle-15, Delhi. (Appellant) (Respondent) Assessee by : Shri Ranjan Chopra, Advocate & Shri Jaspal Singh Sethi, Advocate Revenue by : Shri Mahesh Kumar, CIT-DR Date of Hearing : 03.07.2025 Date of Pronouncement : 30.07.2025 ORDER PER ANUBHAV SHARMA, JM: This appeal is preferred by the assessee against the order dated 26.06.2024 of the Ld. Commissioner of Income-tax (Appeal)-26, Delhi for AY 2014-15. 2. Heard and perused the record. Appellant filed return for the AY on 30.09.20214 wherein total loss declared was Rs. 7,80,571/-. The case was selected for scrutiny and order was passed u/s 143(3) of the Income Tax Act, 1961 ( hereinafter referred as ‘the Act’) by the learned Assessing Officer on Printed from counselvise.com ITA No.3982/Del/2024 2 30.12.2016 wherein the return filed by the appellant had been duly accepted by the department. During the year, appellant had paid External Development Charges (EDC) to HUDA without TDS on the assumption that as provisions of non-deduction of tax u/s Section 196 of the Act was applicable to Government and other Authorities and HUDA is a development authority of State Government of Haryana. Notice u/s 148 of the Act was issued to the appellant on 30.03.2021 i.e. at the end of 6th year. In reassessment proceedings AO examined the issue that Assessee has paid External Development Charges (EDC) of Rs. 79,937,000 to HUDA without deducting TDS and held that as EDC has income character same should have been subjected to TDS. The same was sustained by ld. CIT(A) and for which assessee is in appeal raising following grounds; “1 That the assessment order as passed is against law and facts of the case. 2 That the assessing officer has erred in completing the proceedings u/s 147 of the I.T. Act and learned Commissioner of Income Tax (Appeals) erred in confirming the proceedings u/s. 147 / 143(3) of the I.T. Act beyond time limitation as per the provision of S. 147 of the I.T. Act specifically, when there was nothing new information which came into existence after the assessment u/s. 143(3) of the I.T. Act was completed on an earlier occasion. 3 That the assessing officer erred in making an addition of Rs. 11,77,69,000/- and the Commissioner of Income Tax (Appeals) erred in confirming the same without providing an opportunity to the assessee and bringing the facts of the case before the Commissioner of Income Tax (Appeals). The appellate order as passed is against the principle of natural justice since no time was allowed to the assessee to furnish written submissions against the grounds of appeal raised by the assessee. Printed from counselvise.com ITA No.3982/Del/2024 3 4 That the addition as made amounting to Rs.11,77,69,000/- is bad-in-law since the assessee is not a “assessee in default” as per the provisions of S.201(1) of the I.T. Act. 5 That the assessment order as passed is not sustainable on the facts and circumstances of the case.” 3. Ld. AR has submitted that in the present case, reassessment proceedings initiated is clearly based on mere change of opinion, which is not permissible in law. The appellant had fully and truly disclosed all the material facts necessary for assessment of income for the year under reference and the same were duly examined by the Assessing Officer. Thus, in the absence of any new/fresh material coming on record in respect of the aforesaid issue, the reassessment proceeding is, it is submitted, nothing but an attempt to reappraise the material already available on record, which is not permissible in law. It is also settled law that where reassessment proceedings are sought to be initiated for any assessment year beyond a period of 4 years from the end of such assessment year, the proviso to the Section 147 places further fetters on the powers of the assessing officer by providing that reassessment proceedings cannot be initiated unless the income has escaped assessment by reason of the failure of the assessee to disclose fully and truly all material facts necessary for assessment. Reliance was placed on the decision in CIT Vs Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) 4. Though ld. DR vehemently defended the impugned reopening and consequent orders and has relied the decision of Hon’ble Delhi High Court in Printed from counselvise.com ITA No.3982/Del/2024 4 the case of Puri Constructions (P) Ltd. Versus ACIT [2024]159 taxmann.com 444 (Delhi) to contend that it is now settled that EDC payments would be covered under section 194C of the Act, what we find that after the assessment was completed, an office memorandum had been issued by CBDT being OM F.No. 370133/37/2017-TPL dated 23.12.2017 wherein it was clarified that EDC payments by the builders/ developers in Haryana to HUDA is liable to TDS. Thereafter, another clarification was issued by Directorate of Town and Country Planning, Haryana on TDS deduction on EDC Payments vide letter dated 19.06.2018 according to which payment to HUDA in effect payment to State Government and therefore such payment is exempt from obligations to deduct TDS in view of Section 196 of the Act. 5. Thus as such there was nothing on the part of assessee which was lacking in disclosure in the return of income of assessment concluded u/s 143(3) of the Act as it was only subsequently, the issue about deductibility of TDS was judicially settled in favour of revenue and at the same time the Circular relied by ld. AO for reopening certainly doesn’t have retrospective effect as it is settled law that CBDT circulars are binding on the department but cannot override judicial interpretation or cannot be applied retrospectively to completed assessments. Reliance for this can be placed on Suchitra Components Ltd. Vs CCE [2007] 208 ELT 321 (SC) and CIT Vs SIL Investments Ltd. [2011] 9 taxmann.com 143 (Delhi). So reopening is not only bad being illegal exercise of jurisdiction u/s 147 of the Act being hit by Proviso to section 147 of the Act it is Printed from counselvise.com ITA No.3982/Del/2024 5 also bad for applying retrospectively a Circular which had no force of law binding on the AO for examining the issue in original assessment concluded u/s 143(3) of the Act, because same was not in place when assessment was conducted. 6. Then we find that in DLF Homes Panchkula (P) Ltd. Vs Jt. CIT (OSD) [2023] 149 taxmann.com176 (Delhi) where SLP stands dismissed by Hon’ble Supreme Court and in BPTP Vs Pr. CIT [2020] 113 taxmann.com 587 (Delhi) where SLP stands dismissed by Hon’ble Supreme Court - PCIT Vs BPTP Ltd. [2021] 123 taxmann.com 394 (SC) in similar set of fact and circumstances the impugned reassessment proceedings were quashed. 7. Thus we sustain the grounds and allowing the appeal of assessee quash the impugned orders. Order pronounced in the open court on 30.07.2025. Sd/- Sd/- (MANISH AGARWAL) (ANUBHAV SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30th July, 2025. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, New Delhi Printed from counselvise.com "