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TMI Blog2013 (1) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... (10) of the Income Tax Act, 1961 (hereinafter referred to as' the Act' for sake of brevity) for Rs. 11,50,649/- in connection with the profit earned from that project. The return was initially processed under section 143 of the Act. Thereafter, the case was taken up for scrutiny and notice dated 29.9.2007 under section 143(2) came to be issued, which was served on the petitioner on 9.10.2006. Another notice along with a questionnaire was issued on 7.9.207, and served on the assessee on 12.09.2007. The assessment order under section 143(3) was passed 5.12.2007. 2.1 On 18.03.2011, the respondent issued impugned notice seeking to reopen the assessment which was concluded as above. By communication dated 15.04.2011, the petitioner pointed out that the assessment was already over in which a full and true discloser of facts was made and fair accounts were produced. The petitioner requested the respondent to supply reasons for the reopening. The respondent furnished the reasons recorded by him on 28.02.2011 along with forwarding letter dated 5.8.2011. The petitioner filed his reply on 17.08.2011 raising grounds of objections. They came to be rejected on 10.10.2011 as being without merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the cities of Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place." 3.2 Section 80-IB(10) was amended by Finance (No.2) Act, 2005 and inter-alia clause(d) to sub-section (10) was inserted, which reads as under : "(d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed five per cent of the aggregate built-up area of the housing project or two thousand square feet, whichever is higher." 3.3 The aforementioned provision provides for deduction in respect profits and gains from certain industrial undertaking other than infrastructure development undertaking. By virtue of sub-section (10) thereof, deduction is available to the extent of 100% of the profits derived in the previous year from the housing project, on fulfillment of conditions mentioned therein. The said deduction was available, in so far as the accounting year corresponding to the Assessment Year 2005-2006 was concerned, in respect of the residential portion of a housing project approved before 31.03.2005 by the local authority. The concept of maximu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that a change of opinion cannot be a ground to exercise powers under section 147. In order to buttress the contention that sub clause (d) inserted w.e.f. 1.4.5005 would not apply, learned senior counsel relied on a Bombay High Court decision in CIT v. Brahma Associates 333 ITR 289 to contend that deduction under section 80-IB(10) on the profit derived on the housing projects approved by the local authority as a whole. 4.3 As against that learned advocate Mr. Pranav G. Desai for the respondent, referring to the averments in respondent's affidavit-in-reply, submitted that in order to get the benefit of deduction under section 80-IB(10) of the Act, each of the conditions prescribed in the provision was required to be satisfied by the assessee. It was submitted that under sub-clause (d) of the section, it is contemplated that the built up area of commercial establishment in the project should not exceed the limit of 5% of the aggregate build up area, whereas in the petitioner's case, it exceeded the said limit. According to his submission, the deduction was therefore not allowable. He further submitted that the project was completed after 1.4.2005 and the requirements in clause-(d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year." 5.1 The exercise of powers beyond four years are fettered by an additional condition that the escapement of income has resulted on account of failure on the part of the assessee inter alia to disclose fully and truly material facts necessary for the assessment for that Assessment Year. The import of the said Proviso is that where the assessee is not in default in disclosing fully and truly all material facts necessary for assessment for the assessment year in question, notwithstanding that there is an escapement of income for assessment in his opinion, the assessment cannot be reopened. In other words, a failure on part of the assessee to disclose material facts has to be demonstrated. The attribution of failure to disclose to the assessee is sine quo non for reopening the assessment after lapse of four years. 5.2 A close reading of reasons recorded by the respondent would show that the reopening was not on the premise that there was failure on the part of the assessee to disclose any material fact. It was based on the ground that the benefit was wrongly claimed. A wrong claim made would not necessarily mean the material facts not disclosed. If nothing is attri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessing officer allowed deduction under 80-IB(10) at 100% of profit on sale of tenaments after considering the facts and material before him. In respect of sale of the shops, no deduction was allowed for the reason that the assessee had shown the profit on sale of shops by giving total sale price without giving any supporting evidence. The profit on sale of shops was therefore added in the income. There is, therefore, no gainsaying that the Assessing Officer considered and applied his mind to the facts relating to the housing project developed by the petitioner, the shops and the profit earned therefrom. He thereupon qualified the deduction in the assessment order. 6. The apex court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 has laid down as under : "The assessee has responsibility of disclosing all primary facts, but once he has disclosed all the primary facts, his duty ends and it is for the assessing officer to draw the proper conclusions from it. If the wrong conclusion is drawn, then it is no ground for reopening the assessment because the assessing authority previously held another opinion as to the legal effect of certain primary facts and the assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment to be undertaken by the Assessing Officer on the basis of facts before him. 7.1 In the present case, the assessee disclosed the factum of housing project, the construction of shops and the profit derived therefrom. These were the primary facts sufficient for the Assessing Officer to proceed in its assessment process. He had undertaken such process and applied the facts to the provisions of law by applying his mind. Whether the built-up commercial area/the area of shops conformed the requirement of section 80-IB(10), if that section was applicable, was an aspect to be examined by the Assessing Officer. It was a subsidiary fact to be searched out in the assessment process for which the primary facts were available with the Assessing Officer. An error, a slip, an omission or a mistake on part of the assessing officer in that regard would not furnish a ground to reopen. For, the reopening proceedings are not rectification proceedings. Nor the concluded assessment can be reviewed under the garb. 8. It was also right on part of learned Senior Counsel to rely on the decision of Apex Court in Kelvinator of India Ltd. (supra) and on the decision of this Court Garden Silk Mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ospectively is also without any merit, because, firstly, clause (d) is specifically inserted with effect from 1.4.2005 and, therefore, that clause cannot be applied for the period prior 1.4.2005. Secondly, clause (d) seeks to deny Section 80-IB(10) deduction to projects having commercial user beyond the limit prescribed under clause (d), even though such commercial user is approved by the local authority. Therefore, the restriction imposed under the Act for the first time with effect from 1.4.2005 cannot be applied retrospectively. Thirdly, it is not open to the revenue to contend on the one hand that Section 80-IB(10) as it stood prior to 1.4.2005 did not permit commercial user in housing projects and on the other hand contend that the restriction on commercial user introduced with effect from 1.4.2005 should be applied retrospectively. The argument of the revenue is mutually contradictory and hence liable to be rejected. Thus, in our opinion, the Tribunal was justified in holding that clause (d) inserted to Section 80-IB(10) with effect from 1.4.2005 is prospective and not retrospective and hence cannot be applied to the period prior to 1.4.2005." Since it is held in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X
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