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2015 (12) TMI 1289 - GUJARAT HIGH COURT

2015 (12) TMI 1289 - GUJARAT HIGH COURT - TMI - Recovery proceedings - assessee prayed for refund of the amount already recovered by the department by attaching the petitioner's bank account - deduction under section 80IB(10) disallowed - Held that:- For whatever reason if the Assessing Officer was of the opinion that such deduction was not allowable, such findings could have been recorded. However, in the present case, we prima facie find that after rejecting the assessee's revised valuation of .....

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s the assessee's claim for deduction under section 80IB(10) of the Act. Prima facie, these aspects are incongruent. We make it however, clear that these are purely prima facie observations and certainly not meant to disturb or dislodge the order of assessment or in any manner influence the appellate proceedings.

Nevertheless, we cannot escape the conclusion that the petitioner has made out a strong prima facie case against the order of assessment in which as noted, the sole addition i .....

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. - Special Civil Application No. 12831 of 2015 - Dated:- 8-12-2015 - Akil Kureshi And Mohinder Pal, JJ. For the Appellant : B S Soparkar, Adv For the Respondent : Sudhir M Mehta, Adv ORDER ( Per : Honourable Mr. Justice Akil Kureshi ) 1. The petitioner assessee has challenged recovery notice dated 30.3.2015 as at AnnexureA to the petition and also prayed for refund of the amount already recovered by the department by attaching the petitioner's bank account. 2. Brief facts are as under : 3. .....

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7; 30.30 crores (rounded off), declared net profit for the year under consideration at ₹ 19.33 crores (rounded off) and lastly claimed deduction under section 80IB(10) of the Income Tax Act, 1961 and claimed that there would be no tax liability on the petitioner. 4. The Assessing Officer framed the assessment by an order dated 30.3.2015. The petitioner was called upon to explain the change in valuation of closing stock. The Assessing Officer was of the opinion that the petitioner applied w .....

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012. She concluded that the assessee was not entitled to deduction under section 80IB(10) of the Act which allowed deduction of profit derived from sale of residential units, since during the year under consideration, there was no sale of such residential units. In the result, the Assessing Officer while rejecting the claim of deduction under section 80IB(10) of the Act, added back an amount of ₹ 19.37 crores (rounded off) by way of disallowance of such deduction and raised consequential d .....

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the assessee to approach higher authorities for stay. 6. On 15.6.2015, the Assessing Officer while disposing of such application of the petitioner, required the petitioner to deposit 50% of the outstanding demand by 24.6.2015 upon which the recovery of remaining 50% would stand stayed. The Assessing Officer observed as under : "2. I have perused your application for stay demand till the decision of first appeal. Further, mere filing of appeal or an application for stay in such an appeal wil .....

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directed to pay 50% of the outstanding demand by 24/06/2015 and produce copy of challan to the undersigned on 26.06.2015. The remaining 50% of the demand is stayed till the decision of first appeal by the Ld. CIT(A) or by 31/12/2015, whichever is earlier." 7. On 11.6.2015, the petitioner had also written to the Joint Commissioner of Income Tax and requested for his intervention contending as under : "11 In view of our above submission, and also in view of the fact that the assessed inc .....

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h order dated 15.6.2015 and when the Joint Commissioner of Incometax had not yet responded to the petitioner's similar request for stay, the Assessing Officer by writing a letter to ICICI bank on 25.6.2015 conveyed to the bank that a sum of ₹ 8.14 crores (rounded off) is outstanding to Incometax by way of tax bills and called upon the bank to pay to the department forthwith any amount due from the bank or held by the bank for or on account of the assessee, to the extent of such outstan .....

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ed by the assessee under the revised return, the Assessing Officer has rejected the claim of deduction under section 80IB(10) of the Act without any justification. If the valuation of the closing stock were to be discarded, the original closing stock reflected in the return of the assessee before revision would operate in which case the assessee had suffered loss during the year under consideration. It was therefore, that originally no claim for deduction under section 80IB(10) of the Act was ma .....

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ercive recovery through attachment of the bank account of the petitioner even before the Joint Commissioner had decided the stay petition of the assessee. Counsel relied on the following decision to contend that in view of such wholesale additions and mechanical manner of rejection of stay petition by the Assessing Officer, entire demand be stayed pending appeal and amount of recovery already made be refunded : 1) Lalit Wadhwa v. Commissioner of Incometax, Gurgaon reported in (2013) 29 taxmann.c .....

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n contending that the Assessing Officer has given detailed reasons for rejection of the valuation of the closing stock and for rejecting the petitioner's claim for deduction under section 80IB(10) of the Act, which has resulted into substantial tax demand. Pending appeal therefore, the petitioner cannot claim unconditional stay. The Assessing Officer has already granted conditional stay. Counsel referred to following decisions of High Courts including this Court in support of his contentions .....

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226 of the Act pertains to other modes of recovery. Subsection( 3) thereof authorises the Assessing Officer to recover the tax dues from any person from whom money is due or may become due to the assessee or one who holds or may subsequently hold any money on account of the assessee to pay to the Assessing Officer so much of money as is sufficient to pay the amount due by the assessee in respect of the arrears. 12. Thus undoubtedly, department has power to make coercive recovery in the manner pr .....

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nd prayer was that if this was not possible, the assessee may be given seven days time to appeal to higher authorities for such stay. The Assessing Officer disposed of such request by insisting that the Page 7 of 11 HC-NIC Page 7 of 11 Created On Fri Dec 11 14:26:42 IST 2015 petitioner must deposit 50% of the tax dues to be able to avoid recovery of remaining 50%. 13. If one peruses the order of assessment in question, in the original return that the petitioner filed for the assessment year 2012 .....

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closing stock on account of which such valuation jumped to ₹ 30.30 crores in the revised returns. The Assessing Officer was of the opinion that the petitioner wrongly applied the Percentage Completion Method for valuing the closing stock. The assessee's contention that the competent local authority had granted Project Completion Certificate and that therefore, under the Percentage Completion Method, the assessee was entitled to recognise the revenue in the statement of Profit and Loss .....

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d not claimed deduction under section 80IB(10) of the Act in the original returns but such claim was made only in the revised returns. She was of the opinion that the assessee had claimed such deduction in order to avoid application of minimum alternative tax introduced with effect from 1.4.2013 which would have been applicable to all sales made during the year relevant to assessment year 20132014 and subsequent years. 14. Prima facie, it appears that the Assessing Officer committed an error in .....

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