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AMARNATH CONSTRUCTION COMPANY Versus INCOME TAX OFFICER WARD 9 (2)

2016 (10) TMI 547 - GUJARAT HIGH COURT

Validity of eopening of assessment - deduction issue of section 80IB(10) - Held that:- with regard to this deduction issue of section 80IB(10) of the Act, on earlier occasion, the Assessing Officer has thoroughly examined the eligibility aspect of the petitioner. The scrutiny assessment has taken place under section 143(3) of the Act and in final order on 17.02.2006 after considering the material on record, the deduction is made available to the petitioner to the extent of ₹ 1,83,17,435/- .....

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that there is no element of any nondisclosure on the part of the petitioner. It is also appearing from the record that in response to the query which has been raised by the respondent authority, the petitioner has provided adequate material related to the development work which was undertaken by the petitioner and the petitioner has tried to justify his claim by furnishing necessary documents including the agreement, profit and loss account as well as audit report. The said material has also bee .....

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010 are quashed and set aside. - Decided in favour of assessee - SPECIAL CIVIL APPLICATION NO. 16552 of 2010 - Dated:- 5-10-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR MANISH J SHAH, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE A.J. SHASTRI) 1. The petitioner by way of the present petition is challenging the legality and validity of the impugned action of issuance of notice under section 148 of the Income Tax Ac .....

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the Act. The said return was filed alongwith the audit report in form no.3CB attached with the return. In the context of said return, the Assessing Officer had issued notice under section 142(1) of the Act at the relevant point of time on 05.07.2005, asking about the nature of business, the details of the work executed by the petitioner and also sought particulars with respect to sale deed of the land in question, for which development project was undertaken. Under a communication dated 08.10.20 .....

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fficer has passed an assessment order dated 17.02.2006, giving effect of an amount of ₹ 1,83,17,435/as claimed under section 80IB(10) of the Act and to some extent, the deduction has not been granted. But, substantial deduction has been considered and granted under section 80IB(10) of the Act and the said assessment has been finally framed in the month of February, 2006 under section 143(3) of the Act. It is also borne out from the record that with respect to this assessment which has been .....

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.2010, the petitioner has requested the authority to treat the earlier return which has been filed as one in response to this notice under section 148 of the Act. Subsequently, on 15.12.2010, a notice came to be given to the petitioner, which indicates that petitioner has not fulfilled the condition under section 80IB(10) of the Act. The said notice was given on 15.12.2010, as a result of which, under a communication dated 20.03.2010, the petitioner has requested the Assessing Officer to provide .....

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ee is merely a work contractor and not under taken any developing and building housing project approve by the Local Authority and hence, the claim of the assessee for deduction u/s. 80IB(10) of the I. T. Act, is not in accordance with law. Finance Act, 2009 has amended the section 80IB(10) by way of inserting the explanation with retrospective effect from 01.04.2001. After the introduction of the explanation in the section there is a change in legal matrix, and the deduction u/s. 80IB(10) is not .....

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dated 21.12.2010 submitted objections and pointed out in detail all relevant facts pertaining to the development of construction work undertaken by the petitioner. However, the said objection came to be rejected by order dated 21.12.2010 and it is against this action of respondent authority, the petitioner has brought this petition by invoking jurisdiction under Article 226 of the Constitution. 4. Learned counsel Mr.M.J.Shah appearing for the petitioner has mainly submitted that this issue relat .....

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submitted that this action of reopening of assessment is initiated beyond a period of four years and looking to the reasons which have been recorded, there is no element of any nature whereby it is alleged that the petitioner has not disclosed fully and truly all material facts related to claim of section 80IB(10) of the Act and therefore, in absence of any failure on the part of the petitioner in fully and truly disclosing all material facts beyond a period of four years, it is not open for th .....

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ore particularly in absence of any element of non disclosure. Based upon this, learned counsel submitted to set aside the impugned action of the respondent authority. 5. To oppose the petition, learned counsel for the Revenue Mr.N.K.Mehta submitted that the authority is thoroughly justified in giving effect to the retrospectivity attached to the explanation under section 80IB(10) of the Act and he submitted that no interference be made. Counsel further submitted that respondent has merely acted .....

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s deduction issue of section 80IB(10) of the Act, on earlier occasion, the Assessing Officer has thoroughly examined the eligibility aspect of the petitioner. The scrutiny assessment has taken place under section 143(3) of the Act and in final order on 17.02.2006 after considering the material on record, the deduction is made available to the petitioner to the extent of ₹ 1,83,17,435/- and therefore, the deduction issue has been at threadbare level examined by the Assessing Officer in scru .....

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e record that in response to the query which has been raised by the respondent authority, the petitioner has provided adequate material related to the development work which was undertaken by the petitioner and the petitioner has tried to justify his claim by furnishing necessary documents including the agreement, profit and loss account as well as audit report. The said material has also been examined in detail in past at the time when scrutiny assessment has taken place and therefore, the cent .....

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R 340, the Division Bench of this Court while dealing with this very issue related to retrospective effect of statutory amendment for reopening of assessment beyond the period of four years, has dealt with the issue at length and has observed under: It is true that when there is a statutory amendment with retrospective effect, the statutory amendment has to operate as if the law as amended was there on the statute book. However, as per the settled legal position the fiction is to operate within .....

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mendment was going to be made in the year 1986 with retrospective effect from the year 1974. In the facts of the present case, it could never be said by any stretch of imagination that in the year 1983 when the assessee filed return claiming investment allowance on the capitalization of interest paid after the date on which the machinery was first installed and put to use, the assessee had failed to disclose all material facts. On the contrary, the assessee would have got the benefit of the enti .....

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iod of four years and there is no element of failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment. Its insertion will not have any effect on it and therefore, by giving anxious thought to the said issue, the Court has held that the extract of the said for substantiating this conclusion. From the reasons recorded it is apparent the assessments are sought to be reopened on the ground that as per the explanation given below subsection (13 .....

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sessment for the assessment years under consideration. The record of the case does not in any manner indicate that proceedings under section 147 are sought to be reopened by reason of failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for assessment years under consideration. The respondent in its affidavit in reply also has not disputed the fact that there is no failure on the part of the petitioner to disclose fully and truly all m .....

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sence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment years under consideration, the notices under section 148 of the Act having been issued after the expiry of a period of four years from the end of the relevant assessment years, the very initiation of proceedings under section 147 of the Act stand vitiated and as such cannot be sustained. 9. In case of Classic Network Ltd. v. Deputy Commissioner of Inco .....

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