TMI Blog2021 (5) TMI 445X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in AY 2009-10 vide assessment order passed under section 143(3) of the Act dated 27.09.2011 for A.Y. 2009-10, wherein the issue has been discussed in assessment order. PCIT did not revise the order of assessing officer under section 263 of the Act for the assessment year 2009-10. Based on the principle of consistency the claim of the assessee is genuine. The Principle of consistency applies to an order under section 263 of the Act as well, as held in the case of H.P. Cotton Textile Mills Ltd, . [ 2007 (8) TMI 321 - PUNJAB AND HARYANA HIGH COURT] Assessing Officer has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue, the said decision of the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of the revenue as held by Hon ble Supreme Court in Malabar Industries Ltd. vs. CIT [ 2000 (2) TMI 10 - SUPREME COURT] . - Decided in favour of assessee. - ITA No.95/SRT/2020 - - - Dated:- 12-5-2021 - Shri Pawan Singh, JM And Dr. A. L. Saini, AM For the Assessee : Shri Rasesh Shah, CA For the Revenue : Shri O. P. Vaishnav, CIT(DR) ORDER PER DR. A. L. SAINI, ACCOUNTANT MEMBER: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ₹ 1,25,78,872/- and treated the amount of disclosure of ₹ 1,25,00,000/- (made during the survey ) as income from 'Other sources' and as such, he has stated that assessee is not eligible to claim deduction u/s 80IB(10) of the Act in respect of the amount of ₹ 1,25,00,000/- which was disclosed by the assessee during the survey. 3. Thereafter, the Ld. AO had reopened assessee s case and issued statutory notice u/s 148 of the I.T. Act and finalized the assessment on 22.09.2017, u/s 143(3) r.w.s, 147 of the Act wherein, she has disallowed a sum of ₹ 1,38,40,049/- towards excess deduction claimed u/s 80IB(10) of the I. T. Act. 4. After that, ld. Principal Commissioner of Income Tax ( ld. PCIT ) has exercised his jurisdiction under section 263 of the Act. On verification of the records of the Income-tax assessment proceedings in the assessee s case for the assessment year 2010-11, it was noted by ld. PCIT that the assessee firm has claimed deduction u/s 80IB(10) of ₹ 2,80,64,646/- in respect of developing and building housing project. It was observed by ld. PCIT that the housing project in respect of which the assessee firm has claimed deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the proposed revision and your case will be taken up for decision based on material available on record. Please note that this being time barring matter, no adjournment shall ordinarily be granted. 6. In response to the above show cause notice, the assessee submitted its reply, which is reproduced below: Dear Sir, 1. Please refer to your show cause notice issued u/s. 263 dated 03.03.2020 proposing to revise the assessment made u/s. 147 on 22.09.2017 on the ground that the housing project of the assessee was not approved before 31.03.2008 and therefore deduction u/s. 801B(10) was not available. On issues of the proposed revision, we submit as under on behalf of the assessee client. Facts: 2. Assesses purchased the land on 26.03.2008 for developing and construction of the housing project. On 26.03.2008 when the assesses has undertaken and commenced the development and construction of the housing project, the project was already approved on 30.03.2007. The revised application for development was made by assessee on 19.04.2008 which was approved on 03.02.2009. The whole project was completed by the assessee during the F.Y. 2010-11 and building completion ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was confirmed by the CIT(A). However on further appeal, the deduction u/s. 80IB(10) was allowed by Honourable Tribunal vide their order dated 19.12.2014. 7. The assessing officer issued notice u/s. 148 in the case of the assesses on 31.03.2017. The notice u/s. 148 was issued for proposing to reduce the deduction u/s. 80IB(10) by the amount of interest and remuneration payable to partners on notional basis. In the course of reassessment proceedings u/s. 147, assessing officer issued show cause notice on 10.07.2017 which was replied by the assessee on 17.07.2017 stating that there was no compulsion to provide the interest and remuneration to partners. 8. The first claim of the assesses was made in the year relevant to A. Y. 2009- 10, The conditions for allowing the deduction u/s.80IB(10) were thoroughly examined by assessing officer in the course of assessment proceedings for A. Y. 2009-10 and he has given the detailed finding in the assessment order as per para no. 3 4 as reproduced: 3. Assesses is a partnership firm engaged in the business of developing and building of housing project. The assesses has constructed a project named Nilkanth Heights on plot No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of which is reproduced at Para no. 4 of the Assessment Order [Page no. 2 to 4]. In support of the deduction claimed u/s. 80IB(10), assessee filed the following details along with the said reply: 1. Audit Report u/s. 10CCB of the Act. 2. Purchase deed of land 3. Approved plan and development permission of the Project dated 30.03.2007. 4. BUG dated 24.08.2009. 14.10.2009 19.07.2010. 8. The assessing officer was not satisfied with the reply of the assessee and he disallowed the entire deduction u/s. 80IB(10) for A.Y. 2013-14. The action of the assessing officer was confirmed by the CIT(A). However, it was reversed by the Honourable Tribunal vide order dated 08.10.2018. When the assessment for A.Y. 2010-11 u/s.147 was completed on 22.09.2017, the assessment records for A.Y. 2013-14 were also available with assessing officer including the order of the Honourable Tribunal. Arguments: 1. From the above discussions it is clear that assessing officer made due inquiry necessary for assessment and therefore the assessment order cannot he termed as erroneous or prejudicial to the interest of the revenue. 2. The inquiry was conducted not during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arred. 7. However, the ld. PCIT has rejected the contention of the assessee and held that the assessee has claimed deduction of ₹ 2,80,64,646/- u/s 80IB(10) of the Act, and it was noticed that, the Housing Project in respect of which, deduction u/s 80IB(10) has been claimed by assessee was approved by the local authority on 03.02.2009. However, for the Housing Project to be eligible for deduction under the said section, the same should be approved before 31st March, 2008, by the local authority. As the said project was not approved by local authority before 31.03.2008 and the assessing officer has not examined this fact. The permission granted on 30.03.2007 got lapsed on 29.03.2008. M/s Nilkanth Developers (i.e. assessee) acquired the land on 26.03.2008 and applied for fresh approval on 19.04.2008, which was approved by the local authority on 03.02.2009. In these facts, it is clear that the application for approval itself was made only after 30.03.2008 which was beyond the permissible date for claiming of deduction u/s 80IB(10) of the Act. In view of the facts and circumstances of the case and discussions herein above, particularly non-consideration of the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of survey proceedings, certain incrementing documents were found. Then the statement of Shri Rajivbhai B, Kheni, partner of the assessee firm, was recorded u/s 133A of the I.T. Act. In his statement, he has stated that the entries made on page no. 59 and 60 were out of books of accounts. On the basis of said documents, he had disclosed unaccounted money of ₹ 1,25,00,000/-. Further, he has also stated that they will not claim deduction u/s 80IB of the I.T. Act on this undisclosed income of ₹ 1,25,00,000/-. 5. During the course of assessment proceedings details of flat holders, date of agreement and amount received in respect of sales shown have been called for, As per the details submitted by the AR of the assessee total receipt on sale of flats/shops shown at ₹ 7,09,17,500/- for which documents have been executed. The assessee has also added ₹ 1,25,00,000/- being amount disclosed by them during the course of survey proceeding on 27.08.2009. Accordingly, during the year under considering total receipt is shown at ₹ 8,34,17,500/- in the P L account. After considering the expenditure of ₹ 5,53,38,454/-, net profit for the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 1,25,00,000/- is received by it. When the assessee claims that such receipts is a business receipts of its project, primary burden lies on the assessee to prove that same is a business receipt of its project with supporting evidences/details which the assessee is required to do so. In absence of details as called for the amount of ₹ 1,25,00,000/- declared during the course of survey as unaccounted income cannot be considered as business receipt of assessee's project. Having regard to all these facts of the case the amount of ₹ 1,25,00,000 disclosed by the assessee is treated as Income from other sources. Since the assessee failed to adduce evidence regarding the amount of ₹ 1,25,00,000 and same is treated as income from other sources, assessee is not eligible for deduction u/s. 80IB(10) on this amount as claimed in the return of income. Penalty proceedings u/s 271(1)(C) of the Act are initiated for filing inaccurate particulars. 12. From the above order under section 143(3) of the Act, it is clear that during the original assessment proceedings, the issue relating to deduction under section 80-IB (10) has been discussed and adjudicated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue, relating to deduction under section 80-IB (10), has already been adjudicated in in favour of the assessee by the department and department has allowed deduction under section 80IB(10) of the Act, on the same project. The ld PCIT did not revise the order of assessing officer under section 263 of the Act for the assessment year 2009-10. Based on the principle of consistency the claim of the assessee is genuine. The Principle of consistency applies to an order under section 263 of the Act as well, as held by the Hon`ble Punjab Haryana High Court in the case of H.P. Cotton Textile Mills Ltd, (311 ITR 436). 15. We note that in AY.2009-10 the Auditor in Tax Audit Report vide paper book page no.105, and vide item no. 23 of the Tax Audit Report, wherein it is mentioned about the said project that the date of approval by local authority is as on 30.03.2007. The ld. Counsel took us through paper book page no. 135 wherein the permission from the Surat Municipal Corporation was obtained on 30.03.2007 and thereafter the said permission has been renewed/revised vide development permission of Surat Municipal Corporation dated 03.02.2009 which is placed at paper book page no.112. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r two years from the end of the financial year 31.03.2013. In the assessee`s case, ld PCIT can revise order under section 263 of the Act, up to 31.03.2015, however, the ld. PCIT has revised the original assessment order on 03.03.2020, which is not acceptable in view of the provisions of sub-section 2 of section 263 of the Act, as noted above. Thus, it is abundantly clear that order passed by the ld. PCIT is after the expiry of two years from the end of the financial year 31.03.2013, therefore, ld. PCIT does not have valid jurisdiction to revise the matters which were discussed and concluded in the original assessment order framed by Assessing Officer u/s 143(3) of the Act, on 26.03.2013, therefore order passed by the ld PCIT has to be quashed, on the basis of this very solitary fact. In this regard reliance can be placed on the judgment of the Hon'ble Supreme Court in the case of Alagendran Finance Ltd. (2007) 162 Taxman 465 (SC), wherein it was held as follows: 14. The Madras High Court in A.K. Thanga Pillai's case (supra), in our opinion, has rightly considered the matter albeit under section 17 of the Wealthtax Act, 1957 which is in pari materia with the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s wholly without jurisdiction rendering the entire proceeding a nullity. 17. Thus, it is quite clear that ld PCIT has violated the provisions of subsection (2 ) of section 263 of the Act. In any event, we note that the Assessing Officer has adopted one of the courses permissible in law and even if it has resulted in loss to the revenue, the said decision of the Assessing Officer cannot be treated as erroneous and prejudicial to the interest of the revenue as held by Hon ble Supreme Court in Malabar Industries Ltd. vs. CIT (243 ITR83). Since the order of the Assessing Officer cannot be held to be erroneous as well as prejudicial to the interest of the revenue, in the facts and circumstances narrated above, the usurpation of jurisdiction exercising revisional jurisdiction by the Principal CIT is null in the eyes of law and, therefore, we are inclined to quash the very assumption of jurisdiction to invoke revisional jurisdiction u/s 263 by the Principal CIT. Therefore, we quash the order of the ld. Principal CIT, under section 263 of the Act, dated 16.03.2020 being ab initio void. 18. In the result, the appeal of the assessee is allowed. Order is pronounced on 12/05/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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