TMI Blog2022 (10) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... x Court in Malabar Industrial Co Ltd. Vs CIT [ 2000 (2) TMI 10 - SUPREME COURT] Ergo, in the above context, we find the order of Ld PCIT is unsustainable in law, consequently we quash revisionary order passed u/s 263 of the Act and restore the order of assessment passed u/s 143(3). Appeal of appellant allowed. - ITA No. 167/NAG/2015 - - - Dated:- 28-4-2022 - SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D BATTULL, ACCOUNTANT MEMBER Assessee by: Shri S. C. Thakar Revenue by: Shri Pradeep Headoo ORDER PER JAMLAPPA D BATTULL, AM; The appellant against the revisionary order of Commissioner of Income Tax-3, Nagpur [for short CIT ] dt. 07/03/2015 passed u/s 263 of the Income-tax Act, 1961 [for short the Act ], which in turn dove out of regular order of assessment dt. 27/11/2012 passed u/s 143(3) of the Act by the Income Tax Officer-Ward-2, Chandrapur [for shot AO ], filed these appeals before Income Tax Appellate Tribunal [for short the Tribunal ] u/s 253. 2. The issue in the present controversy is, as to whether the order passed by the assessing officer u/s 143(3) can be said to be erroneous and prejudicial to the interest of the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the above grounds of appeal at any time before, or at the time of, hearing of the appeal, so as to enable the learned bench of Appellate Tribunal to decide this appeal according to law. (Emphasis Supplied) 4. The facts of the case, succinctly stated as; 4.1 The assessee is a partnership firm engaged in the business of real estate projects including development of housing projects and derives income from sale of real estate units including Flats, Shops raw houses etc. For the assessment year [for short AY ] 2010-2011 the assessee e-filed its return of income [for short ROI/ITR ] on 27/09/2010 declaring total income of ₹2,58,650/-, which was processed summarily u/s 143(1) of the Act. The case of the assessee selected for scrutiny under CASS by issue of statutory notice u/s 143(2) dt. 29/08/2011 and finally the assessment u/s 143(3) were completed accepting the returned income. 4.2 The Ld. PCIT after culmination of the assessment proceedings, called for the assessment records and upon perusal thereof, disagreement with the action of Ld. AO, invoked the revisionary powers vested in him by virtue of section 263(1) and held the orders of assessment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of the assessee, holding firmly that; The assessee derives income from the business receipts (Flat, Shop, Row House) of development of housing project and Commission Brokerage. The audit report in Form No 3CB and Form No 10CCB and financial statements are submitted. The assessee submitted copy of bank pass book and bank statement during the course of assessment proceedings and also produced relevant document in respect of claim of deduction u/s 80IB(10) in chapter VI-A, which were verified on test check basis. In view of the above and discussion, the returned income of the assessee is accepted. (Emphasis Supplied) 6.2 As far as the revisionary proceeding is concern, it transpires from the show cause notice [for short SCN ] dt 17/12/2014 30/12/2014 issued u/s 263 of the Act calling upon the assessee, to show case as to why in the absence of completion certificate from a Local Authority certifying the completion of housing project, the deduction u/s 80IB(10) should not be denied. In response to SCN, the appellant assessee was represented by the authorised representative and filed written submission on 16/01/2015 relying on the decision of Hon ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation sought under RTI Act 2005, made two fold submission that, (1) the appellant has duly complied with the mandate of provisions of section 80IB(10) so as to entitle for deduction and upon the inquiry into, on satisfaction, the Ld. AO allowed the claim. (2) the revisionary authority erred in invoking the provisions of section 263 merely on the audit objection and on the issue which was duly inquired into during the course of assessment proceedings without rebutting the claim of deduction on technical ground. Per contra, the departmental representative [for short DR ] placing a strong reliance on the order of revisionary authority contended that, non-compliance of mandate of law cannot be an excuse and mere application to local authority for obtaining completion certificate cannot ispo-fact be taken as compliance of law, hence in the absence of certificate establishing the date by which housing project cannot be inferred, consequently the claim of the assessee. 8. To before shooting the balloon, it will be apt to first reproduce the provision of section 80IB(10) and 263(1) in verbatim as it stood and applicable to the AY under consideration; 7.1 80IB : Deduction in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on record that, the appellant has duly completed the process for obtaining the certificate from the local authority within the stipulated time, however through Right To Information [for short RTI ] it is also placed on records that, for the administrative / technical reasons, the local authority did not issue certificate to anyone during the contemporary period, and in this respect, we are mindful to quote the decision of Hon ble jurisdictional High Court in the case of PCIT Vs Dharti Enterprise where the Lordship have held that; We find that this issue is now no longer res integra as it stands concluded against the Revenue and in favour of the Respondent by the decision of this Court in CIT v/s. Hindustan Samuh Awas Ltd., 377 ITR 150 . In the above case, it has been held that whether the project is completed within the time framed provided under Section 80IB(10) of the Act, and an application for issuance of completion certificate is filed within time, then delay on account of the competent authority in issuing completion certificate would not deprive the Assessee, the benefit of Section 80IB(10) of the Act. (Emphasis Supplied) 7.2 Now coming to the valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of being heard to the assessee following the principle of natural justice. 7.4 In the light of provision of law, it is of paramount importance to note that, an incorrect assumption of facts or an incorrect application of law or passing an order without application of mind or without applying the principle of natural justice, shall discretely be sufficient to hold the order being erroneous. Albeit the term prejudicial to the interests of the revenue is not at all defined in the Act, but is needs to be understood in its ordinary meaning and it is of wide import and is not confined to mere loss to ex-chequer. 7.5 In the light of ration laid down by Hon ble Supreme Court of India on the subject matter, we have the audacity to summarise the inferential but harmonious analysis of revisionary provision laid in section 263 of the Act, into a five steps Queen Principle , falling out of which the assuming revisionary jurisdiction u/s 263 shall be contra legem, and these steps are; (1) There must be an explicit query from the adjudicating tax authority as regards to any claim made including information supplied in the return of income filed or to be filed, and (2) There must be direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority. The relevant observations from page 7 of the order read as under; In exercise of the power the Commissioner must bring to bear and unbiased mind, consider impartially the objections raised by the aggrieved party, and decide the dispute according to procedure consistent with the principles of natural justice; he cannot permit his judgment to be influenced by matters not disclosed to the assessee, nor by dictation of another authority. (Emphasis supplied) 10. Considering the facts of the case extenso, we concede with the contention of the Ld. AR that, in support of appellant claim as expounded hereinbefore at para 6, there was indeed unvarying and indistinguishable material placed before both these tax authorities during the course of regular assessment vis- -vis revisionary proceeding, which in turn demonstrates that, the Ld. AO considering the same submission of the assessee carried out inquiry with respect to eligibility of claim, basis of claim and compliance relating thereto(if any) and then finalized the assessment taking one of the plausible view in the light of settled legal position in allowing the deduction u/s 80IB(10) of the Act, this evidently co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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