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Facts
The assessee, engaged in construction and property sale, claimed 100% deduction under Section 80-IB. The Assessing Officer (AO) initially accepted this but later invoked Minimum Alternate Tax. A revisionary proceeding under Section 263 was initiated due to a discrepancy in closing stock, leading to a fresh assessment order.
Held
The Tribunal held that the issue of closing stock discrepancy was already decided by a coordinate bench in a prior appeal, where it was held that Section 263 was wrongly invoked. Therefore, the addition based on this issue deserves to be deleted.
Key Issues
Whether the addition made regarding closing stock discrepancy is valid when a coordinate bench of the Tribunal has already held that Section 263 was wrongly invoked for this issue.
Sections Cited
80-IB, 144, 263, 115JC, 142(1), 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI OMKARESHWAR CHIDARA
Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 14/02/2025 passed by NFAC, Delhi for assessment year 2015-16 on following grounds of appeal :
“1. In the facts and circumstances of the case and in law, Learned Commissioner of Income Tax (Appeals)(hereinafter also referred to A.Y. 2015-16 S. K. Ventures as 'the CIT(A)') has erred in upholding the addition (w.r.t. alleged mismatch in value of stock-in-trade of Rs. 83,66,359/-)made in the consequential assessment order passed under section 144 read with section 263; disregarding the fact that this Hon'ble Income Tax Appellate Tribunal in ITA No.: 1167/Mum/2021 (order dated 30.03.2022) had already held that the it was beyond the jurisdiction for the Principal Commissioner of Income Tax to raise the issue regarding alleged mismatch in value of stock-in-trade of Rs. 83,66,359/-; accordingly, the impugned consequential assessment order dated 13.09.2021 was itself void-ab-initio.
Without prejudice to the above ground, in the facts and circumstances of the case and in law, the CIT(A) has erred in upholding the addition (w.r.t. alleged mismatch in value of stock-in- trade of Rs. 83,66,359/-) made in the consequential assessment order passed under section 144 read with section 263; disregarding the factual and legal matrix of the case.
The appellant craves leave to add, alter, delete or modify all or any of the above grounds of appeal. All the above grounds are without prejudice to each other.” Brief facts of the case are as under:
2. The Assessee is engaged in the business of construction and sale of immovable property. The housing project undertaken by the assessee was duly approved by the relevant authority and hence assessee was eligible for claiming deduction of 100% of the profit from the housing project u/s 80-IB of the Act. Accordingly, the assessee claimed deduction of 100% profit from the housing project from AY 2008-09 under section 80-IB of the Act. For relevant AY 2015-16, the case of the assessee was selected for scrutiny to examine the mismatch in turnover and claim of deduction u/s.VI-A of the Act. 2.1 The assessee was thus called upon to furnish requisite details. All the details along with the relevant evidences and supporting document were submitted before the Ld.AO. The same A.Y. 2015-16 S. K. Ventures was accepted and there was no additions/disallowances made to the total income. Accordingly order u/s. 143(3) was passed on 27/12/2017. 2.2 The Ld.AO, however, invoked provisions of Minimum Alternate Tax in accordance with Section 115JC while passing assessment order and levied tax @ 18.5% on the Gross Total Income without reducing the amount of 100% deduction of profits allowable u/s. 80-IB(10) in respect of housing project undertaken by the assessee. 2.3 Subsequently, Ld.PCIT-3, Thane invoked revisionary proceedings under section 263 on the premises that, the Ld.AO overlooked alleged discrepancy in stock amount to Rs. 83,66,359/- and overlooked the fact of whether, condition to claim deduction under section 80-IB(10) had been fulfilled by assessee or not. 2.3.1. In response to the above show cause notice, the assessee filed detailed reply along with documentary evidences. The Ld. PCIT after considering the same passed order under section 263 on 24.03.2020, directing the Ld.AO to re-examine the discrepancy in stock of Rs. 83,66,359/- and whether the assessee satisfies necessary criteria to claim deduction u/s. 80- IB(10). Aggrieved by the order of the Ld.PCIT the assessee filed appeal before this Tribunal. 2.4 Meanwhile, amidst COVID-19 in the National Faceless Assessment Centre effect to the order passed u/s.263 of the Act. The Ld.AO sought for issued notice under section 142(1) in the order giving details regarding difference in turnover and eligibility A.Y. 2015-16 S. K. Ventures conditions for claiming deduction u/s. VI-A. Due to ongoing covid-19, the assessee could not respond to the notices issued by National Faceless Assessment Centre. 2.5 On 13/09/2021, the National Faceless Assessment Centre passed Assessment Order under section 144 read with section 263, of the Act. Aggrieved by the ex-parte order passed by the Ld.AO, assessee preferred appeal before the Ld.CIT(A) with a delay.
3. The Ld.CIT(A), however, condoned the delay, considering the fact that it was COVID period during which the assessment order was passed. 3.1. Before the Ld.CIT(A) the assessee failed to respond to multiple notices issued. Thus based on the assessment records, the Ld.CIT(A) passed the impugned order confirming the addition. Aggrieved by the order of Ld.CIT(A) assessee is in appeal before this Tribunal.
At the outset, the Ld.AR submitted that, against the 263 order the assessee filed appeal before this Tribunal wherein this Tribunal dismissed invoking of provisions u/s.263 in respect of difference in closing stock. It is submitted that, as assessee could not represent before the Ld.CIT(A) the said order of this Tribunal in vide order dated 30/03/2022 could not be bought to the notice Ld.CIT(A). The Ld.AR submitted that, the only addition made by the Ld.AO in the assessment order is in respect of difference in closing stock amounting to Rs. 83,89,056/-. 4.1 The Ld.AR submitted that, as Tribunal held that 263 has been wrongly involved on this issue by coordinate bench of this A.Y. 2015-16 S. K. Ventures Tribunal, in (supra), consequential assessment order passed dated 30/09/2021 has no legs to stand. He thus submitted that, the addition deserves to be deleted on this count. 4.2 The Ld.DR on the contrary relied on the orders passed by the authorities below.
We have perused the submissions advance by both sides in the light of record placed before us.
5. Admittedly coordinate bench of this Tribunal in assessee’s case for the year under consideration, in (supra) held that 263 has been wrongly invoked on the issue of closing stock. The assessing officer in the OGE passed to the 263 order has made addition only on this issue. We therefore hold that, addition deserves to be deleted as this issue gets merged with the order of this Tribunal under such circumstances, the addition deserves to be deleted.
Accordingly the grounds raised by the assessee is allowed. In the result the appeal filed by the assessee is allowed. Order pronounced in the open court on 30/04/2025