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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI O.P. KANT
ORDER PER SHRI BHAVNESH SAINI, J.M.
This appeal by assessee has been directed against the order of Ld.CIT(Appeals)-Muzaffarnagar dated 24/02/2015 for AY 2010-11.
Briefly the facts of the case are that the assessee filed return of income declaring Nil income after claiming deductions u/s 80IB(10) of the I.T. Act in a sum of Rs. 6.66 crores. The AO in the assessment order noted that assessee has not satisfied the conditions of section 80IB(10) of the Act, therefore, claim of the assessee were denied and income was assessed at Rs. 6.66 crores.
The Ld. CIT(A) noted in the impugned order that assessee has withdrawn this ground of appeal of assessee regarding claim made of deduction u/s 80IB(10) of the Act. The Ld. CIT(A) further noted that assessee has raised the following additional grounds of appeal:
1. “The Ld. AO having concluded that the project is incomplete has erred in taxing the entire income of Rs. 6.66,77,080/-. The AO, having concluded that the project was incomplete should have assessed only those residential units which were complete and sold.
2. The assessee contends that the AO has erred in assessing an income of Rs. 6,66,77,080/- mechanically, without examining and giving any finding as to how the income has been arrived.” 4. The assessee submitted before Ld. CIT(A) that it is the cardinal principle of taxation that an assessee will be taxed only on its correct taxable income computed according to law. Assessee therefore prayed that additional grounds may be admitted. It was further submitted that in scrutiny assessments for subsequent assessment years 2011-12 & 2012-13, AO has completed the assessments on percentage basis and computed the net profit @ 19.68%. The Ld. CIT(A), however, did not accept the contention of the assessee and dismissed the main ground of appeal as withdrawn and also dismissed the additional grounds of appeal.
5. Ld. Counsel for assessee submitted that AO should have only taxed the income of those units which were complete and sold by assessee. He has submitted that assessee followed completion method of accounting and AO shall have to determine the correct income of the assessee. In subsequent years, the AO completed the assessments by applying the net profit @19.68%. On the other hand, Ld. DR relied upon the order of Ld. CIT(A).
After considering the rival submissions, we are of the view that the matter requires reconsideration at the level of the Ld. CIT(A). The assessee has raised the above additional grounds contending therein that income may be determined on project completion basis which the AO has accepted in subsequent assessment years. Ld. Counsel for assessee submitted that the AO should only taxed the correct taxable income as per law and relied upon Board Circular dated 11/04/1955 in which it was emphasized that Department should not take advantage of an assessee’s ignorance to collect more tax out of him than is legitimately due from him. Further, the Ld. CIT(A) before deciding the additional grounds of appeal should have called for the remand report from the AO and before adjudicating the same should pass the order, whether, he admits the additional grounds of appeal or not and then after giving opportunity of being heard to the assessee as well as AO should decide the additional grounds on merits. However, Ld. CIT(A) without admitting the additional grounds of appeal and without passing any order thereon and without calling the remand report from the AO straightway dismissed the additional grounds of appeals. The Ld.CIT(A) did not consider the subsequent orders passed by the AO on percentage basis. It is well settled law though principles of resjudicata do not apply to Income tax proceedings but rule of consistency do apply to the Income tax proceedings. The order of the Ld. CIT(A) is also non speaking on each aspect raised before him. In this view of the matter, we set aside the impugned order and restore the additional grounds of appeals to the file of Ld.CIT(A) with direction to decide the same as per law by giving reasonable sufficient opportunity of being heard to the assessee as well as to the AO, keeping in mind observation in this order.
In the result, the appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court.