ACIT, NEW DELHI vs. M/S. ADITYA DUROBUILD PVT. LTD., DELHI

This appeal is preferred by the Department against the order dated 29.08.2014 passed by the Ld. Commissioner of Income Tax (Appeals)-XXXI, New Delhi and pertains to the Assessment Year (A.Y.) 2011-12. The only ground raised by the Department challenges the action of Ld. CIT (Appeals) in deleting the disallowance of Rs.50,48,310/- pertaining to claim of ACIT vs. Aditya Durobuild Pvt.Ltd. deduction u/s 80IB of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act', for short).

The brief facts of the case are that the assessee company is engaged in the business of real estate. The return of income was filed declaring an income of Rs.50,48,310/- after claiming deduction of Rs.2,44,91,385/- u/s 80 IB of the Act. The return of income was filed on 01.11.2011 whereas the due date for filing the return was 30.09.2011. However, a copy of the audited balance sheet, profit & loss account, tax audit report and audit report u/s 80 IB of the Act in Form no.10 CCB was filed by the assessee on 28.09.2011 i.e. prior to the last date of filing the income tax return. The A.O., vide intimation u/s 143(1) of the Act, which was never served on the assessee disallowed the deduction claimed u/s 80 IB of the Act. Thereafter, on 27.03.2012 there was a search and seizure operation in the case of the assessee and subsequently notice u/s 153A of the Act was issued to the assessee in response to which the assessee filed a return similar to the return filed earlier on 01.11.2011. During the course of assessment proceedings u/s 153A of the Act, the assessee filed all the relevant documents regarding the claim of deduction u/s 80 IB and the A.O. passed the assessment order accepting the returned income of the assessee and making no addition. 2.1. In the mean time, on 29.05.2013, the assessee received a notice regarding the payment of outstanding demand created vide intimation passed u/s 143(1) of the Act dated 20.01.2012 wherein the assessee’s claim u/s 80 IB was disallowed. The ACIT vs. Aditya Durobuild Pvt.Ltd. assessee carried the matter of raising demand after the conclusion of assessment u/s 153A of the Act in which the returned income was accepted, to the Ld. First Appellate Authority who held that the original assessment proceedings got abated due to search conducted subsequently in the assessee’s case. It was also noted by the Ld. CIT (A) that in this case deduction of claim u/s 80 IB of the Act had already been allowed in the first two years and since this was the third year, and the assessee had duly furnished all the supporting documents, the denial of claim could not be sustained. 2.2 Now, aggrieved, the department is before the ITAT and has challenged the deletion of disallowance by the Ld. CIT (A).

The Ld. Sr. D.R. placed reliance on the fact that the assessee had failed to file the original return within the due date and, therefore, the assessee could not be allowed the benefit of the claim of deduction under proceedings u/s 153A of the Act.

In response, the Ld. A.R. submitted that the search and seizure operation was conducted on 27.03.2012 and the Assessment Year under consideration being A.Y.2011-12 the date up to which the notice u/s 143(2) of the Act, could have been issued to the assessee was 30.09.2012 i.e. within six months from the end of the Financial Year in which the return was filed by the assessee. The Ld. A.R. submitted that the search had taken place on 27.03.2012 and the limitation for issuing notice u/s 143(2) for the year had not expired. It was submitted that the assessment in case of the assessee was pending and, therefore, as per the provisions of Section 153A the pending assessment on ACIT vs. Aditya Durobuild Pvt.Ltd. the date of search was to abate. Reliance was placed on a number of judicial precedents in support of assessee’s claim that once the proceedings abate as a consequence to the search, the original return filed u/s 139 of the Act becomes non-est.

We have heard the rival submissions and have also perused the material placed on record. It is undisputed that the assessee had submitted the report in Form 10 CCB as required u/s 80 IB of the Act before the then Jurisdictional A.O. within the time allowed u/s 139(1) of the Act for filing the return of income. It is also undisputed that the financial results reflected in the return and those mentioned in the report obtained in Form 10 CCB are one and the same. It is also not in dispute that the returned income in the original return as well as in the return filed in response to notice u/s 153A was one and the same. It is also undisputed that the A.O. has accepted the returned income after proper scrutiny and order passed u/s 153A r.w.s. 143(3) of the Act. It is also undisputed that no notice u/s 143(2) of the Act was issued to the assessee in respect of the original return of income and only an intimation u/s 143(1) of the Act was issued which also was not served upon the assessee and the assessee had to obtain a certified copy of the same on being served with the notice of demand wherein the demand was created as a result ACIT vs. Aditya Durobuild Pvt.Ltd. of disallowance of assessee’s claim of deduction u/s 80 IB. Thus, it is beyond doubt that since the statutory period for issuance of notice u/s 143(2) of the Act with respect to the original return of income, had not yet expired, which in this case was 30.09.2012, the assessment for the year under consideration was still pending as on the date of search and as such the same got abated. In such a situation the proceedings u/s 153A of the Act only will have to be considered and the original return filed as well as the intimation u/s 143(1) with respect to the original return of income become non-est. The assessee’s claim for deduction u/s 80 IB of the Act was accepted by the A.O. under these circumstances. The Ld. CIT (A) has also given a categorical finding that the assessee’s claim for deduction had been allowed in the two earlier Assessment Years and there being no change in the facts and circumstances of the case in the third year, we find no reason to interfere with the findings of the Ld. CIT (A) on this issue. We also draw support from the judgement of Hon’ble Delhi High Court in the case of Principal CIT vs. Shri Niraj Jindal in ITA 465/2016 wherein the Hon’ble Delhi High Court has held that Section 153A is a second chance to the assessee. It has been held by the Hon’ble Delhi High Court that once the assessee files ACIT vs. Aditya Durobuild Pvt.Ltd. a revised return u/s 153A, no occasion would arise to refer to the previous return filed u/s 139 of the Act. Therefore, we find no reason to differ from the findings of the Ld. CIT (A). Accordingly we dismiss the grounds raised by Revenue.