M/S. SHASHWATI CONSTRUCTIONS,,PUNE vs. COMMISSIONER OF INCOME-TAX - II,,

आदेश / ORDER

PER VIKAS AWASTHY, JM

This appeal by the assessee is directed against the order of Commissioner of Income Tax-II, Pune dated 11.03.2014 passed under section 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

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assessment year claiming deduction u/s. 80IB(10) of the Act in respect of its

housing project “Bhagwati Palms”, Thergaon, Pune. The Assessing Officer vide

order dated 27.12.2011 accepted the claim of assessee. The Commissioner of

Income Tax invoked the provisions of section 263 and issued notice on

17.02.2013 on the ground that Assessing Officer has failed to take note of the

fact that the area of plot of land on which housing project has been developed is

4000 Sq. mt. that is less than minimum area of 1 acre as required under

section 80IB (10) of the Act. The Commissioner of Income Tax set aside the

assessment order and directed the Assessing Officer to disallow assessee’s claim

of deduction u/s.80IB (10) of the Act. Against the findings of Commissioner of

Income Tax, the assessee is in appeal before the Tribunal.

Commissioner of Income Tax has erred in presuming that the area of plot of

land on which housing project has been constructed is less than 1 acre. The

assessee was under bona-fide impression that 4000 Sq. Mt. is equal to 1 acre.

The ld. AR filed an application for admission of additional evidence in the form

of certificate of Architect to the effect that area of plot by triangular method is

4097.13 Sq. mt. which is more than 1 acre. The ld. AR to support his

submissions placed reliance on the following decisions:

1) Taurus Enterprise Vs. DCIT, ITA No. 85/PN/2011, Assessment year 2007-08 decided on 12.04.2012.

2) Late Shri Krishanchand Vaswani Vs. ITO, Assessment year 2009-10 decided on 31.12.2014.

The ld. AR submitted that the Assessing Officer may be directed to

consider the certificate from Architect. The ld. AR further contended that the

assessee has no objection even if fresh measurement of the plot of land is

carried out.

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vehemently defended the action of Commissioner of Income Tax in setting aside

the assessment order and directing Assessing Officer to re-frame the

assessment after withdrawing benefit of deduction u/s. 80IB (10) of the Act. The

ld. DR submitted that the assessee has not placed on record any evidence

whatsoever before the Authorities below indicating that the land of the assessee

is more than 4046.87 Sq. Mt. i.e. equal to 1 acre. In fact, the assessee has

admitted before the Commissioner of Income Tax and the Assessing Officer that

area of plot of land on which housing project has been constructed is 4000 Sq.

mt.

4.1 The ld. DR taking strong objection to the additional evidence filed by

assessee submitted that no reason whatsoever has been given by the assessee,

for not furnishing the certificate of Architect before the Authorities below. The

ld. DR further asserted that no fresh evidence should be accepted in

proceedings u/s. 263 of the Act. The ld. DR in support of his submission

placed reliance on the decision of Hon'ble Supreme Court of India in the case of

A. Andisamy Chettiar Vs. A. Subburaj Chettiar reported as (2015) 17 SCC 713.

The ld. DR further pointed that the Assessing Officer has already given effect to

the order of Commissioner of Income Tax and has passed assessment order on

25.09.2014. If the assessee has any grievance with respect to the area of plot of

land, he can file additional document in proceedings before the Commissioner of

Income Tax (Appeals).

4.2 The ld. DR submitted that the certificate obtained by the assessee from

an Architect is a self serving document. The tax audit report filed by assessee to

claim deduction u/s. 80IB (10) mentions the area of plot as 4000 Sq. Mt. The

sale deed of the plot mentions the area as 40R = 4000 Sq. Mts. The assessee

has paid stamp duty on the plot measuring 4000 Sq. Mts. The assessee has not

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furnished any document to show that additional stamp duty has been paid in

respect of area in excess of 4000 Sq. Mts.

that there is no bar in furnishing additional evidence before the Tribunal in

proceeding arising from the order of Commissioner of Income Tax u/s. 263 of

the Act. In support of his submission, the ld. AR placed reliance on the decision

of Hon'ble High Court of Himachal Pradesh in the case of Virbhadra Singh

(HUF) Vs. Pr. CIT reported as 86 taxmann.Com 113.

5.1 The ld. AR further submitted that assessee would not be able to agitate

this issue by furnishing additional evidence in proceedings before the

Commissioner of Income Tax (Appeals) arising out of assessment order passed

u/s. 143 r.w.s. 263 of the Act, if he does not raise the objection in proceedings

u/s.263 itself. To support his contentions, the ld. AR placed reliance on the

decision of Hon'ble Bombay High Court in the case of Herdillia Chemicals Ltd.

Vs. Commissioner of Income Tax reported as 221 ITR 194 ( Bom.). The ld. AR

further submitted that duty of the Assessing Officer is to assess correct income

in the hands of assessee. Where the assessee has inadvertently offered more

income to tax, the duty is cast upon the Assessing Officer to guide the assessee

and assess correct tax liability. The ld. AR in support of his submission placed

reliance on the CBDT circular dated 11.04.1955 and the decision of Hon'ble

Bombay High Court in the case of Ahmedabad Electricity Co. Ltd. Vs.

Commissioner of Income Tax reported as 199 ITR 351 (FB).

5.2 The ld. AR further submitted that the assessee cannot be penalized for

the wrong advice given by Chartered Accountant. The assessee has obtained

certificate from the Architect after completion of proceedings u/s. 263 of the

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Act. Therefore, there was no occasion for the assessee to furnish this document

either before the Commissioner of Income Tax or the Assessing Officer.

and have perused the orders of Authorities below. We have also considered the

various judgments on which reliance has been placed by rival parties.

is; Whether the additional evidence filed by assessee can be accepted in

Appellate proceedings arising from order passed u/s. 263 of the Act.

The assessee has obtained certificate from Architect indicating the area of

plot of land measured by applying triangular method as 4097.13 Sq. mt. The

additional evidence filed by assessee i.e. certificate of Architect is dated

03.09.2015. By the time, assessee obtained aforementioned certificate,

assessment order u/s. 143 r.w.s. 263 was already passed. Thus, there was no

occasion for the assessee to furnish this certificate before the Authorities below.

In so far as the power of the Tribunal to accept additional evidence in

proceedings arising from section 263 is concerned; we are of considered view

that there is no impediment, provided the assessee is able to show reasonable

cause in not furnishing the documents before the Authorities below. Our view is

supported by the decision of Hon'ble High Court of Himachal Pradesh in the

case of Virbhadra Singh (HUF) Vs. Pr. CIT (supra.). In the said case, Revenue

had placed additional material to support its case before the Tribunal. The

Tribunal accepted the additional evidence and confirmed the order of

Commissioner of Income Tax passed u/s. 263 of the Act. The assessee carried

the matter in appeal before the Hon'ble High Court inter alia challenging

admission of additional evidence by the Tribunal. The Hon'ble High Court

approved the action of Tribunal in admitting additional evidence and held that

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the scope of the Tribunal to examine correctness of the exercise of jurisdiction

by Commissioner is wide enough to admit additional evidence at its discretion

for doing substantial justice in the matter as defined under section 263 of the

Act. The relevant extract of the judgment of Hon’ble High Court approving the

action of Tribunal in accepting additional evidence in proceedings u/s. 263

reads as under:

“118. Thus, in the given facts and circumstances, we hold the Tribunal to have correctly affirmed the order passed by the Commissioner. Also, it cannot be said that the Tribunal erred in accepting the additional evidence placed on record by the Revenue. It also cannot be said that the Tribunal committed any material irregularity and violated any procedure and such action is illegal or bad in law. In fact, we find principles of natural justice and fair play to have been adhered to and fully complied with.”

Further, the Hon'ble High court held that the term “record” as mentioned

under section 263 of the Act does not impede the powers of Tribunal to consider

additional material for passing necessary orders. The Hon'ble High court

observed:

“122. As is evident, definition of word "record", inclusive in nature, is restricted to and confined only to the exercise of power by the Commissioner and would not relate to the amplitude of the power exercisable by the Tribunal "to pass such orders" "as it deems fit".”

Thus, from the decision of Hon'ble High Court, it is amply clear that the

Tribunal can accept additional evidence for proper adjudication of the case even

in proceedings u/s. 263 of the Act.

certificate from an Architect indicating the area of plot of land by applying

triangular method as more than 4046.87 Sq. Mt. was obtained by assessee on

03.09.2015 i.e. much after the passing of assessment order giving effect to the

order of Commissioner of Income Tax u/s. 263 of the Act. Therefore, there was

no occasion for the assessee to furnish certificate before Commissioner of

Income Tax or the Assessing Officer. We are of considered view that the

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additional evidence furnished by assessee goes to the root of issue in

determining assessee’s eligibility to claim benefit of deduction u/s. 80IB (10) of

the Act. The admission of additional evidence is thus, necessary for proper

adjudication of the case. Non acceptance of additional evidence would result in

assessee loosing the benefit if otherwise; the assessee is eligible for claiming the

same. Therefore, we admit the additional evidence filed by the assessee.

time before the Tribunal as additional evidence, the Revenue had no occasion to

test veracity of this document. The ld. AR has stated at the Bar that the

assessee has no objection if the matter is remitted to the Assessing officer for

verification and re-measurement of the land. Accordingly, we deem it

appropriate to modify the direction given by the Commissioner of Income Tax,

the Assessing Officer is directed to re-adjudicate the issue of assessee’s

eligibility for claiming deduction u/s. 80IB (10) subject to measurement of area

of plot of land on which housing project has been constructed. The benefit of

deduction u/s. 80IB (10) be allowed to the assessee, if the area of plot of land is

more than or equal to 4046.87 Sq. mt (1Acre) after measurement. Accordingly,

the appeal of assessee is allowed for statistical purposes in the terms aforesaid.

Order pronounced on Wednesday, the 09th day of May, 2018

Sd/- Sd/- (डी. क�णाकरा राव/D. KARUNAKARA RAO) (�वकास अव�थी /VIKAS AWASTHY) लेखा सद�य/ACCOUNTANT MEMBER �या�यक सद�य/JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 09th May, 2018 SB

8 ITA No. 2010/PUN/2014 A.Y. 2009-10

आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT-II, Pune. 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 5.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.