SHRI B.MURUGESWARAN,CHENNAI vs. DCIT, CHENNAI

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ITA 502/CHNY/2009Status: DisposedITAT Chennai05 February 2015AY 2004-056 pages
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What did the Tribunal hold?

The Tribunal found merit in the Revenue's contention that the Assessing Officer (AO) failed to make any enquiry regarding the deduction. However, it directed the AO to pass fresh assessment orders considering the assessee's case laws, audit reports, and other evidence, without being influenced by the CIT's revision orders.

What were the facts?

The assessee claimed deduction under Section 80IB(10) for housing projects. The CIT initiated revision proceedings, citing lack of audit report, approval from local authority, timely completion evidence, and doubts about the assessee being the exclusive developer.

What were the issues?

Whether the AO's lack of enquiry renders the assessment order erroneous and prejudicial to revenue, and if the CIT's revision order should be set aside in light of subsequent judicial pronouncements.

Which sections of the Income-tax Act were involved?

Section 80IB

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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI

Before: SHRI B.R. BASKARAN & SHRI VIKAS AWASTHY

For Respondent: Ms. Ruby George, CIT-DR
Hearing: 05.02.2015Pronounced: 05.02.2015

आदेश /O R D E R

PER B.R. BASKARAN, ACCOUNTANT MEMBER:

1.

The assessee has filed these two appeals challenging the revision orders passed by Ld CIT-IX, Chennai and they relate to the assessment years 2004-05 and 2005-06.

2.

The Ld Counsel appearing for the assessee Dr. Anita Sumanth submitted that the Ld CIT has initiated revision proceedings on the ground that the deduction u/s 80IB(10) of the the same has rendered the assessment order erroneous and prejudicial to the interests of the revenue. The Ld A.R submitted that the Ld CIT has held so for the following three reasons:-

(a) The assessee has not filed the audit report in Form No.10CCB as required to be filed in terms of the provisions of sec. 80IB.

(b) Copy of approval obtained for the project from the local authority has not been placed on record.

(c) No evidence to show that the Pallavaram housing project has been completed within the time period prescribed in sec. 80IB(10) of the Act.

(d) The assessee, prima facie, was not exclusive developer of the said project. The assessee may be undertaking a work contract.

3.

The Ld Counsel submitted that the assessee has furnished copies of Form No.10CCB before the Assessing Officer during the course of assessment proceedings relating to the AY 2004-05 and the said report was filed along with the return of income filed for AY 2005-06. She further submitted that the assessee has also filed copies of the said reports in the assessment proceedings completed in consequence to the revision orders. She further submitted that the copies of audit reports are also placed in the paper book filed before the Tribunal. She further submitted that the proposition that non-filing of audit report is only a technical breach, which can be made good at the level of appellate proceedings also is well settled now.

4.

The ld A.R further placed reliance on the decisions rendered by Hon’ble Madras High Court in the cases of CIT Vs. Jain Housing & Construction Ltd (256 CTR (Mad) 408) and CIT Vs. Sanghvi And Doshi Enterprise (2013)(255 CTR (Mad) 156) to contend that the other views expressed by Ld CIT(Appeals) are also not sustainable.

The Ld A.R further submitted that the assessee has been following percentage completion method for declaring income and hence the question of completion certificate shall not arise during the years under consideration. She further submitted that the assessee had completed the project in the subsequent years. Accordingly she contended that the impugned revision orders are liable to be set aside.

5.

On the contrary, the Ld D.R submitted that the assessing officer has neither made any enquiry nor applied his mind with regard to the claim of deduction u/s 80IB(10) of the Act in the two years under consideration. By placing reliance on the decision of Malabar Industrial Company (243 ITR 83), the Ld D.R submitted that the lack of enquiry on the part of the Assessing Officer would render the assessment order erroneous and prejudicial to the interests of the revenue. almost decided on the all issues raised by him and hence the impugned revision orders will not give any further scope to the assessing officer to take a different view.

7.

Having heard the rival submissions, we find merit in the contentions of Ld D.R., since it is an admitted fact that the Assessing Officer did not make any enquiry about the deduction claimed by the assessee u/s 80IB(10) of the Act. We also do not find any discussion about the same in the assessment order. During the course of hearing, the Ld A.R submitted that the Assessing Officer only made oral enquiries, but the said submission could not be entertained in the absence of any evidence. Hence, it leads us to the conclusion that the assessing officer did not make any enquiry with regard to the deduction claimed u/s 80IB(10) of the Act and the same renders the assessment order erroneous and prejudicial to the interests of the revenue.

8.

However, the Ld A.R submits that the views expressed by Ld CIT leaves no scope to the AO to make further enquiries, According to Ld A.R, the various deficiencies pointed out by the Ld CIT has since been settled by the decision of Hon’ble jurisdictional High Court. There cannot be any dispute that the decision of 5 & 503/Mds/09 jurisdictional High Court is binding on the assessing officer. Accordingly, we are of the view that the assessing officer should proceed to pass the assessment order in accordance with the law untrammeled by the views expressed by Ld CIT. Accordingly we direct the assessing officer to pass the assessment orders by duly considering the case laws relied upon by the assessee, the audit reports furnished by the assessee and other information and explanations that may be furnished before him without being influenced by the views expressed by Ld CIT in the impugned revision orders. The orders of Ld CIT stands modified to that extent.

9.

In the result, both the appeals filed by the assessee are treated as partly allowed.

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