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2011 (11) TMI 709 - AT - Income TaxReasseement Proceedings u/s 147 - Assessee contended A.O. has not validly initiated reassessment proceedings u/s 147 for A.Y. 2004-05 and A.Y. 2005-06. CIT upheld such proceedings - HELD THAT - Carefully gone through the orders of the authorities below and find from record and find that the original return of the assessee for assessment year 2005-06 was processed u/s 143(1) and thereafter on the basis of reasons recorded the AO reached the conclusion that there was escapement of income. Accordingly, he reopened the assessment. As per the verdict of the Hon ble Supreme Court in the case of ASSISTANT COMMISSIONER OF INCOME-TAX VERSUS RAJESH JHAVERI STOCK BROKERS P. LIMITED 2007 (5) TMI 197 - SUPREME COURT , processing of return us/ 143(1)(a) is not an assessment and it cannot be said that the Assessing Officer has applied his mind to the facts of the case. In view of the detailed findings recorded by the learned Commissioner of Income tax (Appeals), we do not find any infirmity in his order for holding the reopening of assessment valid. Reopening of assessment in the assessment year 2004-05 was within four years of relevant assessment year, therefore, proviso to section 147 was not applicable and the learned CIT (A) was justified in upholding the reassessment u/s 147. Disallowance of claim of deduction u/s 80IB(10) - Retrospective Application of Amendment - Ld. CIT observed that the assessee has not obtained completion certificate in respect of the housing project from the local authority till 31st March, 2008, therefore, not fulfilled the conditions laid down u/s 80IB(10). Accordingly, confirmed the action of AO for declining the claim of deduction for the assessment years 2004-05 and 2005-06 on the basis of amended provisions which came on the statute at a later date i.e. 1.4.2005. HELD THAT - It is established law that substantive law unless made specifically retrospective has only to be understood as having prospective operation from the date on which it becomes law or any other date specified in the statute. With regard to the retrospective application of the amendment, it was held by the Hon ble Supreme Court in STATE OF KERALA VERSUS ALEX GEORGE AND ANOTHER 2004 (11) TMI 104 - SUPREME COURT ,that where schedule of rates was modified reducing inter alia exemption limit, the effect could be given in the next succeeding year. Applying the relevant provisions of the law with respect to the date of approval of the project by the local authority as on 4.12.2002, we can safely conclude that the provisions applicable for the assessment year 2004-05 do not require any completion certificate of the local authority in so far as amendment was brought with effect from 1.4.2005 i.e. assessment year 2005-06. Accordingly, we direct the AO to allow the assessee s claim for deduction u/s 80IB(10) for the assessment year 2004-05. In respect of the assessment year 2005-06 since the amended provisions came into force, the assessee was required to obtain certificate from the local authority for completion of the project as a pre-condition for deduction u/s 80IB(10) of the Act. As the assessee has not obtained such certificate, we confirm the action of the lower authorities for declining the claim of deduction u/s 80IB(10) to the assessee for the assessment year 2005-06.
Issues Involved:
1. Validity of initiation of reassessment proceedings under Section 147 by issuing notice under Section 148. 2. Entitlement of the appellant for the deduction under Section 80IB(10) of the Income Tax Act for the assessment years 2004-05 and 2005-06. 3. Compliance with the basic conditions for claiming deduction under Section 80IB(10). 4. Adequacy of the opportunity provided by the CIT (Appeals) to the appellant before making a decision. Issue-wise Detailed Analysis: 1. Validity of Initiation of Reassessment Proceedings under Section 147 by Issuing Notice under Section 148: The appellant contended that the reassessment proceedings initiated under Section 147 by issuing notice under Section 148 were invalid. The Assessing Officer (AO) had reopened the assessments based on the information obtained during the subsequent assessment proceedings for the year 2006-07, which indicated that the appellant had not completed the construction of the housing project within the specified period under Section 80IB(10). The CIT (Appeals) upheld the reopening of the assessments, noting that the notices under Section 148 for both assessment years were issued before the expiry of four years from the end of the assessment years, thus the proviso to Section 147 was not applicable. The Tribunal found no infirmity in the CIT (Appeals)'s order, validating the reopening of the assessments. 2. Entitlement of the Appellant for the Deduction under Section 80IB(10) of the Income Tax Act: The appellant argued that the condition for completion of the housing project within four years was prescribed by the Finance (No. 2) Act, 2004, with effect from 1.4.2005, and thus should apply only from the assessment year 2005-06 onwards. The CIT (Appeals) disagreed, holding that since the appellant did not obtain a completion certificate by 31st March 2008, the deduction under Section 80IB(10) was not allowable. The Tribunal concurred with the CIT (Appeals), confirming the disallowance of the deduction for the assessment years 2004-05 and 2005-06. 3. Compliance with the Basic Conditions for Claiming Deduction under Section 80IB(10): The appellant claimed to have fulfilled all basic conditions for the deduction under Section 80IB(10), including submitting relevant evidence. However, the CIT (Appeals) and the Tribunal noted that the appellant failed to obtain a completion certificate from the local authority by the specified date, which was a pre-condition for the deduction. The Tribunal emphasized that as per the provisions applicable from 1.4.2005, obtaining a completion certificate was mandatory. 4. Adequacy of the Opportunity Provided by the CIT (Appeals) to the Appellant: The appellant argued that the CIT (Appeals) did not provide a proper opportunity before taking a contrary view and disallowing the claim under Section 80IB(10). The Tribunal did not find merit in this argument, as the CIT (Appeals) had based the decision on the appellant's failure to meet the statutory requirement of obtaining a completion certificate. Conclusion: The Tribunal allowed the appellant's claim for deduction under Section 80IB(10) for the assessment year 2004-05, as the requirement for a completion certificate was not applicable for that year. However, for the assessment year 2005-06, the Tribunal upheld the disallowance of the deduction due to the appellant's failure to obtain the required completion certificate. The appeals were thus partly allowed for the assessment year 2004-05 and dismissed for the assessment year 2005-06.
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