2018 (5) TMI 2035 - AT - Income Tax

Revision u/s 263 - Eligibility of deduction u/s 80IB - total area of the land on which the project was undertaken is less than the one acre of land - AO 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) - Whether the additional evidence filed by assessee can be accepted in Appellate proceedings arising from order passed u/s. 263? - HELD THAT - 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 - 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. We observe that the additional evidence filed by assessee in the form of 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. No occasion for the assessee to furnish certificate before Commissioner of Income Tax or the Assessing Officer. 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) - 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. Since this certificate from an Architect has been furnished for the first 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.

Summary

Issues involved:
1. Validity of Commissioner's order under section 263 of the Income Tax Act.
2. Acceptance of additional evidence by the assessee in appellate proceedings.
3. Determination of eligibility for deduction u/s. 80IB (10) based on land measurement.

Issue 1: Validity of Commissioner's order under section 263 of the Income Tax Act:
The case involved an appeal against the Commissioner of Income Tax-II, Pune's order under section 263 of the Income Tax Act, 1961. The Commissioner set aside the assessment order of the assessee, a promoter and builder, claiming deduction u/s. 80IB(10) for a housing project in Pune. The issue arose as the Commissioner found the plot of land to be less than the required minimum area of 1 acre under section 80IB (10). The assessee contended that the area was miscalculated and submitted additional evidence from an Architect to support the claim. The Department defended the Commissioner's order, stating the assessee had admitted to the smaller land area previously.

Issue 2: Acceptance of additional evidence by the assessee in appellate proceedings:
The key contention was whether the Tribunal could accept additional evidence filed by the assessee in appellate proceedings arising from the Commissioner's order under section 263 of the Act. The assessee presented a certificate from an Architect indicating the land area exceeded the minimum requirement after the assessment order was passed. The Tribunal, referring to relevant case law, held that there was no impediment to accepting additional evidence if reasonable cause was shown for not furnishing it earlier. The Tribunal admitted the additional evidence as it was crucial to determining the assessee's eligibility for the deduction.

Issue 3: Determination of eligibility for deduction u/s. 80IB (10) based on land measurement:
The Tribunal admitted the additional evidence filed by the assessee, a certificate from an Architect showing the land area exceeded the required minimum. As the evidence was obtained post the assessment order, the Tribunal directed the Assessing Officer to re-adjudicate the eligibility for the deduction based on the revised land measurement. The benefit of deduction u/s. 80IB (10) was to be allowed if the land area was confirmed to be more than or equal to 4046.87 Sq. mt (1 Acre) after remeasurement. The appeal of the assessee was partly allowed for statistical purposes.

This detailed analysis of the judgment showcases the key legal issues, arguments presented by both parties, and the Tribunal's decision on each aspect of the case.