2017 (5) TMI 678 - AT - Income Tax

Validity of proceedings under section 153A - Held that - No search has taken place and no incriminating material was found and seized from the premises subjected to search which belonged to member of AOP Shri Harshad P Doshi, and the assessee has been denying the fact that the search has ever been conducted on the premises of the assessee. When the name of the assessee does not appear in the panchanama and no material is seized with respect to the assessee from business premises of membership of AOP searched it could not be taken as omission on the part of the search party of mentioning the name but it is clear proof and conclusive proof that no search was at all conducted. We are therefore of the considered view that no search has been conducted in the case of the assessee in view of the discussion hereinabove and accordingly, we are of the considered view that the order of the ld.CIT(A) deserved to be set aside and accordingly, we hold that the proceedings under section 153A of the Act is without any valid jurisdiction so is the consequent assessment order also passed u/s 143(3) r.w.s.153(A) of the Act and hence quashed. - Decided in favour of assessee. Disallowance of claim of deduction u/s 80IB(10) - necessary approvals were never obtained from the designated authorities by the assessee - Held that - The project under consideration was approved on 27.1.2006 and the project was completed as per the occupancy certificate issued on 1.10.2007. The total area constructed and completed of building was 12439.70 Square mtr. which is equivalent to 133901 sq.ft which is more than 1 acre and the built up area of each completed flat in the said project was not more than 1000 sq. ft. The above facts have been confirmed by M/s Avinash Mhatre & Associates , architect by issuing the certificate to this effect. Thus we hold the assessee has satisfied all the conditions of section 80(IB)(10) of the Act as developer and is entitled to deduction under the said section - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of assessment order framed under section 153A of the Income Tax Act, 1961.
2. Disallowance of the claim of deduction under section 80IB(10) of the Income Tax Act, 1961.
3. Levy of interest under sections 234B and 234C of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of Assessment Order under Section 153A:
The assessee challenged the assessment order framed under section 153A on the grounds that no proper and valid search was conducted, no specific panchanama was drawn in the name of the assessee, and no incriminating documents were found or seized. The CIT(A) upheld the assessment, stating that the search warrant included the assessee's name and that the search was valid even if conducted at premises not directly owned by the assessee. The Tribunal examined the provisions of sections 153A, 153B, and 132(1) and concluded that for an assessment under section 153A to be valid, a search must be conducted at the assessee's premises, and a panchanama must be drawn in the assessee's name. Since no search was conducted at the assessee's premises and no panchanama was drawn in the assessee's name, the Tribunal held that the assessment proceedings under section 153A were without valid jurisdiction and quashed the assessment order.

2. Disallowance of Deduction under Section 80IB(10):
The assessee claimed a deduction under section 80IB(10) for a housing project. The AO disallowed the claim on several grounds, including that the project approval was not obtained in the name of the assessee, the assessee was not the owner of the land, and the commencement certificate was not in the name of the assessee. The CIT(A) upheld the disallowance. The Tribunal examined the conditions under section 80IB(10) and noted that ownership of the land is not a prerequisite for claiming the deduction. The Tribunal found that the assessee had developed the project, obtained necessary approvals, and completed the project within the stipulated time. The Tribunal relied on the decision in Radhe Developers and others, which held that the developer of the project, not necessarily the landowner, is entitled to the deduction. Therefore, the Tribunal allowed the assessee's claim for deduction under section 80IB(10).

3. Levy of Interest under Sections 234B and 234C:
The Tribunal did not specifically address the issue of levy of interest under sections 234B and 234C in its detailed analysis. However, given that the primary issues regarding the validity of the assessment order under section 153A and the disallowance of the deduction under section 80IB(10) were decided in favor of the assessee, the consequential levy of interest under sections 234B and 234C would also be impacted accordingly.

Conclusion:
The Tribunal quashed the assessment order framed under section 153A due to the lack of a valid search and panchanama. It also allowed the assessee's claim for deduction under section 80IB(10), holding that the assessee met all the conditions for the deduction as a developer of the housing project. The appeal was allowed in favor of the assessee.