2018 (4) TMI 703 - AT - Income Tax

Reopening of assessment - claim of the assessee for deduction u/s. 80IB(10) is not allowable and is liable to be withdrawn - Held that - The tangible and material incriminating information came in possession of the AO during the course of assessment proceedings conducted by the AO for AY 2009-10 that the assessee did not meet the conditions stipulated for claiming deduction u/s 80IB(10) but still the same were claimed by the assessee for AY 2007-08, which led to reopening of the concluded assessment for the impugned assessment year 2007-08 u/s 147 of the 1961 Act. There is no estoppel against law and any view which is adopted by the AO in original assessment proceedings which is in contravention of the law is not sustainable will fall within rigors of Section 147/148 as the AO cannot form any opinion which is contrary to the express provisions of law and hence the instant case is covered within rigors of Section 147/148 of the 1961 Act as the view adopted by the AO was perverse and contrary to the provisions of Section 80IB(10), as there could not be two different views on this issue and hence there can be no question of change of opinion by the AO. Any view adopted by the AO which is contrary to the provisions of law will give rise to an occasion for Revenue to reopen the concluded assessment within rigors of Section 147/148 as the income had escaped assessment due to perverse view contrary to law adopted by the AO in original assessment. Hence reopening of the concluded assessment u/s 147 in the instant case before us is considered to be valid as also on merits, the assessee claim for deduction u/s 80IB(10) deserves to be rejected and the appeal of the Revenue stood allowed. In view of the major error which crept in the orders for AY 2009-10 and AY 2010-11 wherein the learned CIT(A) and tribunal proceeded on the belief that the project was approved by SRA on 04-06-2004 which was a wrong belief instead of correct date of approval of the project by SRA on 07-11-2002 and the said error goes to the root of the matter to decide this controversy because CBDT vide its notification no. 67 dated 31-08-2010 which was later clarified vide notification no. 2 of 2011 had mandated grant of benefit u/s 80IB(10) to slum rehabilitation / redevelopment project which were approved on or after 01-04-2004 but by local authority, and before 31st March 2008, thus no benefit could be allowed to projects approved prior to 01st April 2004, the said error/mistake cannot be allowed to be perpetuated as there is no heroism in perpetuating the mistake is a cardinal principle of jurisprudence. Assessee is not entitled for deduction u/s 80IB(10) of the 1961 Act w.r.t. its residential project at Parel,Mumbai and the appeal of the Revenue is allowed.

Summary

Issues Involved:
1. Validity of reopening the assessment under Section 147 of the Income-tax Act, 1961.
2. Eligibility of the assessee's claim for deduction under Section 80IB(10) of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of Reopening the Assessment under Section 147:

The Revenue challenged the reopening of the assessment under Section 147, claiming it was based on a change of opinion. The CIT(A) quashed the reopening, stating that the Assessing Officer (AO) had not mentioned any new tangible material that came to his knowledge which would lead him to believe that income had escaped assessment. The reopening was based solely on the AO's decision in AY 2009-10 that the appellant was not entitled to a deduction under Section 80IB(10). The CIT(A) referenced the jurisdictional High Court of Bombay's decision in *Purity Techtextile (P) Ltd. vs. ACIT & Anr.*, which emphasized that reopening of assessment cannot be made on a "mere change of opinion." The CIT(A) concluded that the AO's action was a change of opinion and thus invalid, leading to the allowance of this ground of appeal.

2. Eligibility of the Assessee’s Claim for Deduction under Section 80IB(10):

The assessee claimed a deduction under Section 80IB(10) for profits derived from a residential project approved by the Slum Rehabilitation Authority (SRA) on 07.10.2002. The AO disallowed the deduction, stating that the project did not meet the conditions stipulated in Section 80IB(10) because it was approved before 01.04.2004 and was not completed by 31.03.2008. The CIT(A) allowed the deduction, referencing an earlier appellate order for AY 2009-10, which held that the provisions of clause (a) and (b) of sub-section 80IB(10) regarding start and completion dates were not applicable to the assessee's slum rehabilitation project.

However, the tribunal observed that as per the provisions of Section 80IB(10), the relevant date of approval is the date when the project was first approved by the local authority. In this case, the project was first approved on 07.10.2002, and the commencement certificate was issued on 31.03.2003, both dates being prior to 01.04.2004. Therefore, the project did not meet the condition of being approved between 01.04.2004 and 31.03.2008 as required by the CBDT notifications. The tribunal concluded that the assessee was not entitled to the deduction under Section 80IB(10) because the project did not comply with the stipulated conditions.

The tribunal also referenced the Supreme Court's decision in *Joshi Technologies International Inc. v. UOI*, emphasizing that the provisions of a taxing statute are to be strictly construed, and there is no equity in tax laws. The tribunal held that the AO's reopening of the assessment was valid as it was based on tangible material information that the assessee did not meet the conditions for the deduction, and thus, the claim for deduction under Section 80IB(10) was correctly disallowed.

Conclusion:

The tribunal allowed the Revenue's appeal, validating the reopening of the assessment under Section 147 and disallowing the assessee's claim for deduction under Section 80IB(10) for not meeting the stipulated conditions. The appeal of the Revenue was allowed, and the assessee's claim for deduction was rejected.