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2022 (9) TMI 31 - AT - Income TaxRevision u/s 263 by CIT - claim of Deduction u/s 80IB (10) - lack of enquiry by AO - HELD THAT - It emerges during the course of hearing that although the assessee has claimed section 80IB (10) deduction as per the seized documents(supra), the fact remains that the alleged payee Mr. Sagar Bagul had nowhere purchased the corresponding residential unit so as to satisfy the clinching derived from condition having first degree nexus in light of Landmark decision in Liberty India 2009 (8) TMI 63 - SUPREME COURT . This is indeed coupled with the fact that the assessee also could not invite our attention to the Assessing Officers detailed inquiries on the instant issue as well. We thus quote Malabar Industrial Co. 2000 (2) TMI 10 - SUPREME COURT that lack of such an inquiry during the assessment itself renders the same to be an erroneous one causing prejudice to interest of the Revenue. We accordingly affirm the Learned PCIT s revision directions qua the instant former issue. PCIT s directions regarding application of section 269(SS) r.w.s 271D penalty - DR could hardly dispute that there is no loan agreement between the assesses and Mr. Bagul which could attract the forming penal provision as such a seized document indeed carries presumption of correctness u/s 292(c ) of the Act. We therefore reverse the impugned revision direction to this effect in para 7 in very terms. Ordered accordingly.
Issues:
1. Revision of assessment order under section 263 of the Income Tax Act, 1961 for A.Y. 2010-11. 2. Claim of deduction under section 80IB(10) based on cash component received by the assessee. 3. Application of penalty under section 269SS and section 271D. Issue 1: Revision of assessment order under section 263 The Principal Commissioner of Income Tax (PCIT) issued revision directions under section 263, challenging the assessment order passed by the Assessing Officer (AO) for A.Y. 2010-11. The PCIT contended that the AO erroneously allowed excess deduction under section 80IB(10) without considering the cash component of Rs. 25,00,000 received by the assessee. The PCIT directed the AO to re-examine the claim of the assessee and initiate fresh assessment. The PCIT's decision was based on the lack of independent inquiries and evidence regarding the source of the cash received by the assessee. The PCIT found the assessment order to be both erroneous and prejudicial to the revenue's interest. The authorized representative of the assessee challenged the PCIT's revision jurisdiction, citing the lack of examination by the AO regarding the cash component. Issue 2: Claim of deduction under section 80IB(10) During the proceedings, it was revealed that the assessee claimed a deduction under section 80IB(10) based on the cash component of Rs. 25,00,000 received from a certain individual for the purchase of a flat. However, it was observed that the alleged payee did not purchase any residential unit to satisfy the condition of being "derived from" the sale of flats, as required by the law. The lack of detailed inquiries by the AO on this issue was highlighted, rendering the assessment erroneous and prejudicial to the revenue's interest. The tribunal affirmed the PCIT's revision directions concerning this issue, emphasizing the importance of fulfilling the conditions for claiming deductions under section 80IB(10). Issue 3: Application of penalty under section 269SS and section 271D The PCIT directed the AO to examine the provisions of section 269SS and, if applicable, initiate penalty proceedings under section 271D. However, it was noted that there was no loan agreement between the assessee and the individual from whom the cash was received. The absence of a loan agreement meant that the penal provisions of section 269SS and section 271D did not apply. The tribunal reversed the PCIT's direction regarding the application of penalties under these sections, as there was no legal basis for imposing penalties in this case. In conclusion, the tribunal partially allowed the assessee's appeal, affirming the PCIT's revision directions regarding the deduction under section 80IB(10) but reversing the direction on the application of penalties under section 269SS and section 271D. The delay in filing the appeal was condoned due to the circumstances of the Covid-19 pandemic.
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