2017 (8) TMI 1249 - AT - Income Tax

Reopening of assessment - Deduction under section 80 IB(10) denial - date of seeking approval or permission for development from the local authority - as per the Assessing Officer the date of 05/05/1999 is incorrect for the reason that the development permission given by CIDCO is dated 04/06/1998, which is before 01/10/1998 therefore, assessee is ineligible for the benefit of section 80IB(10) - Held that - The date of seeking approval or permission for development from the local authority is of no relevance to decide about the correctness or incorrectness of the date of commencement of the project, which has been taken at the time of original assessment as 05/05/1999. Even if the date of approval is before 01/10/1998, it does not disentitle the assessee because the requirement of the section is that the eligible housing project has to be approved before 31/03/2007. The significance of 01/10/1998 is to examine the date of commencement of development and construction of the housing project, and in the present case it has been canvassed at 05/05/1999. The reasons recorded reflect that the Assessing Officer has confused the date of approval by the local authority with the date of commencement of development and construction of the housing project which are two different aspects. In any case, merely because the permission was given by CIDCO on 04/06/1998 cannot, by itself, be a basis to entertain a belief that the date of commencement of project adopted in the original assessment proceedings as 05/05/1999 is incorrect. In our considered opinion, there is no information or material referred by the Assessing Officer in the reasons recorded which can, even on prima-facie basis, establish that the date of commencement of development and construction of the project taken as 05/05/1999 is incorrect. Therefore, in this context it has to be factually inferred that there was no material with the Assessing Officer form a valid belief that income had escaped assessment on account of incorrect allowance of deduction under section 80IB(10) of the Act. - Decided in favour of assessee.

Summary

Issues Involved:
Validity of proceedings initiated under section 148 of the Income Tax Act for assessment years 2005-06 and 2006-07.

Detailed Analysis:
1. Assessment Year 2005-06:
- The primary issue in this appeal concerns the validity of the proceedings initiated by the Assessing Officer under section 148 of the Income Tax Act. The Assessing Officer reopened the assessment based on the claim of deduction under section 80 IB(10) of the Act related to certain projects. The original assessment allowed the deduction, but in the reopened assessment, the deduction was denied, leading to the current dispute.
- The Assessing Officer's reasons for reopening the assessment highlighted discrepancies in the claimed commencement date of the project and the actual date of permission granted by CIDCO. The Assessing Officer contended that the incorrect date led to the wrongful allowance of the deduction under section 80 IB(10).
- The Tribunal analyzed the legal position under section 80 IB(10) of the Act, emphasizing that the crucial aspect for eligibility was the commencement of the project after 01/10/1998. The Tribunal noted that the date of seeking approval did not invalidate the claimed commencement date unless it affected the project's eligibility under the Act.
- Ultimately, the Tribunal found the reasons recorded by the Assessing Officer insufficient to establish a valid belief that income had escaped assessment due to the incorrect allowance of the deduction. Consequently, the initiation of proceedings and the subsequent assessment were deemed legally invalid and set aside.

2. Assessment Year 2006-07:
- Given the similarity of issues with the assessment year 2005-06, the Tribunal applied the same reasoning and decision mutatis mutandis to the cross appeals for assessment year 2006-07.
- As a result, the appeals of the assessee were allowed, and those of the Revenue were dismissed for both assessment years.

Conclusion:
The Tribunal's detailed analysis focused on the validity of the proceedings initiated under section 148 of the Income Tax Act for the assessment years 2005-06 and 2006-07. It emphasized the legal requirements under section 80 IB(10) of the Act and concluded that the reasons provided by the Assessing Officer were insufficient to support the reopening of the assessments. Consequently, the Tribunal set aside the assessments, allowing the appeals of the assessee and dismissing those of the Revenue for both assessment years.