2022 (7) TMI 683 - AT - Income Tax

Validity of order u/s 143(3) as within the statutory time limit prescribed u/s 153 or not? - HELD THAT - As assessee did not prove with cogent evidence that assessment order passed u/s 143(3), dated 31.03.2013, is beyond the statutory time limit prescribed under the Act. We note that in assessee s case the assessment year under consideration is A.Y. 2010-11. For assessment year (AY) 2010-11, the AO is supposed to frame assessment order within two years from the end of the assessment year, which ends on 31.03.2013. We note that AO passed the order u/s 143(3) on 31.03.2013, which is within the statutory time limit prescribed u/s 153 - Counsel did not furnish any evidence to demonstrate that the order under section 143(3) was passed beyond the statutory limit. The assessment order passed under section 143(3) of the Act dated 31.03.2013, was served on the assessee, on 03.04.2013, that does not mean that order was passed on 03.04.2013. The service of assessment order on the assessee is a different thing altogether. Therefore, we dismiss the ground no.1 raised by the assessee. Disallowance of deduction claimed u/s 80IB(10) - HELD THAT - As we note that assessee company has not fulfilled the conditions of section 80IB(10) of the Act. However, we note that assessee has submitted before us a letter dated 03.05.2007 of Bardoli Nagarpalika, which is paced at paper book page no.1 and also submitted letter dated 09.07.2008 of Nagar Niyojan (town planner), Surat Branch, these papers were not examined by the assessing officer. Therefore, we remit this issue back to the file of the assessing officer to adjudicate the issue afresh. The assessee is also directed to submit relevant evidences and documents to prove its claim of deduction under section 80IB(10) - Therefore, statistical purposes, ground no.2 raised by the assessee is allowed. Addition of development/construction receipts as alleged unrecorded receipts - HELD THAT - We note that as the issue is squarely covered in assessee s own case wherein the Co-ordinate Bench held that it would be reasonable to estimate 6% on net profit on total on-money receipts. We note that addition of development/construction receipts was made by the assessing officer, treating it alleged unrecorded receipts/on-money. Accordingly, Assessing officer is directed to estimate 6% of net profit on total on-money/unrecorded receipts - Appeal of assessee allowed.

Summary

Issues Involved:
1. Validity of the assessment order under section 143(3) of the Income Tax Act, 1961.
2. Disallowance of deduction claimed under section 80IB(10) of the Income Tax Act, 1961.
3. Addition of development/construction receipts as alleged unrecorded receipts.

Issue-wise Detailed Analysis:

1. Validity of the assessment order under section 143(3) of the Act:
The assessee contended that the assessment order dated 31.03.2013 was served on 03.04.2013, beyond the statutory time limit prescribed under section 153(1)(a) of the Act, making the assessment proceedings void. The Revenue argued that the order was passed within the statutory time limit, and the service date is irrelevant. The Tribunal noted that the assessee failed to provide evidence proving the order was passed beyond the statutory limit. The assessment year under consideration was AY 2010-11, and the order dated 31.03.2013 was within the two-year limit ending on 31.03.2013. Hence, the Tribunal dismissed the ground raised by the assessee.

2. Disallowance of deduction claimed under section 80IB(10) of the Act:
The assessee, engaged in constructing residential houses, claimed a deduction of Rs. 44,85,887/- under section 80IB(10). The AO disallowed the deduction, citing that multiple units were sold to related persons, violating clause (f) of section 80IB(10). Additionally, the AO and CIT(A) observed that the project approval date and agreements indicated the assessee acted as a construction contractor rather than a developer, disqualifying the deduction. The Tribunal noted the requirement for the project to be approved before 31.03.2008, which was not met. However, the Tribunal found that certain documents, such as letters from Bardoli Nagarpalika and Nagar Niyojan, were not examined by the AO. Thus, the Tribunal remitted the issue back to the AO to re-examine the eligibility for the deduction under section 80IB(10), directing the assessee to provide relevant evidence.

3. Addition of development/construction receipts as alleged unrecorded receipts:
The AO added Rs. 69,06,611/- as unrecorded receipts. The assessee argued that the issue was covered by a previous Tribunal decision in its favor, where only the net profit on such receipts was taxed. The Tribunal, following the precedent, directed the AO to estimate 6% net profit on the total unrecorded receipts of Rs. 69,06,611/-, thereby partly allowing the assessee's ground.

Conclusion:
The Tribunal upheld the validity of the assessment order, remitted the issue of deduction under section 80IB(10) back to the AO for fresh examination, and directed the AO to estimate a 6% net profit on unrecorded receipts, aligning with the earlier decision in the assessee's case.