2022 (10) TMI 459 - AT - Income Tax

Deduction u/s 80IB - disallowance was on account of that assessee has not fulfilled the certain conditions of the project - order of the learned CIT (A), wherein reopening of the assessment proceedings is quashed - HELD THAT - CIT (A) has not decided the issue on merits of the case. He is merely quashed the reopening of the assessment because the original functional material for the reopening was the assessment order passed by the learned Assessing Officer for A.Y. 2006-07 that has already been decided for 2006-07 in favor of the assessee. Therefore, as the order of the learned Assessing Officer for A.Y. 2006-07 ceased to exist, naturally, reopening made on that basis cannot survive. Therefore, on this ground itself, the appeal of the learned Assessing Officer deserves to be dismissed.

Summary

Issues:
Appeal against allowing claim under Section 80IB of the Income-tax Act, 1961 for A.Y. 2008-09.

Detailed Analysis:

1. Background and Assessment Order:
The appeal was filed by the Dy. Commissioner of Income Tax-26(1), Mumbai against the order of National Faceless Appeal Centre for A.Y. 2008-09. The assessee, a company engaged in builders and developers business, declared total income of Rs. 5,05,27,022/-. The assessment under Section 143(3) of the Act was passed, determining total income at Rs. 9,69,31,939. The notice under Section 143 of the Act was issued, questioning the deduction claimed under Section 80IB of the Act.

2. Reopening of Assessment:
The Assessing Officer reopened the case based on the claim under Section 80IB, similar to A.Y. 2006-07 where the claim was disallowed due to non-fulfillment of project conditions. The Assessing Officer found discrepancies related to commencement certificate and land ownership. Despite detailed responses from the assessee, the deduction under Section 80IB was withdrawn in the reassessment order.

3. Appeal and CIT (A) Decision:
The assessee appealed challenging the reopening and the merits of the case. The CIT (A) noted a previous decision favoring the assessee for A.Y. 2006-07 and quashed the reopening for A.Y. 2008-09 based on the same grounds. The Revenue appealed against this decision.

4. Grounds of Appeal and ITAT Decision:
The ITAT considered the grounds raised by the Assessing Officer, questioning the allowance of deduction under Section 80IB despite land ownership issues and missing details in the audit report. The ITAT observed that the CIT (A) had not decided on the merits but only quashed the reopening based on the previous decision for A.Y. 2006-07. As the original basis for reopening ceased to exist, the ITAT dismissed the appeal of the Assessing Officer.

5. Conclusion:
The ITAT's decision was in favor of the assessee, dismissing the appeal filed by the Assessing Officer. The ITAT emphasized that since the original basis for reopening the assessment no longer existed due to a previous decision, the appeal challenging the deduction under Section 80IB could not be sustained.

This comprehensive analysis covers the background, reassessment, appeal, and the ITAT's decision regarding the deduction claim under Section 80IB of the Income-tax Act, 1961 for the relevant assessment year.