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TMI Blog2017 (6) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ase is valid and therefore, the action of the Assessing Officer is upheld. Disallowance u/s.80-IB(10) - Held that:- In this case, admittedly, the project was not completed and it brought on record by the lower authorities that 66 customers out of 88 customers have chosen to take over the property on their own from the assessee. The project of assessee not at all completed when the project was not completed it is appropriate to withdraw the deduction already given to the assessee u/s.80-IB(10) of the Act. On this issue, we do not find any infirmity in the order of the Ld.CIT(A) and the same is confirmed. Hence, this ground of assessee’s appeal is rejected. - I.T.A. No. 2048/Mds./2016 - - - Dated:- 29-5-2017 - Shri Chandra Poojari, Accountant Member And Shri Duvvuru RL Reddy, Judicial Member Appellant by : Mr.T.Banusekar,C.A Respondent by : Mr.Shiva Srinivas, JCIT,DR ORDER Per Bench This appeal of the assessee is directed against the separate order of the Commissioner of Income Tax (Appeals)-8, Chennai, dated 31.03.2016 pertaining to assessment year 2007-08. 2. The assessee raised the following grounds. 1. For that the order of the Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted the assessment u/s. 143(3) of the Act vide order dated 30.12.2009 on the basis of the original return ignoring the revised return filed by the appellant. In completing the assessment, the Assessing Officer did not accept the loss admitted by the appellant company in the revised return of income for the reason that there was no documentary evidence to show that the land was actually taken over by the Government, and that there was no loss suffered by the assessee company. The Assessing Officer reopened the assessment by issuing notice u/s. 148 on 05.05.2011 as he was of the opinion that the assessee s claim u/s. 80IB(10) of the Act, and therefore, income of the assessee escaped assessment. The AO recorded the reasons for reopening the assessment as follows. The assessee claimed deduction U/s.801B(10) of the IT Act. Housing site was converted into plots and sold to the customers by individual sale deeds. As per construction agreement between the assessee and the purchasers construction work was undertaken by the assessee, Construction work did not progress due to acquisition of land proposed by the Govt. in one of the projects. The construction is not completed due to acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(3) of the Act vide order dated 30.12.2009. It is a settled law that on the basis of material, prima facie, available before the Assessing Officer, opined that income chargeable to tax has escaped assessment can be formed. The word reason in the phrase reason to believe would mean cause or justification. In case the Assessing Officer has a cause or justification to know or suppose that income has escaped assessment, action u/s 148 can be taken. But obviously, there should be relevant material on which a reasonable man could have formed a requisite belief. Whether this material(s) would conclusively prove the escapement of income is not the concern at that particular stage. So what is required is the subjective satisfaction of the Assessing Officer based on objective material evidence. The reason was recorded as discussed above. The argument of the ld.AR is that where there was no fresh tangible material to reopen the assessment u/s 147, no action could be taken by the AO. 7.2 As seen from the assessment order, it gives a clear picture that the Assessing Officer has got material evidence to form his opinion for taking recourse to section 147 r.w.s 148 of the Act. There canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns but the concept change of opinion has to be taken into consideration otherwise it may give unbridled power to an Assessing Officer to reopen any and every assessment order which would simply amount to a review. The concept change of opinion is an in-built test to check the abuse of power by the Assessing Officer. So, now only when the Assessing Officer has a tangible material to base his conclusion that there is an escapement of income from assessment and the reasons recorded have a link with the formation of his belief, he has the power u/s 147 of the Act. 7.3 In the present case, the assessee has not informed to AO that construction work did not progress due to acquisition proceedings initiated by Government. As per Explanation 2 of Section147, it is very clear that due to non-disclosure of this by the assessee, the income chargeable to tax had escaped assessment. The assessee has not produced anything before the Commissioner of Income Tax (Appeals) to show as to how the assessee is entitled for deduction u/s.80-IB(10) of the Act. Hence, the action of Commissioner of Income Tax (Appeals) and that of Assessing Officer is fully covered by the provisions of Explanation 1 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Assessing Officer disallowed the deduction of ₹ 2,59,97,129/- claimed by the assessee. Aggrieved, the assessee carried the appeal before the Ld.CIT(A). 10.2 On appeal, Ld.CIT(A) observed that it is an admitted fact that deduction u/s. 801B was allowed to the assessee in the preceding years consequent to the orders of Tribunal. After considering the introduction of Explanation w.r.e.f. from 01.04.2001 u/s. 801B(10), inserted by the Finance (No.2) Act, 2009, the Assessing Officer reopened the assessment for the assessment year under consideration. The Ld.CIT(A) observed that considering the Explanation to u/s.80-IB(10) of the Act, the Assessrng Officer concluded that the appellant is not an actual developer aid that its risk related to the project is restricted to contract risk and does not extend to investment risk. The Ld.CIT(A) placed reliance in the decision of Radhe Developers (341 ITR 403)(Guj.). In the case of Radhe Developers the assessee was engaged in business of developing housing projects approved by the local authority. It entered into a development agreement in terms of which assessee had to buy land from land owners for development purpose. After develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration of the purchasers paying the cost of site and also agreeing to have independent houses constructed by the assessee . 10.4 In this background, the initial return of income was filed by the appellant after considering the income from River View Phase-Il, Manapakkam, Chennai. Later the assessee filed a revised return of income on 31.03.2009 since its project at RVC Phase II in Manapakkarn had to be withdrawn on account of the Government s proposal to acquire the property for airport expansion. In the revised return of income the income already taken into account by the appellant on this project was not only withdrawn but in fact a liability repayable to persons who had booked flats in the project was recognised. However, the Assessing Officer completed the assessment u/s. 143(3) on the basis of the original return ignoring the revised return filed by the assessee. In completing the assessment, the Assessing Officer did not accept the loss admitted by the appellant-company in the revised return of income for the reason that there was no documentary evidence to show that the land was actually taken over by the Government, that appellant had sold most of the project, and th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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