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TMI Blog2019 (12) TMI 755X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the initial show cause notice issued by the Pr. CIT., it has been stated that the case was selected for limited scrutiny, it should be accepted that the case of the assessee was selected for limited scrutiny in view of material facts, as we have noticed above, as emanating from the records which shows clearly that the case of the assessee was selected for complete scrutiny. Assessee having participated in the assessment proceedings and not raising this objection before the AO during the assessment proceedings cannot be permitted to raise this contention in the revision proceedings. We are therefore of the considered view that the case of the assessee had been selected under complete scrutiny and not under limited scrutiny. In the assessment order passed u/s 143(3), AO has stated that the assessee firm is notified by the Central Govt. in the special economic zones for construction and development of low cost project of houses and is also entitled for claim of deduction under section 80IB for any 10 consecutive assessment years out of fifteen years beginning from the year in which special economic zone has been notified. This finding of the Assessing officer is clearly out of sy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income on 23.09.2014 declaring Nil income after claiming deduction u/s 80IB of the Act. The case was selected for scrutiny under CASS and a notice u/s 143(2) was issued to the assessee on 10.09.2015. Subsequently, the assessment order was passed u/s 143(3) dated 19.12.2016 wherein the returned income was accepted. Thereafter, the assessment records were called for and reviewed by the ld. Pr. CIT and the order u/s 263 was passed setting aside the assessment order passed by the Assessing Officer u/s 143(3) with the following directions: "12. Keeping the above discussion in view, by the virtue of the powers conferred on the undersigned under the provisions of Section 263 of the IT Act 1961, I hold that the order under Section 143(3) dated 19.12.2016 for assessment year 2014-15 passed by the assessing officer is erroneous in so far as it is prejudicial to the interest of revenue as the order has been passed by the assessing officer in a routine and perfunctory manner without making enquiries/verification which ought to have been made before accepting the submission made by the assessee regarding deduction u/s 80IB during the year. It is therefore liable to revision under explanation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion u/s 80IB of the Act, he cannot be held responsible for not examining and verifying the claim u/s 80IB of the Act. It was accordingly submitted that ld. Pr. CIT was wrong in setting aside the assessment order and therefore, the order so passed by the ld. Pr. CIT deserves to be quashed. 4. On merits, it was submitted by the ld AR that during the proceedings u/s 263 before the Pr. CIT, it was submitted that all the conditions for allowing claim u/s 80IB of the Act stood complied with by the assessee and there was no occasion for issuing directions to the Assessing Officer to re-examine the issue. It was submitted that it is not the case of the ld. Pr.CIT that the assessee did not comply with the provisions of section 80IB rather the case of the ld. Pr. CIT is that the claim u/s 80IB of the Act was allowed without verification and examination. Further, it was submitted that in respect of various objections raised by the ld. Pr. CIT vis-à-vis conditions for claiming the deduction, the assessee has complied with the same as per details below:- Sr. No. Objection by Learned Pr. CIT Compliance by the assessee (i) Form no. 10CCB not sent electronically It stood furnishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AR submitted that the assessee fully complied with the provisions of section 80IB(10) of the Act. In this regard, it was submitted as under:- "The perusal of the aforesaid provision reveals following: - (i) The deduction is available to the assessee where the housing project has been approved by the Local Authority on or after 1st April 2005 and the construction is completed within five years from the end of the financial year in which the project is approved by the local authority. In the case of the assessee the approval was given on 30.03.2008 and the project stood completed on 17.10.2009. Thus the assessee has complied with the provisions of section 80IB(10)(a)(iii). (ii) In the order u/s 263 the Pr. CIT has wrongly stated that the circular of the Board No. 4/2009 mandates completion of the project within the specified time in four years. In fact this time limit of four year is applicable in cases where approval by the local authority was given between 01.04.2004 to 31.03.2005 [Provisions of section 80IB(10(a)(ii)]. (iii) Regarding default of the assessee in not furnishing form no. 10CCB electronically with the return of income it is submitted that assessee cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not correct in view of the other materials facts available on record. It was accordingly submitted that the case of the assessee was clearly selected for complete scrutiny and not limited scrutiny. Therefore, the contention advanced by the ld AR should not be accepted. It was further submitted that even where it is held by the Bench that the case was initially selected for limited scrutiny, given that the Assessing Officer was seized of the material that the assessee has claimed deduction u/s 80IB(10) of the Act and on prima facie reading of the report in Form no. 10CCB so submitted manually by the assessee, it is reasonably possible to form the view that the claim so made by the assessee company is not admissible, the Assessing Officer should have sought the permission of the concerned Higher authorities to convert the case from limited scrutiny to complete scrutiny and our reference was drawn to the instruction No. 5/2016 dated 14th July, 2016 issued by the CBDT. It was accordingly submitted that where there exists material and information on record that the claim made by the assessee is prima facie not admissible then the Assessing Officer should have referred the matter to supe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch issues as also apparent from Instruction No. 5/2016 dated 14th July, 2016 issued by CBDT, which has been relied upon by the ld. AR and binding on the Assessing officer. Para 4 of the said instructions is relevant and the same reads as under:- "4. It is further clarified that in cases under 'Limited Scrutiny', the scrutiny assessment proceedings would initially be confined only to issues under 'Limited Scrutiny' and questionnaires, enquiry, investigation etc. would be restricted to such issues. Only upon conversion of case of 'Complete Scrutiny' after following the procedure outlines above, the AO may examine the additional issues besides the issue(s) involved in 'Limited Scrutiny'. The AO shall also expeditiously intimate the taxpayer concerned regarding conducting 'Complete Scrutiny' in such cases." 9. The aforesaid instructions issued by the CBDT are clear to the effect that only when the case has been converted from limited into complete scrutiny, the additional issues can be examined by the Assessing officer and that too, after the assessee has been informed that the case has been converted into complete scrutiny. In the instant case, therefore, had it been the case of li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it fulfills all conditions stipulated in section 80IB of the Act. However, there is nothing on record to substantiate such claim by the assessee company. It is only towards the fag end of the assessment proceedings that the assessee submitted a copy of Form No. 10CCB on 15.12.2016 and thereafter, the assessment was completed and order u/s 143(3) passed on 19.12.2016 by simply accepting the claim of the assessee u/s 80IB of the Act without any query and any question being asked by the Assessing Officer as to how the assessee has fulfilled the conditions for such claim. The fact that the Assessing officer has not examined the claim is apparent from the fact that on a reading of the Form No. 10CCB filed by the assessee company, deduction is prima facie not admissible as the date of commencement of operation/ activity by the undertaking or enterprise shown at 07/4/2007, date of approval from authority was shown on 30/3/2008 and the date of completion of project shown on 18/3/2013. Further, we note that in the assessment order passed u/s 143(3), the Assessing officer has stated that "the assessee firm is notified by the Central Govt. in the special economic zones for construction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erve the same. • The dates of projects available in the physical copy of the audit report filed during assessment does not allow the benefit of Section 80IB to the assessee in the current year. Here it is also for consideration that till the said defect was pointed out to the assessee the assessee had relied upon the auditor's report submitted during the assessment proceedings for claiming the deduction. It is only on pointing out the defect and its ineligibility to claim the said deduction that the assessee has stated that the first report of the auditor was incorrect and has submitted another report stating that it is the correct one. • If the second report is true then it stands that the first report will need to be disregarded and it would mean that there was no report filed which will render the assessee ineligible for the said claim as the mandatory condition would not have been fulfilled. • Secondly the assessee has given no reason or basis of changing its report except to say that there was a typographical error. It is not understood how a professional Chartered Account firm would have made the said error in respect of all the dates concerned. Besid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of operation/ activity by the undertaking or enterprise shown at 07/4/2007, date of approval from authority was shown on 30/3/2008 and the date of completion of project shown on 18/3/2013. AO should have gone through the CBDT instruction No.4/2009 in which Board clarify that 3.(b) "in case it is late, found that the condition of completing the project within the specified time limit of 4 years as stated in section 80IB(10) has not been satisfied, the deduction granted 16 made to the assessee in earlier years should be withdrawn". • Here it is seen that there was no claim for section 80IB deduction in AY 2012-12 and 2013-14 -the reason for which has not been inquired into by the AO and on what grounds have the claim be made in the AY under consideration and its allowability vis a vis the provisions of the Act/ rules and the various circulars / instructions on the subject. • There is apparent violation of provisions of section 80IB(10) where assessee has sold two units to one person i.e. Flat No. 207-208 to Rahul Mishra through POA Hari Ram Sharma which also does not stand questioned or explained during the assessment proceedings. • In fact with th ..... 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