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TMI Blog2022 (8) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... 132 of the Act. 2. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of deduction u/s 801A(4) in respect of following infrastructure projects undertaken by the appellant: Sr. No. of project referred by CIT (Appeals) Name of the project 1 Repairing of road 2 EE/B1/32/04-05 Repairing of road 3 EE/B1/33/04-05 Repairing of road 4 Repairing of road 5 SE/B1/05-06 Repairing of road 6 EE/B1/32/04-05 Repairing of road 7 SE/B1/26/04-05 Repairing of road 8 SE/B1/04-05 Repairing of road 9 EE/B1/05-06 Repairing of road 10 Package No. NABARD/RIDF-V/RAJ/P Repairing of road 11 Repairing of road 12 Job No. SR/Rajkot/204-05/15 Repairing of road 13 Tender No. 49 Repairing of road 14 Providing WBM asphalt carpet 15 Providing WBM asphalt carpet 16 Providing WBM asphalt carpet 17 Providing WBM asphalt carpet 18 Providing WBM asphalt carpet 19 Agreement No. ADB/2 Mahua Road Repairing only 23 Agreement No. CE/6. Repairing of road 25 Agreement No. CE/6. Repairing of road 26 Agreement for Road Repairing only. & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/100) Ta. Rajkot (Panchayat R&B Division Rajkot) 76 SR to Thana Golal Amarpara Resamadi Golal Road Ta. Jetpur (Km 0/0 to 3/80) 77 SR to Vasavad Madhadam Road Km 0/0 to 3/10 Ta. Jasdan 78 Lothadada Bhayasar Road repair & recarpet Bitumen Ta. Rajkot 79 Improvement including strengthening of Urban Road in Jetpur City under R&B Department (Vikashapath Yojna) Pkg. RJD/VP/2 80 SR to SH to Mota Matra Road KmO/0 to 5/0 (selected length) by prov. 25mm thick carpet & 0.18 cum/10 sqm. Seal coat by HMP&PF 81 RMC Zone I & III 82 Recarpeting Road of Word No. 5,6,7,16,17,18, 23 East Zone 83 Modheswar Filtration Plant Una Nagarpalika 3. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of projects specified by him and listed in ground No. 2 above. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal." AY 2006-07 "1. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in upholding the validity of order passed u/s 153A r.w.s. 143(3) of the Act particularly in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, Ahmedabad erred in holding that appellant was not a developer of infrastructure facility in respect of projects specified by him and listed in ground No. 2 above. 4. The learned Commissioner of Income Tax (Appeals) - 11, Ahmedabad erred in confirming disallowance of Rs. 50,000/- out of administrative expenses. The appellant craves leave to add, amend, alter and withdraw any ground anytime up to the hearing of this appeal." 3. The Revenue has taken the following grounds of appeal:- AY 2005-06 "1. The Ld. CIT(A) has erred in law and on facts in allowing the deduction U/s 80IA(4) in respect of various projects by treating the assessee as developer instead of work contracts' as treated by the A.O. 2. On the facts-and circumstances of the case, the ld. CIT(A) has erred in interpreting the provision of section 80IA(4) of the Act whereby the vital conditions to be fulfilled such as findings on new infrastructure facility and requirement of eligible income to be derived from use of the said infrastructure facility was ignored while deciding the issue of deduction u/s 80IA(4)of the Act. 3. On the facts and circumstances of the case, the ld. CIT(A) erred in not taking into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent 2005-06 would apply to assessment year 2006-07 as well. At the outset, the counsel for the assessee has raised the issue of jurisdiction of passing the assessment order for the above years under section 153A r.w.s. 143(3) of the Act on the ground that assessment for the above years were already concluded/unabated and during the course of search initiated on the assessee for the impugned assessment years, no incriminating material was found so as to justify the aforesaid additions. The counsel for the assessee relied on several judicial precedents including on the case of Pr. CIT v. Saumya Constructions 81 Taxman.com 292 (Gujarat) rendered by the jurisdiction Gujarat High Court which is to the effect that additions under section 153A r.w.s. 143(3) of the Act in case of completed / unabated assessments can be made only on the basis of incriminating material found during the course of search, and not otherwise. 5. In order to understand/appreciate the issue raised by the counsel for the assessee, it would be pertinent to reproduce the relevant extracts of the assessment order for assessment year 2005-06, to understand whether any fresh incriminating material was found in the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxxxxxxxxxxxxxxxxxx "5. The arguments put forth by the assessee company have been carefully considered and a claim of the assessee has been thoroughly examined in the light of provisions of section 80IA(4) read with explanation inserted after sub section (13) of section 80IA of the Act. On perusal of the reply submitted by the assessee it is seen that the same is not acceptable for the reasons discussed in the following paragraphs: 5.1 The claim of the assessee is that in the decision of Hon. ITAT Mumbai Bench, Mumbai in the case of M/s. All Cargo Global Ltd Vs DCIT(supra) it was held that the assessment years which are not abated has to be finalized on the basis of incriminating materials found during the course of search and which was not produced in the course of original assessment and undisclosed income or property discovered during the course of search. However, the decision of the Hon, ITAT Mumbai Bench in this case has to be read in proper context. The Hon. ITAT has held further that this is in addition to the income that has been already assessed. The Hon. ITAT has therefore, mentioned that the original income assessed has to be taken into consideration and it did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s felt that such an attitude would be a travesty of justice when the assessee is not eligible for deduction on merit. Further, in the case of Som Datt Builders Pvt. Ltd. vs DCIT(2006) 280 ITR(AT)229(Kol) it was held by the Hon. Kolkata High Court that where relief under section 80HHB was wrongly given for a year for which the provision was not applicable, reassessment in such a case cannot be challenged on the ground of change of opinion. Hence, the underlying principle of these decisions is that a claim wrongly allowed previously could be and should be set right in subsequent assessments and limiting the provisions of section 153A in the manner suggested by the assessee would in fact be a travesty of justice. 5.2 Further, the decision of Hon. Special bench has to be seen in the context of the case. The essence of this decision is that the issues which have reached finality in original assessment should not generally be disturbed in the assessments under section 153A unless and until evidences were found during the course of search demanding necessity for the same. In the case under consideration, original assessment under section 143(3) was completed prior to insertion of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order "Hence, the underlying principle of these decisions is that a claim wrongly allowed previously could be and should be set right in subsequent assessments and limiting the provisions of section 153A in the manner suggested by the assessee would in fact be a travesty of justice.....Since, the original assessment was completed prior to insertion of this explanation the then Assessing Officer did not had the benefit or occasion to examine the claim of the assessee in the light of intention and meaning of the provision as clarified by the said Explanation". Thus, the order passed u/s 153A r.w.s. 143(3) of the Act was not on the basis of any incriminating material found during the course, but on the basis of revision of order sought to be made on the basis of insertion of new Explanation to section 80-IA, which was not existing at the time of completion of original assessment. Now, which shall also refer to the relevant extracts of the order of the Ld. CIT(Appeals) on this point: "6. The decisions relied by the appellant were carefully gone through and it was observed contents of the decisions were reproduced by the appellant in a distorted manner just to make believe his submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd during the course of search so as to disallow the claim of the assessee under section 80-IA of the Act. The Ld. CIT(Appeals) in his order has categorically observed that "it is not relevant whether any incriminating was found in any particular order and all of the relevant years. Therefore, ground of appeal that the assessments already made cannot be reopened under section 153A is not in accordance with the provisions of the Act". 8. Before us, the Ld. Counsel for the assessee challenged the validity of the assessment framed under section 153A of the Act in the absence of any incriminating material found during search action undertaken on the assessee, particularly when the assessment years 2005-06 and 2006-07 had attained finality and thus not abated. Further, vide order sheet entry dated 1st March 2022, this Bench had directed the Department to submit in writing any incriminating material on the basis of which the assessment has been framed duly substantiated in order to counter the contention of the counsel for the assessee. However, despite several opportunities, the Department has not been able to produce any material/evidence to prove that the assessment under section 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment under section 153A, would not be entitled to interfere with assessee's claim for deduction under section 80-IA, which was part of original assessment proceedings and such assessment had abated. The ITAT Rajkot Bench in the case of a Rajat Minerals v. DCIT 114 Taxman.com 536 (Ranchi-Trib) held that where no incriminating evidence against the assessee was found or seized during course of search, invocation of provisions of section 153A and making additions/disallowances on basis of tax evasion petition found much after search was unjustified. The Delhi High Court in the case of Pr. CIT v. Jaypee financial services Ltd 127 Taxman.com 419 (Delhi), held that where AO during the course of post search proceedings under section 153A against assessee-share trader found certain evidences showing client code modification done by assessee which were not for genuine reasons and, accordingly, made addition on account of such client code modification, since impugned addition was not made by AO based on any incriminating material found during search against assessee and assessment was not pending on date of search, impugned addition was unjustified and same was to be deleted. The Depart ..... X X X X Extracts X X X X X X X X Extracts X X X X
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