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TMI Blog2018 (2) TMI 2114X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of such notice as well as the assessment order passed u/s. 143(3) r.w.s. 147 of the Act in pursuance thereto is rendered invalid. It is relevant to observe, in assessee's own case for A.Y. 2006-07, [ 2016 (6) TMI 836 - ITAT MUMBAI] the assessment order was quashed by the Tribunal under identical facts due to lack of satisfaction by the prescribed authority in terms of proviso to section 151(1) - Hon'ble Bombay High Court has expressed similar view in the case of Ghanshyam K Khabrani [ 2012 (3) TMI 266 - BOMBAY HIGH COURT] In view of the aforesaid, we have no hesitation in quashing the impugned assessment order. The grounds raised are allowed. Re-opening of assessment on the basis that the assessee is not eligible to claim deduction u/s 801B(10) for the housing project as it was not completed on or before 31% March 2009 - HELD THAT:- AO while completing the original assessment has examined all facts and materials relating to assessee's claim of deduction under section 801B(10) of the Act in respect of the housing project and only after proper application of mind has allowed assessee's claim of deduction. While re-opening the assessment, the Assessing Officer had n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant for deciding the additional ground are that the assessee is a partnership firm engaged in the business of builders and developers of housing projects. For the assessment year under dispute, the assessee filed its return of Income on 31.10.2007 declaring 'nil' income after claiming deduction u/s. 801B(10). Assessment in the case of the assessee was originally completed u/s. 143(3) of the Act vide order dated 23.12.2009 accepting the income returned by the assessee. Subsequently, the Assessing Officer re-opened the assessment u/s. 147 of the Act on the reasoning that the assessee was not eligible to claim deduction u/s 801B(10) as its housing project on which the said deduction was claimed was not completed on or before 31.03.2009. Accordingly, the Assessing Officer issued notice u/s. 148 of the Act to the assessee. In response to the notice issued u/s. 148 of the Act, the assessee submitted its reply adopting the income declared in the original return of income. Ultimately, the Assessing Officer completed the assessment vide order dated 31.12.2013 disallowing the deduction u/s. 801B(10) of the Act. Against the assessment order so passed, the assessee preferred appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the expiry of four years from the end of the relevant assessment year. Section 151(1) of the Act postulates sanction by prescribed authority for issuance of notice u/s. 148 of the Act by the Assessing Officer. As per the proviso to section 151(1) of the Act as existed during the relevant assessment year, in case of an assessee where assessment u/s. 143(3) has already been completed, no notice u/s. 148 can be issued after expiry of four years from the end of the relevant assessment year, unless, the Principal Chief Commissioner or the Chief Commissioner or Principal Commissioner or Commissioner is satisfied on the reasons record by the Assessing Officer that it is a fit case for issue of such notice. From perusal of the notice issued u/s. 148 of the Act dated 17.09.2012, a copy of which is placed at page 37 of the paper-book, it is very much evident that the Assessing Officer has mentioned that such notice is being issued after obtaining necessary satisfaction of the Additional CIT Range 12(1). Further, at the time of hearing, learned AR has submitted before us a copy of the form for recording the reasons for initiating proceedings u/s. 148 of the Act, which reveals that the sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come returned. Subsequently, the Assessing Officer being of the view that the housing project for which the assessee claimed deduction u/s. 801B(10) was not completed within the cut-off date i.e., 31.03.2009, is not eligible to avail deduction u/s. 80IB(10). Since, according to the Assessing Officer, allowance of assessee's claim of deduction u/s. 801B(10) has resulted in escapement of income, he reopened the assessment u/s. 147 of the Act by issuing notice u/s. 148 on 17.09.2012. Ultimately, the Assessing Officer completed the assessment, vide order dated 31.12.2013 u/s. 143(3) r.w.s. 147 of the Act, disallowing the deduction claimed u/s. 801B(10). 10. The learned CIT(A) also upheld the disallowance while deciding the appeal filed by the assessee. 11. Challenging the validity of the re-opening of assessment, the learned AR submitted that after completion of the original assessment no fresh material has come to the possession of the Assessing Officer to form the belief that income has escaped assessment. He submitted, merely on a change of opinion the Assessing Officer has re-opened the assessment u/s. 147 of the Act. The learned AR submitted, during the - Original assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iny under section 143(3) of the Act vide order dated 30% December 2010. Though, the re-opening of assessment under section 147 of the Act for the impugned assessment year is before the expiry of four years from the relevant assessment year, however, the validity of the reopening of assessment has to be tested keeping in view the following factors. Firstly, whether the issue on which the assessment was re-opened as per the reasons recorded was examined at the time of original assessment; secondly, whether the formation of belief that income has escaped assessment has a live link with the materials on record and thirdly, whether the re-opening of assessment under section 147 of the Act is on the basis of some tangible material. Before proceeding further on the issue, it is necessary to look into the reasons for re-opening of assessment as reproduced by the Assessing Officer in Para-2 of the impugned assessment order. On verification of records, it is seen that the assessee was developing housing project within the limits of Pimpri Chinch wad Municipal Corporation on plot bearing survey Nc 185 Hissa No 185148, 18515, 185168. During the year the project was under construction. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in form no.10CCB in support of the deduction claimed. In course of the original assessment proceedings, the Assessing Officer when wanted to examine the eligibility of the assessee's claim under section 801B(10) of the Act, the assessee vide letter dated 25 November 2010, has submitted its reply not only answering the queries raised by the Assessing Officer but has also furnished all supporting documentary evidences in support of the claim of deduction. The Assessing Officer while completing the assessment under section 143(3) of the Act on 30 December 2010, allowed assessee's claim of deduction under section 80IB(10) in respect of the housing project after examining the documentary evidences as well as being satisfied with the fact that the assessee has fulfilled the conditions for claiming deduction under section 801B(10). This fact is evident from the following observations of the Assessing Officer in the original assessment order passed under section 143(3) of the Act. 4, Assessee is developing housing project with in the limits of Pimpri Chinchwad Municipal Corporation. During. the year under consideration, the project was under construction and some of the flats ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of which is at Page-32 of the paper book, clearly demonstrates that only on re-examining the documents submitted by the assessee in course of original assessment proceedings in support of deduction claimed under section 801B(10), he has formed a belief that the assessee was not eligible to claim such deduction as the housing project was not completed before 31st March 2009. Thus, the aforesaid facts available on record clearly establish that there was no tangible material available before the Assessing Officer at the time of recording reasons for reopening the assessment that income chargeable to tax has either escaped assessment or has been under assessed. It is evident, on re examination of the very same material considered by the Assessing Officer while allowing assessee's claim of deduction under section 801B(10) of the Act during the original assessment proceedings, the re-assessment proceedings have been initiated. The Assessing Officer on examining the documentary evidences brought on record by the assessee at the time of original assessment having formed an opinion that the assessee is eligible to claim deduction under section 801B(10) of the Act in respect of the hous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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