9911796707
TMI Blog2024 (5) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... 10/2023, The assessee has filed a paperbook consisting of 102 pages containing documents already filed before the lower authorities and a compilation of various notifications issued by the Punjab Government (with running page number 103 to 127) which also certified to have been filed before the AO, and the notifications being directly linked to the nature of work carried out by the assessee as per direction of the State Government. Moreover, the Ld AR has filed a judgment set containing 267 pages, consisting of judgments of the Hon'ble Apex Court, various High Courts, and Tribunals, relating to the issue of reopening of cases u/s 148 of the Act 61, the matter challenged in these appeals. The AR, has further filed a synopsis containing 26 pages, retreating his arguments and submissions relating to the grounds of appeal . 2. There is common issue involved in all the years, regarding reopening of already completed assessment u/s 143(3) in Asstt.Years 2012, -13, 2013-14 and 2014-15 and on merits also, the issue is almost same in all the assessment years under consideration and, thus, for the sake of convenience, all the above appeals are being decided by way of common order for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration. 2. That the Ld. CIT(A) has failed to appreciate that the original assessment had been framed u/s 143(3) vide order, dated 29.2.2016 and, thus, there was due application of mind by the Assessing Officer regarding the claim of 'External Development Charges' as claimed by the assessee and, thus, without any tangible material on record, the reopening of assessment u/s 148 is devoid of any valid consideration. 3. That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer in reopening of the case u/s 148 on the basis of judgment of Hon'ble Punjab & Haryana High Court in the case of Greater Mohali Area Development Authority (GMADA) as quoted by him, at page 22 of the order and which, judgment did not find favour with the Hon'ble Apex Court and rather in the case of GMADA, the proceedings u/s 148 have been quashed after considering the judgment of Hon'ble ITAT. 4. That the Ld. CIT(A) has failed to appreciate that the change of opinion on the same issue, is not permitted by way of numerous judgments of different High Courts/Apex Court. 5. Notwithstanding the above said ground of appeal, the Ld. CIT(A) has erred in confirming the addition of Rs. 8,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of Rs. 1,01,68,500/- on account of EWS/Flat Charges as claimed in the profit and loss account by the assessee. 9. That the addition has been made against the facts and circumstances of the case and without any application of mind. 10. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off." 4. Brief facts of the case are that, the assessee is a development authority, a Government Body established by the State of Punjab, on 16.07.2007 as per notification of Government of Punjab, for the development and maintenance of the areas of Jalandhar, and surrounding places, such as Kapurthala, Phagwara and others, under the name of "Jalandhar Development Authority" (in short JDA). The source of income of the authority are mainly on account of receipts of the proceeds from the sale of land, which are acquired by them through capital receipts, instalment collections, interest income, etc. The expenditure incurred are mainly on account of the development of basic infrastructure and maintenance of the areas along with the administration and establishment expenditures. The JDA is again governed by the provisions of the "P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, that the "extra development charges" ( EDC ) and the "license fees", both received ( collected ) by the assessee, were duly disclosed and reflected in the liability side of the audited balance sheet, which subsequently, was the subject matter of issuance of notice u/s 148 by the assessing Officer, on the ground, that these are revenue receipts and there was failure on the part of the assessee to disclose all the material facts. The CIT (A) has reproduced the recorded reasons in his appeal order for the Asst year 2012-13 which is being reproduced as follows: "On perusal of the assessment records, it has been noticed that the assessee had received External Development Charges amounting to Rs. 10,12,67,004/- and License Fee to the tune of Rs. 58,13,596/-, and the said receipts had been shown as Capital receipt in its balance sheet. However, the nature of these receipts, which are collected from allottees / colonisers, is required to be treated as revenue receipts. During the course of assessment proceedings, the assessee failed to file information in this regard. On 04.08.2018, notice u/s 154 was issued to the assessee to show cause as to why these receipts be not treated as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which ought to have been disclosed as revenue receipts. The Ld.Counsel has stated that the said external development charges ( EDC ) and license fee, had been duly disclosed in the audited balance sheet of the assessee, wherein, under the head current liabilities ( placed in page 16 of the paper book ), such amount of EDC and License fee had duly been reflected and, thus, there is neither any omission or failure on the part of the assessee to disclose fully/truly all material facts, nor the Assessing Officer has in his possession any material, for formation of belief, that income of the assessee has escaped assessment. 8. The first four grounds of appeal of the assessee ( Ground No 1 to 4 of the appeal memorandum ), relates to the reopening of the case u/s 148 of the Act 61. The Ld. AR has filed a written submission on this aspect of the matter, and only the relevant portion of same is being reproduced below : "Written submission of the assessee : 1. At the outset it is submitted that the re-opening of the case U/s 148 is bad in law due to the following facts: Change of Opinion by successor AO on same facts. All facts regarding the External Development Charges and Licen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby that no new material or information has been received but it is reappraisal from the information already in the file. b). In the same para, there is detail with regard to EDC and how, they are collected, which was in the knowledge of the earlier Assessing Officer also, have been mentioned and, as such, everything is borne out from the records only. c). Then again certain observations have been made that how that liability of EDC has been reflected in the balance sheet and, thus, everything is borne out from the records. d). It has been mentioned in the last para that there is failure on the part of the assessee to fully and truly disclose all the material facts relating to its income. It is submitted that there is no failure on the party of the assessee and each and everything is borne out from the balance sheet, which was with Ld A.O. at the time of original assessment. 12 . From the above facts, it is very much clear that the re-opening of the case is merely the change of opinion on the part of the AO as the matter has already been considered during the course of original assessment proceedings. 13. The case has been re-opened after four years and it has been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts which he already knew. However, that cannot lead to the conclusion that there is nondisclosure of true and material facts by the assessee. The duty of an assessee is limited and restricted to disclosing all the "primary facts" before the AO. And the same may be treated as a "full and true disclosure" made by an assessee. iii) The Hon'ble Supreme Court held that the assessee must be put to notice of all the provisions on which the Revenue relies upon. The notice and reasons given thereafter do not conform to the principles of natural justice and NDTV did not get a proper and adequate opportunity to reply to the allegations which are now being relied upon by the revenue. If the revenue is to rely upon the second proviso and wanted to urge that the limitation of 16 years would apply, then in our opinion in the notice or at least in the reasons in support of the notice, the assessee should have been put to notice that the revenue relies upon the second proviso. The assessee could not be taken by surprise at the stage of rejection of its objections or at the stage of proceedings before the High Court that the notice is to be treated as a notice invoking provisions of the seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does it have to be indicated in the order passed in the regular assessment proceedings. Thus, issuing the impugned notices on the above ground would, prima-facie, amount to a change of opinion." iv) Hon'ble Bombay High Court in the case of Idea Cellular Ltd. v/s DCIT reported in 301 ITR 407 wherein it was held as under; "Where the assessee's assessment was reopened on the ground that since the assessee had failed to disclose the income accruing on amalgamation, provisions of section 147 were applicable. Held that this was not a case where it could be said that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment in the relevant assessment year. The accounting entry for the amount of Rs. 9,984.15 lakhs was mentioned in the returns for the relevant year. The queries raised were replied to by the assessee. There was a full true disclosure of all material facts placed before the Assessing Officer and thus there was no suppression of any material from the assessment officer. Therefore, all materials were placed before the Assessing Officer when he passed the order. Therefore, the pre-requisite condition cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgments of various courts, all leading to the same conclusion, and he concluded his arguments by submitting that, there is no failure on the part of the Assessee and hence provisions of sec 148 of the Act are not applicable ( as per the Ld AR ), because of the fact that: (i) the Assessee has properly disclosed the EDC and License fees in the face of the Balance Sheet (Pg-16 of PB-1), (ii) the original Assessment has been framed u/sec 143(3) of the Act after due application of mind, (iii) the proceedings u/sec 154 of the Act were initiated on same grounds, (iv) the AO at the time of re-opening has duly relied upon the "assessment record" only and there was no new tangible material with the Assessing Officer, on the basis of which reason to believe has been formed, (v) it is a clear case of change of opinion. (vi) there is no failure on the part of the Assessee as there is proper disclosure of EDC and License Fees in the Balance Sheet, (vi) the assessments in the case of the Assessee has been completed u/sec 143(3) of the Act year after year." 9. The Ld AR further retreated that the Ld. CIT(A) as well as the AO has laid emphasis on the dismissal of writ petition as fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43(3) on the issue of EDC and License fee. 13. The Ld. Counsel of the assessee, has brought to our notice the judgment of GMADA ( Greater Mohali Area Development Authority ) for Asstt. Year 2010-11 & 2011-12 in ITA Nos. 1177 & 122/Chd/2019, a copy of which has been placed before us. It is brought to our notice from that judgement, that after the writ petition of GMADA was dismissed by the Hon'ble Punjab & Haryana High Court, the petitioner in that case, GMADA had filed the SLP before the Hon'ble Apex Court and the Hon'ble Supreme Court, though, had dismissed the 'SLP', but the Hon'ble Apex Court had clarified that it is open to the assessee to challenge the order of Assessing Officer in regular appeal and the Appellate Authority would adjudicate the issue uninfluenced by the observation made by the Hon'ble High Court, referred to page 6 of the judgment of GMADA as stated above and read out the finding of the Hon'ble Apex Court in SLP (C) No. 15102/2018 dated 2007-2018 as reproduced in the order of GMADA by the Chandigarh Bench as mentioned above, as under:- "Since the reassessment is already complete and the assessing officer has passed the assessment order, we do not find any r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he years and there is a settled law on this aspect that the case cannot be subjected to 148 beyond four years unless, there is failure on the part of the assessee and in the present facts and circumstances of the case, we have no hesitation in holding that there is no failure on the part of the assessee to disclose all facts material to the computation of income for all the three years. 17. The reliance by the Ld. Counsel on other judgments are also on similar facts and thus, we have no hesitation in holding that the reopening was made by the Assessing Officer only on the basis of facts already on record and there was no tangible material with the Assessing Officer or failure on the part of the assessee to disclose fully and truly the particulars of income and, as such, based on the number of cases relied upon by the Ld. Counsel of the assessee, particularly the case of GMADA for Asstt. Year 2010-11 and 2011-12 by the Co-ordinate Bench of Chandigarh ITAT, we hold that the reopening u/s 148 for all the three years is merely on the change of opinion and is not permitted as per law. 18. The Ld DR, has not filed any written submissions, but relied upon the arguments of order of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal and the Hon'ble Bench has given a finding to which, we also agree as under:- "11. Clearly the reopening was resorted to beyond four years from the relevant assessment year and law stipulates that reopening can be resorted to beyond four years only if any income chargeable to tax has escaped assessment by reason of failure of the assessee, amongst other things, to disclose fully and truly all material facts necessary for his assessment for that year. There is no dispute vis-a-vis this requirement of law. 12. Going forward from here & examining and perusing the contents of the reasons recorded we find that there is no material fact, relating to the escapement of income, which the assessee could be said to have not disclosed truly and fully. The reasons recorded escapement of income on account of EDC, not being taxed. The assessee ought to have been found by the AO to have concealed some material fact relating to the same for him to validly assume jurisdiction to reopen the case of the assessee u/s 147 of the Act, and the reasons recorded should have mentioned this act of concealment. But on the contrary we find, the reasons note that the EDC charges were shown by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue of reopening of the case u/s 148, without going into the merits of the case (which are merely academic in nature ) and, as such, the appeal filed by the assessee raising various grounds on the merits of the case become infructuous. In the result, appeal filed by the assessee in ITA No. 377/Asr/2023, for Asstt. Year 2012-13, ITA No. 378/Asr/2023 for Asstt. Year 2013-14 and ITA No. 3/Asr/2024 for Asstt. Year 2014-15 are allowed. ITA No 379/ASR/2023 for Assessment year 2017-18 21. The grounds of appeal taken by the assessee in this year is as follows : Assessment Year 2017-18 ( Grounds of the Appellant ) "1. That the Ld. CIT(A) has erred in confirming the EWS House/Flat/charges amounting to Rs. 1,25,96,475/-, ignoring the fact that the same has already been assessed in previous years and that the said receipts are not the income of Assessee on behalf of Ministry of Housing and Urban Development. 2. That the confirmation of addition has been made against the facts and circumstances of the case and ignoring the submissions filed by the assessee. 3. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount nor it is disclosed as an income, since the said amount does not belong to the assessee and neither it has any authority to spend the same. 24. Further, the assessee has by way of submissions as made on merits for Asstt. Year 2012-13, has given detailed submissions on this issue and since the facts and circumstances in Asstt. Year 2012-13 & 2017-18 remains the same on merits, the same being reproduced as under and are being considered for decision on merits for Asstt. Year 2017-18 bearing ITA No. 379/2023:- Argument on Merits : "1. The Assessee is governed by the provisions of Punjab Apartment and Property Regulation Act, 1995 (PAPR Act) and as per the said Act, JDA is a competent authority to receive such funds. 2. In the said Act, it has also been clearly stated that external development works to be carried out by the government or a local authority. Regarding the nature of the EDC it is submitted that the said charges are collected from the promoters/developers of colonies as per the stipulated rates and are meant to be spent on the external development of the said colonies. These charges are for providing infrastructure facilities like roads, water supply and sew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be read in isolation and it has to read along with the PAPR Act, wherein it is already clear that the amount collected as EDC has to be spent by the Government or the Local Authority. The AO has laid stress on the point that EDC will be utilized by the concerned local planning and urban development authorities and if the concerned authority feels that connectivity is required from any local body or any work is to be got executed from a local body, the proportionate amount may be deposited by the authority with the local body on case to case basis. In this regard it is submitted that it is clear from the said wording that the amount cannot be spent by the Assessee in isolation. The area of work which can be done by the Assessee can be done by it but that too with the approval of the Government of the Punjab as the Assessee is merely the custodian of the said amount. It is also submitted that in the future years, the amount has been transferred to the various local authorities for development of the infrastructure. The detail of amount spent from the said EDC A/c has already been filed with the department. The AO has not doubted that the amount has been spent for the purposes f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rban Development that EDC amount cannot be used without obtaining order from Govt and it has also been clearly stated that State Urban Development Authorities are only the custodians. (Copy placed in PB-II Pg-127) 6. The Assessee has even given the details of amount spent year wise from the EDC account to the Assessing Officer from which it is clear that the major amount has been spent for the construction of the connectivity roads, laying down the water supply and for building drainage system etc. The department has not even doubted the expenditure as incurred by the Assessee out of the EDC funds available with the Assessee. Thus, the expenditure has been incurred for those years which ultimately benefits the Assessee's existing and upcoming projects. 7. The Assessee has to incur the expenditure even after so many years as and when required. The amount as collected from the colonizers has to be kept in a separate bank account. It has to be spent when ever required. The number of persons living in a particular colony will increase year after year and there is always a need to expand the basic infrastructure facilities after a span of time. 8. If the Assessee had not spent any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Police Housing Corporation Ltd. on account of unutilized Government grant (lying with the Assessee on behalf of the Government) has been held to be not liable to tax and not the grant. So, on the similar footing the EDC amount as lying with the Assessee belongs to the Punjab Government and the Assessee has not control over the same. So under such circumstances, the same cannot be taxed in the hands of the Assessee. b) Further Reliance in this regard is also being placed upon the Judgment of the Delhi Bench in the case of M/s Perfect Constech Pvt Ltd. vs Addl CIT in ITA No. 6907/Del/2019 order dated 29.12.2020, wherein it has been held as iunder: "It is also not in dispute that HUDA has shown EDC as current liability in the balance sheet, but in the 'Notes' to the Accounts Forming part of the Balance Sheet, it has been shown that EDC has been received for execution of various external development works and as and when the development works are carried out, the EDC's liabilities are reduced accordingly. It is also not in dispute that HUDA is engaged in acquiring land, developing it and finally handing it over for a price. It is also not in dispute that EDC is fixed by HUDA from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in (2021) 127 Taxmann. Com 387 (Agra-Trib) (Development Authority in an extended arm of State Govt. and thus entitled for exemption u/s 11). 43. Judgment of Hon'ble ITAT Delhi Bench C, Delhi in the case of Hapur Pikhuwa Development Authority Vs. ACIT, in ITA No. 4125/Del/2017 for AY 2012-13 (Development Authority in an extended arm of State Govt. and thus entitled for exemption u/s 11). 44. We rely on these judgments only for the preposition that all the receipts of EDC and utilization are being utilized for the purposes of development of Urban areas for the welfare of General Public and not for any personal use and, therefore, the "EDC" having been utilized for the purpose of development of "Urban Area" the same is not taxable at all. 15. The AO as well as CIT(A) has merely stated that the EDC amount is collected by the Assessee of its own and it has full control over the sad funds. The AO as well as CIT(A) has not supported it by any evidence. But on the other side, the Assessee has filed sufficient documents like a notification issued by the Principal Secretary, Housing & Urban Development that EDC amount cannot be used without obtaining order from Govt and it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lice Housing Corpn." as relied upon by the assessee (supra) and in that case also, certain funds were received from the State Govt. for various purposes, including construction of houses for Police officials, and certain grants had remained unutilized and the money was parked in the bank and the issue was with regard to the interest income on such deposit out of unutilized funds as accrued to Punjab Police Housing Corpn., and it was held by the Jurisdictional Punjab & Haryana High Court, that since the funds were not diverted and could not be diverted to any other purpose and, therefore, even the interest on such bank deposits was not liable to be taxed. Thus, having gone through the argument and documents as furnished by the assessee's counsel, we have no hesitation in holding that the assessee was only custodian of funds of EDC and other similar nature of receipts, as the assessee has neither any control, regarding the rates of EDC charges as being collected from the various developers nor has the control over such funds or its utilization, as per various notifications of the State of Punjab on the directions of the state government and the same is the case with EWS charges and, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment Authority, reported in 449 ITR 1 and after relying upon number of judgments, on the similar issue of various High Courts and Co-ordinate Benches of the ITAT, the exemption of income have been allowed to the Development Authority. 31. We have carefully gone through the arguments of the Ld. Counsel and the order of the CIT(A), Assessing Officer and contention of the Ld Departmental Representative and have also carefully gone through the various case laws as relied upon by both the sides and hold that as the assessee is only collecting agency on behalf of State Govt. or Ministry of Housing & Development and they have neither any control over the fixation of the charges and nor have any independent authority to utilize the funds of their own and, as such, they have rightly treated such receipts as capital receipts by the assessee and shown as liabilities in the balance sheet as the amount shall be utilized as per guidelines of the State Govt./Ministry of Housing & Development and, thus, such charges cannot be treated as revenue receipts and the various judgements as relied upon by the Ld.Counsel of the "Urban Development Authorities" of Hon'ble Apex Court, Judgements of "coor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
