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IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "F", MUMBAI
^ .. , Û , ^ . . ã , ¢
Before ShriI P Bansal, Judicial Member & Shri N K Billaiya, AM
./ ITA No.6441/Mum/2011
[ [ / Assessment Year 2003-04
The ITO Wd 25(2)(4), Vinay Enterprises,
Mumbai. 501 Harikurpa, Opp St. Annies
Vs. School, L T Road, Borivali (W)
Mumbai- 400 092.
PAN: AABFV4564H
( /Appellant) (×/Respondent)
Appellants By : Shri Ravi Prakash
Respondent By : S/Shri K Gopal & Jitendra Singh
/ /
Date of Hearing :13.05.2014. Date of Pronouncement : 16.05.2014
/ O R D E R
Per N K Billaiya, AM:
With this appeal the revenue has challenged the correctness of the order of
the CT(A)-35, Mumbai, dated 13.07.2011 pertaining to A.Y. 2003-04. The
grievances of the revenue read as under:
"1. On the facts and circumstances of the case and in law, the Ld.
CIT(A) erred in holding the reassessment proceedings as invalid and
cancelling assessment proceedings and the order passed by the
Assessing Officer under section 144 r.w.s. 147 of the Income Tax Act,
1961 dated 31.12.2010 wherein the deduction under section 80IB(10)
of the Income Tax Act, 1961 claimed by the assessee at
Rs.35,03,447/- was disallowed by the Assessing Officer.
2. On the facts and in the circumstances of the case, and in law,
the ld. CIT(A) erred in holding the reassessment proceedings as
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invalid and cancelling assessment proceedings without appreciating
the fact that the assessee has also not raised this issue before the
Assessing Officer during assessment proceedings nor in the Ground of
Appeal before CIT(A)."
2. In this case the original return of income was filed on 25.11.2003 declaring
total income at "nil". Deduction u/s. 80IB(10) was claimed at Rs.35,03,447/-. The
return was selected for scrutiny assessment and was completed u/s. 143(3) of the
Act on 28.03.2005 determining the total income at Rs.15,150/-.
3. Information was received from the DCIT, Circle-4, Mumbai, that the assessee
firm has claimed deduction u/s. 80IB(10) of the Act for A.Y. 2002-03. As per the
information , the revenue audit has raised the objection regarding the claim of
deduction u/s. 80IB(10) by the assessee. It was further stated in the information
that the claim has to be denied because the assessee does not fulfill the mandatory
conditions for claiming deduction u/s. 80IB(10) of the Act.
4. In view of these facts, the assessment was re-opened after recording the
reasons and obtaining prior approval of the Additional/Jt. CIT -25(2), Mumbai.
Statutory notices u/s. 148 was issued on 24.03.2010. The assessee was asked to
file a return. However, no return was filed in response to the notice u/s. 148 of the
Act. As the assessment was getting barred by limitation, the AO proceeded to
complete the assessment on the basis of the material available on record.
5. After perusing Form No.10CCB and CIDCO order dated 10.12.1999, the AO
noticed that the size of the plot of land of the project is less than one acre. The AO
was of the firm belief that the mandatory condition of section 80IB(10) clause (b)
has not been fulfilled by the assessee, the assessee is not entitled for deduction u/s.
80IB(10). The assessment was completed by withdrawing the deduction allowed in
the original return assessed. Aggrieved by this the assessee carried the matter
before he CIT(A).
6. Before the CIT(A) it was strongly contended that the assessment was already
completed u/s. 143(3) on 28.03.05 therefore, if the AO wanted to reopen the
assessment after four years from the end of the assessment year, he ought to have
obtained the approval of the CIT or the CCIT as per the proviso to section 151(1) of
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ITA No.6441/Mum/2011
the Act. It was pointed out that the assessment had been reopened with the
approval of the additional CIT Range 25(2), Mumbai. Therefore, the reassessment
proceedings are invalid. After carefully considering the facts and the submissions
and also after perusing the records , CIT(A) observed as under:-
"... It is further seen from the records that the A.O. submitted proposal dt.
22.3.2010 to the Jt. CIT 25(2) and he accorded approval on 24.3.2010.
The letter issued by Jt. CIT-Rg.25(2) reads as under:-
"To,
The ITO-25(2)(4),
Mumbai.
Sub: Approval u/s. 151(2) of the I.T Act, 1961 for issue of
notice u/s. 148 in the case of M/s. Vinay Enterprises for
A.Y. 2003-04- reg."
Ref : Your letter No.ITO-25(2)(1)/Reopening/2009-10 dt.
22.3.2010
********
This has reference to the above.
2. The undersigned is satisfied with the reasons recorded by you
that it is a fit case for issue of a notice u/s. 148. Accordingly, your
proposal for approval u/s. 151(2) of the Income tax Act, 1961 for
issue of notice u/s. 148 in the above mentioned case for A.Y. 2003-04
is hereby approved with a direction to issue notice u/s. 148.
Sd/-
(Dr.SANDEEP GOEL)
Jt.Commissioner of Income Tax, Range 25(2),
Mumbai."
The CIT(A) was convinced that as per the proviso to section 151(1), the AO ought
to have obtained the approval of the CCIT or the CIT before issue of notice u/s. 148
of the Act. Since the notice was issued after obtaining the approval of Jt CIT Range
25(2), Mumbai, the AO did not follow the procedure laid down in proviso to section
151(1) of the Act while reopening the assessment , the CIT(A) held that the entire
reassessment proceedings are ab initio void and invalid and, therefore, the
reassessment proceedings are cancelled. The CIT(A) further proceeded to hold that
the reopening proceedings u/s. 148 was not justified and there was no failure on
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the part of the assessee to disclose the material facts fully and truly. Aggrieved by
this, the revenue is before us.
7. The DR could not bring any evidence in support of the grievance of the
revenue to show that the approval was taken from the CCIT/CIT before issue of
notice u/s 148 of the Act. As no such evidence has been brought on record before
us, after carefully perusing the assessment order and the order of the CIT(A), we
find that the notice issued was undisputedly with the approval of the Joint CIT
Range 25(2), Mumbai. Section 151(1) read as under:
"In a case where an assessment under sub- section (3) of section 143
or section 147 has been made for the relevant assessment year, no
notice shall be issued under section 148 [by an Assessing Officer, who
is below the rank of Assistant Commissioner [or the Deputy
Commissioner] unless the [Joint] Commissioner is satisfied on the
reasons recorded by such Assessing Officer that it is a fit case for the
issue of such notice]
Provided that, after the expiry of four years from the end of the
relevant assessment year, no such notice shall be issued unless the
Chief Commissioner or Commissioner is satisfied, on the
reasons recorded by the Assessing Officer aforesaid, that it is
a fit case for the issue of such notice."
Facts of the case clearly show that the assessment was re-opened after four years
from the end of the relevant assessment year, which means that the AO ought to
have taken the approval of the CCIT/CIT. The AO has grossly failed to do so in the
instant case.
8. Considering the facts in the light of the provisions of section 151(1) read with
proviso, we do not find any reason to interfere with the findings of the CIT(A).
9. In the result, the appeal filed by the revenue is accordingly dismissed.
Order pronounced in the open court on this 16th day of May, 2014.
Sd/- Sd/-
(I P Bansal) (N K Billaiya)
Û /JUDICIAL MEMBER / ACCOUNTANT MEMBER
Mumbai; Dated : 16th May, 2014.
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ITA No.6441/Mum/2011
SA
/Copy of the Order forwarded to :
1. /The Appellants.
2. × / The Respondent.
3. () / The CIT(A), Mumbai.
4. / CIT
5. , , / DR, `F' Bench, ITAT, Mumbai
/ BY ORDER,
× //True Copy//
/ (Dy./Asstt. Registrar)
, / ITAT, Mumbai
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