Tribunal orders fair verification in assessment discrepancies, upholds deductions for profit from car parking.

The Tribunal found discrepancies in the assessment order regarding the size of flats in a project, leading to a denovo assessment for fair verification. The Tribunal emphasized compliance with procedural requirements and fair play in determining eligibility for deductions under section 80(IB)(10). Additionally, the Tribunal upheld the entitlement for a deduction under section 80IB for profit from the sale of the car parking area. Violations of natural justice by the assessing officer and the CIT(A) were noted, prompting the direction for a denovo assessment to ensure proper examination of evidence and fair play in the assessment proceedings.

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Issues:
- Allowance of deduction u/s. 80(IB)(10) for a project with flats exceeding 1500 sq.ft
- Discrepancies in the assessment order regarding built-up areas of certain flats
- Compliance with provisions of section 153A in relation to returned income
- Entitlement for deduction u/s. 80IB in profit from the sale of car parking area
- Violation of principles of natural justice in assessment proceedings

Issue 1: Allowance of deduction u/s. 80(IB)(10) for a project with flats exceeding 1500 sq.ft
The department appealed against the decision of the ld CIT(A) allowing the claim of deduction u/s. 80(IB)(10) for a project where several flats exceeded the prescribed 1500 sq.ft limit. The AO disallowed the claim citing non-compliance with the size limit. However, the ld CIT(A) allowed the claim based on previous decisions and the Hon'ble Jurisdictional High Court's ruling. The Tribunal observed inconsistencies in the assessment and restored the appeal to the AO for a denovo assessment, emphasizing the need for physical verification and fair examination of evidence to determine the eligibility for the deduction.

Issue 2: Discrepancies in the assessment order regarding built-up areas of certain flats
During the assessment proceedings, discrepancies arose regarding the built-up areas of certain flats in the project Purva Riviera. The AO found that the assessee had constructed houses exceeding the prescribed limit of 1500 sq.ft, leading to the disallowance of the deduction u/s. 80(IB)(10). The ld CIT(A) reversed this decision, relying on past judgments and additional evidence. The Tribunal, considering the violation of principles of natural justice by both the AO and the CIT(A), directed a denovo assessment for a fair examination of the evidence and proper verification of the flats to determine the eligibility for the deduction.

Issue 3: Compliance with provisions of section 153A in relation to returned income
The department argued that the ld CIT(A) erred in allowing the deduction u/s. 80(IB)(10), which went below the returned income of the assessee, contrary to the provisions of section 153A. The Tribunal emphasized the importance of adhering to procedural requirements and directed the AO to conduct a denovo assessment to ensure compliance with the law and fair play in determining the eligibility for the deduction.

Issue 4: Entitlement for deduction u/s. 80IB in profit from the sale of car parking area
The ld CIT(A) held that the assessee was entitled to a deduction u/s. 80IB for profit from the sale of the car parking area, considering it separate from the residential units eligible for the deduction. The Tribunal did not dispute this contention and allowed the appeal for statistical purposes, indicating agreement with the decision regarding the entitlement for the deduction in this specific context.

Issue 5: Violation of principles of natural justice in assessment proceedings
The Tribunal noted violations of natural justice by both the AO and the CIT(A) in the assessment proceedings, emphasizing the need for fair play and proper examination of evidence. The direction for a denovo assessment aimed to rectify these violations and ensure a just determination of the eligibility for the deduction u/s. 80(IB)(10) based on accurate verification and examination of the relevant factors.

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