TaxTMI 
TaxTMI 
2011 (4) TMI 941
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....py of an acknowledgement of Speed Post was filed. However ld. DR made it clear that he is not relying on the same. He pointed out that this acknowledgement does not show the year of notice or the date of receipt clearly and it may refer to some other year [we will consider the other argument of the ld. DR little later]. 3. The Ld. Counsel of the assessee referred to this receipt and pointed out that this cannot be called a valid service because against the name of recipient it has been stamped by some Novacare Drug Ltd. and address is shown as B 119, Vardhman Complex, LBS Road, Mumbai, whereas address of the assessee was B-124, Vardhman Complex, LBS Road, Mumbai. Therefore, this cannot be construed as valid service of notice. Since Revenue has failed to prove the service, assessment has to be quashed. 4. On the other hand, ld. DR filed a copy of the order sheet of assessment proceedings and pointed out that Shri Kulin Mehta, Chartered Accountant and Authorised Representative of the assessee attended the assessment proceedings as early as 7-3-2006. If no notice was served, then how Chartered Accountant of the assessee attended the proceedings. In such circumstances a service of no....
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....is provision has been held to be of prospective nature by the Special Bench of the Tribunal in the case of Kuber Tobacco Products (P) Ltd. v. Dy. CIT [2009] 117 ITD 273/28 SOT 292 (Delhi). He also pointed out that service of notice is a mandatory requirement and in this regard relied on the decision of the Hon'ble Bombay High Court in the case of CWT v. HUF of H. H. Late J. M. Scindia [2008] 300 ITR 193. 7. We have considered the rival submissions carefully and are unable to agree with the submissions of the Ld. Counsel of the assessee. The second para of the assessment order reads as under: "Notices u/s.143[2] & 142[1] of the Income Tax Act, 1961 was issued and duly served on the assessee along with a detailed questionnaires. Subsequently, with the change in incumbent, notice u/s.143[2] of the I.T. Act, 1961 was issued by the undersigned. Shri Kulin Mehta, C.A. attended from time to time and furnished the various details as called for such as details of sales party-wise, details of sundry debtors/creditor, details of secured/unsecured loans. Loan confirmations, details of additions to fixed assets, details of rent & compensation, details of various expenses debited to P & L acco....
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....e decision of the Hon'ble Gujarat High Court in the case of P.V. Doshi (supra) is concerned, the High Court was concerned with the following facts: "An order of reassessment was passed on the assessee. In appeal against the order of the Appellate Assistant Commissioner the assessee gave up the contention regarding the validity of the notice of reassessment. On merits, the Appellate Assistant Commissioner dismissed the appeal. On further appeal the Tribunal remanded the case to the Income-tax Officer with directions to cross-examine a witness. On appeal from the order passed on remand the assessee contended that the reassessment proceedings were not validly initiated the Appellate Assistant Commissioner examined the original order sheet and found that no reasons had been recorded by the Income-tax Officer as required by section 148[2]. He further found that the Income-tax Officer had not specified in clause of section 147 under which the assessment had been reopened. He, therefore, annulled the order of reassessment. The Tribunal, however, held that once the Tribunal passed an order the matter became final and that the order restoring the case to the file of the Income-tax Officer ....
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....ed u/s.143[2]. That is why perhaps no objection was taken before the AO or the CIT[A]. In fact, this issue became settled only by the decision of the Hon'ble Supreme Court in the case of Asstt. CIT v. Hotel Blue Moon wherein it was held that it shall be mandatory to issue notice u/s.143[2] in addition to the notice u/s.158BC. Therefore, it is clear again that the issue before the Special Bench of the Tribunal in the case of Kuber Tobacco (P.) Ltd. (supra) was not regarding service of notice u/s.143[2]. At the same time reference was made to sec.292BB and it was held that sec.292BB would be applicable only prospectively. 11. In the case before us assessee never raised any objection for service of notice u/s.143[2] before the AO. An objection was definitely taken before the CIT[A] vide ground No.3 which reads as under: "The Assessing Officer has erred in law and in facts in issuing various notices which are invalid and illegal. The consequential assessment order is void ab initio." But the above ground was not pressed before the ld. CIT[A] who held vide para-4 as under: "4. Ground No.3 is a general ground relating to the issue of various notices being invalid and illegal thereby ....
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....on what transpired before a Court or Tribunal can be gathered from the proceedings or order of the court no party will ordinarily be permitted to take exception to or contradict the statement to that effect in the order. What has been stated in the order should be taken as the last word on that question. Even if a wrong record has been made in the order as to what transpired before the Court or Tribunal, the remedy of the aggrieved party is not to dispute the record before a higher forum, but to seek a review before the lower forum itself." Thus, the Hon'ble court clearly held that if a particular finding has been given in a year even if erroneously, then the remedy would lie before that authority and not before the higher forum. Thus, in the case before us if the ld. CIT[A] has given a finding that the ground regarding service of notice was not pressed before him, even if presuming is a erroneous finding, then the assessee should have moved the office of the CIT[A] only but cannot rake up this issue before the Tribunal. 12. Normally when assessee has not received a notice, then assessee is supposed to raise this legal objection before the AO or in any case before the CIT[A]. Hav....
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.... Even though the Municipal approved plans show the individual flat areas less than the specified limit of 1500 sq.ft. for each unit from the details filed of the sale effected shows that adjoining two units have been sold to one buyer only in all the Wings. (2) The layout of the adjoining unit from the approved plant as well as the sale agreement clearly shows that the units are complimentary to each other i.e. intended to be sold as one unit and in reality also all the adjoining unit have invariably been sold to one buyer. (3) From the certified true copy made available by you today and as discussed with Shri Kulin Mehta, the interior of the adjoining flat compliments each other to make a single unit only and the units as shown in the approved plan will not survive independent user by any buyer if he is to purchase only one unit considering further that: i. The project is apparently intended to be constructed for high income group only given the fact that the society has a club house, swimming pool, etc. which goes with the requirement of the elite class in the society; ii. The size and layout of kitchen which is directly opening to toilet, Living, Bedroom and Dinning cl....
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....can be drawn from the above is even though each individual units are having area lesser than 1500 sq.ft. to make the project eligible for the claim of deduction u/s.80IB, sale effected clearly indicates the reality that the adjoining flats clubbed for use for one individual buyer. Therefore, assessee's claim of deduction u/s.80IB is rejected on the ground that it does not satisfy the condition prescribed of individual unit being less than 1500 sq.ft. in area. Assessee's claim for deduction u/s.80-IB 80,16,478/- is not admitted." 19. On appeal, ld. CIT[A] noted that show-cause notice was issued on 29-3-2006 to submit the details before 31-3-2006 which means adequate opportunity of being heard was not allowed to the assessee and, therefore, a remand report was called for. The remand report dated 9-2-2007 was received but even from that remand report it was observed that proper opportunity of being heard was not given. Therefore, the matter was again sent for the remand report and the fresh remand report dated 13-7-2007 was received. From that remand report it became clear that assessee has, in spite, of various opportunities did not furnish the requisite details. It was observed tha....
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....ric meter installed for every two residential units. A copy of the letter of the Dy. Commissioner of Income Tax, Executive Engineer, Aundh Sub-division, MAHA DISCOM, Pune, dated 16-10-2007, which stated that M/s Thistle Properties Pvt. Ltd. made the application for the electric meter vide application dated 21-01-2003 and the same was provided on 27-02-2003 was also given to the appellant. During the appeal proceedings, the appellant was required to explain why, if the intention was to sell individual residential units, application for electric meters for every two adjoining residential units was made. However, no reply on this point was filed. What therefore clearly emerges from the above facts is that by making application for one electricity meter for every two individual residential units, it was never the intention of the appellant to sell the individual residential unit as such. This clearly also proves that it was only on paper that the residential units were shown to be less than 1500 sq.ft. merely for the purposes of claiming deduction u/s.80-IB. In reality what the appellant constructed and sold were residential units much more in area than 1,500 sq.ft. and thus ineligibl....
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....t Floor First Floor A 111/112 Radhika S. Bapat C 111/112 Menon B 111/112 Radhika Bapat D 111/112 Kamalini Babhubai Second Floor Second Floor A 211/112 Vevek & Anuja Joshi C 211/212 K Moras B 211/112 Vevek & Anuja Joshi D 211/212 Prakash Telan Third Floor Third Floor A 311/112 K.K.Ramani C 311/312 Sidjarajan Prasad B 311/112 Arindum & Suchita Basu D 311/312 Dark K. t. Fourth Floor Fourth Floor A 411/112 S.D.Dikshit C 411/412 -- B 411/112 Anant Gupta D 411/412 S.V.Rohankhedkar Fifth Floor Fifth Floor A 511/112 D Venkatesh C 511/512 C Belh B 511/112 Anat Gupta D 511/512 B.S.Dabke Sixth Floor Sixth Floor A 611/112 Jayashree P. Sawant C 611/612 Dongre B 611/112 R.S.Jaisinghani D 611/612 Shaill & Kiran Nataraj Seventh Floor Seventh Floor A 711/112 Sunil Shah C 711/712 Poonam & Madhav Kudekar B 711/112 Sunil Shah. D 711/712 Rita Daljit Jagtiani The list makes it very clear that without exception, each flat, comprising two residential units were sold as one flat t....
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....aid down in sec.80IB(10)(c) because the residential flats constructed and sold by the appellant, as elaborated above, have a built up area of more than 1,500 sq.ft. The action of the AO in denying the claim of deduction u/s.80IB of Rs.80,16,678/- is, therefore, upheld." 20. Before us, Ld. counsel of the assessee submitted that deduction has been mainly rejected by pointing out five defects by the CIT(A) which mainly rest on the issue that size of the flats constructed by the assessee was more than 1500 sq.ft. Then he referred to para 5.3 of the CIT(A)'s order and pointed out that the first defect pointed out is that there was only one electric meter for every two flats. He submitted that this fact has been brought out by the enquiry report dated 17-2-2003 and it has been alleged that the copy was given to the assessee. Reference was also made to the copy of the letter of Deputy Executive Engineer, Aundh Sub-Division, MAHA DISCOM, Pune, to the letter dated 16-10-2007. He wondered how this letter of 2007 was given to the assessee in 2003. However, on a query from the Bench whether there was one electric meter for two flats, he gave an evasive reply. He could not point out to any doc....
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.... shows that the flats are independent flats. In response to question no.11 whether any approval was required for structure changes, it was submitted that since changes were to internal wall therefore no approval was required. This clearly shows that changes were made by the flat owners on their own. 22. He then referred to sec.80IB[10] and pointed out that clauses [e] and [f] were inserted by the Finance Act, 2009 w.e.f. 1-4-2010 by which a restriction was put that not more than one residential unit in a housing project could be allotted to any person. This means that at the relevant point of time there was no such restriction and two or more flats could be allotted to one person in the same housing society. Therefore, even if two flats have been sold to same person or same family member, it will not make any difference for allowance of deduction u/s.80IB[10]. 23. On the other hand, Ld. DR submitted that assessee has constructed about 100 flats then how it is possible that in all the cases two adjacent flats have been sold to the same buyer and/or family. This only shows that, in fact, assessee had constructed only one flat which was complimentary to each other. He pointed out th....
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....his could only lead to the inference that, in fact, only one flat was constructed and the same was shown as two flats only on paper. 24. He also submitted that it is not the case of the department that assessee has sold two flats to the same buyers, therefore, deduction should be denied. The case of the Revenue is that the assessee had actually never constructed the flats which were less than 1500 sq.ft. The assessee has, in fact, constructed a single flat which was more than 1500 sq.ft. but same was shown only on paper being less than 1500 sq.ft. by manipulating various records. 25. We have considered the rival submissions carefully. We have also perused the various documents filed in the paper book. The case of the Revenue for denying deduction u/s.80IB[10] is that assessee has not actually constructed the flats which were less than 1500 sq.ft. as per the condition under cl.(c). We find force in the submissions of the Ld.DR. We have already extracted the order of the ld. CIT(A) in the above noted paras which clearly give detailed reasons for hold that flats constructed were of more than 1500 sq.ft.. The first objection raised is that assessee had only one electricity meter for ....
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....tchen, bedroom, etc. itself proves that there were two units being constructed and which has been combined together to suit the needs of the buyer. It is submitted that the fact that there are two kitchens, 2 toilets and 2 livings/bedrooms, all being differently and distantly located in both the units and that none of the said sub-units are closely and located adjoining; itself proves that the 2 flats though purchased by single buyer were in effect 2 different flats: 26. In fact, in the above para it has been admitted that these flats were combined to suit the needs of the buyers. Further it is mentioned that kitchen in one of the flats was directly opening to toilets, which is not possible, because kitchen in a house would never open to a toilet. Though assessee tried to explain to us through the maps that two units were combined and it is very difficult to judge the actual lay out of the flats on a small plan but if we read this plan along with the above enquiry report, then it seems that both the flats were only one unit and planning was right from the beginning to have one unit. This is further corroborated by the fact that all the 104 units have been sold in adjoining pairs t....
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....s purchased by me from M/s Thistle Properties Pvt. Ltd. during the year 2002-2003. (2) I say that I was in search of the bigger premises for my resident. At the time when I approached the site office of "A" Building [M/s Thistle Properties Ltd.], I found that the project was meant for smaller flats. (3) I say that upon inquiry with the sale staff, I was told that the flats are of size less than 1,500 sq.ft. (4) I say that since I am not in need of two separate flats, I asked them if I purchased two flats, would it be possible for them to combine the same into one as per my specification. (5) I say that I was told by them the flats could be combined into one, but the same will continue to be held as two flats for legal purposes as well as for the purpose of registration. (6) I say that since I had no objection in registering two flats independently, I agreed to purchase the same. (7) I say that the sample flat shown to me was of smaller size as compared to the one owned by me. Almost all the flats were stated to be of the identical size less than 1500 sq.ft. I was told that if the two flats are to be purchased, I will be provided two adjacent flats so that the same could be co....