2017 (3) TMI 1326

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....ssment u/s. 143(3) was completed on 31-12-2008. In the said assessment, the ITO deputed his Inspector to verify the site and eligibility of assessee in claiming the deduction u/s. 80IB. The ITI after due inspection have stated that he has randomly selected and measured similar type of duplex houses. The built up area as measured is found to be correct as per the specifications provided by the firm. On the above basis, AO accepted the claim of assessee for deduction u/s. 80IB(10) and has completed the assessment u/s. 143(3). Similarly, for AY. 2007-08, assessee filed the return of income declaring total income of Rs. 1,20,31,006/- claiming deduction u/s. 80IB(10) on an amount of Rs. 96,33,962/-. In this year also, the assessment was completed on 31-12-2009 and the AO reproduced the Inspector's report as in earlier year and has allowed Section 80IB deduction to the extent of assessee's claim. 2.1. Subsequently, AO has come to an opinion that the deduction allowed to assessee u/s. 80IB is not correct, as assessee has excluded the area of terrace, portico from the computation of built-up area which resulted in wrongly allowing the deduction u/s. 80IB. Accordingly, after recording the ....

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.... got inspection done and allowed the deduction u/s. 80IB(10). Therefore, the successor officer differing from that opinion is a change of opinion not permitted under law. Apart from relying on the Hon'ble Supreme Court decision in the case of CIT Vs. Kelvinator of India Ltd., [320 ITR 561], assessee also relied on the jurisdictional High Court decision in the case of Kohinoor Hatcheries Pvt. Ltd., Vs. DICT and another [389 ITR 493] (T&AP). 4.1. Ld. Counsel also submitted that the objection was raised by the audit and AO has reported that objection is not valid but still on the directions of the audit, the assessment was reopened after four years. He relied on the documents placed in the Paper Book for the above submission. 4.2. Coming to the merits, it was the submission that Hon'ble Gujarat High Court in the case of CIT-IV Vs. Amaltas Associates [75 Taxmann.com 180 (GJ)] has considered that open terrace space would not be included in built up area for Section 80IB relief. Ld. Counsel also relied on the decision of the CIT Vs. Radhe Developers [341 ITR 403] which in turn relied on by the Hon'ble Gujarat High Court in the earlier case of CIT-IV Vs. Amaltas Associates [....

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....no dispute that the order u/s. 143(3) was passed after duly examining the claim of 80IB(10) as can be seen from the report of the ITI, extracted by the ITO in the assessment orders. Thus, there is no dispute that assessee had placed all the information relevant for completion of assessment before the AO. Provisions of Section 147 do allow the AO to reopen the assessment, if he has reason to believe that income has escaped assessment, but that power is limited by various other provisos. The Hon'ble Jurisdictional High Court in the case of Kohinoor Hatcheries Pvt. Ltd., Vs. DCIT and another [389 ITR 493] (T&AP) has considered similar issue wherein a notice was issued after expiry of limitation period of four years, the Hon'ble High Court has held as under: "Held, allowing the petition, (i) that the assessee had challenged the very initiation of proceedings for reopening of assessment as being without jurisdiction and also in complete defiance of the statutory prescriptions. Therefore, it was not a case which could be thrown out on the ground of availability of alternative remedy. (ii) That the Department could not deny the fact that there was a full and true disclosure b....

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....ee after receipt of notice u/s 148 did inform the AO by way of letter in writing that the return originally filed earlier should be treated as a return in response to notice u/s. 148. Generally, this is the procedure followed by most of the assessees instead of filing a fresh return form and the Revenue is accepting such letters as deemed filing of return. In fact, the AO after such deemed filing of return did communicate the reasons for reopening. Had assessee not filed the return/deemed return in response to notice u/s. 148, question of communicating the reasons does not arise, as per the direction of the Hon'ble Supreme Court in the case of GKN Drive Shafts (India) Ltd., Vs. ITO [259 ITR 19] (SC). Thus, the contention of CIT(A) that assessee has not filed return of income, therefore, there is no need for issuance of notice u/s. 143(2) has no legal basis. Since there is failure on the part of the AO in issuance of notices u/s. 143(2) within the time limits prescribed, subsequent proceedings of assessment becomes bad in law. 9. Coming to the merits, it is true that ITAT in another sister-concern case has accepted Revenue's contention that portico and terrace are to be include....