TaxTMI 
TaxTMI 
TaxTMI 
2017 (10) TMI 678
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....ese CO's are identical and hence, the grounds are reproduced from C.O. No. 62/Bang/2014 for the Assessment Year 2006- 07. The grounds are as under "1. The learned CIT (A) failed to appreciate the fact that the assessment made by the learned Assessing Officer u/s 153A of Income-tax Act, 1961 is beyond the scope of section 153A. 1.1. The learned CIT (A) failed to appreciate the fact that in the absence of any incriminating materials completed assessments cannot be disturbed. 1.2. The learned CIT (A) erred in relying the on the statement of Mr. Kumar Babu to uphold the validity of the assessment. 1.3. The learned CIT(A) failed to appreciate the fact that disallowance of deduction u/s 80lB of the Income Tax Act, 1961 is beyond the scope of section 153A of the Income Tax Act, 1961. For the above mentioned grounds or any other grounds that may be pressed at the time of hearing, the Appellant prays that the cross appeal of the appellant be allowed." 4. It was submitted by ld. AR of assessee that as per the judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Lancy Constructions as reported in 383 ITR 168 (Kar), it was held by Hon'ble Karnataka High Court t....
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....years u/s. 143(3) r.w.s. 153A are bad in law and should be quashed. 5. As against this, the ld. DR of revenue placed reliance on the judgment of Hon'ble Karnataka High Court rendered in the case of Canara Housing Development Co. Vs. DCIT as reported in 274 CTR 122 (Karnataka) wherein it was held that for assessment u/s. 153A of IT Act, finding of incriminating material in the course of search is not essential. 6. We have considered the rival submissions. First of all, we examine the applicability of the judgment of Hon'ble Karnataka High Court rendered in the case of Canara Housing Development Co. Vs. DCIT (supra) on which reliance is placed by the ld. DR of revenue. As per this judgment in the Para no. 7 of judgment, the issue which was considered by Hon'ble Karnataka High Court was as under:- "When once the proceedings under Section 153A of the Act is initiated, whether the Commissioner of Income Tax can invoke the power under Section 263 of the Act to review the order of assessment passed by the Assessing Authority?" 7. Hence it is seen that in that case, the issue under consideration of Hon'ble Karnataka High Court was not this as to whether the finding of....
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....ioner u/s. 263 of IT Act. The direction of Hon'ble Karnataka High Court as per Para 10 and 11 are reproduced herein below. "10. Section 153A of the Act starts with a non obstante clause. The fetters imposed upon the Assessing Officer by the strict procedure to assume jurisdiction to reopen the assessment under Sections 147 and 148, have been removed by the non obstante clause with which subsection (1) of Section 153A opens. The time-limit within which the notice under Section 148 can be issued, as provided in Section 149 has also been made inapplicable by the non obstante clause. Section 151 which requires sanction to be obtained by the Assessing Officer by issue of notice to reopen the assessment under Section 148 has also been excluded in a case covered by Section 153A. The time-limit prescribed for completion of an assessment or reassessment by Section 153 has also been done away with in a case covered by Section 153A. With all the stops having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, i....
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....assess the total income of six assessment years. Once the assessment is reopened, the assessing authority can take note of the income disclosed in the earlier return, any undisclosed income found during search or and also any other income which is not disclosed in the earlier return or which is not unearthed during the search, in order to find out what is the "total income" of each year and then pass the assessment order. Therefore, the Commissioner by virtue of the power conferred under Section 263 of the Act gets no jurisdiction to initiate proceedings under the said provision because the condition precedent for initiating proceedings under Section 263 is any order passed under the Act by the Assessing officer is erroneous insofar as it is prejudicial to the interest of the revenue. Once the order passed by the Assessing officer gets reopened, there is no order which can be said to be erroneous insofar as it is prejudicial to theinterest of the revenue which confers jurisdiction on the Commissioner to exercise the power of the jurisdiction. 11. The Tribunal has proceeded' on the assumption by virtue of the judgment of the special bench of the Mumbai, the scope of enquiry u....
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.... by the assessee in the original return and also any other income which comes to light in the assessment proceedings u/s 153A. 9. Now, we examine the applicability of the later judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Lancy Constructions (supra). The question of law No. 1 before the Hon'ble Karnataka High Court in this case was as under. "i. Whether accounts in Tally copied and seized at the time of search do not come within the purview of 'material found during the course of search' as per the ratio of the decision of the special Bench of the Bangalore Tribunal in the case of All Cargo Global Logistics Ltd. v. CIT 18 ITR (Trib.) 106." 10. Hence it is seen that in this case, the question before the Hon'ble Karnataka High Court was this as to whether the accounts in tally copied at the time of search is incriminating material found during the course of search. After holding that the same is not incriminating material, it was held by the Hon'ble Karnataka High Court that assessment cannot be reopened on the basis of search in which no incriminating material was found. For the sake of ready reference, we reproduce Para no. 6....
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....terial in the assessment order and therefore, in the absence of any incriminating material found in the course of search, the assessment proceedings u/s. 153A of IT Act is bad in law as per this judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Lancy Constructions (supra) on which reliance is placed by the ld. AR of the assessee. Respectfully following this judgment of Hon'ble Karnataka High Court, we quash the assessment orders passed by the AO u/s. 143(3) r.w.s. 153A for Assessment Years 2006-07, 2007-08 and 2008-09. 12. In the result, these three Cross Objections of assessee are allowed. 13. Now we take up the appeals filed by the revenue. In the appeals filed by the revenue for these four years, the only grievances of the revenue is regarding allowability of deduction to assessee u/s 80IB (10) of IT act which were disallowed by the AO but held to be allowable by the ld. CIT(A). In our considered opinion, once the assessment order which were framed by the AO u/s. 153A of IT Act itself are quashed by us for three Assessment Years 2006-07, 2007-08 and 2008-09, the appeals of revenue for these three years do not survive. Hence these three appeals of....
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.... on facts, it is clear that the assessee was merely owner of land and has entered into a JDA on 09.08.2004 with M/s Shriram Properties Limited, Chennai and when the A.O. stated in the assessment proceedings that the deduction u/s 80IB (10) is not allowable for this reason, the assessee agreed to this disallowance proposed by the A. O. The CIT (A) has also noted that even before him, it was the contention raised that although the assessee is land owner only; deduction u/s 80 IB (10) is allowable because the assessee is a stake holder in the JDA and the said construction was carried out jointly. She submitted that the learned CIT (A) has not given any finding on this claim of the assessee that the said construction was carried out jointly and decided the issue in favour of the assessee by following the judgment of Hon'ble Karnataka High Court rendered in the case of Shravanee Constructions as reported in 209 Taxman 006. She submitted that in the absence of any finding on factual aspect that the said construction was carried out by the assessee jointly with the builder as per JDA, the order of CIT (A) is not sustainable and it should be reversed and that of the A.O. should be restored....
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....and deeds as required for obtaining combined khata in respect of proposed composite development of Schedule 'A' property of which the schedule 'B' property is a part. He also pointed out that the first party i.e. the assessee will pay any charges levied on the schedule 'B' property including betterment charges. Thereafter he drawn our attention to Para no. 5.2 of JDA available on page no. 92 of paper book and pointed out that it was agreed that the party has mutually agreed to share the sale proceeds between the landowners including first party and the developer in the ratio of 33:67 respectively. Thereafter he drawn our attention to Para no. 15 of JDA available on pages 103 of paper book and pointed out that it was a right of the assessee to inspect the progress of work. He also drawn our attention to Para no. 10 of JDA available on pages 100 and 101 of paper book and pointed out that as per this Para of JDA, the assessee had the obligation to carry out such acts, deeds and things as may be reasonably required by the second party in order to enable them to successfully develop the property in question. Thereafter he drawn our attention to page no. 81 of paper book in which a certi....
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....ct that the assessee was actively engaged in the construction work because as per the assessment order, a clear finding is given by the AO on page no. 10 of assessment order that the assessee was not involved in any manner in project construction and entire project was carried out by M/s. Shriram Properties Private Limited. In reply, it was submitted by ld. AR of assessee that for factual verification about involvement of assessee in the construction work, the matter may be restored back to the file of AO for fresh decision with proper direction. 19. We have considered the rival submissions. Regarding the additional ground raised by the revenue, we are of the considered opinion that in view of the facts of the present case and in view of the tribunal order rendered in the case of bambino Investment & trading Co. Ltd. vs. DCIT (Supra), there is no infirmity in the order of CIT (A) on this aspect and therefore, the additional grounds raised by the revenue are rejected. 19. On merit, we find that in Para no. 4.11 of assessment order for Assessment Year 2009-10, the AO has summarized the reasons for his decision that the assessee is not eligible for deduction u/s. 80IB(10) of the IT ....
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....sessee was actually doing some activities connected with developing and building housing projects then the assessee is eligible for deduction u/s. 80IB (10) even if major construction is being undertaken by other party i.e. the builder as per the JDA. In that case i.e. in the case of CIT Vs. Shravanee Constructions (supra), it was found that the assessee has undertaken the job of Obtaining khata from municipality, Obtaining plan sanction for construction of apartment on the said property by the local authority, Making the land usable for the purpose of apartment construction by providing proper road and to give an approach to the site, Jointly supervising the construction of the apartments and Marking the apartments falling to the share of the assessee and also Undertaking the leveling of the road and removal of rocky surface in the said land and making usable for the purpose of construction of the apartment complexes. In our considered opinion, this is not the ratio of this judgment that all these activities are to be necessarily done by the assessee in each and every case. In our considered opinion, the ratio is this that the assessee should be able to establish that the assessee....