TaxTMI 
TaxTMI 
2024 (5) TMI 1546
X X X X Extracts X X X X
X X X X Extracts X X X X
.... /Asr / 2023, Asst year: 2017-18 against CIT(A) NFAC order dated 30/10/2023, The assessee has filed a paperbook consisting of 102 pages containing documents already filed before the lower authorities and a compilation of various notifications issued by the Punjab Government (with running page number 103 to 127) which also certified to have been filed before the AO, and the notifications being directly linked to the nature of work carried out by the assessee as per direction of the State Government. Moreover, the Ld AR has filed a judgment set containing 267 pages, consisting of judgments of the Hon'ble Apex Court, various High Courts, and Tribunals, relating to the issue of reopening of cases u/s 148 of the Act 61, the matter challenged in these appeals. The AR, has further filed a synopsis containing 26 pages, retreating his arguments and submissions relating to the grounds of appeal . 2. There is common issue involved in all the years, regarding reopening of already completed assessment u/s 143(3) in Asstt.Years 2012, -13, 2013-14 and 2014-15 and on merits also, the issue is almost same in all the assessment years under consideration and, thus, for t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he finding of the Assessing Officer with regard to reopening of the assessment as framed by the Ld. Assessing Officer by issuance of notice u/s 148 for the year under consideration. 2. That the Ld. CIT(A) has failed to appreciate that the original assessment had been framed u/s 143(3) vide order, dated 29.2.2016 and, thus, there was due application of mind by the Assessing Officer regarding the claim of 'External Development Charges' as claimed by the assessee and, thus, without any tangible material on record, the reopening of assessment u/s 148 is devoid of any valid consideration. 3. That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer in reopening of the case u/s 148 on the basis of judgment of Hon'ble Punjab & Haryana High Court in the case of Greater Mohali Area Development Authority (GMADA) as quoted by him, at page 22 of the order and which, judgment did not find favour with the Hon'ble Apex Court and rather in the case of GMADA, the proceedings u/s 148 have been quashed after considering the judgment of Hon'ble ITAT. 4. That the Ld. CIT(A) has failed to appreciate that the change of opinion on the same issue, is not per....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the assessee. 7. That the Ld.CIT(A) has also erred in confirming the addition of Rs. 37,44,11,087/- on account of Regularization fee as claimed in the profit and loss account by the assessee. 8. That the Ld.CIT(A) has also erred in confirming the addition of Rs. 1,01,68,500/- on account of EWS/Flat Charges as claimed in the profit and loss account by the assessee. 9. That the addition has been made against the facts and circumstances of the case and without any application of mind. 10. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off." 4. Brief facts of the case are that, the assessee is a development authority, a Government Body established by the State of Punjab, on 16.07.2007 as per notification of Government of Punjab, for the development and maintenance of the areas of Jalandhar, and surrounding places, such as Kapurthala, Phagwara and others, under the name of "Jalandhar Development Authority" (in short JDA). The source of income of the authority are mainly on account of receipts of the proceeds from the sale of land, which are acquired by them through capital re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urn had been filed declaring a loss of ( Rs. 1,25,38,280/-) and the same was assessed u/s 143(3) vide order, dated 17.10.2014, after due application of mind by the Assessing Officer, who completed the assessment by accepting the loss of ( Rs. 1,25,38,280/- ) . It was further brought to our notice, that the "extra development charges" ( EDC ) and the "license fees", both received ( collected ) by the assessee, were duly disclosed and reflected in the liability side of the audited balance sheet, which subsequently, was the subject matter of issuance of notice u/s 148 by the assessing Officer, on the ground, that these are revenue receipts and there was failure on the part of the assessee to disclose all the material facts. The CIT (A) has reproduced the recorded reasons in his appeal order for the Asst year 2012-13 which is being reproduced as follows: "On perusal of the assessment records, it has been noticed that the assessee had received External Development Charges amounting to Rs. 10,12,67,004/- and License Fee to the tune of Rs. 58,13,596/-, and the said receipts had been shown as Capital receipt in its balance sheet. However, the nature of these receipts, which are....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n perusal of the assessment record " during the course of original assessment proceedings u/s 143(3) and, further, as per the reasons, it has been stated that the assessee had not disclosed material facts with regard to External Development charges ( EDC ) to the tune of Rs. 10,12,67,004/- and license fee at Rs. 58,13,596/-, which ought to have been disclosed as revenue receipts. The Ld.Counsel has stated that the said external development charges ( EDC ) and license fee, had been duly disclosed in the audited balance sheet of the assessee, wherein, under the head current liabilities ( placed in page 16 of the paper book ), such amount of EDC and License fee had duly been reflected and, thus, there is neither any omission or failure on the part of the assessee to disclose fully/truly all material facts, nor the Assessing Officer has in his possession any material, for formation of belief, that income of the assessee has escaped assessment. 8. The first four grounds of appeal of the assessee ( Ground No 1 to 4 of the appeal memorandum ), relates to the reopening of the case u/s 148 of the Act 61. The Ld. AR has filed a written submission on this aspect of the matter, and only ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Assessee. 11. From a bare perusal of the reasons, it is very clear that there is no fresh material with the Assessing Officer to justify the reopening of the assessment and which is evident from the copy of the reasons and following few salient points need your kind consideration:- a). In the reasons at page 56, it has been mentioned in first paragraph (On perusal of the assessment records), meaning thereby that no new material or information has been received but it is reappraisal from the information already in the file. b). In the same para, there is detail with regard to EDC and how, they are collected, which was in the knowledge of the earlier Assessing Officer also, have been mentioned and, as such, everything is borne out from the records only. c). Then again certain observations have been made that how that liability of EDC has been reflected in the balance sheet and, thus, everything is borne out from the records. d). It has been mentioned in the last para that there is failure on the part of the assessee to fully and truly disclose all the material facts relating to its income. It is submitted that there is no failure on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ii) The Hon'ble Supreme Court rightly held that NDTV had disclosed all primary facts before the AO and it was not required to give any further assistance to the AO by disclosure of other facts. It was for the AO at this stage to decide what inference should be drawn from the facts of the case. In the present case, the AO on the basis of the facts disclosed to him did not doubt the genuineness of the transaction set up by NDTV. This the AO could have done even at that stage on the basis of the facts which he already knew. However, that cannot lead to the conclusion that there is nondisclosure of true and material facts by the assessee. The duty of an assessee is limited and restricted to disclosing all the "primary facts" before the AO. And the same may be treated as a "full and true disclosure" made by an assessee. iii) The Hon'ble Supreme Court held that the assessee must be put to notice of all the provisions on which the Revenue relies upon. The notice and reasons given thereafter do not conform to the principles of natural justice and NDTV did not get a proper and adequate opportunity to reply to the allegations which are now being relied upon by the revenue. I....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt in Madhukar Khosla v. Assistant Commissioner of Income Tax (2014) 90CCH 0023 Delhi High Court and Orient Crafts Ltd. 354 ITR 536 (Delhi) rightly allowed the appeal on the ground that the Assessing Officer was not entitled to assume jurisdiction under section 147 of the Act in the absence of any new information or material. We are unable to state that the finding is perverse or irrational. (iii) State Bank Of India vs ACIT (Bom HC) 96 taxmann.com 77 "Therefore, where he accepts the claim made, the occasion to ask questions on it will not arise nor does it have to be indicated in the order passed in the regular assessment proceedings. Thus, issuing the impugned notices on the above ground would, prima-facie, amount to a change of opinion." iv) Hon'ble Bombay High Court in the case of Idea Cellular Ltd. v/s DCIT reported in 301 ITR 407 wherein it was held as under; "Where the assessee's assessment was reopened on the ground that since the assessee had failed to disclose the income accruing on amalgamation, provisions of section 147 were applicable. Held that this was not a case where it could be said that there was failure on the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that case also, the assessment was sought to be reopened within four years. Similar are the judgments as under where the reassessment proceedings u/s 148 have been quashed, on change of opinion even if the notice u/s 148 had been issued within four years. The case of the Assessee is even more stronger wherein the reassessment has been initiated after a period of four years and there is no tangible material in possession of the AO and thus, there is no failure on the part of assessee to disclose truly and fully all material facts . 22. Apart from the above cases relied upon by the assessee, the Ld. AR has referred to various other judgments of various courts, all leading to the same conclusion, and he concluded his arguments by submitting that, there is no failure on the part of the Assessee and hence provisions of sec 148 of the Act are not applicable ( as per the Ld AR ), because of the fact that: (i) the Assessee has properly disclosed the EDC and License fees in the face of the Balance Sheet (Pg-16 of PB-1), (ii) the original Assessment has been framed u/sec 143(3) of the Act after due application of mind, (iii) the proceedings u/sec 154 of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to 20 ) of his order and then, the CIT(A) has given his finding from ( page 20, para 7 to page 23 ) of his order and has dismissed the ground of appeal with regard to assumption of jurisdiction by the Assessing Officer u/s 148. It has been argued that the finding of the CIT(A) are totally based on the Civil Writ Petition filed by the "Greater Mohali Area Development Authority" ( in short GMADA ) on the identical issue before the Hon'ble Punjab and Haryana High Court, where the same issue of 147/148 was involved and the Hon'ble Punjab & Haryana High Court, had dismissed the Writ Petition of the assessee, and in that case also, the Assessing Officer had reopened the already completed assessment u/s 143(3) on the issue of EDC and License fee. 13. The Ld. Counsel of the assessee, has brought to our notice the judgment of GMADA ( Greater Mohali Area Development Authority ) for Asstt. Year 2010-11 & 2011-12 in ITA Nos. 1177 & 122/Chd/2019, a copy of which has been placed before us. It is brought to our notice from that judgement, that after the writ petition of GMADA was dismissed by the Hon'ble Punjab & Haryana High Court, the petitioner in that case, GMADA had filed the SLP before t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nformation which led to the reopening of the Assessment for assessment years 2012-13, 2013-14 and 2014-15. 16. We have also gone through the audited balance sheet of the assessee as filed before us and particularly, the page 16 of the Paper Book, from which, it is very clear that the EDC and License fee has been reflected on the face of the balance sheet and, thus, everything has been borne out from the record of the Assessing Officer and, as such, how, there is failure on the part of the Assessee to fully and truly disclose all material facts, relating to income has not been substantiated by the Assessing Officer and CIT(A) and particularly when the assessment has been reopened beyond four years u/s 143(3) for all the years and there is a settled law on this aspect that the case cannot be subjected to 148 beyond four years unless, there is failure on the part of the assessee and in the present facts and circumstances of the case, we have no hesitation in holding that there is no failure on the part of the assessee to disclose all facts material to the computation of income for all the three years. 17. The reliance by the Ld. Counsel on other judgments are also on similar fac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have not disclosed truly and fully and rather the assessee had not concealed any material fact relating to EDC and License fee etc., which has duly been disclosed in the balance sheet as per page 16 of the Paper Book and as per balance sheet of other years i.e. Asstt. Years 2013-14 & 2014-15 and, thus, the assessments as framed by the Assessing Officer for Asstt.Years 2012-13, 2013-14 & 2014-15 consequent to the issuance of notice u/s 148 and confirmed by the CIT(A) are liable to be set aside. At this stage we would like to refer to the judgment of the Co-ordinate Bench of the ITAT, Chandigarh for the Asstt. Years 2010-11 & 2011-12 in ITA Nos. 1177 & 1202/Chd/2019, in the case of GAMADA, where the facts are absolutely identical and the Hon'ble Bench has given a finding to which, we also agree as under:- "11. Clearly the reopening was resorted to beyond four years from the relevant assessment year and law stipulates that reopening can be resorted to beyond four years only if any income chargeable to tax has escaped assessment by reason of failure of the assessee, amongst other things, to disclose fully and truly all material facts necessary for his assessment for that ye....
X X X X Extracts X X X X
X X X X Extracts X X X X
....our years from the relevant assessment year. 13. In view of the above, we have no hesitation in holding that since the AO has failed to point out concealment of any material fact relating to income escaping assessment, being EDC, the reopening of the case of the assessee resorted to beyond four years from the assessment years, is against the provisions of law. The jurisdiction assumed by the AO therefore, to frame the assessment u/s 147 of the Act is, therefore, not as per law. The order passed, by the AO as a consequential is not sustainable in law and is, therefore, set aside." 20. Respectfully following the decision of the coordinate bench (referred to above), we set aside the assessments for Asstt. Years 2012-13, 2013-14 and 201415 on the issue of reopening of the case u/s 148, without going into the merits of the case (which are merely academic in nature ) and, as such, the appeal filed by the assessee raising various grounds on the merits of the case become infructuous. In the result, appeal filed by the assessee in ITA No. 377/Asr/2023, for Asstt. Year 2012-13, ITA No. 378/Asr/2023 for Asstt. Year 2013-14 and ITA No. 3/Asr/2024 for Asstt. Year 2014-15 are allowed....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee is only collecting agency on their behalf as per the policies notified from time to time. Further, the assessee is not free to use these funds without the permission of Ministry of Housing & Development or other funds like EDC etc. and it was further argued that relevant notifications in this regard are quite clear. 23. Further to that, it has been argued by the Ld. Counsel that these EWS Housing and Flat/Charges or EDC,License fee, etc have been shown separately towards the liability side of the balance sheet and, later on, as and when, the necessary expenditure is to be made as per directions of State Govt. or Housing Development Department, they are spent out of such sum as lying with the assessee and, as such, neither it is claimed as an expense in the profit and loss account nor it is disclosed as an income, since the said amount does not belong to the assessee and neither it has any authority to spend the same. 24. Further, the assessee has by way of submissions as made on merits for Asstt. Year 2012-13, has given detailed submissions on this issue and since the facts and circumstances in Asstt. Year 2012-13 & 2017-18 remains the same on merits, the same b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....charges are in the nature of income of the Assessee as the said notification only states the EDC rates. But from the said notification, one thing which is very much clear that, any change in the EDC rates or any change in the policy with regard to EDC is governed only by the Government of Punjab and the Assessee has no control over the same. ii) Notification of 2007: (Pg-107-112-PB-II) (specific reference Pg-111) It is again reiterated that the notification has been issued by the Government of Punjab and the Assessee has to abide by the same. The purpose of notification is only with regard to change in the rates of EDC, License Fees and Conversion charges. The Government of Punjab (Pg-111) have even held that the EDC Charges are the charges for utilization of existing infrastructure/proposed infrastructure. The said notification cannot be read in isolation and it has to read along with the PAPR Act, wherein it is already clear that the amount collected as EDC has to be spent by the Government or the Local Authority. The AO has laid stress on the point that EDC will be utilized by the concerned local planning and urban d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... seek permission from the State Government. 4. The EDC charges are collected by the Assessee and are used as per the specific directions of the State Government. Generally, EDC is used in order to provide the basic necessities of the colonies such as building the approach roads till the colonies, laying of sewerage systems etc. It is worth to mention that the whenever the new colonies are built, the infrastructure is required like roads, sewerage systems, water supply etc. 5. The Assessee has been acting only as a custodian of the amount which is collected by it. In the case of " Greater Ludhiana Area Development Authority " ( in short GLADA ), letter was issued by the GLADA for use of funds lying with them as EDC (Copy placed in PB-II pg-121) but the said request was rejected by the Govt of Punjab. (Copy placed in PB-II Pg-126). Further on similar footing, a notification has also been issued by the Principal Secretary, Housing & Urban Development that EDC amount cannot be used without obtaining order from Govt and it has also been clearly stated that State Urban Development Authorities are only the custodians. (Copy placed in PB-II Pg-127) 6. The Assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....automatic conclusion that the interest is income of the assessee-it is not the case of the Revenue that the books of the assessee ever revealed diversion of any interest income-Tribunal arrived at finding of facts that the income which accrued to the assessee from the funds of the Government which were released to it were not diverted by it and could not be diverted to any other purpose and had to be used only for the purposes which the Government directed and in case the funds were not used the Government had the right to recall them-Therefore, the interest on such bank deposits was not liable to tax." The facts of the above said case are very much similar to that of the Assessee, as even in the above said case, the Government grant as received by Punjab Police Housing Corporation Ltd. is kept separately as in the case of the Assessee, wherein EDC is kept separately and the Assessee merely act as custodian of the same. In the above said case law even the interest as earned by the Punjab Police Housing Corporation Ltd. on account of unutilized Government grant (lying with the Assessee on behalf of the Government) has been held to be not liable to tax and not the grant. So,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Urban Development Authority", as reported in 122 Taxman.com 76, placed at pages 152 to 157 of Common Paper Book/Judgement Set, of Karnataka High Court and the said authority had also been carried out the same obligation as being carried out by the assessee and have been held to be charitable organization with the following remarks:- "Income Tax: Where assessee, a statutory Authority, was established under provisions of Karnataka Urban Development Authorities Act, 1987 to establish urban areas in Belgaum in a planned manner, activity carried on by assessee did not amount to an activity in nature of trade, commerce or business and it was entitled for registration under Section 12A." 41. Judgment of Hon'ble ITAT Agra Bench in the case of Jhansi Development Authority Vs. DCIT, Circle-4, Agra reported in [2021] 123 Taxmann.Com 247 (Agra- Trib.) (Development Authority in an extended arm of State Govt. and thus entitled for exemption u/s 11). 42. Judgment of Hon'ble ITAT Agra Bench in the case of Agra Development Authority Vs. DCIT, reported in (2021) 127 Taxmann. Com 387 (Agra-Trib) (Development Authority in an extended arm of State Govt. and thus entitled for exemption....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er to that, it has been argued that as per the copy of account of EWS Charges placed at page 45 of the Paper Book, no fresh charges have been received during the year under consideration and, as such, the same was not even liable to be considered as revenue receipts in the year under consideration. 27. Further, the assessee has relied upon the arguments on merits that in the Assessment years 2012-13, 2013-14 & 2014-15, the mode and manner of making the addition of the EDC and License fee, had been the 'net inflow' after considering the outflow, for which, the addition has been made by the Assessing Officer in various years and for the year under consideration, since the outflow is much more than the inflow, no separate addition of External Development Charges and License fee has been made in these years and, these charts are placed at pages 79 and 94 in the Paper Book for Asstt. Year 2012-13 and copy of the same filed before us for Asstt. Year 2017-18. 28. Further, we have gone also through the judgment of Hon'ble Punjab & Haryana High Court, in the case of "Punjab Police Housing Corpn." as relied upon by the assessee (supra) and in that case also, certain funds were received....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for the purpose of development of urban areas, the same is not taxable at all. Hon'ble 'Apex Court' in the case of CIT (Exemptions) Vs Gandhinagar Urban Development Authority, 148 Taxmann.com 339 (SC), in which, the Hon'ble Apex Court, has held that the 'Urban Development Authority', executing works in connection with supply of water, disposal of sewerage and provision of other services and amenities, could be said to be providing general public utility service within meaning of section 2(15) and hence eligible for benefit of section 11 and same is the case of Ahmedabad Urban Development Authority, as reported in (2022) 144 Taxmann.com 78 (SC) 30. Our attention was also drawn to the judgement of ITAT, Ahmedabad "D" Bench in the case of 'Vadodara Urban Development Authority in ITA Nos. 333 to 335/Ahd/2023 vide order, dated 29.02.2024, have discussed the Finance bill 2023, by way of which new section 10 (46A) has been inserted as stated above and in this judgment also, the reliance has been placed on the judgment of Apex Court in the case of JCIT (Exemptions) Vs Ahmedabad Development Authority, reported in 449 ITR 1 and after relying upon number of judgments, on the similar iss....