Madras High Court
Assistant Commissioner Of Income ... vs M/S.Doshi Housing Limited on 10 March, 2022
W.A. Nos. 216, 217 & 232 of 2013
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 10.03.2022
CORAM
THE HONOURABLE MR. JUSTICE R. MAHADEVAN
and
THE HONOURABLE MR. JUSTICE J.SATHYA NARAYANA PRASAD
Writ Appeal Nos. 216, 217 & 232 of 2013
and
M.P.No.1 of 2013
----
W.A.Nos. 216 & 217 of 2013
Assistant Commissioner of Income Tax
Company Circle – I (4)
121, M.G. Road, Nungambakkam .. Appellant in both
Chennai – 600 034 the appeals
Versus
M/s.Doshi Housing Limited
Represented by Managing Director
Mr.Harshad V Doshi
Doshi Towers, 9th Floor
156 Poonamallee High Road .. Respondent in both
Kilpauk, Chennai – 600 034 the appeals
W.A.No.232 of 2013
Deputy Commissioner of Income Tax
Company Circle – I (1)
121, M.G. Road, Nungambakkam
Chennai – 600 034 .. Appellant
Versus
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W.A. Nos. 216, 217 & 232 of 2013
M/s.Arun Excello Foundations P Ltd
Represented by Managing Director
Mr.Suresh
Battad Towers
18 West Cott Road
Royapettah, Chennai – 600 014 .. Respondent
Appeals filed under Clause 15 of Letters Patent against the orders dated
27.04.2012 passed by the learned Judge in W.P. Nos. 29069, 29070 & 23899
of 2011 respectively.
For Appellants : Mrs. Hema Muralikrishnan
Senior Panel Counsel
in all the Writ Appeals
For Respondent : Mr. R. Sivakumar
in all the Writ Appeals
COMMON JUDGMENT
(Judgment of the Court was delivered by R. MAHADEVAN, J.)
These intra-court appeals are filed by the appellants questioning the
correctness of the orders dated 27.04.2012 passed by the learned Judge in W.P.
Nos. 29069, 29070 & 23899 of 2011, filed by the respondents herein.
2. The respondents herein have filed the aforesaid writ petitions
questioning the notices dated 01.03.2011, 16.03.2011 and 25.03.2011
respectively and the consequential orders dated 25.11.2011 passed by the
appellants herein, rejecting the objections raised by them against the
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W.A. Nos. 216, 217 & 232 of 2013
proceedings initiated under Section 147 of the Income Tax Act (in short, the
Act) for re-opening the concluded assessment.
3. The respondents are registered companies engaged in the business
of construction and development of housing project. For the assessment years
2006-2007, 2004-2005 and 2004-2005 respectively, they filed their returns of
income declaring total loss. One of the major claims raised by the respondents
in their returns was deduction under Section 80-IB(10). Such returns were
taken up for scrutiny and the assessing officer passed orders of assessment
under Section 143(3) granting deduction under Section 80IB(10) as claimed by
the respondents herein. However, after a period of four years, the assessing
officer sought to reopen the assessments on the ground that the respondents
company are not eligible to claim deduction under Section 80-IB(10) in the
light of the explanation inserted below section 80-IB(10) of the Act by
Finance Act, 2 of 2009 with retrospective effect from 1-4-2000 whereunder, it
was stated that deduction under section 80-IB(10) of the Act shall not be
admissible to a contractor in respect of works contract awarded by any person.
On receipt of the notices for re-assessment, the respondents have submitted
their objections, but they were rejected.
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W.A. Nos. 216, 217 & 232 of 2013
4. Assailing the orders of rejection, the respondents herein have filed
the writ petitions contending that the Assessing Officer was not justified in re-
opening the assessment after expiry of four years. Further, there was no
failure on the part of the respondents to disclose truly and fully all facts. The
Assessing Officer has no new material evidence to show that certain income
earned by the respondents has escaped from the purview of assessment and
therefore, the re-assessment is not warranted. The respondents also placed
reliance on the decision in the case of Commissioner of Income Tax, Delhi
vs. Kelvinator of India Limited reported in (2010) 320 ITR 561 (SC) and
contended that the re-assessment proceedings initiated against them after lapse
of four years is liable to be set aside. They have also placed reliance on the
decision of this Court in the case of Fenner (India) Limited vs. Deputy
Commissioner of Income Tax reported in (2000) 241 ITR (Madras) 672
wherein it was held that issuing re-assessment notice after expiry of four years
on the ground that there is escapement of income is not sufficient. It must be
shown that the escapement must be by reason of the failure on the part of the
assessee, either to file a return or to disclose, truly and fully, the material
particulars necessary for concluding the assessment. Accordingly, the
respondents herein prayed for setting aside the orders, which were impugned
in the writ petitions.
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W.A. Nos. 216, 217 & 232 of 2013
5. The writ petitions were opposed by the appellants-revenue
contending that in the orders of assessment, deduction was allowed in favour
of the respondents. However, Section 80IB (10) of the Act was amended
which excludes commercial areas exceeding 2000 square feet in extent from
the purview of deduction under Section 80IB (10) of the Act. Such
amendments were brought with retrospective effect from 01.04.2001.
Therefore, it was contended on behalf of the appellants that the amendment
will have a bearing on the concluded assessment and it warranted initiation of
re-assessment.
6. The learned Judge, on considering the rival submissions, allowed
the writ petitions by separate orders dated 27.04.2012 on the ground that the
respondents herein have placed all the material records at the time of original
assessment and it cannot be said that they have suppressed any material
particulars. It was also held that the initiation of re-assessment after expiry of
four years from the date of original assessment is illegal and invalid. The said
orders of the learned Judge are impugned in these appeals.
7. The learned Senior Standing Counsel appearing for the appellants
would contend that the re-assessment proceedings were sought to be initiated
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not only due to the amendments brought by way of explanation to Section
801B (10) of the Act, with retrospective effect from 01.04.2001 but due to the
fact that after concluding assessment, it unfolded that the respondents herein
undertook and constructed the building as a contractor and not as a developer
and therefore, they are not entitled to the deduction under Section 801B (10)
of the Act. The learned Judge, without appreciating the above aspect has
erroneously set aside the orders of rejection passed by the appellants under
Section 147 of the Act. It is also contended that if the respondents are
aggrieved against the order dated 25.11.2011 passed by the respective
appellants, rejecting their objections to the re-assessment proceedings, they
ought to have filed statutory appeals before the appellate authority and the
learned Judge ought not to have entertained the writ petitions filed under
Article 226 of The Constitution of India. Therefore, the learned Senior
Standing Counsel prayed for allowing the writ appeals by setting aside the
orders of the learned Judge.
8. Per contra, the learned counsel for the respondents contended that
in the absence of any tangible material evidence, the initiation of re-
assessment proceedings itself is bad. It is not the case of the appellants that
the respondents, at the time of original assessment, have withheld any
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documentary evidence or suppressed material particulars. In the absence of
the same, the re-assessment proceedings cannot be initiated against the
respondents and it was rightly considered by the learned Judge while allowing
the writ petitions filed by them. In support of his contention, the learned
counsel for the respondents relied on the decision of the Division Bench of
this Court rendered on 18.10.2012 in Tax Case (Appeal) Nos. 1348 and 1349
of 2007 in the case of Commissioner of Income Tax, Chennai vs. M/s. Arun
Excello Foundations Private Limited wherein it was held that when the
project undertaken by the assessee fulfils the criteria for being approved as a
housing project, then, deductions cannot be denied under Section 80IB (10) of
the Act merely because the project is approved as residential plus commercial
project. It was further held that when the conditions specified under Section
80IB of the Act are satisfied, then deduction is allowable on the entire project
and there is no question of allowing deduction to a part of the project alone.
9. The learned counsel for the respondents also placed heavy
reliance on the decision of the Division Bench of the Gujarat High Court in the
case of Ganesh Housing Corporation Limited vs. Deputy Commissioner of
Income Tax, Circle 4 & 1 reported in (2016) 74 Taxmann.com 172
(Gujarat) wherein it was held that when there is no failure on the part of the
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W.A. Nos. 216, 217 & 232 of 2013
assessee to truly and fully disclose all facts and the assessing officer has no
new material establishing that there was escapement of income, the re-opening
of the assessment by placing reliance on the explanation added to the statute
with retrospective effect could not be a ground. Thus, the learned counsel for
the respondents prayed for dismissal of the writ appeals.
10. We have heard the learned counsel for both sides and perused the
materials placed on record.
11. Admittedly, for the assessment years 2006-2007, 2004-2005 and
2004-2005 respectively, the respondents herein have filed their returns of
income and the assessments were also concluded. However, after expiry of
four years, notices under Section 148 of the Act were issued to the respondents
herein on 01.03.2011, 16.03.2011 and 25.03.2011 respectively. On receipt of
such notices, the respondents have submitted their objections by stating that
they have not suppressed any material particulars at the time of original
assessment and therefore, the re-assessment proceedings is not warranted.
However, such objections were rejected by the respective appellant on
25.11.2011. Therefore, challenging the show cause notices issued under
Section 148 of the Act as well as the orders of rejection dated 25.11.2011, the
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writ petitions were filed. The writ petitions were allowed by the learned Judge
on the ground that there is no proof to show that there was escapement of
income warranting initiation of re-assessment proceedings.
12. In the decision of the Division Bench of the Gujarat High Court in
the case of Ganesh Housing Corporation Limited vs. Deputy
Commissioner of Income Tax, Circle 4 & 1 reported in (2016) 74
Taxmann.com 172 (Gujarat) it was held that re-assessment proceedings are
not warranted if the assessee did not suppress any material particulars at the
time of assessment or the assessing officer had not collected any new materials
to show that there was escapement of assessment. In Para Nos.10 and 11 of
the decision, it was held as follows:-
"10. Thus, the entire claim of deduction came up for
consideration at the hands of the Assessing Officer in the
original assessment. The claim was minutely examined and
only thereafter accepted. It would therefore not permissible to
the Assessing Officer to disturb such claim in exercise of
powers under Section 147 of the Act by issuing the notice
beyond the period of four years and beyond the period of
relevant assessment year. Here again, the Assessing Officer
had not recorded, in what manner, the assessee failed in its
duty to disclose truly and fully all material facts. In fact, the
thirst of the contention of the Assessing Officer appears to be
that the assessee had not developed housing projects, but was
acting as a contractor. In this respect, the Assessing Officer
has placed reliance on the retrospective explanation added to
section 80IB (10) of the Act. It is well settled by the series of
judgments of this Court that retrospective amendment in
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statute would not enable the Assessing Officer to reopen an
assessment beyond a period of four years.
11. The stand of the Assessing Officer that in one of
the projects in the development permission, the name of the
assessee was not mentioned as a developer. The petitoiner has
explained this in the objections raised to the reasons recorded
by pointing out that after development of phase-1 of the
project, when permission was granted for phase-II, the same
was done in computerized format, which did not contain an
entry for showing of the name of the developer. Quite apart
from this explanation, on this ground, it would not be open for
the Assessing Officer to re-examine the claim, which was
originally accepted after scrutiny. If there was an error in view
of the Assessing Officer in granting the claim, the option of the
Revenue lay elsewhere. Likewise, the contention that the
societies had deducted tax at source, indicating that the
relationship between the petitioner and the was one of the
contractor and the employer of a contract, also would not
permit the Assessing Officer to reopen the assessment. Firstly,
in a claim, which is scrutinized, the objections of this nature
would be an additional element, which if at all ought to have
been examined by the Assessing Officer originally and surely
cannot provide a ground for re-opening the assessment beyond
a period of four years. Secondly, the deduction of tax at source
principally is in the hands of the payer of an account. For
whatever reason if the tax is deducted at a higher rate or
deducted when no such deduction was warranted, it would be
for the payee for taking up the issue before the department and
claim adjustment or refund, as the case may be. Mere factum
of deduction of tax at source or the rate at which it was
deducted would not be conclusive proof of the relationship
between the parties."
13. The said decision of the Division Bench of the Gujarat High Court
squarely applies to the facts of this case. The contention of the learned Senior
Standing Counsel for the appellants that the re-assessment is not solely based
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on the amendments brought to the statute, but due to the fact that the
respondents herein undertook and constructed the building as a contractor and
not as a developer, also cannot be sustained in the light of the decision of the
Division Bench of the Gujarat High Court mentioned supra. The learned
Judge also categorically held that the Assessing Officer is not in possession of
tangible material evidence to initiate re-assessment proceedings against the
respondents herein. Such a finding rendered by the learned Judge, in our
opinion, is proper and therefore, we are not inclined to interfere with the
orders, which are impugned in these writ appeals.
14. In the result, the orders dated 27.04.2012 passed by the learned
Judge in W.P. Nos. 29069, 29070 & 23899 of 2011, filed by the respondents
herein are confirmed. All the writ appeals are dismissed. No costs.
(R.M.D., J.) (J.S.N.P., J.)
10.03.2022
Internet : Yes / No
Index : Yes / No
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W.A. Nos. 216, 217 & 232 of 2013
R. MAHADEVAN, J
and
J. SATHYA NARAYANA PRASAD, J
av/rsh
WA Nos. 216, 217 & 232/2013
10.03.2022
https://www.mhc.tn.gov.in/judis
