Rashmi Infrastructure v. Dy. CIT

Case snapshot

Sections / provisions: 143(3)

Questions before the Court / Tribunal

• S. 143(3) : Assessment-Survey-Settlement Commission-Housing project-On money-Natural justice-Order passed by the Assessing Officer only on the basis of rejection order of the Settlement commission was not valid-The Assessing Officer is directed to pass the order in accordance with law after considering the submissions of the Assessee. [S. 80IB(10), 133A, 245D(1), 245D(4)] During course of survey certain materials relating to unaccounted receipts for sale of residential flats were impounded. The assessee admitted unaccounted income. The assessee filed an application before the Settlement Commission which was…
• What factual, statutory and procedural conditions control the relief?
• How does the operative order apply to the parties and the challenged proceeding?

Material facts and procedural background

M/s. Rashmi Infrastructure Vs. Deputy Commissioner of Developers Ltd., Income Tax-3(3)(1) th 10 Floor, Regent Chambers Aaykar Bhavan 208, Nariman Point Mumbai Mumbai-400 021 PAN/GIR No.AACCR2499B (Appellant) .. (Respondent)

Assessee by Dr. K. Shivaram Revenue by Shri Ajay Chandra & Shri T. Shankar Date of Hearing 11/05/2022

2. Though the assessee has raised several grounds of appeal for both the assessment years, we find that it had raised a preliminary ground for both the years that the orders have been passed by the lower authorities in gross violation of principles of natural justice and without following the due process of law. Since this is a preliminary issue, we deem it fit and appropriate to address this issue first. With the consent of both the parties, the facts prevailing in Asst Year 2013-14 are taken as the lead case and both the parties agreed that the decision rendered thereon would apply with equal force for Asst Year 2014-15 also in view of identical facts, except with variance in figures.

3. We have heard the rival submissions and perused the materials available on record. We find that the assessee company is engaged in the business as a Builder / Developer. The return of income for the Asst Year 2013-14 was filed by the assessee company on 27.9.2013 declaring total income of Rs 60,12,040/-, which was later revised on 8.7.2014 declaring total income at Rs Nil. In the revised return, the assessee claimed deduction u/s 80IB(10) of the Act for Rs 60,12,044/-. This revised return was filed within the time prescribed u/s 139(5) of the Act which fact is also conceded by the ld. AO in page 1 para 1 of his order. 3.1. A survey action u/s 133A of the Act was conducted on 18.10.2013 in the business premises of the assessee. During the course of survey proceedings, certain materials relating to unaccounted receipts from sale

of residential flats in the project ‘Rashmi Heights’ were impounded. In the survey, the assessee company admitted unaccounted income of Rs 7,64,20,047/- on the basis of documents found at the time of survey, which included declaration on account of unaccounted cash receipts amounting to Rs 7,49,69,700/- and excess claim of provision of expenditure made in final accounts for the Asst Year 2013-14 amounting to Rs 14,50,347/-.

Appellant / assessee submissions

3.6. During the course of assessment proceedings, the assessee submitted that Slum Redevelopment Project is eligible for deduction u/s 80IB(10) of the Act. It was submitted that the Central Government had relaxed two very important pre-conditions for availing the deduction us 80IB(10) of the Act viz area of plot and time limit for completion of housing project in respect of slum redevelopment. The assessee also placed on record the point wise submissions and explanations given to the objections raised by the Principal Commissioner of Income Tax before the ITSC in his report u/s 245D(3) of the Act. The main crux of the submissions of the assessee before the ld. AO is that once the ITSC rejects the application of the assessee u/s 245D(4) of the

3.7. With regard to on money receipts from the project, the assessee furnished the entire details of on money receipts flat wise from the project ‘Rashmi Heights’ which are tabulated in pages 15 to 17 of the assessment order. The assessee also submitted that the project was completed in Asst Year 2013-14 and it would be incorrect to tax the cheque amount in the year when sale of the flats are recognized and tax the on money in one in another assessment year i.e the year of receipt thereon. The assessee submitted that the on monies were also received only for the very same project ‘Rashmi Heights’ and hence the same takes the same character of receipt of project receipts. The assessee submitted that the on money in the year of receipt should be considered only as ‘Advances received against the project’ and the same would get transferred to income account in the year of project completion. The assessee pleaded that since the cheque portion is entitled for deduction u/s 80IB(10) of the Act, the on money portion also would be eligible for the said deduction. The assessee also placed reliance on various decisions in support of its contentions in this regard. The assessee also claimed…

Revenue / respondent submissions

The packaged judgment does not separately label the respondent's submissions in an independently extractable passage. No contention is inferred; read the full order.

Court / Tribunal analysis and reasoning

2. Though the assessee has raised several grounds of appeal for both the assessment years, we find that it had raised a preliminary ground for both the years that the orders have been passed by the lower authorities in gross violation of principles of natural justice and without following the due process of law. Since this is a preliminary issue, we deem it fit and appropriate to address this issue first. With the consent of both the parties, the facts prevailing in Asst Year 2013-14 are taken as the lead case and both the parties agreed that the decision rendered thereon would apply with equal force for Asst Year 2014-15 also in view of identical facts, except with variance in figures.

3. We have heard the rival submissions and perused the materials available on record. We find that the assessee company is engaged in the business as a Builder / Developer. The return of income for the Asst Year 2013-14 was filed by the assessee company on 27.9.2013 declaring total income of Rs 60,12,040/-, which was later revised on 8.7.2014 declaring total income at Rs Nil. In the revised return, the assessee claimed deduction u/s 80IB(10) of the Act for Rs 60,12,044/-. This revised return was filed within the time prescribed u/s 139(5) of the Act which fact is also conceded by the ld. AO in page 1 para 1 of his order. 3.1. A survey action u/s 133A of the Act was conducted on 18.10.2013 in the business premises of the assessee. During the course of survey proceedings, certain materials relating to unaccounted receipts from sale

5. We find that the ld. AR before us had filed a chart containing filing of various details before the ld. AO and ld. CIT(A) in respect of each of the allegations leveled by the lower authorities. We find that none of these submissions were considered by the lower authorities. Infact the Director of the assessee company Mr Umashankar had even filed a retraction statement which ise enclosed in pages 34 to 36 of the Paper Book 1. There is absolutely no whisper in the orders of the lower authorities in this regard. The details of unit wise eligibility u/s 80IB(10) of the Act are enclosed in pages 71 to 72 of the Paper Book. Architect Certificate is enclosed in Page 129 of the Paper Book. There is absolutely no discussion about these documents and workings in the orders of the lower authorities. The assessee had furnished the details of unaccounted expenses together with the supporting evidences in pages 151 to 580 of the Paper Book. There is absolutely no discussion about these documents in the orders of the lower authorities.

Operative decision and relief

3.2. During the course of survey action u/s 133A of the Act, it was found that the assessee company was following project completion method for recognizing the income for the construction project. A statement on oath u/s 131 of the Act of the Director was recorded wherein he voluntarily disclosed a sum of Rs 7,64,20,047/- (74969700+1450347) for the Asst Year 2013-14 in respect of Rashmi Heights project. The assessee filed an application before the Hon’ble Income Tax Settlement Commission (ITSC) on 2.2.2015. The ITSC vide its order u/s 245D(1) of the Act dated 11.2.2015 allowed the application to be proceeded with. The ITSC vide its order u/s 245D(4) of the Act dated 9.8.2016 rejected the settlement application of the assessee company. Aggrieved by the order of the ITSC, the assessee filed a writ petition before the Hon’ble Jurisdictional High Court in W.P. No. 2814 of 2016. The Hon’ble Bombay High Court vide its order dated 20.1.2017 dismissed the petition of the assessee company. Accordingly, the assessment proceedings which were earlier abated, got resumed and the ld. AO proceeded with the same.

5.1. In view of the aforesaid facts and the manner in which the orders of the lower authorities had been passed , we deem it fit and appropriate, in the interest of justice and fairplay, to remand these appeals to the file of ld. AO for denovo adjudication in accordance with law. The ld. AO is directed to consider all the submissions and objections of the assessee and pass the orders in accordance with law. Needless to mention that the

assessee be given proper opportunity of being heard. The assessee is also given liberty to furnish fresh evidences, if any, in support of its contentions. Accordingly, all the grounds raised by the assessee for both the years are set aside to the file of ld. AO and hence allowed for statistical purposes.

6. In the result, both the appeals of the assessee are allowed for statistical purposes.

Ratio and legal principle

• The packaged judgment addresses S. 143(3) : Assessment-Survey-Settlement Commission-Housing project-On money-Natural justice-Order passed by the Assessing Officer only on the basis of rejection order of the Settlement commission was not valid-The Assessing Officer is directed to pass the order in accordance with law after considering the submissions of the Assessee. [S. 80IB(10), 133A, 245D(1), 245D(4)] During course of survey certain materials relating to unaccounted receipts for sale of residential flats were impounded. The assessee admitted unaccounted income. The assessee filed an application before the Settlement Commission which was…. The precise proposition must be read with the Court/Tribunal's reasoning and operative directions.
• Reliance depends on matching the statutory version, jurisdiction, procedural stage and material evidence recorded in the judgment.

Why this judgment matters

This decision is relevant to practitioners and affected parties dealing with s. 143(3) : assessment-survey-settlement commission-housing project-on money-natural justice-order passed by the assessing officer only on the basis of rejection order of the settlement commission was not valid-the assessing officer is directed to pass the order in accordance with law after considering the submissions of the assessee. [s. 80ib(10), 133a, 245d(1), 245d(4)] during course of survey certain materials relating to unaccounted receipts for sale of residential flats were impounded. the assessee admitted unaccounted income. the assessee filed an application before the settlement commission which was… Its value lies in showing how the adjudicating forum connected the applicable rule to the proved facts and procedural posture.

Practitioner action points

• Match the statutory version, jurisdiction, procedural stage and decisive evidence before relying on the result.
• Verify current appellate, review and SLP history and any later amendment or controlling authority.
• Attach the complete judgment to the working paper or filing and cite the paragraph/page supporting the proposition.

Does this case match your facts?

Section / provision impact

• 143(3) - apply the exact version considered in the judgment.

Case network

Similar issue / useful comparison

• Agreeko Energy Rental Vs DCIT - ITAT Pune
• BASHIR AHMAD SOFI V ITO WARD 1 - ITAT Amritsar
• Chennai Port Authority v. NFAC - Madras High Court

Different outcome / possible distinction

• PCIT Chandigarh v. ABC Papers Limited - Dismissed
• Greatship (India) Ltd. v. ACIT (Bombay High Court) - Disposed

Related Finin2min resources

• Case Law Hub
• Search all judgments
• Income-tax study guide

Full judgment and source control

Read / download packaged judgment record

Source class: Sanitized local full-judgment copy; official primary replacement pending · Repository status: Published