Income Tax Appellate Tribunal – Mumbai
Sumer Corporation, Mumbai vs Dcit Cen Cir 5(3), Mumbai on 26 December, 2018 IN THE INCOME TAX APPELLATE TRIBUNAL “E” Bench, Mumbai Before Shri B.R. Baskaran (AM)& Shri Pawan Singh (JM) I.T.A. No. 6801/Mum/2017 (Assessment Year 2011-12) M/s. Sumer Corporation DCIT CC-5(3) 203, A Wing, Peninsula Vs . Room No. 1906 Corporate Park, 19 t h Floor Ganpatrao Kadam Marg Air India Building Lower Parel Nariman Point Mumbai-400 013. Mumbai-400 021. PAN : AACFS4279F (Appellant) (Respondent) C.O. No. 162/Mum/2018 (Assessment Year 2011-12) DCIT CC-5(3) M/s. Sumer Corporation Room No. 1906 Vs . 203, A Wing, Peninsula t h 19 Floor Corporate Park, Air India Building Ganpatrao Kadam Marg Nariman Point Lower Parel Mumbai-400 021. Mumbai-400 013. PAN : AACFS4279F (Appellant) (Respondent) Assessee by S/Shri Rafique Dada,Vipul Joshi & Nishit Gandhi Department by S/Shri R. Manjunatha Swamy, Rajeshwar Yadav, Ashok Kumar Jha & Rajesh Damor Date of He aring 27.11.2018 Date of Pronounceme nt 26.12.2018 ORDER
Per B.R. Baskaran (AM) :-

The assessee has filed appeal challenging the order dated 14-09-2017
passed by Ld CIT(A)-53, Mumbai for assessment year 2011-12 confirming the
rectification order passed by the assessing officer u/s 154 of the Act. The
revenue has filed Cross objection raising certain legal contentions.
2 2. We shall first deal with the appeal filed by the assessee. The assessee
herein belongs to Sumer Group and is engaged in the business of development
and construction of buildings. The revenue carried out search and seizure
operations in Sumer Group on 23.12.2010. The year under consideration,
being the year of search, the AO completed the assessment u/s 143(3) r.w.s.
153A of the Act on 28-03-2013.

3. In the assessment order, the AO has observed that the assessee has e-
filed its return of income on 30-09-2011 declaring income of Rs.5.78 crores.
During the year under consideration, the assessee has completed its on-going
project named Chandivali Project, which was a SRA project (Slum
Rehabilitation Scheme project). The assessee claimed deduction u/s 80IB(10)
of the Act on the income derived from the above said project to the tune of
Rs.447.92 crores in the return of income filed by it. The assessee also declared
interest income, income from generation of electricity from its Wind Mill
project.

4. As per the SRA scheme, the assessee has borne construction cost of
12500 units along with shops, balwadis, school infrastructure etc., with inner
roads. The assessee has also received TDR (Transferrable development rights)
under this project. The assessee has followed Project Completion Method for
offering income from this project. Since the project was completed during the
year under consideration, the assessee declared income from this project
during the instant year and has also claimed deduction u/s 80IB(10) of the
Act. The income so declared by the assessee included the sale proceeds of
TDR. The AO found the claim of the assessee to be in accordance with the
CBDT’s notification No.67/2010 dated 30-08-2010 and No.2/2010 dated 05-
01-2011, as per which the Schemes falling under Regulation 33(10) of
Development Control Regulation for Greater Mumbai are eligible for deduction
u/s 80IB(10) of the Act.
3 5. During the course of search proceedings, the assessee had admitted
additional income of Rs.60.91 crores as its income. The assessee disclosed the
same in its return of income as its business income and accordingly claimed
deduction u/s 80IB(10) thereon. The AO, however, treated the same as income
under the head Income from Other Sources. Accordingly he reduced the
deduction u/s 80IB(10), inter alia, by the amount of Rs.60.91 crores referred
above. Accordingly, in the assessment proceedings, the AO restricted the
deduction is u/s 80IB(10) of the Act to Rs.384.71 crores.
6. It is pertinent to note that the above said assessment order was revised
by the Ld Pr. CIT u/s 263 of the Act on 30-03-2015 directing the AO to verify
the eligibility of the assessee to claim deduction u/s 80IB(10) of the Act. The
AO again passed an assessment order u/s 143(3) r.w.s. 263 of the Act on
31.3.2016, wherein he allowed deduction of same amount of Rs.384.71 crores
u/s 80IB(10) of the Act.
7. The details relating to the above said amount of Rs.60.91 crores are
discussed in brief, as they are relevant to the appeal under consideration. This
amount consisted of three items, which were found from the incriminating
material found during the course of search. The details thereof are discussed
below:-
(a) Page No.3 of Annexure A-5:- This document revealed that the assessee has received a sum of Rs.33.99 crores by way of cash on sale of TDR. The document itself was titled as “Cash receipts on sale of TDRs from 01.04.2010”. The relevant table is extracted below:-
(b) Page No.4 of Annexure A-5:- This document contained certain cash transactions undertaken in the name of certain parties. The relevant table is extracted below:-
4 The transactions appearing in the name of Satara Properties (India) Ltd and Khyati Realtors was owned up by the assessee and claimed that they represent cash receipts against sale of TDRs. The aggregate amount received from both the parties was Rs.25.79 crores.

(c) Cash receipts of Rs.1.12 crores on sale of scrap.
All these transactions were confronted to Shri Ramesh S Shah, partner of
assessee firm, during the course of search and he, in the statement recorded
from him u/s 132(4) of the Act, admitted that these receipts were not recorded
in the books of accounts and also agreed to disclose the same in the return of
income. With regard to the receipts mentioned in item (a) above, in reply to
question no.20 posed to him, he stated that the cash receipts as receipts on
sale of TDRs. With regard to receipts mentioned in item (b) above, the
transactions mentioned under the name of M/s Satara Properties (India) P Ltd
and M/s Khyati Realtors were identified as belonging to the assessee herein.
He replied that they represent cash received for various miscellaneous
transactions done by the assessee (M/s Sumer Corporation) with M/s Satara
Properties (India) P Ltd & M/s Khyati Realtors. The transaction mentioned in
item (c) above was stated to be the unaccounted amount realised on sale of
scrap generated from the Chandivili project. The aggregate amount of all the
three items was Rs.60.91 crores. Besides the above, the assessee also
5 accepted that purchases to the extent of Rs.29.92 lakhs was bogus in nature,
out of which Rs.9,75,612/- was relating to the year under consideration.

8. As stated earlier, the assessee disclosed the above said amount of
Rs.60.91 crores in the return of income filed for the year under consideration
as its business income and also claimed deduction u/s 80IB(10) of the Act.
However, the assessing officer assessed the same as income under the head
Income from other sources for the reasons mentioned in the assessment order.
Hence the deduction u/s 80IB(10) of the Act was reduced to the extent of
Rs.60.91 crores. The AO further reduced the bogus purchases amount of
Rs.29.92 lakhs and also the sum of Rs.2.00 crores, being the scrap sales
pertaining to AY 2009-10, from the amount of deduction claimed u/s 80IB(10)
of the Act. Accordingly, the AO allowed deduction u/s 80IB(10) of the Act to
the tune of Rs.384.71 crores.

9. The assessee had also increased the cost of construction of the SRA
project by Rs.9.00 crores mentioning it as “Chandivali Project Additional WIP
Cost”. According to the assessee, it has used the undisclosed income in
incurring additional costs and the same has been accounted for as application
of income. Since the assessee could not furnish supporting evidences for the
claim, the AO disallowed the said claim. The AO passed the assessment order
on 28-03-2013, but the assessee did not prefer appeal challenging the above
said decision of the assessing officer.

10. Subsequently, the assessee filed a rectification petition u/s 154 of the Act
on 13.04.2016 seeking rectification of the assessment order passed u/s 143(3)
r.w.s 153A of the Act, on the issue of deduction claimed u/s 80IB of the Act on
the above said disallowances, viz.,
(a) Assessment of cash receipts aggregating to Rs.60.91 crores as income under the head Income from other sources instead of assessing the same as business income, thereby denying deduction u/s 80IB(10) of the Act on the above said amount.
6 (b) Rejection of deduction u/s 80IB(10) of the Act on the disallowance towards bogus purchases of Rs.29.92 lakhs and addition of Rs.9.00 crores relating to application of income by way of increase in WIP, i.e., both the additions would increase business income only.

(c) The reduction of Rs.2.00 crores relating to scrap sales of AY 2009-
10 has resulted in double taxation of same income.

11. The AO, however, took the view that the above said claims of the
assessee cannot be considered as mistakes apparent from record within the
scope of sec.154 of the Act. The AO has also discussed the principles relating
to rectification of mistakes apparent from record by placing reliance on certain
case laws. The AO observed that he has given proper reasons for assessing the
amount of Rs.60.91 crores as income under the head Income from other
sources. He further observed that the assessee has accepted the said findings
given in the assessment order by not filing appeal and hence it has attained
finality. He also observed that the assessee has not given valid reasons for not
accounting these cash receipts in the regular books of accounts. Accordingly,
he rejected the rectification petition filed by the assessee. The assessee
challenged the same by filing appeal before Ld CIT(A).

12. In the appellate proceedings, the Ld CIT(A) upheld the view taken by the
AO. In this regard, the Ld CIT(A) has also referred to certain decisions which
explained the meaning of “mistakes apparent from record”. The ld CIT(A) held
that the AO has taken a plausible view in assessing the amount of Rs.60.91
crores as income under the head Income from other sources. With regard to
the addition of Rs.9.00 crores claimed by the assessee as application of
income, the Ld CIT(A) took the view that the claim of the assessee shall have
effect on closing stock without affecting profit and hence the same will fall
outside the scope of sec.154 of the Act. The Ld CIT(A) also expressed the view
that the assessee is having projects other than Chandivali Project and hence
the contentions of the assessee cannot be readily verified from the facts
available on records. The Ld CIT(A), however, accepted the contention of the
assessee on double taxation of the amount of Rs.2.00 crores relating to sale of
7 scrap assessed in AY 2009-10 and accordingly directed the AO not to assess
the amount of Rs.2.00 crores in this year. Aggrieved by the order passed by Ld
CIT(A), the assessee has filed this appeal.

13. We heard the parties and perused the record. The provisions of sec.154
authorise an income tax authority to amend any order passed by it “with a
view to rectify the mistake apparent from the record”. Under sec.154(7) of the
Act, no amendment shall be made after expiry of four years from the end of
financial year in which the order sought to be amended was passed (except
cases covered by sec.155 and sec.186(4)). In the instant case, the original
assessment order was passed on 28-03-2013. The assessee has moved the
rectification petition on 13.04.2016 and the AO has passed the order u/s 154
of the Act on 28-09-2016, i.e., within four years period as mentioned in
sec.154(7) of the Act.

14. The AO as well as the Ld CIT(A) has, inter alia, observed that the
assessee has not challenged the assessment order and hence the issues
decided therein has attained finality. In this regard, the Ld A.R placed reliance
on the decision rendered by Hon’ble Supreme Court in the case of J.M.Bhatia
vs. J.M.Shah (1985)(156 ITR 474). The Ld A.R submitted that the Hon’ble
Supreme Court has held that the order, which is not appealed against, does
not attain finality in the literal sense, since it is always liable to be modified
u/s 35 of the Act (similar to sec. 154 of the 1961 Act). We have gone through
the decision rendered by Hon’ble Supreme Court in the above said case. For
the sake of convenience, we extract below the relevant observations made by
Hon’ble Supreme Court:-
“5. It is clear that the ground which was urged before the High Court and which seemed to find favour with it was that the question whether the amending Act applied to assessments which were already completed was a highly debatable question and, therefore, it was not a case of an error apparent on the face of the record which entitled the AAC to rectify his predecessor’s order but the question, thus raised would, in our view, arise only if it is really a case of completed assessment in the literal sense of the word, it may be pointed out that this very aspect of the matter was pressed in service in the Bombay Dyeing & Mfg. Co. Ltd.’s case
8 (supra)(34 ITR 143) and this Court while negativing the contention has taken
the view that the assessment order that had been initially passed in
that case (which was under section 18A(5) of the Indian Income-tax Act,
1922 (‘the 1922 Act’) could not be said to have become final in the
literal sense of the word and in that behalf this Court pointed out that
irrespective of the question whether any appeal had been preferred
or not against it that original order was liable to be modified or
rectified under section 35 of the 1957 Act and, therefore, could not
be said to have become final or complete and as such the contention
raised would not be of much assistance to the assessee. After referring to
the decision of the Privy Council in Delhi Cloth & General Mills Co.
Ltd. v. ITC AIR 1927 PC 242 as also to the Board’s decision in Colonial
Sugar Refining Co. v. Irving [1905] AC 369 this Court’ with reference to the
precise argument observed thus :
“… The same argument is put in another form by contending that the finality of the order passed by the Income-tax Officer cannot be impaired by the retrospective operation of the relevant provision. In our opinion, this argument does not really help the respondent’s case because the order passed by the Income-tax Officer under section 18A(5) cannot be said to be final in the literal sense of the word. This order was and continued to be liable to be modified under section 35 of the Act. What the Income-tax Officer has purported to do in the present case is not to revise his order in the light of the retrospective amendment made by section 13 of the Amendment Act alone, but to exercise his power under section 35 of the Act ; and so the question which fails to be considered in the present appeal centres round the construction of the expression ‘mistake apparent from the record’ used in section 35. That is why we think that the principle of the finality of the orders or the sanctity of the existing rights cannot be effectively invoked by the respondent in the present case.” [Emphasis supplied] (p. 147)
6. We feel the aforesaid observations apply with equal force to the facts of the present case. The AAC’s original order whereby the jewellery and ornaments had been excluded from the computation of the total wealth of the assessee had been passed on 26-5-1970. After the amendment had come into force with retrospective effect from 1-4-1963, proceedings for rectification were undertaken by the AAC in January 1972. It was well within four years of period of limitation available to him under section 35. This is not a case where the resort to the rectification power was required to be made by reference to any provision in the Amending Act but de horse the Amending Act power was sought to be exercised under the original section, namely, 35(7). If that be so, following the observations quoted above, it must be held that the AAC’s order dated 26-5-1970 had not become final in the literal sense of the word notwithstanding the fact that no appeal had been preferred against that order or that the requisite period for appeal was allowed to expire. The said order was and
9 continued to be liable to be modified under section 35(7) and in this view of the matter the assessee herein also would not be in a position to invoke the principle of finality of orders or the sanctity of the existing rights which are said to have been acquired by her under the initial order.
In view of the above said decision of Hon’ble Supreme court, we agree with the
contentions of the assessee that there is no bar in moving rectification petition
against an assessment order within the period prescribed under the relevant
provisions, which has not been appealed against. In the instant case, there is
no dispute that the assessee has moved the rectification petition within the
period prescribed u/s 154 of the Act.

15. The Ld A.R submitted that the assessee has been executing only one
project, viz., Chandivali Housing Project and has claimed deduction u/s
80IB(10) of the Act in respect of that project only. Accordingly he submitted
that all the receipts are related to the above said project only. He submitted
that the Ld CIT(A) was not correct in observing that the assessee has been
executing other projects also and the said observation has been made without
any supporting material. There appears to be merit in the above said
submissions also. We notice that it is not the case of the AO that the assessee
has been executing other projects also. Hence there is merit in the contentions
of Ld A.R that the Ld CIT(A) has made the above said observation without
corroborating the same.

16. Be that as it may, the question that requires consideration is whether
the mistakes pointed out by the assessee would fall under the category of “mistakes apparent from record” warranting the rectification of the assessment
order passed by the AO. We shall extract below the contents of rectification
petition filed by the assessee:-
4.1. Cash receipts of Rs. 33,99,27.120/- on page no. 3 of A-5 i. Cash receipts of Rs. 33,99,27,120/- on sale of TDR as mentioned on page no. 3 of Annexure A-5 pertains to sale of TDR as various seized pages found and seized during the course of search envisages that those cash receipts refer to sale of TDR. Details of seized pages submitted by the Assessee is as follows:
10 ii. Further, while recording statement u/s. 132(4) of the Act of Shri Ramesh S. Shah, partner of the Assesses, officer who conducted search and ADIT while analyzing Annexure – A -5 have also accepted that the above mentioned cash receipts of Rs.
33,99,27,120/- pertains to sale of TDR.

iii. Thus, the same should be taxed under the head “Profit and Gains of Business or Profession” instead of the residuary hear being “Income from Other Sources”.

4.2. Cash receipts of Rs. 11,79,49,616/- and Rs. 14.00,00,0OO/-
from M/s. Satra Properties (India) Limited and M/s. Khyati
Realtors:

i. Cash receipts of Rs. 11,79,49,616/- and Rs. 14,00,00,000/- from M/s. Satra Properties (India) Limited and M/s. Khyati Realtors respectively as mentioned on page no. 4 of Annexure A-5 also, pertains to sale of TDR as various seized pages found and seized during the course of search envisages that those cash receipts refer to sale of TDR. Details of seized pages submitted by the Assesses is as follows:

Pg. No. Remarks
11 ii. Thus the same should be taxed under the head “Profit and Gains of Business or Profession” instead of the residuary hear being “Income from Other Sources”. .

4.3. Cash receipts ofRs. 1,12,79,442/- from sale of Scrap i. Cash receipts of Rs. 1,12,79,442/- from sale of scrap as mentioned on page no. 1 of Annexure A-5 pertains to receipts from sale of scrap as on the seized page no. 1 against s. no 3 to 6, aggregating to Rs. 1,12,79,442/- “Rahim Bhai Chandaivali – SCORP” is mentioned.

ii. Thus, the same should be taxed under the head “Profit and Gains of Business or Profession” instead of the residuary hear being “Income from Other Sources”.

4.4. Application of Income of Rs. 9,00,00,000/- towards Chandivali Housing Project:

i. Application of Income of Rs. 9,00,00,0007- towards Chandivali Housing Project which is disallowed by the Assessing Officer vide order u/s. 143(3) of the Act ‘ dated 28.03.2013. Thus the deduction u/s. 80-18(10) should be increased by the same amount.

4.5. Bogus Purchase of Rs. 29,92,087/-:

i. Bogus Purchase of Rs. 29,92,0877- declared in the hands of the Assessee should added back to the profit of the Chandivali Project. Thus, the deduction u/s. 80-18(10) increases by the same amount.

4.6. Double Taxation of Rs. 2,00,00,000/- on account of Sale of Scrap:

i. During the course of search the Assessee declared sale of scrap of Rs.
2,00,00,0007- generated from Chandivali Project pertaining to AY 2009-10, which Assessee recorded as revenue in the books of account in AY 2011-12. The same has been brought to taxation in AY 2009-10 and reduced deduction u/s. 80-18(10) of the Act by Rs. 2,00,00,0007- in AY 2011-12.

ii. However, the same has not been reduced from AY 2011-12, leading to double taxation.

17. In the written submissions, the assessee has submitted various legal
propositions relating to rectification of mistakes apparent from record. We
summarise the same below:-
12 (I) The term “record” means record of all proceedings leading to framing
of assessment order. The following case laws explain this proposition:-
(a) Maharana Mills (P) Ltd vs. ITO (1959)(36 ITR 350)(SC)
(b) Gammon India vs. CIT (1995)(214 ITR 50)(Bom)
(c) Upasana Hospital and Nursing Home vs. CIT (253 ITR 507)(Kerala) (II) If the AO does not look at entire record or an important material or
fact, which was brought to his notice, then the same can be rectified and
order can be altered:-
(a) ITO vs. ITAT (1964)(58 ITR 634)(All)
(b) CIT vs. Mithalal Ashok Kumar (1984)(158 iTR 755)
(c) Laxmi Electronic Corporation vs. CIT (1990)(188 ITR 398)(All) (III) When the assessee has got only one business/project, all income
unearthed during the search have to be treated as being earned from the
said business:-
(a) CIT vs. Mhaskar General Hospital (Tax Appeal No.1474 of 2009)
(b) CIT vs. Suman Paper and Boards Ltd (2009)(314 ITR 119)(Guj)
(c) Lakhmichand Baijnath vs. CIT (1959)(35 ITR 416)(SC) (IV) The undisclosed income unearthed during the course of search in
the form of on-money/cash received is eligible for deduction u/s
80IB(10) of the Act irrespective of whether it is recorded in the books of
accounts or not.
CIT vs. Sheth Developers P Ltd (2012)(254 CTR 127)(Bom) (V) Non-consideration of the decision of Hon’ble Supreme Court or
Hon’ble jurisdictional High Court is an error apparent from record and
must be rectified. ACIT vs. Saurashtra Kutch Stock Exchange Ltd
(2008)(305 ITR 227)(SC).

(VI) Under the Scheme of Act, the income is assessed to tax under
various heads. All the heads of income must be exhausted/excluded
before taxing an income under the head “income from other sources”:-
(a) S.G. Mercantile Corporation P Ltd vs. CIT (83 ITR 700)(SC)
(b) CIT vs. T.P. Sidhwa (1982)(133 ITR 840)(Bom)
13 (c) Bihar State Co-op Bank Ltd vs. CIT (39 ITR 115)(SC). Non-consideration of above said decisions is an error apparent from record.

(VII) The deductions under Chapter VIA should be restricted to the amount of Gross Total income, if Gross total income works out to less than the eligible amount of deduction.
(a) CIT vs. J.B.Boda & Co. P Ltd (ITA No.3224 of 2009)(Bom)
(b) CIT vs. Tridoss Laboratories Ltd (2010)(328 ITR 448)(Bom)
(c) CIT vs. Eskay K’nit (India) Ltd (ITA No.184 of 2007)(Bom) The AO has not followed the above cited binding decisions.

(VIII) If an order has been passed on mistaken assumption and without considering the materials available on record, then it deserves to be rectified.
(a) Neeta Shah and Ors vs. CIT (191 ITR 77)(Kar)
(b) Kesoram Industries Ltd vs. CIT (271 ITR 501)(Cal) (IX) A rectification is maintainable in order to correctly decide an issue as per law. If it is apparent from record that the assessee is entitled to a particular relief, then the same is allowable by way of rectification u/s 154 of the Act.
(a) CIT vs. Ballabh Prasad Agarwalla (233 ITR 354)(Cal)
(b) CIT vs. K.N. Oil Industries (142 ITR 13)(MP) 18. The question that needs to be addressed here is whether the claim made
by the assessee in its rectification petition would fall under the category of “mistakes apparent from record” within the meaning of sec.154 of the Act
warranting rectification of assessment order or not?.

19. We shall deal with each of the issues separately. The first item of receipts
pertains to Cash receipts on sale of four TDRs amounting to Rs.33.99 crores.
The AO has denied deduction u/s 80IB(10) of the Act in respect of this receipt,
14 since he assessed the same as income from other sources and not business
income. We have noticed earlier, the details pertaining to the above receipts
were unearthed during the course of search proceedings and the document
itself was titled as “Cash receipts on sale of TDRs from 01-04-2010”. This
document was confronted with the partner of the assessee firm during the
course of search proceeding and the partner has accepted the same as
unaccounted receipts and agreed to offer the same as income. Accordingly,
the assessee has offered the same as its income in the return of filed by it
thereafter as its business income. The AO has also accepted the same. But
the AO has denied the deduction u/s 80IB(10) of the Act with the observation
that the assessee has failed to prove that the above said receipt pertains to
sale proceeds of TDRs. The various reasons mentioned by the AO are given
below:-
(a) the seized document contained the name of some Brokers, whose identity and address details were not given by the assessee and hence it is difficult to infer that the amounts mentioned on these papers are actually receipts on sale of TDR.
(b) Further the TDRs have been sold to various parties in small bits and pieces and the Assessee could not furnish the details of cash received from each of the parties.
(c) Cash received may be in the form of deposits which the brokers might have given in respect of many sundry transactions made between them and the assessee.
20. It is the contention of learned AR that the assessee has executed only one
project, viz., Chandivali project and received TDR in respect of that project
only. The said project is eligible for deduction u/s 80IB(10) of the Act. Hence
the on money received by the assessee in the course of sale of TDRs related the
above said project only. Even the document seized during course of search
also clearly states that cash receipts pertain to sale of TDRs. We also notice
that the seized document also contains TDR number, area and amount
15 received alongwith computation. Accordingly, the learned AR submitted that
there cannot be two views in this respect. He submitted that the said
document was put to Mr. Ramesh S. Shah, partner of the assessee and he has
admitted the said receipts as undisclosed income of the assessee-firm.
Accordingly, the Ld A.R submitted that the view taken by the Assessing Officer
is not in accordance with evidence available on record and hence there is no
scope for assessing the same as income from other sources. The Ld A.R further
submitted that the Hon’ble Bombay High Court in the case of Sheth
Developers (supra) has held that on money receipts are also eligible for
deduction u/s. 80IB(10) of the Act. Accordingly, learned AR submitted that the
view so taken by the Assessing Officer is a mistake apparent from record and
hence it should be rectified.

21. Learned DR, on the contrary, relied upon the order passed by Ld CIT(A).
He also raised a legal issue with regard to eligibility of the assessee to claim
deduction u/s 80IB(10) of the Act. He submitted that the assessee has filed its
return of income belatedly beyond the due date prescribed u/s. 139(1) of the
Act and hence the assessee is not entitled for deduction u/s. 80IB(10) of the
Act by virtue of provisions of section 80AC of the Act. He submitted that the
assessee has misrepresented before the AO that it has filed its return of
income by the due date and also filed a copy of acknowledgement for filing
return of income. The enquiries made by the AO with the Central Processing
Centre has proved that there is no such return of income filed, as claimed by
the assessee. The Ld D.R submitted that the assessee has filed return of
income only in response to the notice u/s 142(1) of the Act, issued by the AO.
He submitted that the AO issued notice on 09-02-2012 and the assessee has
furnished return of income for the first time for the year under consideration
only on 29-02-2012, i.e., beyond the due date prescribed u/s 139(1) of the Act.
The Ld D.R submitted that the provisions of sec.80AC of the Act debars
allowing deduction u/s 80IB(10) of the Act, if the return of income is not
furnished within the due date prescribed u/s 139(1) of the act. He further
submitted that the decision rendered in the case of Seth Developers (supra) by
16 Hon’ble Bombay High Court did not consider provisions of section 80AC. He
also submitted that the Tribunal, being the last facts finding authority, is
obliged to conduct proper inquiry on facts, if there is lacunae or defect in the
order passed by the AO. In this regard he placed reliance on the decision
rendered by Hon’ble Delhi High Court in the case of CIT Vs. Jansamperk
Advertising and Marketing Pvt. Ltd. (2015) 375 ITR 373. The Ld D.R also
placed his reliance on various case laws, where it has been held that the
deduction u/s 80IB & other similar provisions could be denied in terms of
sec.80AC of the Act, if the return of income is not filed within the due date
prescribed u/s 139(1) of the Act. Some of the decisions relied upon by the Ld
D.R are given below:-
(a) CIT vs. Shelcon Properties (P) Ltd (2014)(44 taxmann.com) 170)(Cal)
(b) Suolificio Linea Italia (India) P Ltd Vs. JCIT (Cal)
(c) Saffire Garments vs. ITO (2012)(28 taxmann.com 27)(SB)
(d) Shri Dwarkadas G Panchmatia vs. ACIT (ITA No.4727/Mum/2012)
(e) ITO vs. Yashashvi Developers (ITA No.3645/Mum/2012) 22. We noticed that the present appeal is emanating from the order passed
by the Assessing Officer u/s. 154 of the Act. The Scope of provisions of section
154 of the Act is only to find out as to whether there are mistakes apparent
from record in the assessment order passed by the Assessing Officer or not.
The question as to what constitutes “mistakes apparent from record” is well
settled and the various propositions submitted by the assessee has been
discussed supra. Before us, the Ld D.R has raised a legal contention, as
discussed in the preceding paragraph. Subsequently, the revenue has also
filed Cross objection raising very same legal contentions. However, we prefer to
deal the contentions of revenue with regard to the legal issue urged by them
separately.
23. We shall deal with the grounds urged in the appeal filed by the assessee.
With regard to receipt of Rs 33.99 crores, there is no dispute that the said
addition has been made on the basis of document bearing Page No. 3 of
17 Annexure-5 seized from the assessee-firm. The said document, which is
extracted in earlier paragraph, is titled as “cash receipts on sale of TDRs from
1.4.2010”. As submitted by learned AR, the said document gives details of TDR
number, area sold, amount received and calculations thereof. This document
also mentions name of broker through whom sale was executed. The Assessing
Officer has refused to acknowledge this receipt as “business income” of the
assessee, only for the reasons that assessee has not furnished details of broker
and also details of purchaser of TDRs. But the question here is whether
amount of Rs 33.99 crores represent business income of the assessee or not.
In any case, we notice that the assessee, vide its letter dated 26-06-2012
(pages 258 to 261 of paper book), has furnished the details of TDR, the parties
to whom it was sold etc. Admittedly, these details were not considered by the
AO and the same results in mistake apparent from record. When the assessee
itself is offering the receipts found in the document as its income, the details of
brokers would loose its relevance. In any case, the above said receipt has
already been identified as unaccounted receipts towards sale of TDR. The
seized document clearly states that the impugned amount was received by way
of cash on sale of TDRs and the partner of the assessee has also confirmed the
same as undisclosed receipts. Further, the assessee has completed only one
project, viz., Chandivali project, during the year under consideration and the
TDR was received against the said project only. All these facts cumulatively
show that there is no scope for treating this receipt as not related to business
activity carried on by the assessee, particularly when the amount accounted by
the assessee in respect of sale of TDR has been accepted as business income of
the assessee. The Hon’ble Supreme Court in the case of Lakhmichand Baijnath
(supra) and Hon’ble Gujarat High Court in the case of Suman Papers and
Boards Ltd. (supra) have taken the view that when the assessee has got only
one business/project, the income unearthed during the search have to be
treated as being earned from the said business. The decision rendered by
Hon’ble jurisdictional High Court in the case of Sheth Developers (supra) also
support this view.
18 24. We noticed that the Assessing Officer has allowed deduction u/s.
80IB(10) of the Act in respect of income from building project already disclosed
by the assessee. It appears that the Assessing Officer has proposed to assess
the above said receipt under the head “income from other sources” only for the
purpose of rejecting claim of deduction u/s. 80IB(10) of the Act on the above
said income. The foregoing discussions would show that the decision so taken
by the Assessing Officer is contrary to the decision rendered by Hon’ble
Supreme Court in the case of Lakhmichand Baijnath (supra). The fact that the
assessee has completed only one project, viz., Chandivali project and further
the TDR was received in connection with that project is not denied, in which
case, the impugned receipts have to considered as business income only as per
the decision rendered by Hon’ble Supreme Court in the above said case.
Hence non-consideration of decision rendered by Hon’ble Supreme Court
results in mistake apparent from record. The claim of the assessee also gets
support from the decision rendered by Hon’ble jurisdictional High Court in the
case of Sheth Developers (supra). Non-consideration of decision rendered by
jurisdictional High Court also constitutes mistake apparent from record.
Further, we notice that the evidences found during the course of search clearly
indicate that the impugned income is related to the building project executed
by the assessee. Hence the decision taken by the AO to assess the income
under the head Income from other sources is against the facts available on
record and hence clearly a mistake apparent from record. Once it is assessed
as business income of the assessee, then as per the decision rendered by
Hon’ble Bombay High Court in the case of Sheth Developers (supra), the
assessee would be eligible for deduction u/s 80IB(10) of the Act on the above
said income also. Accordingly, we are of the view that there is merit in the
contentions of the assessee. Accordingly, we set aside the order passed by the
learned CIT(A) on this issue and direct the Assessing Officer to assess this
income under the head “income from business” and consequently allow
deduction u/s. 80IB(10) of the Act.
19 25. The next two receipts are Rs.11.79 crores received from Satara Properties
India Ltd and Rs.14.00 crores received from Khyati Realtors. The assessee
claimed the above amounts as unaccounted receipts relating to sale of TDR to
the above said two parties. The AO did not accept the above said claim of the
assessee for the reason that
(a) the partner of the assessee has stated the above said amounts were received on account of “various miscellaneous transactions” entered with the above said parties.
(b) M/s Satara Properties India Ltd is undertaking civil construction works from the assessee and hence the amount received from it may be on account of adjustment of various other business transactions.
(c) In the impugned document (page no.4 of Annexure A-5), the amounts mentioned against the name of M/s Vignahata Properties was explained as amount “received by” M/s Vignahata. However, the amounts mentioned against the name of M/s Satara Properties and M/s Khyati Associates were claimed as amount “received from” them.
(d) The name of the assessee is not mentioned in page no.4 of Annexure A-5.
26. The submission of the assessee is that the above said observations made
by the AO to reject the receipts as related to business of the assessee is against
the facts available on record. First of all, the Ld A.R submitted that if the
impugned amounts are considered to be amounts received by M/s Satara
Properties and M/s Khyati Associates, then there is no necessity for the
assessee to offer the same as its income. Since the assessing offier has already
accepted the income of Rs.11.79 crores and Rs.14.00 crores aggregating to
Rs.25.79 crores offered by the assessee, the AO was not justified in taking the
view that the assessee might not have received the amounts. Secondly, the Ld
A.R submitted that the following materials available on record has been
completely ignored by the assessing officer:-
(A) Transactions with M/s Satara Properties India Ltd:-
20 (a) MOU/Agreement entered between the assessee and the above said party for sale of TDR (Pages 89, 97 to 110, 111 and 157 to 162 of Paper book) seized from the assessee.
(b) Seized Ledger a/c of Satara Properties India Ltd showing receipts from sale of TDR (Pg 111 and 163 to 166 of Paper book)
(c) Letter dated 26-06-2012 filed before the AO (Pages 251 to 253 of paper book) (B) Transactions with M/s Khyati Realtors
(a) Seized Ledger account showing amounts received on sale of TDR to M/s Khyati Realtors (Pages 180 and 181 of paper book)
(b) Seized Agreements on sale of TDR between assessee and Khyati Realtors (Pages 182 to 186 of paper book)
The above documents would show that the transactions entered between the
assessee and M/s Satara Properties India Ltd and M/s Khyati Associates were
in connection with sale of TDR by the assessee to them. The sale proceeds of
TDR accounted by the assessee has already been accepted as business income
of the assessee. It is the contention of the assessee that the above said
amount of Rs.25.79 crores received from them was also related to TDR
transactions and hence constitute business income of the assessee. The AO
noticed that the assessee has given contract works to M/s Satara Properties
and accordingly he has taken the view that the amount received from M/s
Satar Properties India Ltd may pertain to civil construction works. The Ld A.R
submitted that the civil construction works was undertaken by another
concern named M/s Satara Property developoment Co P Ltd and not by M/s
Satara Properties India Ltd. The Ld A.R submitted that the ledger account
copy of M/s Satara Property development Co P Ltd is available at page no.163
to 166 of paper book and the same clarifies the above said position.
Accordingly the Ld A.R submitted that non-consideration of materials available
on record is mistake apparent from record.

27. We notice that the materials already available on record, which were
listed out in the preceding paragraph, would show that the assessee has
21 entered business transactions with the above said two parties in connection
with sale of TDR only. The reasoning given by the AO to reject the claim of the
assessee does not emanate from the facts already available on record.
Accordingly non-consideration of materials already available on record results
in mistake apparent from record. Further, the decision rendered by Hon’ble
Supreme Court in the case of Lakhmichand Baijnath (supra) also support the
case of the assessee, which has not been considered by the AO. Hence, the
reasoning mentioned by us in the earlier paragraphs, while considering the
cash receipt of Rs.33.99 crores relating to sale of TDR, shall equally apply to
the facts of the present case. Following the same, we set aside the order passed
by Ld CIT(A) on this issue and direct the AO to assess the amount of Rs.25.79
crores as business income of the assessee and consequently allow the
deduction u/s 80IB(10) of the Act on the above said income.
28. The next item of receipt is cash of Rs.1.12 crores received on sale of
Scrap. The AO assessed the same as income under the head income from
other sources, only for the reason that the assessee did not furnish the year-
wise breakup of generation of scrap and the details of parties to whom scrap
was sold. Further the AO has also observed that there is a possibility that
scrap might have been generated from windmill farm also.
29. It is the submission of the assessee that the assessee has generated
scrap from its construction activities only and this fact has been accepted by
the AO in AY 2009-10. Further the receipts on sale of scrap was assessed as
business income in AY 2009-10. The Ld A.R further submitted that there is no
material available on record to show that the assessee could have generated
scrap from any other source, since the assessee was executing only one
project, viz., Chandivali project. There is also no material to show that these
scraps were generated from Wind mill operations. The Ld A.R accordingly
submitted that the view so taken by the AO was not on the basis of any
material available on record and, in fact, it is contrary to the facts available on
22 record as well as the decision taken by the AO himself in AY 2009-10.
Accordingly he submitted that the AO has committed a mistake apparent from
record in assessing the cash receipts on sale of scrap as income under the
head income from other sources, thereby denying deduction u/s 80IB(10) of
the Act.

30. On the contrary, the Ld D.R supported the order passed by Ld CIT(A).

31. We heard the parties on this issue and perused the record. As noticed
earlier, the assessee has executed only one project during the year under
consideration and accordingly, it has been claimed that the scrap has been
generated from that project only. It was further submitted that the AO has
accepted this fact in AY 2009-10. Further, the assessee has offered the
impugned amount on the basis of seized material found during the course of
search, since it was not accounted for in the books of accounts of the assessee.
We notice that the assessee has offered entire amount as its income and
further, the source of receipt is accepted as sale of scrap. Accordingly, the
reasoning given by the AO to reject the claim of the assessee does not emanate
from the facts already available on record and also contrary to the view taken
by him in AY 2009-10. Accordingly, rejection of claim of the assessee without
any basis and without considering the materials available on record results in
mistake apparent from record. Further, the decision rendered by Hon’ble
Supreme Court in the case of Lakhmichand Baijnath (supra) also support the
case of the assessee, which has not been considered by the AO. Hence, the
reasoning mentioned by us in the earlier paragraphs, while considering the
cash receipt of Rs.33.99 crores on sale of TDR, shall equally apply to the facts
of the present case. Following the same, we set aside the order passed by Ld
CIT(A) on this issue and direct the AO to assess the amount of Rs.1.12 crores
as business income of the assessee and consequently allow the deduction u/s
80IB(10) of the Act on the above said income.
23 32. The Last item relates to the disallowance of Rs.9.00 crores. Since the
assessee offered additional income, it increased its work in progress by Rs.9.00
crores by claiming the same as application of income. Since the said
expenditure is not supported by any evidence, the AO disallowed the same.
The Ld CIT(A) held that the claim of the assessee may have bearing on the
closing stock without affecting the Profit and Loss account. However, he
expressed the view that this amount would fall outside the scope of sec.154 of
the Act.
33. We heard the parties on this issue. The assessee has offered income to
the tune of Rs.60.91 crores and hence it has increased its work in progress by
Rs.9.00 crores as application of income out of Rs.60.91 crores. Since the
income has already been taxed, it is the contention of the assessee, that the
same would result in double taxation, if the claim of application is rejected.
Even though the Ld CIT(A) has expressed the view that this issue may fall
outside the scope of sec.154 of the Act, he has not given any specific direction
to the AO. The assessee, in the alternative contended that where an
expenditure is disallowed, it will go to increase the profits eligible for deduction
u/s 80IB(10) of the Act. In this regard, the assessee placed its reliance on the
decision rendered by Hon’ble jurisdictional Bombay High Court in the case of
CIT vs. Sunil Vishambharnath Tiwari (2016)(388 ITR 630). We notice that the
AO has not considered the binding decision of the jurisdicitonal High Court
and the same constitutes mistake apparent from record. Accordingly we direct
the AO to allow deduction u/s 80IB(10) of the Act on the disallowance of
Rs.9.00 crores made by him.

34. We shall now take up the Cross Objection filed by the revenue. The
revised or reframed grounds of objections urged by the revenue read as under:-

Grounds Of Cross Objection 1) “Whether on the facts and circumstances of the case, the deduction u/s
24 80IB(10) of the I.T. Act amounting to Rs. 447,92,81,226/- claimed by the assessee based on a fraudulent return filed during the course of assessment proceedings, bearing Acknowledgement No. 34552817130092011 dated 30.09.2011 is allowable ? ”

2) “Whether on the facts and circumstances of the case, the deduction u/s 80IB(10) of Act amounting to Rs. 447,92,81,226/- fraudulently claimed by the assessee, in contravention to the mandatory conditions prescribed under section 80AC of the I.T. Act, which requires filing of the return of income on or before the due date specified u/s 139(1) of the IT Act is allowable?”

3) “Whether on the facts and circumstances of the case, the deduction u/s 80IB(10) of the Act amounting to Rs. 447,92,81,226/- fraudulently claimed by the assessee in contravention to the judgment of the Hon’ble SC in the case of United India Insurance Vs. Rajendra Singh(2000) 3 SCC 581 be allowed ?

4) “Whether on the facts and circumstances of the case, the deduction u/s 80IB(10) of the Act amounting to Rs. 447,92,81,226/- claimed by the assessee in the return of income filed u/s 139(4) of the IT Act be allowed, ignoring the vital fact that the assessee has made a fraudulent claim of return filed u/s 139(1) of the Act ? ”

5) “Whether on the facts and circumstances of the case, the deduction u/s 80IB(10) of Act amounting to Rs. 447,92,81,226/- fraudulently claimed by the assessee, being a mistake apparent from record as per the provisions of section 154 of the Act be allowed? ”

6) “Whether in the peculiar facts and circumstances of the case, should not the Hon’ble Tribunal, using its existing wide powers buttressed by judgment of the Hon’ble SC in the case of United India Insurance Vs. Rajendra Singh(2000) 3 SCC 581 in cases of fraud, set-aside the assessment, to the file of the A.O. for fresh assessment, directing the Assessing Officer, to only consider the return filed on 29.02.2012, on the basis of fact that the entire edifice on which the earlier assessment order dated 28.03.2013 was made i.e the return purportedly filed on 30.09.2011 and now proved forged, has now collapsed?”

35. The Cross objection filed by the assessee is barred by limitation. The
Registry initially intimated the revenue that the cross objection filed by it is
barred by limitation by 4 days. In response thereto, the AO has filed a petition
requesting the bench to condone the delay. The said petition reads as under:-
25 1. I, Manoj Tripathi, Dy CIT Central Circle 5(3), Mumbai having my office at Pr CIT Central 3,Mumbai do hereby solemnly affirmed and state as under :

2. The assesse had filed the copy of Return of Income vide ack no 34552817130092011 dated 30.09.2011. Subsequently the assessee had filed another ack of return of income 345528171290212 dated 29.02.2012.

3. The AO accepted the Return of Income filed by the Ack. No 34552817130092011 dated 30.09.2011 under the bonafide belief that the hard copy of ack of return of income e-filed by the assessee was genuine and accordingly the 80 IB (10) claim of the assessee was allowed.

4. However, during the appellate proceeding this fact was verified from the CPC, Bangalore and the CPC, Bangalore vide their communication dated 31.05.2018 has confirmed that no ‘e- Return’ of Income was filed through e filing portal with ack no 34552817130092011 dated 30.09.2011.

5. The return of Income filed by the assessee vide ack no 345528171290212 dated 29.02.2012 is a belated ‘original’ return and there cannot exist any other original return purportedly filed by the assessee on 30.09.2011 and therefore, the return on the basis of which claim is made is proved to be fake.

6. The assessee has failed to satisfy the primary condition of section 80AC which mandates the filing of return of Income on or before the due date specified u/s Sub Section (1) of 139 of the IT Act 1961, and as such is ineligible for claim of entire 80IB (10) deduction.

6. As the above facts unearthed only recently, the cross objection is being filed today accordingly. Therefore the undersigned was prevented by reasonable cause to file cross objection earlier. As the revenue implication of this new fact are high and may involve criminal culpability, the cross objection may kindly be admitted and heard by the Hon’ble bench. There is a bonafide delay of 04 days in filing the cross objections which is not deliberate and intentional and hence, deserves to be condoned in the interest of justice.

7. I say that whatever stated herein above paragraph is true to the best of my own knowledge and I believe the same to be true.

Thereafter, the Registry recomputed the period of dealy as 124 days and
hence, the AO filed another petition citing the very same reasons for delay in
filing cross objection.
26 36. It is pertinent to note that the revenue had urged following grounds only
initially in the Cross objection filed by it. Further the approval of the Ld Pr.
CIT has been obtained for the following grounds only:
1) The Respondents prays that the assessee has claimed deduction u/s 80IB(10) without filing a Return of Income on or before the due date and therefore is not eligible to claim deduction u/s 80IB(10).
2) The Respondents prays that the ROI filed by the assessee vide ack no.34552817130092011 dated 30-09-2011 is not genuine and the same has been confirmed by the Central Processing Centre, the authority for “E filing of returns”.
3) The Respondents prays that the assessee has failed to satisfy the primary condition of section 80AC which mandates the filing of return of income on or before the due date specified u/s sub. Section (1) of 139 of the I T Act, 1961 and as such is ineligible for claim of entire 80IB(10) deduction of Rs.445,62,89,140/- (Rs.388,00,68,095/- + Rs.60,91,56,178/-.) 37. The revenue has not filed copy of approval, if any, granted by Ld Pr. CIT
to the reframed grounds of Cross objection filed by the AO.
38. Be that as it may, the only issue urged by the revenue is that the return
of income claimed to have been filed by the assessee on 30-09-2011 is forged
one and the assessee has actually filed its return of income for the year under
consideration only on 29-02-2012, i.e., beyond the due date prescribed u/s
139(1) of the Act. Hence the assessee’s claim for deduction u/s 80IB(10) of the
Act is liable to rejected in toto in view of the provisions of sec. 80AC of the Act.
39. Before considering the petition filed by the revenue requesting the bench
to condone the delay, we prefer to extract the provisions of sec.253(4) and sec.
253(5) of the Act as available during the year under consideration, which deals
with filing of Cross objection:-
27 “(4) The Assessing Officer or the assessee, as the case may be, on receipt of notice that an appeal against the order of the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) or the Assessing officer in pursuance of the directions of the Dispute Resolution Panel has been preferred under sub-section (1) or sub-section (2) or sub-section (2A) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof, within thirty days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Assessing officer (in pursuance of the directions of the Dispute Resolution Panel) or Deputy Commissioner (Appeals), or as the case may be, the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub- section (3) or sub-section (3A).

(5) The Appellate Tribunal may admit an appeal or permit the filing of a memorandum of cross-objections after the expiry of the relevant period referred to in sub-section (3) or sub-section (4), if it is satisfied that there was sufficient cause54 for not presenting it within that period.”
Section 253(4) was amended in 01-06-2016 and accordingly, it reads as under
presently:-
“(4) The Assessing Officer or the assessee, as the case may be, on receipt of notice that an appeal against the order of the Commissioner (Appeals), has been preferred under sub-section (1) or sub-section (2) by the other party, may, notwithstanding that he may not have appealed against such order or any part thereof, within thirty days of the receipt of the notice, file a memorandum of cross-objections, verified in the prescribed manner, against any part of the order of the Commissioner (Appeals), and such memorandum shall be disposed of by the Appellate Tribunal as if it were an appeal presented within the time specified in sub-section (3).”
A perusal of the above said provisions would show that the power to file Cross
objections is given to both the assessee as well as the revenue against any part
of the order passed by Commissioner (Appeals), notwithstanding the fact that
either of the parties have not preferred appeal. Through Cross objections, the
parties can challenge any part of the order passed by Commissioner (Appeals).
An exception has been provided to the above said conditions by Hon’ble
Supreme Court in the case of National Thermal Power Corporation Ltd cs. CIT
(1998)(229 ITR 382), wherein it was held that the legal issues going to the root
28 of the matter can be agitated at any stage, provided all the facts relating
thereto are already available on record.
40. With the support of these legal propositions, we shall now examine the
cross objection filed by the revenue. For this purpose, it is necessary to dwell
upon the facts of the case, while led the revenue to file this Cross Objection.
As per the facts available on record,
(a) the assessee has claimed to have filed its return of income for the year under consideration on 30-09-2011 vide e-acknowledgement number 34552817130092011.
(b) The assessee furnished a letter dated 30-09-2011 to the AO furnishing a copy of manual return, computation of income, financial statements, tax audit report u/s 44AB of the Act, Report in Form No.10CCB. (The contention of the revenue is that the letter of assessee does not bear officer seal, acknowledgement number and signature of the recipient.)
(c) The AO issued a notice u/s 142(1) of the Act to the assessee on 09-
02-2012 which reads as under:-

“The return of income for Assessment year 2011-12 has not been filed u/s 139(1) of the I T Act, 1961. You are hereby required to furnish the return of income for assessment year 2011-12 within 7 days of receipt of this notice.
2. Failure to furnish the return of income within the specified time would result in initiation of penalty proceedings u/s 271F of the I.T Act, 1961.”

(d) The AO also issued a Common questionnaire dated 17-02-2012 us 142(1) for Ays 2005-06 to 2011-12.
(e) The assessee filed return return of income in response to the notice issued u/s 142(1) of the Act on 29-02-2012.
(f) In both the returns of income, the assessee claimed deduction u/s 80IB(10) of the Act to the tune of Rs.447.92 crores.
29 (g) The assessee furnished a letter dated 30-03-2012 to the AO enclosing therewith copy of e-acknowledgement copy of return of income filed on 29-02-2012
(g) The AO completes the assessment u/s 143(3) r.w.s. 153A of the Act on 28-03-2013 after obtaining mandatory approval of the Jurisdictional Additional Commissioner of Income tax u/s 153D of the Act. (It is pertinent to note that the assessee was subjected to search operations u/s 132 of the Act on 23.12.2010 and hence the assessment was completed u/s 143(3) r.w.s. 153A of the Act). The AO allowed deduction only to the extent of Rs.384.71 crores. During the course of search operations, the Assessee had offered income on account of on-money receipts and scrap sales to the tune of Rs.60.91 crores. The assessee claimed deduction u/s 80IB(10) in respect of those additional income also, but the AO rejected the said claim.
(h) The Ld Pr. CIT passed an order u/s 263 of the Act on 30-03-2015, wherein he directed the AO to examine the eligibility of the assessee to claim deduction u/s 80IB(10) of the Act.
(i) The AO passed order u/s 143(3) r.w.s 263 of the Act on 31.3.2016, wherein he determined the very same total income as was assessed in the original assessment order passed on 28.03.2013.
(j) The assessee filed a rectification petition u/s 154 of the Act on 13.04.2016 before the AO, wherein it was prayed that the deduction u/s 80IB(10) should be allowed on income relating to on-money receipts offered by the assessee. The assessee, in this regard, placed its reliance on the decision rendered by Hon’ble Bombay High Court in the case of CIT vs. Sheth Developers P Ltd (2012)(254 CTR 127).

41. As noticed earlier, the AO rejected the rectification petition and the same
was also partially confirmed by Ld CIT(A) and hence the assessee filed appeal
before the ITAT challenging the decision taken by Ld CIT(A) against the
assessee, which was adjudicated in the earlier paragraphs. While the Tribunal
was hearing the appeal of the assessee, the Ld D.R brought a new fact that the
30 assessee’s claim of filing its return of income within the due date is found to be
wrong and the assessee has, for the first time, has filed its return of income on
29-02-2012 in response to the notice issued by the AO u/s 142(1) of the Act.
Since the return of income was filed beyond the due date prescribed u/s
139(1) of the Act, the Ld D.R submitted that the assessee is not eligible for
deduction u/s 80IB(10) of the Act as per the provisions of sec.80AC of the Act.
After conclusion of hearing of the appeal filed by the assessee, the revenue has
filed this cross objection, wherein also the revenue has questioned as to
whether the claim of deduction u/s 80IB(10) of the Act is allowable in the
hands of the assessee?. In the grounds, it is submitted that assessee has
claimed to have filed its return of income within the due date prescribed u/s
139(1) of the Act and fradulently prepared an e-acknowledgement also. It is
submitted that the assessee is not eligible for deduction in view of the
provisions of sec.80AC of the Act.
42. The Cross objection filed by the revenue was posted for hearing. For the
sake of convenience, the appeal of the assessee was also posted for hearing,
even though full hearing had already been completed, since the revenue has
urged a legal issue in its cross objection.
43. At the time of hearing of Cross objection, the Ld A.R vehemently
contended that the revenue is not entitled to file Cross objection after
conclusion of hearing of the appeal filed by the assessee. By placing reliance
on the decision rendered by Hon’ble Supreme Court in the case of Arjun Singh
vs. Mohindra Kumar & Ors (1964 AIR 993 SC/ 1964 SCR (5) 946), the Ld A.R
submitted that the Tribunal should pass order after conclusion of hearing and
no further submissions by parties can be permitted to be made.
44. He further contended that the revenue has not cited proper reasons for
condoning the delay. He submitted that the revenue has to cite cogent reasons
for the delay and should show that there was sufficient cause for the delay.
31 45. He submitted that if an assessee has taken a conscious decision not to file
appeal, then he is not entitled to file appeal later on. He submitted that this
was so held in the case of Somerset Place Co-operative housing society Ltd vs.
ITO (374 ITR 307)(Bom) by Hon’ble Bombay High Court. The Ld A.R submitted
that the revenue took a conscious decision not to file CO initially.
Subsequently it has taken decision to file C.O and hence it was an after
thought only. Accordingly he contended that the CO should not be admitted.
He further submitted that the grounds urged in Cross objection should be
restricted to the issues adjudicated in the order appealed against. He
submitted that the grounds urged in the Cross Objection do no arise out of the
order passed by Ld CIT(A).
46. On the contrary, the Ld D.R submitted that the Hon’ble Supreme Court
has accepted the plea of the counsel to make further submissions after
conclusion of hearing in the case of Bimal Gurung vs. Union of India & Ors
(W.P (Criminal) No.182/2017 dated 23-02-2018). Accordingly, the Ld D.R
submitted that there is no bar in filing Cross objection after conclusion of
hearing. He further submitted that the facts relating to non-filing of return of
income within the due date prescribed u/s 139(1) of the Act was noticed only
during the course of hearing of appeal filed by the assessee before the Tribunal
and further it came to light that the e-acknowledgement filed by the assessee
to support of its claim of filing of return of income within the due date was
found to be fraudulent one after receipt of report from Central Processing
Centre (CPC). By placing reliance on the decision rendered by Hon’ble Gauhati
High Court in the case of CIT vs. Purbanchal Pribahan Gosthi (1998)(234 ITR
663), the Ld D.R submitted that the cross objections filed by the assessee need
not be confined to the points taken by the opposite party in the main appeal.
The Ld D.R further submitted that the Cross objection is also an appeal. He
submitted that so long as the issue contested in the Cross objection is relevant
to the issue decided by the Ld CIT(A), the same can be considered and decided.
32 He further submitted that the issue contested by the revenue in Cross
objection is a legal issue and it goes to the root of the matter and hence the
same should be admitted as held by Hon’ble Supreme Court in the case of
NTPC vs. CIT (1998)(229 ITR 382).
47. With regard to the delay, the ld D.R submitted that the revenue has
cited proper reasons for the delay. He submitted that the details of fraud
committed by the assessee came to be proved only after receipt of confirmation
by the revenue from CPC, Bangalore, i.e., it came to light that the assessee has
not filed its return of income within the due date prescribed u/s 139(1) of the
Act. Immediately thereafter, the revenue has filed the cross objection, since
the mistakes cannot be allowed to be perpetuated. By placing reliance on the
decision rendered in the case of Collector, land Acquisition vs. Mst. Katiji and
others (1987)(2 SCC 107) and also the decision rendered in the case of Vedabai
alias Vaijanatabai Baburao Patil vs. Shantaram Baburao Patil (2002)(122
Taxman 114)(SC) and also some other decisions, the Ld D.R submitted that
while construing the expression “sufficient cause”, the principle of advancing
substantial justice is of prime importance. Accordingly, the Ld D.R contended
that the delay in filing Cross Objection should be condoned.
48. The Ld D.R further submitted that the Tribunal should allow filing of
additional evidences and additional grounds under Rule 29 of ITAT Rules. By
placing reliance on the decision rendered by Hon’ble Supreme Court in the
case of Kapurchand Shrimal vs. CIT (1981)(131 ITR 451), the Ld D.R
submitted that the appellate authority has the jurisdiction as well as the duty
to correct all errors in the proceedings under appeal and to issue, if necessary,
appropriate directions to the authority against whose decision the appeal is
preferred to dispose of the whole or any part of the matter afresh, unless
forbidden from doing so by Statute.
33 49. The Ld D.R also made extensive arguments on the jurisprudence on the
cases of Fraud. He submitted that the judgement/decree obtained on fraud
has to be treated as a nullity by every court and further, it can be challenged
in the collateral proceedings also. In support of this proposition, the Ld D.R
placed his reliance on the decision rendered by Hon’ble Supreme Court in the
case of United India Insurance Co. Ltd vs. Rajendra Singh (2000)(3 SCC 581),
CIT vs. Electronic Research Ltd (2003)(130 Taxman 216)(Kar) and also many
other decisions. The Ld D.R also placed his reliance on the decision rendered
by Hon’ble Calcutta High Court in the case of CIT vs. Shelcon Properties
(2014)(44 taxmann.com 170) to contend that the assessee is not eligible for
deduction u/s 80IB(10) if the return of income is not filed in time. He further
submitted, by placing reliance on the decision rendered by Hon’ble Supreme
court in the case of Dilip Kumar and Company (Civil Appeal No.3327 of 2007),
that the tax exemption clause/notification should be read strictly and if there
is ambiguity, it must be interpreted in favour of revenue.

50. The Ld A.R, on the contrary, submitted that the revenue is only alleging
that the assessee has committed a fraud by claiming that it has filed its return
of income before the due date prescribed u/s 139(1) of the Act by furnishing a
copy of e-acknowledgement of return of income, which was not found in the
records of CPC, Bangalore. Further, the CPC, Bangalore has found fault with
the e-acknowledgement number also. He submitted that the allegation of
fraud, howsoever strong it may be, cannot take place of “established fraud”.
He submitted that the various case laws relied upon by the revenue are not
applicable to the facts of the present case, since in those case, the fraud was
either admitted or established. In support of this proposition, the ld A.R
placed his reliance on the decision rendered by Hon’ble Supreme Court in the
case of Bishundeo Narain & another vs. Seogeni Rai & others (AIR (38) 1951
Supreme Court 280). The Ld A.R also placed his reliance on the following
observations made by Hon’ble Supreme Court in the case of Smt. Shrisht
Dhawan vs. M/s Shaw Brothers (AIR 1992 Supreme Court 1555):-
34 “10. Fraud is essentially a question of fact, the burden to prove which is upon him who alleges it. He who alleges fraud must do so promptly. There is presumption of legality in favour of a statutory order. The Controller’s order under S.21 is presumed to be valid until proved to be vitiated by fraud or mala fide. If his order was obtained by the fraud of the party seeking it or if he made a mindless order in the sense of acting mala fide by illgetimate exercise of power owing to non-application of his mind to the strict requirements of the section, then the special mechanism of the section would not operate. (See S.B.Noronah v. Prem Kumari Khanna (1980) 1SCC 52 : (AIR 1980 SC 193).”
He submitted the revenue is only alleging fraud upon the assessee before the
Tribunal and pursuading the Tribunal to take cognizance of the same. He
submitted that the ITAT cannot take congnizance of the same, unless the fraud
is established by the competent authority. Accordingly he submitted that the
Tribunal cannot deal with the question of fraud, if any, committed by the
assessee. Accordingly he submitted that the allegation of fraud should not be
taken congnizance of by the Tribunal.
51. The Ld A.R submitted that the revenue, taking support from section 80AC
of the Act, is contending that the assessee should be denied deduction u/s
80IB(10) of the Act, since the assessee has filed its return of income for the
year under consideration beyond the due date prescribed under the Act. Their
claim of filing of return of income before the due date was a fraud committed
by the assessee and hence the said return should be ignored by the Tribunal.
There is no dispute that the assessee has filed return of income in response to
the notice issued u/s 142(1) of the Act also. The manual return of income filed
by the assessee within the due date is also available on record. Under these
set of facts, the Ld A.R submitted that, if at all the contention of the revenue
that the assessee has committed a fraud is accepted, then it would only give
rise to a legal issue as to whether the assessee would be entitled for deduction
u/s 80IB(10) or not. He submitted that the revenue is placing reliance on the
35 provisions of sec.80AC of the Act to contend that the assessee would not be
eligible for deduction u/s 80IB(10) of the Act, if the return is filed beyond the
due date prescribed under the Act. However, there are number of decisions
rendered by High Courts and Tribunal, wherein it has been held that the
condition prescribed in sec.80AC of the Act is only directory. The Ld A.R
submitted that the paper book filed by the revenue would show that the
assessee has also filed return of income manually with the Assessing officer
before the due date prescribed u/s 139(1) of the Act for filing return of income.
Hence the assessee should be eligible for deduction u/s 80IB(10) of the Act on
the strength of manual return of income also. Accordingly he submitted that
the contentions urged by the revenue, at the most, would give rise to a legal
issue. Accordingly, he submitted that the Cross objection filed by the revenue
is liable to be rejected on this reason alone.
52. The Ld A.R submitted that the assessing officer has allowed the claim
for deduction u/s 80IB(10) of the Act in the original assessment proceedings as
well as in the reassessment order passed u/s 143(3) r.w.s 263 of the Act. He
submitted that the assessing officer has examined the matter twice, the Ld Pr.
CIT has examined the matter once while finalising revision proceeding u/s 263
of the Act and the Ld CIT(A) also examined the matter in the present
proceedings. He submitted that all the authorities did not find fault with the
claim made by the assessee. He submitted that it is the D.R, who has raised
this issue for the first time before the Tribunal. He submitted that the D.R is
attempting to improve the case of the AO, which he is not entitled to.
53. The Ld A.R submitted that, under the scheme of the Act, the assessing
officer is not entitled to challenge his own order by filing appeal before the
appellate authorities. He submitted that the AO, by filing the present Cross
Objection, is attempting to challenge his own decision in allowing deduction
u/s 80IB(10) of the Act, which is not permitted under the Act. He submitted
that it is mandatory for the AO to follow the scheme of the Act and hence, if
36 any wrong committed by the assessee is found, he is required to deal with the
same in accordance with the law by following prescribed methodologies.
Accordingly he submitted that the present Cross objection filed by the
assessing officer is not in accordance with the scheme of the Act and hence the
same is liable to be dismissed.
54. The Ld A.R further submitted that the assessee has filed return of
income for the succeeding year, i.e. A Y 2012-13 also belatedly, i.e., beyond the
due date prescribed u/s 139(1) of the Act and the assessing officer himself has
allowed deduction u/s 80IB(10) of the Act claimed by the assessee. He
submitted that the order passed by the AO for AY 2012-13, when read with the
order passed for AY 2011-12, would show that the assessing officer has taken
the view that the provisions of sec.80AC, which is pressed into service by
revenue, are directory in nature. He submitted that the view so taken by the
AO also gets support from many decisions rendered by the Tribunal and High
Courts.
55. The Ld A.R further submitted that the Tribunal is confined with the
matter/proceeding before it. Hence the Tribunal cannot travel beyond those
issues. He further submitted that the present appeal filed by the assessee is
against the rectification proceedings completed u/s 154 of the Act against the
original assessment order passed u/s 143(3) r.w.s 153A of the Act. Hence the
power of the Tribunal is confined to the said rectification order only. He
further submitted that the legal issues permitted to be raised by Hon’ble
Supreme Court should pertain to same proceedings. However, in the instant
case, the revenue is attempting to raise a legal issue relating to original
assessment proceedings and the same is not related to the rectification order
passed u/s 154 of the Act, rejecting the rectification petition filed by the
assessee. Hence the theory of merger also would not apply in the instant case.
37 56. He further submitted that the Hon’ble Supreme Court has only allowed
making of additional submissions on the already existing issue in the case of
Bimal Gurung (supra), relied upon by the revenue, where as in the instant
case, the revenue is attempting to raise altogether new issue, divorced from the
issues urged by the assessee in the appeal filed by it.
57. The Ld A.R submitted that the original assessment order passed by the
AO would retain its sanctity and the same can be upset only as per the legal
process known to law. He further submitted that the period of limitation shall
apply even to a void order. In support of these propositions, the Ld A.R placed
his reliance on paragraph 18 of the decision rendered by Hon’ble Bombay High
Court in the case of BPCL vs. ITAT (W.P No.1740 of 2013), wherein the Hon’ble
Bombay High Court had placed its reliance on the following observations made
by Hon’ble Supreme Court in the case of Sultan Sadik vs. Sanjay Raj Subba
reported in 2004 (2) SCC 277. For the sake of convenience, we extract below
relevant observations made by Hon’ble Bombay High Court:-

18) Before concluding, we would like to make it clear that an order passed in breach of Rule 24 of the Tribunal Rules, is an irregular order and not a void order. However, even if it is assumed that the order in breach of Rule 24 of the Tribunal Rules is an void order, yet the same would continue to be binding till it is set aside by a competent Tribunal. In fact, the Apex Court in the Sultan Sadik v/s. Sanjay Raj Subba reported in 2004(2) SCC 277 has observed as under:-

” Patent and latent invalidity In a well-known passage Lord Radcliffe said :

” An order, even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity upon its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders.”

This must be equally true even where the brand of invalidity is plainly visible, for there also the order can effectively be resisted in law only by obtaining a decision of Court.”
38 Further the Supreme Court in Sneh Gupta v/s. Dev Sarup (2009) 6 SCC 194 has observed ” We are concerned herein with the question of limitation. The compromise decree, as indicated herein before, even if void was required to be set aside. A consent decree as is well known, is as good as a contested decree. Such a decree must be set aside if it has been passed in violation of law. For the said purpose, the provisions contained in Limitation Act 1963 would be applicable. It is not the law that where the decree is void, no period of limitation shall be attracted at all.”

Therefore, in this case also the period of four years from the date of order sought to be rectified/recalled will apply as provided in Section 254(2) of the Act. This is so even if it is assumed that the order dated 6 December 2006 is a void order.”
58. The Ld A.R further submitted that the exemption provision is to be
construed liberally, while the prosecution provisions should be construed
strictly. He said that it is so held by Hon’ble Rajasthan High Court in the case
of Pr. CIT vs. Shankar Lal Saini (2018)(89 taxmann.com 235). He further
submitted that the Hon’ble Supreme Court has held in the case of UOI vs.
Wood Papers Ltd (1990)(4 SCC 256) that “Truly speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause, then it being in nature of exception is to be construed strictly and against the subject, but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then fully play should be given to it and it calls for a wider and liberal construction…”
The Ld A.R submitted that the above said decision was followed by Hon’ble
Supreme Court in the case of Dilipkumar & Co (supra) in civil appeal No.3327
of 2007. The Ld A.R submitted that, in the instant case, there is no difference
of opinion that the assessee is eligible for deduction u/s 80IB(10) of the Act
and the revenue is pleading for its withdrawal only for the reason that the
return has been alleged to have been filed belatedly by placing reliance u/s
39 80AC of the Act, which has been held to be procedural in nature by some High
Courts and Tribunal.
59. We have heard rival contentions and perused the record. Before going
into the two preliminary issues, viz., (a) maintainability of Cross objection filed
by the Revenue after conclusion of hearing of appeal of the assessee and (b)
the delay in filing the CO and the matter of condoning the delay, we shall
briefly dwell upon the grounds urged by the revenue in its C.O and its validity
under the provisions of the Act.
60. There should not be any doubt that the Respondent in the appeal filed
by the assessee is the “assessing officer” and it is the Assessing Officer, who is
applicant in the Cross objection filed by the revenue. It is well settled
proposition of law that the Income tax Act does not authorise an assessing
officer to file appeal against his own order. This statutory position has been
clarified by Hon’ble Supreme Court in the case of Commissioner of Income tax
vs. Amritlal Bhogilal & Co. (1958)(34 ITR 130)(SC), wherein it was held by
Hon’ble Supreme Court that it is patent that the scheme of the Act in respect
of appeals to the AAC (Appellate Assistant Commissioner) is that it is only the
assessee who is given a right to make appeal and not the Department. It was
further held that if section 30(1)*(* under 1922 Act) does not provide for an
appeal against a particular order, Legislature obviously intends that the
correctness of the said order cannot be impeached before the appellate
authority. The jurisdiction and powers of the appellate authority must
inevitably be determined by the specific and relevant provisions of the Act.
61. The Hon’ble jurisdictional Bombay High Court also had an occasion to
examine the power of the revenue to challenge the order passed by the AO.
The Hon’ble Bombay High Court in the case of CIT vs. Maersk Global Service
Centre (I) Pvt Ltd (ITA No.692 and 693 of 2012 dated 22-08-2014) held that the
40 revenue cannot raise grounds before the Tribunal to get over the defects and
lacunas so also any discrepancies in the order of the Transfer Pricing Officer.
62. We have earlier noticed that the Assessing officer (revenue) has raised
grounds in the Cross objection filed by him questioning his own decision in
granting deduction u/s 80IB(10) of the Act in the original assessment
proceedings. We have earlier noticed that the
(a) AO himself allowed the deduction in the original assessment order passed on 28-03-2013 u/s 143(3) r.w.s 153A of the Act.
(b) Subsequently the said order was revised by Ld Pr. CIT u/s 263 of the Act, vide his revision order dated 30.03.2015, directing the AO to examine the eligibility of the assessee to claim deduction u/s 80IB(10) of the Act.
(c) The assessing officer passed reassessment order on 31.3.2016 to given effect to the revision order passed u/s 263 of the Act, wherein also, the assessing officer allowed deduction u/s 80IB(10) of the Act.
(d) Thereafter, the assessee filed a rectification petition before the AO u/s 154 of the Act seeking rectification of order passed on 28-03-2013.
(e) The Ld CIT(A) passed order on 14.09.2017 against the appeal filed by the assessee challenging the rectification order passed by the AO u/s 154 of the Act.
(f) The present appeal before us has been filed by the assessee challenging the order passed by Ld CIT(A) against the order passed by the AO u/s 154 of the Act.
(g) In the present proceedings, the AO has filed the cross objection praying that the deduction granted by him u/s 80IB(10) of the Act may be withdrawn.
63. A perusal of the sequence of events discussed above would show that
the assessing officer himself has examined the claim of the assessee for
deduction u/s 80IB(10) of the Act twice. The Ld Pr.CIT and Ld CIT(A) have
41 examined the claim of the assessee once. By filing this Cross objection, the
assessing officer is challenging his own decision in allowing the deduction u/s
80IB(10) of the Act in the original assessment proceedings. The decision
rendered by Hon’ble Supreme Court in the case of Amritlal Bhogilal (supra)
goes against the said action of the assessing officer, meaning thereby, the
grounds urged in the Cross objection filed by the revenue is contrary to the
decision rendered by Hon’ble Supreme Court in the above said case.
64. The Ld A.R contended that the revenue is free to take recourse as
available in law against the assessee, if the assessing officer was satisfied that
the income has escaped the assessment or if it is considered that the assessee
has availed the benefit of deduction by misrepresenting the facts. We are of
the view that there is merit in the said submissions of the Ld A.R. As
submitted by Ld A.R, the AO could pursue other procedures known to law in
order to withdraw the deduction, if he is of the view that the same has been
wrongly granted. Certainly, the action of the AO in challenging his own
decision by filing an Appeal (in the form of CO) is not a process known or
permitted by law. At this juncture, it is apt to extract the following
observations made by Hon’ble Madras High Court in the case of Seshasayee
Paper & Boards Ltd vs. IAC (1986)(157 ITR 342)(Mad):-
“Even a wrong order has a finality and unless that finality is disturbed by a process known to law or by a process authorized by law, the rights of the assessee and the revenue will continue to be governed by the order….”
It is also well settled proposition of law that what is not permitted to be done
directly cannot also be done indirectly as held in the case of CIT vs. Kelvinator
of India Ltd (2001)(256 ITR 1)(Delhi). When it was question as to why the AO
could proceed against the assessee under other provisions of the Act, the Ld
D.R submitted that the time limit for reopening of assessment has already
expired. Hence there is merit in the contentions of the assessee that the
42 revenue is trying to achieve something indirectly which it is not entitled to
achieve directly, which is not permissible.
65. We have noticed that the order appealed before the Tribunal is the order
passed by Ld CIT(A) against the rectification order. The scope of rectification
proceedings is only to rectify mistake apparent from record. We have noticed
that the revenue has urged altogether new ground challenging the decision
taken by the AO in the original assessment order, i.e., the grievance of the
revenue urged in the CO relates to the deduction granted by the AO in the
original assessment order and not in the rectification order, which is
challenged before us now. Under these facts, the question that arises is
whether the revenue is entitled to urge the impugned grounds in the appeal
filed by the assessee against rectification orders?. The revenue has sought to
support its decision by contending that
(a) as per the decision rendered by Hon’ble Supreme Court in the case of National Thermal Power Co. Ltd vs. CIT (229 ITR 383), the legal issues can be urged afresh in any of the appeal proceedings.
(b) the assessee has obtained deduction by committing a fraud and hence the order so obtained by fraud is nullity in the eyes of law.
66. The Ld A.R opposed both the reasons cited by the Revenue. With regard
to the first contention of the revenue, the Ld A.R submitted that the decision
rendered by Hon’ble Supreme Court does not take away the discretion of the
Tribunal, i.e., it is the Tribunal which has to take a final call as to whether to
admit the legal ground or not. The Ld A.R further submitted that the legal
ground should relate to the very same proceeding, which is being adjudicated
by the Tribunal. He submitted that, in the instant case, the revenue is trying
to rake up a legal issue pertaining to original assessment proceedings, whereas
the present proceedings relate to rectification proceedings u/s 154 of the Act.
Before addressing the objections of Ld A.R, we prefer to extract following
observations made by Hon’ble Supreme Court in the case of National Thermal
43 Power co. Ltd (supra) with regard to admission of legal issue by way of
additional grounds:-

“5. Under Section 254 of the Income-tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier.

6. In the case of Jute Corporation of India Ltd. v. C.I.T. . this Court, while dealing with the powers of the Appellate Assistant Commissioner observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The Appellate Assistant Commissioner should exercise his discretion in permitting or not permitting the assessee to raise an additional ground in accordance with law and reason. The same observations would apply to appeals before the Tribunal also.

7. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner of Income-tax (Appeals) takes too narrow a view of the powers of the Appellate Tribunal [vide, e.g., C.I.T, v. Anand Prasad (Delhi), C.I.T. v. KaramchandPremchand P. Ltd. and C.I.T. v. Cellulose Products of India Ltd. . Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings we fail to see why such a question should not be
44 allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee.”

A perusal of the above decision rendered by Hon’ble Supreme Court makes it clear
that the Tribunal will have the discretion to allow or not allow a new ground to be
raised. But where the Tribunal is only required to consider a question of law arising
from the facts which are on record in the assessment proceedings, then the same
shall be considered by the Tribunal in order to correctly assess the tax liability of an
assessee. We notice that the condition prescribed by Hon’ble Supreme Court for
admitting a legal ground is that the facts relating to the same should be available on
record in the assessment proceedings. In the instant case, we notice that the revenue
is alleging fraud and accordingly seeking withdrawal of deduction by citing the
provisions of sec.80AC of the Act. However, there is no dispute that the fraud, if any,
is in allegation stage only and further the said contentions are being raked up on the
basis of information obtained from CPC only recently, meaning thereby, the details
relating to alleged fraud were not available on record in the assessment proceedings.
Hence, the principle laid down by Hon’ble Supreme Court in the above said case for
admission of a legal issue, does not apply to the facts of the present case. In any
case, the above said decision of Hon’ble Supreme Court does not override the first
principle that the assessing officer is not entitled to question his own order in appeal.
67. We have noticed that the legal issue urged by the revenue in the CO relates to
the original assessment proceeding, where as the present appeal relates to the
rectification order passed u/s 154 of the Act challenging the rejection of the
rectification petition filed by the assessee. Since the rectification petition has been
rejected, the doctrine of merger also does not apply to the instant case. The Ld D.R
contended that the question of fraud could be raised in collateral proeedings also.
However, there is only allegation of fraud at this stage and the same has not been
established in the proper forum. Accordingly, we find merit in the contentions of the
Ld A.R that the revenue could not raise this legal issue in the appeal preferred by the
assessee against rectification proceedings. Hence, in our view, the revenue cannot
take support of this decision of Hon’ble Supreme Court, referred supra.
68. The next reasoning given by the revenue is that the assessee has committed a
fraud by furnishing a copy of e-acknowledgement, which has been found to be bogus.
45 First of all, as submitted by Ld A.R, there is only allegation of fraud, if any, committed
by the assessee. Secondly, the Income tax Appellate Tribunal is not the authority
empowered to decide about the allegation of fraud. Thirdly, as submitted by Ld A.R,
the alleged fraud, even if it is proved to be true, would give rise to only a legal issue as
to whether the assessee would be entitled for deduction u/s 80IB(10) of the Act for
non-filing of return of income within the due date or not. Before us, the Ld A.R placed
his reliance on host of decisions and submitted that it has been held by various
Courts and Tribunal that the exemption provision shall be construed liberally, once it
is found that the assessee is eligible for deduction. In some of the cases, the
deduction claimed by the assessee was allowed, even if the return of income was filed
belatedly by holding that the condition prescribed in sec.80AC/other provisions is
directory in nature. Some of the decisions relied upon by the assessee are given
below:-
(a) Trustees of Tulsidas gopalji Charitable & Cheleshwar Temple vs. CIT
(1994)(207 ITR 368)(Bom)
(b) Fiberfill Engineers vs. DCIT (2017) (299 CTR 173)(Delhi)
(c) Chirakkal Service Co-operative Bank Ltd vs. CIT (2016)(384 ITR 490)(Ker)
(d) CIT vs. S.Venkatiah (ITA No.114 of 2013)(AP)
(e) Principal CIT vs. Shankarlal Saini (2018)(253 Taxman 308)(Raj)
(f) ITO vs. M/s Yash Developers (ITA No.809/Mum/2011)
The Ld A.R further submitted that the assessee has also filed return of income
manually within the due date before the AO and hence the revenue cannot discard the
manual return in order to deny deduction claimed u/s 80IB(10) of the Act.
69. We have earlier noticed that the revenue has placed reliance on the
decision rendered by Hon’ble Calcutta High Court, wherein it was held that the
deduction u/s 80IB(10) would be denied, if the return of income is filed beyond
the due date prescribed u/s 139(1) of the Act. The above discussions would
show that there are two views on the issue. Hence the Ld A.R submitted that,
if the assessee is considered to have filed the return of income belatedly
beyond the due date prescribed u/s 139(1) of the Act, then the view in favour
of the assessee should be taken as per the decision rendered by Hon’ble
Supreme Court in the case of Vegetable Products of India Ltd (1973)(88 ITR
46 182)(SC). We find merit in the submissions made by Ld A.R. The revenue is
only alleging fraud on the part of the assessee and the Tribunal is not the
competent authority to decide on the same. As submitted by Ld A.R, the issue
raked up by the revenue would give rise to only a legal issue and on the same,
two views are existing as on today.
70. We have noticed that the limitation would apply for all orders, even if it
is a wrong order. We have also noticed that, what cannot be achieved directly
cannot be achieved indirectly. In the instant case, the revenue has fairly
admitted that the time limit for reopening of assessment has already expired,
meaning thereby, the AO could not disturb the assessment order already
passed by him, even if any wrong is found therein. By filing this CO before the
Tribunal, that too in an appeal proceeding challenging the rectification order
passed u/s 154 of the Act, the revenue is trying to achieve its objectives, which
could not be achieved by it directly. The said objectives are sought to be
achieved indirectly on the basis of allegation of fraud, since the AO could not
take direct action due to expiry of limitation period.
71. The Ld A.R also submitted that the assessee has filed its return of
income for AY 2012-13 also beyond the due date prescribed u/s 139(1) of the
Act claiming deduction u/s 80IB(10) of the Act. It was submitted that the AO
has allowed the said deduction in AY 2012-13. Accordingly, it was submitted
by Ld A.R that there is no merit in the allegation of fraud, if any, committed by
the assessee, as the AO himself has allowed deduction in the succeeding year
on the basis of belated return of income.
72. In view of the foregoing discussions, we are convinced that the the CO
filed by the revenue is not maintainable. Accordingly we reject the same.
73. We have earlier noticed that the revenue has furnished sanction of Ld CIT
only in respect of original grounds of appeal filed by it. The approval in respect
47 of revised grounds of appeal was not placed before us. The provisions of
sec.253(2) mandates that the AO should file appeal on the direction of the
Principal Commissioner or Commissioner, as the case may be. We notice that
the practice followed by the revenue is to furnish a copy of approval granted by
Ld Pr. CIT or CIT to the grounds urged by the assessing officer. Accordingly,
in the absence of approval of Principal Commissioner or Commissioner, the
reframed grounds of the revenue are liable to be rejected on this ground also.
74. The assessee argued at length that the CO filed by the revenue should
not be admitted, since the CO has been filed by the revenue after conclusion of
hearing of the appeal filed by the assessee. It was also argued that the delay of
124 days in filing the CO should not be condoned. We notice that the power to
file CO is given to the parties u/s 253(4) of the Act and the same has to be filed
within 30 days from the date of receipt of notice of appeal filed by the other
party. In the normal practice, the appeal and CO are heard and disposed of
together. Hence there may be merit in the contentions of the assessee that the
CO should not be admitted, if it is filed after conclusion of hearing of the
appeal. However, we notice that the bench has put up the appeal of the
assessee for hearing the same along with the Cross objection by refixing it.
Under these set of facts, the objection of the assessee may not survive. We
have earlier noticed that the Ld D.R, during the course of hearing of appeal of
the assessee, submitted about the alleged fraud and also contended that the
deduction claimed u/s 80IB(10) should be withdrawn in view of provisions of
sec.80AC of the Act. Since it is a well established proposition that the Ld D.R
cannot improve the case of the AO, the revenue, in its wisdom, has thought it
fit to file Cross objection belatedly. The reason cited for the delay was the
delay occurred in obtaining the details from CPC. In our view, the reasoning
given by the revenue may constitute sufficient cause in filing the CO belatedly.
However, in the preceding paragraphs, we have held that the CO as well as the
grounds urged by the revenue in the CO is not maintainable. Hence we are of
48 the view that the objections raised by the assessee on preliminary issues lose
their significance.
75. In the result, the appeal filed by the assessee is allowed and the cross
objection of the revenue is dismissed.

Order has been pronounced in the Court on 26.12.2018.

Sd/- Sd/- (PAWAN SINGH) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 26/12/2018 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// Senior Private Secretary
Kishore, SPS ITAT, Mumbai

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