Reopening of assessment on prior material without new evidence is impermissible; valid revised returns under specific conditions relate back to original filings.

1. The aforesaid cross-appeals for Assessment Year (AY) 2011- 12arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)]

dated 18-03-2024 in the matter of an assessment framed by Ld. AO u/s

143(3) r.w.s.147 of the Act on 27-12-2018.

2. The Ld. AR advanced arguments on legal grounds as well as on merits. The Ld. Sr. DR also advanced arguments by referring to the findings of Ld. AO in the assessment order. Having heardrival submissions and upon perusal of case records, the appeals are disposed-off as under. The assessee being residentpartnership firm is stated to be engaged in construction of residential flats.

Assessment Proceedings

3.1 The assessee filed regular return of income on 30-09-2011 declaring loss of Rs.0.54 Lacs. However, the return was revised on 14- 03-2012 declaring income of Rs.2.03 Lacs which was processed u/s 143(1). Subsequently, the return was scrutinized u/s 143(3) on 24-01- 2014 at Rs.8.14 Lacs. However, the case was reopened u/s 147 on the ground that no claim for deduction u/s 80-IB was made in the original return of income. The assessee claimed deduction u/s 80-IB for Rs.242.20 Lacs for the first time in its revised return of income filed on 14-03-2012. Further, the project was approved by Municipal Corporation, Kharar on 24-05-2006 and as such the project was required to be completed by 31-03-2012. However, as per Form No.10CCB, the project was yetto be completed. The completion certificate as issued by local authority was not submitted by the assessee. Accordingly, notice u/s 148 was issued on 30-03-2018 against which the assessee offered same revised return of income. The assessee’s objections to reopening were dismissed by Ld. AO vide order dated 22-12-2018.

3.2 During the course of assessment proceedings, the assessee was required to justify it claim of deduction u/s 80-IB. The Ld. AO, in terms of Explanation (ii) to sub-section (10) of Sec. 80-IB, held that date of completion of construction of housing project shall be taken to be the date on which the completion certification was issued by the local authority. This condition was a mandatory requirement which was not fulfilled by the assessee. Secondly, considering the provisions of Sec.80AC, this deduction was to be allowed only if the return of income was furnished within due date as specified u/s 139(1). The same was not the case here since the claim was made in the revised return of income. Therefore, the deduction of Rs.242.20 Lacs was denied to the assessee.

Appellate Proceedings

4.1 The assessee assailed the assessment on legal grounds as well as on merits by way of elaborate written submissions. The Ld. CIT(A) rejected various legal grounds raised by the assessee and upheld the jurisdiction of Ld. AO. Aggrieved, the assessee is in further appeal before us.

4.2 Another pertinent argument on merits was that a valid revised return would relate back to the date of original return. If the original return was filed in time and the claim was made in the revised return, the same would not be hit by the provisions of Sec.80AC as per various judicial decisions. A valid revised return would replace the original return of income and therefore, the assessee would be eligible to lay claim on the impugned deduction.

4.3 The Ld. CIT(A) noted that in terms of requirement of Sec.80AC, the assessee was required to file a return of income u/s 139(1) wherein this deduction was not claimed. However, there was no restrictive condition that the admissible deduction was to be claimed in the said return of income and there was also no condition that the assessee could not revise the said regular return. In absence of any such restriction, the claim of the assessee could not be faulted with. The reasons for revision of the return also could not be overlooked. The assessee did not disclose any details of income/expenditure, asset/li