M/s. Girilal and Co. vs. ITO and Ors.(2016) 387 ITR 122
(SC)
The appellant, a partnership firm, was engaged in the
business of construction of building and development of real estate. In the
year 2000, the appellant/firm was engaged in developing two housing projects on
a plot bearing CTS No. 329 B(Part) of village Kondiwita in Andheri (East)
Mumbai (hereinafter referred to as “the said plot”). The said plot was acquired
by the appellant originally as a capital asset but portion thereof was
converted at different point of time into stock-in-trade. The appellant on
October 29, 2001 filed its return of income for the assessment year 2001-02. On
May 1, 2003, an assessment order was passed u/s. 143(3) of the Act determining
the total income at Rs. 12,36,393 after allowing deduction u/s. 80-1B (10) of
the Act. After scrutiny of the said return of income, a notice dated March 15,
2007, was served on the appellant u/s. 148 of the Income-tax Act, 1961
(hereinafter referred to as “the Act” ) inter alia alleging that the
appellant’s income chargeable to tax for the assessment year 2001-02 has
escaped assessment within the meaning of section 147 of the Act. Vide
communication dated April 11, 2007, the appellant sought the reason recorded
for reopening the assessment which were made available to the appellant on
April 12, 2007. It was found that the appellant had not correctly disclosed the
actual *assets of the said plot and hence, the appellant was not entitled for
deduction u/s. 80(1B)(10) of the Act. It was noted that the information
regarding the actual size of the plot used for the construction was only
available in the valuation report and hence, the case was covered under
Explanation 2(c)(iv) of section 147 of the Act. The appellant objected to the
assumption of jurisdiction u/s. 148 for the reason that the appellant had
disclosed all the facts fully and truly and respondent No. 1 was fully aware of
the floor space index. Respondent No.2 rejected the objections. Being
aggrieved, the appellant preferred a writ petition before the High Court
challenging the notice dated March 15, 2007 issued u/s. 147 of the Act. The
High Court vide impugned judgment dated December 12, 2007 dismissed the
writ petition. The High Court was of the opinion that as there was no true
disclosure of the exact size of the plot when the new construction commenced it
prima facie could not be said that there were no reasons to believe. The
information was in the annexures and consequently Explanation 2(c)(iv) of
section 147 of the was applicable.
Accordingly, to the High Court, the question was whether the petitioners
considering the size of the plot and part of it having already been developed
could claim the benefit u/s. 80-1B (10) of the Income-tax Act. The issue as to
whether the size of the plot of land to be considered at the time the new
construction is being put up or whether the building already constructed
including various deduction like R. G. Area, set back had to be considered in
computing the size of the plot was an issue which it did not wish to answer at
the stage in the exercise of their extraordinary jurisdiction.
Before the Supreme Court, the Learned Senior Counsel
appearing on behalf of the appellant/firm submitted that there was no reason to
reopen the assessment when in the return filed by the appellant full disclosure
of all the relevant facts was made. On this basis, it was further argued that
it was merely a case of change of opinion which was not a valid ground for
reopening of the assessment. He drew the attention of the Supreme Court to the
communication dated February 10, 2003 addressed by the appellant to the
Assessing Officer. In para 11 thereof, there was a mention about the land in
question. The Supreme Court rejected the aforesaid submissions of the learned
senior counsel for the appellant as according to the Supreme Court, in para 11,
only the value of the land was stated and in support, a certificate from the
registered architect and engineer was filed. The Supreme Court held that it was
clear from the above that this information was supplied as there was some query
about the value of the land. Obviously, while going to this document the
Assessing Officer would examine the value of the land. However, the reason for
issuing notice u/s. 148 of the Income-tax Act was that the appellant had not
correctly disclosed the actual *assets of the plot and hence, it was not
entitled for deduction u/s. 80-IB (10) of the Act. The income-tax authority
itself had mentioned in the notice u/s.148 of the Act that such information was
available only in the valuation report. Giving the information in this manner
was of no help to the appellant as the Assessing Officer was not expected to go
through the said information available in the valuation report for the purpose
of ascertaining the actual *construction of the plot.
On the facts of this case, therefore, the Supreme Court found
that the Revenue was right in reopening the assessment and the High Court had
rightly dismissed the writ petition of the appellant challenging the validity
of the notice u/s. 148 of the Act.
*
Note: This should be the size of the plot. _
