ITO Vs Shreeji Associates Iscon House (ITAT Ahmedabad)
The Revenue filed two appeals against separate orders of the Commissioner of Income Tax (Appeals), NFAC, Delhi, relating to Assessment Years 2011-12 and 2012-13, challenging the deletion of disallowances made under Section 80IB(10)(f) of the Income Tax Act. The delay of 11 days and 7 days in filing the appeals was condoned. Taking AY 2011-12 as the lead case, the Tribunal noted that the assessee, a partnership firm engaged in developing housing projects, had originally been allowed deduction under Section 80IB(10). Subsequently, reassessment proceedings were initiated following a search on the JP-ISCON group. The Assessing Officer alleged that 13 flats had been sold to employees of JP Iscon Pvt. Ltd. with interest-free loans from the assessee’s partners and that repayment of those loans after three years violated Section 80IB(10)(f). Accordingly, the Assessing Officer disallowed the deduction of ₹19,91,61,270. The CIT(A) upheld the reopening of assessment but deleted the disallowance, holding that the purchasers were employees in whose names the flats were allotted and registered, payments were made through their bank accounts, and the Assessing Officer had relied only on the statement of Shri Ankit Shah without independent evidence or granting cross-examination.
Before the Tribunal, the assessee filed an application under Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963 to support the CIT(A)’s order on additional legal grounds, contending that the alleged allotments took place during Financial Year 2012-13 relevant to AY 2013-14, whereas the present appeal concerned AY 2011-12. The Tribunal held that Rule 27 permitted the assessee to support the impugned order on grounds decided against it despite not filing a cross-appeal or cross-objection. It observed that the Revenue had not produced material showing that the alleged allotments related to AY 2011-12 and held that even if there had been any violation, it pertained to AY 2013-14 and could not justify disallowance in AY 2011-12. The Rule 27 application was accordingly allowed.
