M/S. THISTLE PROPERTIES PVT. LTD, MUMBAI V. THE ACIT CEN CIR-45, MUMBAI

ITA 1082/MUM/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48373 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-04-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 07-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 13-02-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Keywords: Opportunity of being heard; Block assessment; Reassessment proceedings
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A.NO.1082/MUM/2008 A.Y 2003-04 M/S THISTLE PROPERTIES PVT. LTD., B 124, VARDHAMAN COMPLEX, FITWELL COMPOUND, L.B.S.MARG, VIKHROLI [WEST], MUMBAI 400 083. PAN: AABCT 4274 D VS. ASST. COMMISSIONER OF I.T., CENTRAL CIRCLE 45, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DHARMESH SHAH. RESPONDENT BY : SHRI R.K.SINGH O R D E R PER T.R.SOOD, AM: IN THIS APPEAL VARIOUS GROUNDS HAVE BEEN RAISED, B UT AT THE TIME OF HEARING GROUND NOS.1 TO 3 WERE NOT PRESSED, THER EFORE, THEY ARE DISMISSED AS NOT PRESSED. GROUND NOS.4 & 5 ARE AS U NDER: 4. THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS ] OUGHT TO HAVE APPRECIATED THAT THE NOTICES ISSUED BY THE ASS ESSING OFFICER ARE INVALID AND HENCE THE ASSESSMENT ORDER U/S.143[ 3] OF THE ACT WAS ALSO VOID AB INITIO. 5. THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] HAS ERRED IN LAW AND IN FACTS IN NOT APPRECIATING THAT THE IN TEREST CHARGED U/S.234B AND 234C OF THE ACT ARE INCORRECT. 2. GROUND NO.4 : THIS GROUND RELATES TO THE SERVICE OF NOTICE U/S.143[3]. IT SEEMS ON EARLIER OCCASION THE BENCH HAD ASKED THE DEPARTMENT TO FILE PROOF OF SERVICE OF NOTICE, IN R ESPONSE TO WHICH A COPY OF AN ACKNOWLEDGEMENT OF SPEED POST WAS FILED. HOWEVER LD. DR MADE IT CLEAR THAT HE IS NOT RELYING ON THE SAME. H E POINTED OUT THAT 2 THIS ACKNOWLEDGMENT DOES NOT SHOW THE YEAR OF NOTIC E OR THE DATE OF RECEIPT CLEARLY AND IT MAY REFER TO SOME OTHER YEAR [WE WILL CONSIDER THE OTHER ARGUMENT OF THE LD. DR LITTLE LATER]. 3. THE LD. COUNSEL OF THE ASSESSEE REFERRED TO THIS RECEIPT AND POINTED OUT THAT THIS CANNOT BE CALLED A VALID SERV ICE BECAUSE AGAINST THE NAME OF RECIPIENT IT HAS BEEN STAMPED BY SOME N OVACARE DRUG LTD. AND ADDRESS IS SHOWN AS B 119, VARDHMAN COMPLE X, LBS ROAD, MUMBAI, WHEREAS ADDRESS OF THE ASSESSEE WAS B-124, VARDHMAN COMPLEX, LBS ROAD, MUMBAI. THEREFORE, THIS CANNOT B E CONSTRUED AS VALID SERVICE OF NOTICE. SINCE REVENUE HAS FAILED T O PROVE THE SERVICE, ASSESSMENT HAS TO BE QUASHED. 4. ON THE OTHER HAND, LD. DR FILED A COPY OF THE OR DER SHEET OF ASSESSMENT PROCEEDINGS AND POINTED OUT THAT SHRI KU LIN MEHTA, CHARTERED ACCOUNTANT AND AUTHORISED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS AS EARLY AS 7-3 -2006. IF NO NOTICE WAS SERVED, THEN HOW CHARTERED ACCOUNTANT OF THE ASSESSEE ATTENDED THE PROCEEDINGS. IN SUCH CIRCUMSTANCES A S ERVICE OF NOTICE HAS BEEN HELD TO BE VALID BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. REGENCY EXPRESS BUILDERS PVT. LTD. [291 ITR 55]. HE ALSO FILED A COPY OF THE LETTER DATED 12-8-2005 THROUGH WHICH IT WAS INFORMED THAT A NOTICE HAS BEEN SERVED U/S.143[2] R AISING VARIOUS QUERIES AND NO OBJECTION WAS TAKEN EVER AGAINST THI S NOTICE. THIS FACT CLEARLY SHOWS THAT THE NOTICE WAS DULY SERVED ON TH E ASSESSEE. HE THEN REFERRED TO THE ACKNOWLEDGEMENT AND SUBMITTED THAT NO ASSESSMENT 3 YEAR HAS BEEN MENTIONED IN THIS ACKNOWLEDGEMENT, TH EREFORE, IT IS NOT NECESSARY THAT THIS NOTICE RELATES TO THIS YEAR ONL Y. 5. HE ARGUED THAT NO OBJECTION WAS TAKEN AGAINST TH E SERVICE OF NOTICE BEFORE THE AO. HOWEVER, THIS ISSUE WAS TAKEN UP BEFORE THE CIT[A] VIDE GROUND NO.3 OF THE ASSESSEES APPEAL. H OWEVER, THIS GROUND WAS NOT PRESSED BEFORE THE CIT[A] AND THE SA ME HAS BEEN DISMISSED BY THE CIT[A] AS NOT PRESSED. THIS CLEARL Y SHOWS THAT ASSESSEE HAS ACCEPTED THE SERVICE OF NOTICE AND NOW ASSESSEE CANNOT BE ALLOWED TO RAKE-UP THIS ISSUE AGAIN. HE THEN REF ERRED TO THE DECISION OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS. ABDUL KHADER AHAMED [285 ITR 57] WHEREIN IT WAS CLEARLY HELD THA T THE AGGRIEVED PARTY COULD NOT DISPUTE THE RECORD BEFORE A HIGHER FORUM AND REMEDY, IF ANY, WOULD LIE AGAINST THE SAME AUTHORITY. THE A SSESSEE CANNOT AT THIS STAGE AFTER A GAP OF ALMOST FIVE YEARS BE ALLO WED TO RAISE THIS OBJECTION REGARDING SERVICE OF NOTICE BECAUSE AFTER SUCH A LONG GAP, IT MAY NOT ALWAYS BE POSSIBLE FOR THE REVENUE AUTHORIT IES TO PRODUCE THE PROOF OF SERVICE OF NOTICE. THEREFORE, ASSESSEE COU LD NOT AGITATE THIS ISSUE NOW. 6. IN THE REJOINDER, LD. COUNSEL OF THE ASSESSEE SU BMITTED THAT THERE CANNOT BE ANY WAIVER OF THE NOTICE AND IN THI S REGARD HE RELIED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN T HE CASE OF P. V. DOSHI VS. CIT [113 ITR 22]. IN THIS DECISION IT WAS CLEARLY HELD THAT THE JURISDICTIONAL PROVISION WHICH WAS MANDATORY AND EN ACTED IN PUBLIC INTEREST COULD NEVER BE WAIVED. HE ALSO SUBMITTED T HAT THOUGH 4 SEC.292BB HAS BEEN INSERTED BY THE FINANCE ACT 2008 W.E.F. 1-4-2008, WHEREIN IT IS PROVIDED THAT IF AN ASSESSEE HAS ATTE NDED THE PROCEEDINGS IT SHALL BE DEEMED THAT NOTICE, IF ANY, UNDER WHICH IT IS REQUIRED TO BE SERVED, HAS BEEN DULY SERVED UNDER ANY PROVISIONS O F THE ACT, THEN SUCH ASSESSEE IS BARRED FROM TAKING THIS OBJECTION LATER ON. HOWEVER, THIS PROVISION HAS BEEN HELD TO BE OF PROSPECTIVE N ATURE BY THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF KUBER TOBACCO PRODUCTS (P) LTD. [117 ITD 273]. HE ALSO POINTED OUT THAT SERVICE OF NOTICE IS A MANDATORY REQUIREMENT AND IN THIS REGARD RELIED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CWT VS. HU F OF H. H. LATE J. M. SCINDIA [300 ITR 193]. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY AND ARE UNABLE TO AGREE WITH THE SUBMISSIONS OF THE LD. COU NSEL OF THE ASSESSEE. THE SECOND PARA OF THE ASSESSMENT ORDER R EADS AS UNDER: NOTICES U/S.143[2] & 142[1] OF THE INCOME TAX ACT , 1961 WAS ISSUED AND DULY SERVED ON THE ASSESSEE ALONG WITH A DETAILED QUESTIONNAIRES. SUBSEQUENTLY, WITH THE CHANGE IN IN CUMBENT, NOTICE U/S.143[2] OF THE I. T. ACT, 1961 WAS ISSUED BY THE UNDERSIGNED. SHRI KULIN MEHTA, C. A. ATTENDED FROM TIME TO TIME AND F URNISHED THE VARIOUS DETAILS AS CALLED FOR SUCH AS DETAILS OF SA LES PARTY-WISE, DETAILS OF SUNDRY DEBTORS/CREDITOR, DETAILS OF SECURED/UNSE CURED LOANS. LOAN CONFIRMATIONS, DETAILS OF ADDITIONS TO FIXED ASSETS , DETAILS OF RENT & COMPENSATION, DETAILS OF VARIOUS EXPENSES DEBITED T O P & L ACCOUNT ETC. THE CASE WAS DISCUSSED WITH HIM. THE ABOVE CLEARLY SHOWS THAT SHRI KULIN MEHTA APPEA RED AGAINST NOTICE SERVED U/S.143[1]. FURTHER A LETTER HAS BEEN ISSUED ON 12-8-2005 IN WHICH IT IS AGAIN STATED THAT THE CASE WAS SELECTED FOR SCRUTINY VIDE NOTICE DATED 7-10-2004 ISSUED U/S.143[2] BUT NO OBJ ECTION HAS BEEN 5 TAKEN EVEN TO THIS LETTER. IF THE ASSESSEES CONTEN TION IS CORRECT THAT NO NOTICE WAS SERVED, THEN ONE FAILS TO UNDERSTAND HOW ASSESSEES AUTHORISED REPRESENTATIVE SHRI KULIN MEHTA MADE APP EARANCE BEFORE THE AO STARTING FROM 7-3-2006. THE NOTING SHEET DAT ED 7-3-2006 READS AS UNDER: SHRI KULIN MEHTA, C.A. ATTENDED. FILED LETTER DATE D 6-3-06 IN RESPONSE TO NOTICE [QUESTIONNAIRE] DATED 12-8-2005 BY PREVIO US AO. HE IS TO ATTEND ON 13-3-06 AT 11.00 AM. THIS CLEARLY SHOWS THAT ASSESSEES AUTHORISED REPRE SENTATIVE HAD ATTENDED IN RESPONSE TO THE LETTER DATED 12/8/2005 AS WELL AS NOTICE U/S.143[2]. IN ANY CASE, THE FACT OF NOTICE IS CLEA RLY MENTIONED IN THE LETTER DATED 12-8-2005. THE HON'BLE DELHI HIGH COUR T IN THE CASE OF CIT VS. REGENCY EXPRESS BUILDERS PVT. LTD. [SUPRA] WHER E ASSESSEE HAD DENIED THE SERVICE OF NOTICE, HAS OBSERVED AS UNDER : EVEN ASSUMING FOR ARGUMENTS SAKE THAT NO NOTICE UN DER SECTION 143(2) OF THE ACT HAS BEEN RECEIVED ON BEHALF OF TH E ASSESSED ON 29TH DECEMBER, 2000, THEN THERE WAS NO OCCASION FOR ASSE SSED OR HIS REPRESENTATIVE TO APPEAR BEFORE THE ASSESSING OFFIC ER ON 11TH JANUARY, 2001. THE FACT THAT ON 11TH JANUARY, 2001 MR. HARISH BANS AL, CHARTERED ACCOUNTANT APPEARED BEFORE THE ASSESSING OFFICER AN D FILED HIS POWER OF ATTORNEY AND WAS ASKED TO FILE DETAILS/INFORMATI ON AND THEREAFTER ON 7TH FEBRUARY, 2001, ONE SHRI MOHAMMAD ASLAM, ASSIST ANT ALONG WITH M/S. S. PRASAD AND CO., CHARTERED ACCOUNTANT APPEAR ED BEFORE THE ASSESSING OFFICER AND FILED A LETTER SEEKING ADJOUR NMENT, GOES ON TO SHOW THAT NOTICE UNDER SECTION 143(2) OF THE ACT HA S BEEN DULY SERVED ON THE ASSESSED THROUGH HIS REPRESENTATIVE ON 29TH DECEMBER, 2000 AND THAT IS WHY THE REPRESENTATIVES OF THE ASSESSED HAV E BEEN APPEARING BEFORE THE ASSESSING OFFICER IN PURSUANCE OF THE NO TICE. THUS FROM THE ABOVE IT IS CLEAR THAT ALLEGATION THA T NO NOTICE WAS SERVED BUT, STILL ASSESSEES APPEARANCE BEFORE THE AUTHORITIES ITSELF 6 SHOWS THAT THE NOTICE MUST HAVE BEEN SERVED OTHERWI SE THERE WAS NO OCCASION FOR THE ASSESSEE TO GO BEFORE THE ASSESSIN G AUTHORITY. 8. AS FAR AS THE DECISION OF THE HON'BLE GUJARAT HI GH COURT IN THE CASE OF P.V.DOSHI VS. CIT [SUPRA] IS CONCERNED, THE HIGH COURT WAS CONCERNED WITH THE FOLLOWING FACTS: AN ORDER OF REASSESSMENT WAS PASSED ON THE ASSESSE E. IN APPEAL AGAINST THE ORDER OF THE APPELLATE ASSISTANT COMMIS SIONER THE ASSESSEE GAVE UP THE CONTENTION REGARDING THE VALIDITY OF TH E NOTICE OF REASSESSMENT. ON MERITS, THE APPELLATE ASSISTANT CO MMISSIONER DISMISSED THE APPEAL. ON FURTHER APPEAL THE TRIBUNA L REMANDED THE CASE TO THE INCOME-TAX OFFICER WITH DIRECTIONS TO C ROSS-EXAMINE A WITNESS. ON APPEAL FROM THE ORDER PASSED ON REMAND THE ASSESSEE CONTENDED THAT THE REASSESSMENT PROCEEDINGS WERE NO T VALIDLY INITIATED THE APPELLATE ASSISTANT COMMISSIONER EXAMINED THE O RIGINAL ORDER SHEET AND FOUND THAT NO REASONS HAD BEEN RECORDED B Y THE INCOME-TAX OFFICER AS REQUIRED BY SECTION 148[2]. HE FURTHER F OUND THAT THE INCOME-TAX OFFICER HAD NOT SPECIFIED IN CLAUSE OF S ECTION 147 UNDER WHICH THE ASSESSMENT HAD BEEN REOPENED. HE, THEREFO RE, ANNULLED THE ORDER OF REASSESSMENT. THE TRIBUNAL, HOWEVER, HELD THAT ONCE THE TRIBUNAL PASSED AN ORDER THE MATTER BECAME FINAL AN D THAT THE ORDER RESTORING THE CASE TO THE FILE OF THE INCOME-TAX OF FICER WITH CLEAR INSTRUCTIONS ONLY TO CROSS-EXAMINE A WITNESS MEANT THAT THE ONLY POINT THAT WAS LEFT OPEN WAS IN RESPECT OF THE SUM AND NO T THE LEGAL OR JURISDICTIONAL ASPECT WHETHER THE REASSESSMENT PROC EEDINGS WERE CORRECTLY INITIATED. ON THE ABOVE FACTS, IT WAS HELD AS UNDER: HELD, THAT AS A JURISDICTIONAL PROVISION WHICH WAS MANDATORY AND ENACTED IN PUBLIC INTEREST COULD NEVER BE WAIVED AN D THE WANT OF JURISDICTION WAS DISCOVERED BY THE APPELLATE ASSIST ANT COMMISSIONER, THERE WAS NO QUESTION OF WAIVER BY THE ASSESSEE. NO QUESTION OF FINALITY OF THE REMAND ORDER OF THE TRIBUNAL WOULD ARISE BECAUSE THE MANDATORY CONDITIONS FOR FOUNDING JURISDICTION FOR INITIATING RE- ASSESSMENT PROCEEDINGS HAD BEEN FULFILLED. THE ORDE R OF RE-ASSESSMENT WAS HELD TO BE NOT VALID. THUS IT IS CLEAR FROM THE ABOVE THAT THE ISSUE WAS REGARDING REOPENING OF THE ASSESSMENT U/S.147 UNDER WHICH RECORDING OF THE REASON IS MANDATORY AND SUCH REASON ONLY PROVIDES JURISDICTIO N TO THE ASSESSING 7 AUTHORITY FOR DOING THE RE-ASSESSMENT AND THAT IS W HY THE HON'BLE HIGH COURT HELD THAT THIS ISSUE COULD NOT BE WAIVED BECA USE IT PROVIDED THE VALID JURISDICTION FOR RE-ASSESSMENT. THEREFORE, IN OUR VIEW, THIS DECISION IS NOT APPLICABLE TO THE FACTS OF THE CASE . 10. SIMILARLY, THE QUESTION BEFORE THE SPECIAL BENC H IN THE CASE OF KUBER TOBACCO PVT. LTD. VS. DCIT [SUPRA] WAS AS UND ER : 'WHETHER THE ASSESSEE WHO HAS PARTICIPATED IN THE B LOCK ASSESSMENT PROCEEDINGS IS PRECLUDED FROM TAKING ANY OBJECTION THAT NOTICE UNDER S. 143(2) WAS NOT SERVED UPON HIM OR WAS NOT SERVED UP ON HIM IN TIME IN VIEW OF THE PROVISIONS OF S. 292BB INSERTED BY THE FINANCE ACT, 2008 W.E.F. 1ST APRIL, 2008 AND IF SO, SINCE WHEN HE CAN BE SAID TO BE SO PRECLUDED? IN THIS CASE A SEARCH WAS CONCLUDED AGAINST THE ASS ESSEE U/S.132 OF THE ACT AND CONSEQUENTLY NOTICE U/S.158BC WAS ISSUE D. THE ASSESSMENT ORDER WAS SILENT ABOUT THE ISSUANCE OF N OTICE U/S.143[2] AND NO OBJECTION WAS TAKEN BY THE ASSESSEE EITHER B EFORE THE AO OR CIT[A]. THIS ISSUE WAS RAISED FOR THE FIRST TIME BY WAY OF AN ADDITIONAL GROUND BEFORE THE SPECIAL BENCH OF THE TRIBUNAL. IN THE MEANTIME U/S.292BB HAD ALSO BEEN INSERTED BY THE FINANCE ACT 2008 W.E.F. 1-4- 2008. HOWEVER, IT HAS TO BE NOTICED CAREFULLY THAT IN RESPECT OF BLOCK ASSESSMENT LOT OF CONTROVERSY WAS GOING ON, WHETHER NOTICE U/S.158BC ITSELF WAS SUFFICIENT OR A FURTHER NOTICE WAS REQUI RED TO BE SERVED U/S.143[2]. THAT IS WHY PERHAPS NO OBJECTION WAS TA KEN BEFORE THE AO OR THE CIT[A]. IN FACT, THIS ISSUE BECAME SETTLED O NLY BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF ACIT VS. H OTEL BLUE MOON [321 ITR 362] WHEREIN IT WAS HELD THAT IT SHALL BE MANDATORY TO ISSUE 8 NOTICE U/S.143[2] IN ADDITION TO THE NOTICE U/S.158 BC. THEREFORE, IT IS CLEAR AGAIN THAT THE ISSUE BEFORE THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF KUBER TOBACCO PVT. LTD. VS. DCIT [SUPRA ] WAS NOT REGARDING SERVICE OF NOTICE U/S.143[2]. AT THE SAME TIME REFERENCE WAS MADE TO SEC.292BB AND IT WAS HELD THAT SLEC.292BB W OULD BE APPLICABLE ONLY PROSPECTIVELY. 11. IN THE CASE BEFORE US ASSESSEE NEVER RAISED ANY OBJECTION FOR SERVICE OF NOTICE U/S.143[2] BEFORE THE AO. AN OBJE CTION WAS DEFINITELY TAKEN BEFORE THE CIT[A] VIDE GROUND NO.3 WHICH READ S AS UNDER: THE ASSESSING OFFICER HAS ERRED IN LAW AND IN FAC TS IN ISSUING VARIOUS NOTICES WHICH ARE INVALID AND ILLEGAL. THE CONSEQUE NTIAL ASSESSMENT ORDER IS VOID AB INITIO. BUT THE ABOVE GROUND WAS NOT PRESSED BEFORE THE LD. CIT[A] WHO HELD VIDE PARA-4 AS UNDER: 4. GROUND NO.3 IS A GENERAL GROUND RELATING TO THE ISSUE OF VARIOUS NOTICES BEING INVALID AND ILLEGAL THEREBY MAKING TH E CONSEQUENTIAL ASSESSMENT ORDER NULL AND VOID. THIS GROUND OF APPE AL WAS AGAIN NOT PRESSED DURING THE COURSE OF APPEAL PROCEEDINGS, AN D IS THEREFORE, TREATED AS DISMISSED. THUS, IT IS CLEAR THAT THE ABOVE GROUND WAS NOT PRE SSED BEFORE THE CIT[A], WHICH MEANS THAT ASSESSEE WAS NOT AGGRIEVED IN RESPECT OF SERVICE OF NOTICE. IN ANY CASE, AS POINTED OUT BY T HE LD. DR, IF ASSESSEE HAD ANY PROBLEM IN THIS RESPECT HE CANNOT AGITATE T HIS ISSUE NOW BEFORE THE HIGHER FORUM, I.E. BEFORE US AS HELD BY THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS. ABDUL KHADER AHME D [SUPRA]. IN THAT CASE THE FACTS WERE AS UNDER: 9 GOLD BISCUITS OF WEIGHT 5595 GRAMS WERE SEIZED FRO M THE ASSESSEE BY AIRPORT SECURITY STAFF AND HANDED OVER TO THE POLIC E. THE INCOME TAX AUTHORITIES REQUISITIONED THE SEIZED GOLD FROM THE POLICE AUTHORITIES. THE ASSESSEE MOVED THIS COURT CHALLENGING THE REQUE ST MADE BY THE IT AUTHORITIES. THIS COURT SET ASIDE THE ACTION TAKEN BY THE IT AUTHORITIES AND ORDERED RETURN OF THE GOLD TO THE MAGISTRATES COURT. A NOTICE WAS ISSUED TO THE ASSESSEE UNDER SECTION 142 OF THE INC OME-TAX ACT, 1961 UPON WHICH THE ASSESSEE FILED A NIL RETURN, WHICH W AS PROCESSED AND NO FURTHER ACTION WAS TAKEN. THE INCOME TAX AUTHORITIE S MOVED THE MAGISTRATE FOR THE CUSTODY OF THE GOLD, BUT THIS WA S REFUSED. THE INCOME-TAX DEPARTMENT MOVED THE SESSIONS COURT, WHI CH ORDERED DELIVERY OF GOLD TO IT. THE DEPARTMENT TOOK POSSESS ION OF THE GOLD AND DEPOSITED THE GOLD BISCUITS WITH THE RESERVE BANK O F INDIA. THE COMMISSIONER BY LETTER DATED MAY 30, 2003, DIRECTED THE DEPUTY COMMISSIONER WHO WAS THE ASSESSING OFFICER, TO INI TIATE INCOME-TAX PROCEEDINGS BY ISSUING NOTICE UNDER S. 148 OF THE A CT AFTER RECORDING HIS REASONS FOR THE SAME AND DIRECTING THE ASSESSI NG OFFICER TO COMPLY WITH ALL THE REQUIREMENTS OF LAW WHILE INITI ATION ACTION. ON RECEIPT THEREOF THE DEPUTY COMMISSIONER AFTER VERIF YING THE RECORDS RECORDED REASONS FOR THE BELIEF THAT INCOME HAD ESC APED ASSESSMENT AND AFTER ISSUANCE OF NOTICE COMPLETED THE ASSESSMENT, TREATING THE VALUE OF GOLD AS ESCAPED INCOME. AN APPEAL AGAINST THE ASSES SMENT WAS DISMISSED BUT ON FURTHER APPEAL, THE APPELLATE TRIB UNAL ALLOWED IT, HOLDING THAT THE NOTICE UNDER SECTION 148 HAD BEEN ISSUED ACTING UNDER THE DICTATES OF HIS SUPERIOR WITHOUT APPLICATION OF MIND. FROM THE ABOVE FACT, IT WAS OBSERVED BY THE HON'BLE HIGH COURT AS UNDER: THE QUESTION WHAT TRANSPIRED BEFORE A COURT OR TRIB UNAL CAN BE GATHERED FROM THE PROCEEDINGS OR ORDER OF THE COURT NO PARTY WILL ORDINARILY BE PERMITTED TO TAKE EXCEPTION TO OR CON TRADICT THE STATEMENT TO THAT EFFECT IN THE ORDER. WHAT HAS BEEN STATED I N THE ORDER SHOULD BE TAKEN AS THE LAST WORD ON THAT QUESTION. EVEN IF A WRONG RECORD HAS BEEN MADE IN THE ORDER AS TO WHAT TRANSPIRED BEFORE THE COURT OR TRIBUNAL, THE REMEDY OF THE AGGRIEVED PARTY IS NOT TO DISPUTE THE RECORD BEFORE A HIGHER FORUM, BUT TO SEEK A REVIEW BEFORE THE LOWER FORUM ITSELF. THUS, THE HON'BLE COURT CLEARLY HELD THAT IF A PART ICULAR FINDING HAS BEEN GIVEN IN A YEAR EVEN IF ERRONEOUSLY, THEN THE REMED Y WOULD LIE BEFORE THAT AUTHORITY AND NOT BEFORE THE HIGHER FORUM. THU S, IN THE CASE BEFORE US IF THE LD. CIT[A] HAS GIVEN A FINDING THA T THE GROUND 10 REGARDING SERVICE OF NOTICE WAS NOT PRESSED BEFORE HIM, EVEN IF PRESUMING IS A ERRONEOUS FINDING, THEN THE ASSESSEE SHOULD HAVE MOVED THE OFFICE OF THE CIT[A] ONLY BUT CANNOT RAKE UP THIS ISSUE BEFORE THE TRIBUNAL. 12. NORMALLY WHEN ASSESSEE HAS NOT RECEIVED A NOTIC E, THEN ASSESSEE IS SUPPOSED TO RAISE THIS LEGAL OBJECTION BEFORE THE AO OR IN ANY CASE BEFORE THE CIT[A]. HAVING CHOSEN NOT TO RA ISE ANY OBJECTION BEFORE THE AO AND THEN NOT AGITATING THE ISSUE BEFO RE THE CIT[A], ASSESSEE CANNOT PRESS THIS ISSUE AGAIN BEFORE THE T RIBUNAL AFTER A GAP OF 5 YEARS BECAUSE AT THAT POINT OF TIME IT MAY NOT BE ALWAYS POSSIBLE FOR THE REVENUE AUTHORITIES TO SHOW THE PROOF OF SE RVICE. IN THESE CIRCUMSTANCES, WE REJECT THE GROUND REGARDING VALID ITY OF SERVICE OF NOTICE AND HOLD THAT ASSESSEE HAS BEEN SERVED NOTIC E U/S.143[2]. 13. GROUND NO.5 : THE ISSUE REGARDING CHARGING OF INTEREST U/S.234B AND 234C IS OF CONSEQUENTIAL NATURE, THEREFORE, WE DIRECT THE AO TO CHARGE INTEREST IN ACCORDANCE WITH THE LAW. 14. IN ADDITION TO THE ABOVE GROUNDS, ASSESSEE HAS ALSO FILED AN ADDITIONAL GROUND VIDE LETTER DATED 7 TH MAY, 2010 WHICH READS AS UNDER: THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] H AS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DISALLOWANCE OF DEDU CTION U/S.80IB OF THE ACT AMOUNTING TO ` `` ` .80,16,478/- MADE BY THE ASSESSING OFFICER . 15. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ISSUE REGARDING DEDUCTION U/S.80IB(10) IS PURELY OF LEGAL NATURE AND ALL THE FACTS REQUIRED FOR ADJUDICATION OF THE SAME ARE ALR EADY ON THE RECORDS. 11 THIS ISSUE WAS RAISED EVEN BEFORE THE CIT[A] AND JU ST BY OVER-SIGHT THIS WAS OMITTED WHILE RAISING THE NORMAL GROUNDS. HE ALSO RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF NATIONAL THERMAL POWER CO. LTD. 229 ITR 383. 16. ON THE OTHER HAND, LD. DR HAD NO SERIOUS OBJECT ION FOR ADMISSION OF THE ADDITIONAL GROUND. 17. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT THE ISSUE RAISED IN ADDITIONAL GROUND IS PURELY OF LEGAL NATU RE AND ALL THE FACTS FOR ADJUDICATION OF THE SAME ARE AVAILABLE ON RECORD. T HEREFORE, THIS GROUND IS ADMITTED. 18. AFTER HEARING BOTH THE PARTIES, WE FIND THAT TH E ASSESSEE HAD MADE A CLAIM U/S.80IB(10) AND THE AO DURING ASSESSM ENT PROCEEDINGS REQUESTED THE AUTHORISED REPRESENTATIVE OF THE ASSE SSEE TO PRODUCE THE PURCHASE AGREEMENT OF THE LAND AND COPIES OF SA LE AGREEMENT, BROUCHERS OF THE PROJECTS ETC. SOME OF THE DETAILS WERE NOT FILED AND ACCORDINGLY SHOW-CAUSE NOTICE DATED 20-3-2006 WAS I SSUED RAISING FOLLOWING POINTS: FROM THE DETAILS FILED AND EXPLANATION/CLARIFICATIO N OFFERED BY YOUR REPRESENTATIVE SHRI KULIN MEHTA, IT IS OBSERVED TH AT THE PROJECT ON WHICH HAVE CLAIMED THE DEDUCTION IS NOT ELIGIBLE FO R IT FOR THE FOLLOWING REASONS: 1. EVEN THOUGH THE MUNICIPAL APPROVED PLANS SHOW THE I NDIVIDUAL FLAT AREAS LESS THAN THE SPECIFIED LIMIT OF 1500 SQ .FT. FOR EACH UNIT FROM THE DETAILS FILED OF THE SALE EFFECTED SH OWS THAT ADJOINING TWO UNITS HAVE BEEN SOLD TO ONE BUYER ONL Y IN ALL THE WINGS. 2. THE LAYOUT OF THE ADJOINING UNIT FROM THE APPROVED PLANT AS WELL AS THE SALE AGREEMENT CLEARLY SHOWS THAT THE U NITS ARE COMPLIMENTARY TO EACH OTHER I.E. INTENDED TO BE SOL D AS ONE UNIT 12 AND IN REALITY ALSO ALL THE ADJOINING UNIT HAVE INV ARIABLY BEEN SOLD TO ONE BUYER. 3. FROM THE CERTIFIED TRUE COPY MADE AVAILABLE BY YOU TODAY AND AS DISCUSSED WITH SHRI KULIN MEHTA, THE INTERIOR OF THE ADJOINING FLAT COMPLIMENTS EACH OTHER TO MAKE A SIN GLE UNIT ONLY AND THE UNITS AS SHOWN IN THE APPROVED PLAN WI LL NOT SURVIVE INDEPENDENT USER BY ANY BUYER IF HE IS TO P URCHASE ONLY ONE UNIT CONSIDERING FURTHER THAT: I. THE PROJECT IS APPARENTLY INTENDED TO BE CONSTRUCTE D FOR HIGH INCOME GROUP ONLY GIVEN THE FACT THAT THE SOCI ETY HAS A CLUB HOUSE, SWIMMING POOL, ETC. WHICH GOES WITH T HE REQUIREMENT OF THE ELITE CLASS IN THE SOCIETY; II. THE SIZE AND LAYOUT OF KITCHEN WHICH IS DIRECTLY OP ENING TO TOILET, LIVING, BEDROOM AND DINNING CLUBBED INTO ONE BIG FLAT WITH A WIDE BALCONY IN ONE UNIT AND WITH ADJOINING AND HAVING PROPER KITCHEN, BEDROOM ETC. ALL THESE GOES TO INDICATE THAT THE TWO ADJOINING U NITS ARE FOR ALL PRACTICAL PURPOSES, TO BE SOLD AS ONE UNIT ONLY. ON SUCH CLUBBING THE AREA IN ANY GIVEN CASE IS INVARIABLY M UCH ABOVE THE SPECIFIED LIMIT OF 1500 SQ.FT. THUS MAKING THE PROJECT INELIGIBLE FOR DEDUCTION U/S.80IBOF THE I.T.ACT. TH E ISSUE HAS BEEN DISCUSSED IN DETAIL WITH SHRI KULIN MEHTA, C.A . YOUR REPRESENTATIVE, IN THE HEARING TODAY. DURING THE COURSE OF HEARING EVEN THOUGH REPEATEDLY REQUIRED TO FILE THE BROCHURE OF THE PROJECT, THE REQUIREMEN T HAS NOT BEEN MET TILL NOW. YOU ARE REQUIRED TO FILE A COPY OF BR OCHURE ALONG WITH A REPLY TO THIS LETTER. IN RESPONSE TO THE ABOVE, NEITHER ANY DETAILS WERE FURNISHED NOR ANYBODY ATTENDED AND, THEREFORE, AO MADE THE FOLLOW ING OBSERVATIONS: AS REGARDS THE ELIGIBILITY OF THE PROJECT FOR THE D EDUCTION U/S.80IB CERTAIN QUERIES RAISED IN THE SHOW CAUSE NOTICE DT. 29-3-2006 ISSUED TO THE ASSESSEE HAS NOT BEEN REPLIED BY THE ASSESSEE. AS IS DISCUSSED IN THE SAID NOTICE THE PROJECT VIZ. PARADISE TOWERS IS A R ESIDENTIAL COMPLEX, BASICALLY INTENDED FOR THE HIGHER INCOME GROUP COMP LETE WITH THE CLUB HOUSE, SWIMMING POOL ETC. THE BUILDING IS HAVING FO UR UNITS PER FLOOR AND FOUR WINGS A,B,C AND D. IT IS SEEN FROM THE DET AILS FILED BY THE ASSESSEE THAT EACH FLOOR ADJOINING FLATS HAVE INVAR IABLY BEEN SOLD TO ONE BUYER ONLY. THE ADJOINING FLATS HAVE GOT A LONG WAL L SEPARATING THE UNITS. TYPICAL FLOOR PLAN OF WING A B IS ATTACHED A S ANNEXURE A TO THIS ORDER TO BRING OUT BRING OUT CLEARLY THE LAY O UT OF THE ADJOINING UNITS. THE INTERIOR LAY OUT AS DISCUSSED IN THE SHO W CAUSE NOTICE DT. 29- 3-06 CLEARLY BRINGS OUT THE FACT THAT THESE ADJOINI NG UNITS ARE BEING USED/INTENDED TO BE USED AS A SINGLE UNIT ONLY. WHE N THE ADJOINING UNITS ARE CLUBBED INTO ONE IN ANY INDIVIDUAL CASE, BUILT UP AREA OF THE 13 UNIT IS ABOVE 2000 SQ. FEET MAKING THE PROJECT INEL IGIBLE FOR THE DEDUCTION U/S.80IB OF THE ACT. A HOUSING PROJECT WI TH SWIMMING POOL, CLUB HOUSE ETC. AND HAVING SMALL AREAS WITH SIZE OF 900 SQ.FT. FOR INDIVIDUAL FLAT IS SOMETHING WHICH WILL NOT ATTRACT HIGHER INCOME GROUND AND THEREFORE, THE PRACTICAL WAY OF ATTRACTI NG CUSTOMERS OF THE SORT THAT WILL GO WITH THE PROJECT AS ALSO GET THE BENEFIT OF DEDUCTION U/S.80IB FOR THE PROJECT. THE OBVIOUS CONCLUSION THAT CAN BE DRAWN FROM THE ABOVE IS EVEN THOUGH EACH INDIVIDUAL UNITS ARE HAVING AREA L ESSER THAN 1500 SQ.FT. TO MAKE THE PROJECT ELIGIBLE FOR THE CLAIM O F DEDUCTION U/S.80IB, SALE EFFECTED CLEARLY INDICATES THE REALITY THAT TH E ADJOINING FLATS CLUBBED FOR USE FOR ONE INDIVIDUAL BUYER. THEREFORE , ASSESSEES CLAIM OF DEDUCTION U/S.80IB IS REJECTED ON THE GROUND THA T IT DOES NOT SATISFY THE CONDITION PRESCRIBED OF I8NDIVIDUAL UNIT BEING LESS THAN 1500 SQ.FT. IN AREA. ASSESSEES CLAIM FOR DEDUCTION U/S.80IB 80 ,16,478/- IS NOT ADMITTED. 19. ON APPEAL, LD. CIT[A] NOTED THAT SHOW-CAUSE NOT ICE WAS ISSUED ON 29-3-2006 TO SUBMIT THE DETAILS BEFORE 31-3-2006 WHICH MEANS ADEQUATE OPPORTUNITY OF BEING HEARD WAS NOT ALLOWED TO THE ASSESSEE AND, THEREFORE, A REMAND REPORT WAS CALLED FOR. THE REMAND REPORT DATED 9-2-2007 WAS RECEIVED BUT EVEN FROM THAT REMA ND REPORT IT WAS OBSERVED THAT PROPER OPPORTUNITY OF BEING HEARD WAS NOT GIVEN. THEREFORE, THE MATTER WAS AGAIN SENT FOR THE REMAND REPORT AND THE FRESH REMAND REPORT DATED 13-7-2007 WAS RECEIVED. F ROM THAT REMAND REPORT IT BECAME CLEAR THAT ASSESSEE HAS, IN SPITE, OF VARIOUS OPPORTUNITIES DID NOT FURNISH THE REQUISITE DETAILS . IT WAS OBSERVED THAT THERE WAS CERTAIN GAP IN THE INQUIRY MADE AND, THER EFORE, CIT[A] HERSELF GOT CERTAIN ENQUIRIES CONDUCTED. THE LAST O F SUCH ENQUIRY REPORT WAS RECEIVED ON 23-10-2007 AND THE APPELLANT WAS CO NFRONTED WITH THE REMAND REPORTS, STATEMENT OF OATH TAKEN DURING THE REMAND REPORT AS WELL AS ENQUIRY REPORT DURING THE ASSESSMENT PROCEE DINGS. THE LD. 14 CIT[A] THEREAFTER EXAMINED THE SUBMISSIONS AND OBSE RVED THAT ONE OF THE MAIN CONDITION FOR ALLOWING DEDUCTION U/S.80IB( 10) WAS THAT THE SIZE OF A FLAT SHOULD NOT BE MORE THAN 1500 SQ.FT. AND THEREAFTER HAS MADE THE FOLLOWING OBSERVATIONS: 5.3 IN THE PRESENT CASE, ON THE BASIS OF ENQUIRIES MADE DURING REMAND PROCEEDINGS THROUGH SPOT ENQUIRIES AND CAMP OFFICE AT PUNE AS WELL AS ENQUIRIES DURING APPEAL PROCEEDINGS, IT IS CLEAR THAT THAT IT WAS ONLY IN ORDER TO CLAIM THE BENEFIT U/S.80IB THAT EA CH RESIDENTIAL UNIT WAS SHOWN ON PAPER TO BE LESS THAN 1,500SQ.FT. IN A REA. FOR ALL OTHER PRACTICAL PURPOSES, HOWEVER, EACH RESIDENTIAL UNIT WAS NEVER MEANT TO BE SOLD SEPARATELY. IT WAS TWO SUCH INDIVIDUAL RESI DENTIAL UNITS TAKEN TOGETHER WHICH COMPRISED A FLAT AND WAS SOLD AS SUC H. INVESTIGATIONS FURTHER REVEALED THAT RIGHT FROM THE INCEPTION STAG E, THE TWO RESIDENTIAL UNITS WERE ALWAYS INTENDED TO BE SOLD AS ONE FLAT, EXCEPT THAT ON PAPER I.E. IN THE BROCHURE AND THE FLOOR PLANS, THEY WERE SHOWN AS TWO RESIDENTIAL UNITS. AND ONCE TWO SUCH INDIVIDUAL RES IDENTIAL UNITS WERE COMBINED, THE AREA UNDISPUTEDLY WAS MORE THAN 1,500 SQ.FT., A FACT NOT EVEN DISPUTED BY THE APPELLANT, THEREBY MAKING IT I NELIGIBLE TO CLAIM DEDUCTION U/S.80IB.. DETAILED BELOW ARE THE RESULTS OF THE ENQUIRIES WHICH ARE ALSO THE REASONS AS TO WHY THE APPELLANT IS NOT ELIGIBLE TO CLAIM DEDUCTION U/.80IB. (I) THE MOST VITAL EVIDENCE THAT THE SINGLE RESIDEN TIAL UNIT MEASURING LESS THAN 1500 SQ.FT. WAS NEVER MEANT TO BE SOLD AS SUCH IS THAT THE BUILDER, I.E. THE APPELLANT APPLIED FOR ON E ELECTRIC METER NOT FOR EVERY RESIDENTIAL UNIT, AS WOULD BE PRACTICAL AND E XPECTED, BUT FOR EVERY TWO RESIDENTIAL UNITS TAKEN TOGETHER. THIS CLEARLY PROVES THAT THE INTENTION WAS NEVER TO SELL THE INDIVIDUAL RESIDENT IAL UNIT MEASURING LESS THAN 1500 SQ.FT. AS ONE FLAT BUT SELL TWO UNIT S COMBINED AS ONE FLAT. THE AO, IN HIS ENQUIRY REPORT DATED 27-02-2003, A C OPY OF WHICH WAS ALSO GIVEN TO THE ANNUAL REPORT OF THE APPELLANT, H AD CLEARLY BROUGHT OUT THE FACT THERE WAS ONLY ONE ELECTRIC METER INST ALLED FOR EVERY TWO RESIDENTIAL UNITS. A COPY OF THE LETTER OF THE DY. COMMISSIONER OF INCOME TAX,. EXECUTIVE ENGINEER, AUNDH SUB-DIVISION , MAHA DISCOM, PUNE, DATED 16-102007, WHICH STATED THAT M/ S THISTLE PROPERTIES PVT. LTD. MADE THE APPLICATION FOR THE E LECTRIC METER VIDE APPLICATION DATED 21-01-2003 AND THE SAME WAS PROVI DED ON 27-02- 2003 WAS ALSO GIVEN TO THE APPELLANT. DURING THE AP PEAL PROCEEDINGS, THE APPELLANT WAS REQUIRED TO EXPLAIN WHY, IF THE I NTENTION WAS TO SELL INDIVIDUAL RESIDENTIAL UNITS, APPLICATION FOR ELECT RIC METERS FOR EVERY TWO ADJOINING RESIDENTIAL UNITS WAS MADE. HOWEVER, NO REPLY ON THIS POINT WAS FILED. WHAT THEREFORE CLEARLY EMERGES FROM THE ABOVE FACT S IS THAT BY MAKING APPLICATION FOR ONE ELECTRICITY METER FOR EV ERY TWO INDIVIDUAL RESIDENTIAL UNITS, IT WAS NEVER THE INTENTION OF TH E APPELLANT TO SELL THE 15 INDIVIDUAL RESIDENTIAL UNIT AS SUCH. THIS CLEARLY A LSO PROVES THAT IT WAS ONLY ON PAPER THAT THE RESIDENTIAL UNITS WERE SHOWN TO BE LESS THAN 1500 SQ.FT. MERELY FOR THE PURPOSES OF CLAIMING DEDUCTIO N U/S.80IB. IN REALITY WHAT THE APPELLANT CONSTRUCTED AND SOLD WERE RESIDE NTIAL UNITS MUCH MORE IN AREA THAN 1,500 SQ.FT. AND THUS INELIGIBLE FOR DEDUCTION U/S.80IB. (II) THE FACT THAT THE INDIVIDUAL RESIDENTIAL UNIT AS SHOWN ON PAPER I.E. BROCHURE AND THE FLOOR PLANS WAS NEVER MEANT T O BE SOLD AS SUCH BUT ALWAYS TOGETHER WITH THE ADJACENT UNIT, THEREBY MAK ING THE AREA MORE THAN 1,500 SQ.FT. IS FURTHER GLARINGLY BROUGHT OUT BY THE EXAMINATION OF THE LAYOUT OF THE TWO ADJACENT RESIDENTIAL UNITS, W HICH COMPLEMENT EACH OTHER. THOUGH ON PAPER EACH UNIT WAS SHOWN TO HAVE A KITCHEN, BEDROOM, LIVING ROOM AND TOILET EACH, ON ACTUAL SPO T ENQUIRY, IT WAS FOUND THAT THE SPACE EARMARKED FOR KITCHEN IN ONE U NIT NEITHER HAD ANY DRAINAGE FACILITIES NOR ANY PROVISION FOR WATER SUP PLY. THIS PROVES THAT EVEN DURING CONSTRUCTION STAGE, THE INTENTION WAS T O COMBINE THE TWO FLATS AS ONE AND TO CATER TO BUYERS LOOKING FOR BIG GER FLATS. WHEN CONFRONTED WITH THIS FINDING DURING APPELLATE PROCE EDINGS, AGAIN, NO EXPLANATION WAS FORTHCOMING. (III) FURTHERMORE, IF ANY LAYOUT OF ONE RESIDENTIAL UNIT IS TAKEN IN ISOLATION OF THE ADJACENT UNIT, THEN ONE RESIDENTIA L UNIT WOULD BE WITHOUT A SEPARATE BEDROOM AND THE OTHER WITHOUT IT S LIVING ROOM, LEADING TO LOGICAL CONCLUSION THAT THE TWO RESIDENT IAL UNITS TOGETHER CONSTITUTE ONE FLAT. (IV) FURTHERMORE, THE BROCHURE/FLOOR PLAN SHOWS THA T THERE IS ONLY ONE ENTRY TO EVERY TWO ADJOINING RESIDENTIAL UNITS, FURTHER, STRENGTHENING FACT THAT THE TWO RESIDENTIAL UNITS W ERE NEVER INTENDED TO BE SOLD SEPARATELY BUT TO ONE OWNER ONLY. (V) IT IS COMMON FOR BUILDERS TO COMPLETE ONE SAMPL E FLAT AT THE STAGE OF CONSTRUCTION ITSELF FOR SHOWING TO THE PRO SPECTIVE BUYERS. IN THIS CASE, INTERESTINGLY, THE SAMPLE FLAT WAS MADE BY CLUBBING TOGETHER FLAT NO.A-111 AND A-112 AND A BIG FLAT WAS SHOWN TO THE BUYERS. THIS AGAIN SUBSTANTIATES THE FINDINGS BY THE AO THAT THE SINGLE RESIDENTIAL UNITS WERE NEVER INTENDED TO BE SOLD INDIVIDUALLY B UT TWO RESIDENTIAL UNITS COMBINED TO MAKE A FLAT AND THEREBY THE BUILT UP AREA EXCEEDED 1500 SQ.FT. WHEN CONFRONTED WITH THIS FINDING, AGAI N, NO EXPLANATION WAS GIVEN BY THE APPELLANT. (VI) ALL THESE FIND FURTHER SUBSTANTIATION FROM THE UNDISPUTED FACT THAT NO SINGLE RESIDENTIAL UNIT HAS BEEN SOLD AS SI NGLE RESIDENTIAL UNIT, BUT IN TWOS AS IS AS IS BORNE OUT BY THE LIST OF OC CUPANTS MENTIONED ON THE BOARD IN THE LOBBY, REPRODUCED BELOW:- 16 BLOCK A & B BLOCK C & D FIRST FLOOR FIRST FLOOR A 111/112 RADHIKA S. BAPAT C 111/112 MENON B 111/112 RADHIKA BAPAT D 111/112 KAMALINI BABHUBA I SECOND FLOOR SECOND FLOOR A 211/112 VEVEK & ANUJA JOSHI C 211/212 K MORAS B 211/112 VEVEK & ANUJA JOSHI D 211/212 PRAKASH TE LAN THIRD FLOOR THIRD FLOOR A 311/112 K.K.RAMANI C 311/312 SIDJARAJAN PRASAD B 311/112 ARINDUM & SUCHITA BASU D 311/312 DARK K. T. FOURTH FLOOR FOURTH FLOOR A 411/112 S.D.DIKSHIT C 411/412 -- B 411/112 ANANT GUPTA D 411/412 S.V.ROHANKHEDKAR FIFTH FLOOR FIFTH FLOOR A 511/112 D VENKATESH C 511/512 C BELH B 511/112 ANAT GUPTA D 511/512 B.S.DABKE SIXTH FLOOR SIXTH FLOOR A 611/112 JAYASHREE P. SAWANT C 611/612 DONGRE B 611/112 R.S.JAISINGHANI D 611/612 SHAILL & KIRAN NATARAJ SEVENTH FLOOR SEVENTH FLOOR A 711/112 SUNIL SHAH C 711/712 POONAM & MADHAV KUDEKAR B 711/112 SUNIL SHAH. D 711/712 RITA DALJIT JAGTIA NI THE LIST MAKES IT VERY CLEAR THAT WITHOUT EXCEPTION , EACH FLAT, COMPRISING TWO RESIDENTIAL UNITS WERE SOLD AS ONE F LAT TO ONE FAMILY. (VII) THE PARADISE TOWERS COMPLEX HAS AMENITIES LIK E CLUB HOUSE, GYMNASIUM, SWIMMING POOL AND STILL PARKING, INDICAT ING THAT IT WAS CONSTRUCTED FOR THE HIGHER MIDDLE CLASS. IT WAS ALS O FOUND THAT THE QUALITY OF CONSTRUCTION WAS VERY HIGH WITH ITALIAN MARBLE FLOORING AND GRANITE KITCHEN PLATFORM. THE MANICURED LAWS AT THE ENTRANCE OF THE LOBBY, THE STILT PARKING FACILITIES AS WELL AS THE HIGH QUALITY CONSTRUCTIONS ALL INDICATE THAT THE PROSPECTIVE BUY ERS WOULD OF THE UPPER MIDDLE CLASS, WHO WOULD NOT BE INTERESTED IN PURCHASING ONE VERY SMALL RESIDENTIAL UNIT, BUT BIGGER FLATS. THE FACT THAT NONE OF THE UNITS WERE SOLD INDIVIDUALLY BUT IN TWOS FURTHER SU BSTANTIATES THIS POINT. THEREFORE, IF AN OVERALL VIEW IS TAKEN, EACH OF TH E ABOVE FACTS INDICATES THAT THE INDIVIDUAL RESIDENTIAL UNIT, MEA SURING LESS THAN 1,500 SQ.FT. IN BUILT UP AREA ON PAPER WAS NEVER MEANT TO BE SOLD AS SUCH BUT WAS ALWAYS TO BE SOLD TOGETHER WITH THE ADJOINING U NIT, THE BUILT-UP AREA OF THE TWO UNITS EXCEEDING 1500 SQ.FT. AND THE REBY MAKING THE APPELLANT INELIGIBLE TO CLAIM THE DEDUCTION U/S.80I B. 5.4 AS A LAST DITCH EFFORT, DURING THE APPELLATE PR OCEEDINGS, IT WAS SUBMITTED BY THE APPELLANT THAT THE STRUCTURAL CHAN GES IN CONVERTING TWO RESIDENTIAL UNITS INTO ONE RESIDENTIAL UNIT HAD BEE N UNDERTAKEN BY THE RESPECTIVE FLAT OWNERS. THE PHOTO COPY OF THE AGREE MENT WITH THE M/S 17 VATSALYA ENGINEERS PVT. LTD., SISTER CONCERN OF M/S THISTLE PROPERTIES PVT. LTD. WAS FILED TO SUBSTANTIATE THAT M/S VATSAL YA ENGINEERS PVT. LTD. AS PER AGREEMENT WAS REQUIRED TO CARRY OUT THE STRUCTURAL CHANGES. THE MATTER WAS REMANDED TO THE AO FOR EXAMINATION A S THE AGREEMENTS WERE NOT PRODUCED DURING ASSESSMENT PROCEEDINGS AND , THEREFORE, CONSTITUTED FRESH EVIDENCE. THE AO EXAMINED THE FLA T OWNERS DURING REMAND PROCEEDINGS ON THIS POINT AND FOUND THAT NEITHER THE STRUCTURAL CHANGES WERE MADE BY ANY FL AT OWNER NOR WAS ANY ADDITIONAL EXPENDITURE INCURRED FOR SUCH ST RUCTURAL ALTERNATION. THEREFORE, THE APPELLANTS CONTENTIONS IS FOUND TO BE FALSE AND NO CONSIDERATION AND IS, THEREFORE, REJECTED. 6. WHAT THEREFORE, CLEARLY EMERGES AFTER ON THE SPO 9T ENQUIRY OF FLATS, THE EXAMINATION OF FLAT OWNERS AND THE ENQUI RIES MADE FROM VARIOUS AUTHORITIES IS THAT THE APPELLANT IS NOT EN TITLED TO CLAIM DEDUCTION U/S.80IB ON THE PARADISE TOWER PROJECT, B ANER, PUNE AS IT HAS NOT FULFILLED THE CONDITION LAID DOWN IN SEC.80 IB(10) BECAUSE THE RESIDENTIAL FLATS CONSTRUCTED AND SOLD BY THE APPEL LANT, AS ELABORATED ABOVE, HAVE A BUILT UP AREA OF MORE THAN 1,500 SQ.F T. THE ACTION OF THE AO IN DENYING THE CLAIM OF DEDUCTION U/S.80IB OF ` `` ` .80,16,678/- IS, THEREFORE, UPHELD. 20. BEFORE US, LD.COUNSEL OF THE ASSESSEE SUBMITTED THAT DEDUCTION HAS BEEN MAINLY REJECTED BY POINTING OUT FIVE DEFEC TS BY THE CIT(A) WHICH MAINLY REST ON THE ISSUE THAT SIZE OF THE FLA TS CONSTRUCTED BY THE ASSESSEE WAS MORE THAN 1500 SQ.FT.. THEN HE REFERRE D TO PARA 5.3 OF THE CIT(A)S ORDER AND POINTED OUT THAT THE FIRST D EFECT POINTED OUT IS THAT THERE WAS ONLY ONE ELECTRIC METER FOR EVERY TW O FLATS. HE SUBMITTED THAT THIS FACT HAS BEEN BROUGHT OUT BY TH E ENQUIRY REPORT DATED 17-2-03 AND IT HAS BEEN ALLEGED THAT THE COPY WAS GIVEN TO THE ASSESSEE. REFERENCE WAS ALSO MADE TO THE COPY OF TH E LETTER OF DEPUTY EXECUTIVE ENGINEER, AUNDH SUB-DIVISION, MAHA DISCOM , PUNE, TO THE LETTER DATED 16-10-07. HE WONDERED HOW THIS LETTER OF 2007 WAS GIVEN TO THE ASSESSEE IN 2003. HOWEVER, ON A QUERY FROM T HE BENCH WHETHER 18 THERE WAS ONE ELECTRIC METER FOR TWO FLATS, HE GAVE AN EVASIVE REPLY. HE COULD NOT POINT OUT TO ANY DOCUMENTARY EVIDENCE IN THE PAPER BOOK TO SHOW THAT THIS FINDING WAS WRONG AND EVERY FLAT HAD AN INDEPENDENT ELECTRIC METER. HE THEN REFERRED TO PAGE 12 OF THE PAPER BOOK WHICH IS A COPY OF THE SUBMISSIONS MADE BEFORE THE AO ALONG WITH THE APPROVED PLAN AND COMPLETION CERTIFICATE AND SUBMIT TED THAT THE PLAN WAS SANCTIONED FOR THE FLATS AND EACH OF THE FLATS, ACCORDING TO THE SANCTION, WAS LESS THAN 1500 SQ.FT. EVEN AS PER THE COMPLETION CERTIFICATE, EACH OF THE FLAT WAS LESS THAN 1500 SQ .FT. HE THEN TRIED TO EXPLAIN TO US FROM TWO COPIES OF THE PLANS FOR INDI VIDUAL FLATS AND SUBMITTED THAT THE OBSERVATIONS OF THE LD. CIT(A) T HAT THE FLATS WERE CONSTRUCTED IN SUCH A WAY THAT THEY WERE COMPLEMENT ARY TO EACH OTHER AND WOULD BE OF NO USE INDEPENDENTLY, IS NOT CORREC T. HE TRIED TO EXPLAIN THAT ALL THE FLATS HAVE INDEPENDENT BATH-RO OMS AS WELL AS KITCHENS AND ALSO ALL THE INDEPENDENT FLATS HAD IND EPENDENT ENTRIES. HE ALSO SUBMITTED THAT SPOT ENQUIRIES WERE MADE IN 200 7 IN WHICH IT WAS OBSERVED THAT THERE WAS NO DRAINAGE PIPE IN THE KIT CHEN. THIS REPORT HAS BEEN MADE MUCH AFTER THE COMPLETION OF THE FLAT AND BY THAT TIME DRAINAGE PIPE MIGHT HAD BEEN REMOVED BY THE INDIVID UAL BUYERS. 21. HE ALSO SUBMITTED THAT IT IS NOT CORRECT THAT A LL THE FLATS HAVE BEEN SOLD I.E. TWO ADJOINING FLATS TO THE SAME BUYE R. HOWEVER, HE ADMITTED THAT THE ADJOINING FLATS WERE SOLD TO THE MEMBERS OF THE SAME FAMILY. HE SUBMITTED THAT IT IS A MATTER OF CH ANCE THAT FEW OF THE BUYERS PURCHASED TWO ADJACENT FLATS AND BY SEEING T HIS BEHAVIOUR MORE 19 CUSTOMERS BECAME INTERESTED IN THE PAIR OF FLATS I. E. TO BUY ADJOINING FLATS BUT NO ADVERSE INFERENCE CAN BE DRAWN FROM TH IS FACT. HE THEN REFERRED TO THE TWO AFFIDAVITS FILED AT PAGES 64-65 OF THE PAPER BOOK BY SHRI SADANAND DATTATREY BAPAT AND SHRI CHITTARANJAN BEHEL RESPECTIVELY. HE POINTED OUT THAT IN THESE AFFIDAVI TS IT IS CLEARLY EXPLAINED THAT THE SIZE OF EACH FLAT WAS LESS THAN 1500 SQ.FT. AND EVEN THE SAMPLE FLAT SHOWN WAS LESS THAN 1500 SQ.FT. HE ALSO REFERRED TO PAGE 72 OF THE PAPER BOOK, WHICH IS A COPY OF THE S TATEMENT RECORDED BY THE DEPARTMENT OF SHRI DAVIES K. THALAKOTTUR. IN THIS STATEMENT IN RESPONSE TO QUESTION AS TO WHAT WAS THE PURPOSE FOR PURCHASING ADJACENT FLAT, IT WAS STATED THAT IT WAS TO AVAIL L ARGE SPACE AND IN RESPONSE TO QUESTION NO.10 IT WAS STATED THAT CORPO RATION TAX WAS BEING PAID FOR EACH OF THE FLATS SEPARATELY. THIS S HOWS THAT THE FLATS ARE INDEPENDENT FLATS. IN RESPONSE TO QUESTION NO.11 WH ETHER ANY APPROVAL WAS REQUIRED FOR STRUCTURE CHANGES, IT WAS SUBMITTE D THAT SINCE CHANGES WERE TO INTERNAL WALL THEREFORE NO APPROVAL WAS REQUIRED. THIS CLEARLY SHOWS THAT CHANGES WERE MADE BY THE FLAT OW NERS ON THEIR OWN. 22. HE THEN REFERRED TO SEC.80IB[10] AND POINTED OU T THAT CLAUSES [E] AND [F] WERE INSERTED BY THE FINANCE ACT, 2009 W.E.F. 1-4-2010 BY WHICH A RESTRICTION WAS PUT THAT NOT MORE THAN ONE RESIDENTIAL UNIT IN A HOUSING PROJECT COULD BE ALLOTTED TO ANY PERSON. TH IS MEANS THAT AT THE RELEVANT POINT OF TIME THERE WAS NO SUCH RESTRICTIO N AND TWO OR MORE FLATS COULD BE ALLOTTED TO ONE PERSON IN THE SAME H OUSING SOCIETY. THEREFORE, EVEN IF TWO FLATS HAVE BEEN SOLD TO SAME PERSON OR SAME 20 FAMILY MEMBER, IT WILL NOT MAKE ANY DIFFERENCE FOR ALLOWANCE OF DEDUCTION U/S.80IB[10]. 23. ON THE OTHER HAND, LD.DR SUBMITTED THAT ASSESSE E HAS CONSTRUCTED ABOUT 100 FLATS THEN HOW IT IS POSSIBLE THAT IN ALL THE CASES TWO ADJACENT FLATS HAVE BEEN SOLD TO THE SAME BUYER AND/OR FAMILY. THIS ONLY SHOWS THAT, IN FACT, ASSESSEE HAD CONSTRU CTED ONLY ONE FLAT WHICH WAS COMPLIMENTARY TO EACH OTHER. HE POINTED O UT THAT THROUGH SPOT ENQUIRY IT WAS CLEARLY FOUND THAT THERE WAS ON LY ONE ELECTRIC METER PER SET OF TWO FLATS. IF THE FLATS WERE MEANT TO BE INDIVIDUAL FLATS, THEN HOW AND WHY ONLY ONE ELECTRIC CONNECTION WAS OBTAIN ED FOR TWO ADJOINING FLATS. SPOT ENQUIRIES FURTHER REVEALED TH AT IN ONE OF THE FLATS KITCHEN WAS SHOWN ONLY ON THE PAPER AS NO DRAINAGE PIPE WAS THERE. ONCE THE DRAINAGE PIPES HAVE BEEN LAID OUT SAME CAN NOT BE LATER ON REMOVED. THIS FURTHER SHOWS THAT ASSESSEE HAS MANIP ULATED THE SANCTIONED PLAN ONLY FOR THE PURPOSE OF CLAIMING DE DUCTION U/S.80IB[10]. SPOT ENQUIRIES HAVE FURTHER REVEALED THAT THERE WAS ONLY ONE ENTRY AND MERELY SHOWING TWO ENTRIES ON THE PAP ER WOULD NOT ALTER THE SITUATION. HE THEN REFERRED TO COPIES OF AFFIDA VITS OF SHRI SADANAND DATTATREY BAPAT AND SHRI CHITTARANJAN BEHEL FILED B Y THE ASSESSEE AT PAGES 64-65 OF THE PAPER BOOK AND POINTED OUT THAT THE LANGUAGE IS IDENTICAL WHICH ONLY SHOWS THAT IT IS A SELF SERVIN G AFFIDAVITS. IN ANY CASE, BOTH THE AFFIDAVITS CONTAINED CLAUSE [4] THRO UGH WHICH IT IS CLEARLY MENTIONED THAT THE PARTICULAR BUYER WAS IN NEED OF TWO SEPARATE FLATS AND WAS LOOKING FOR ONE FLAT AND SUCH PROSPECTIVE B UYERS ASKED THE 21 ASSESSEE WHETHER SAME COULD BE COMBINED INTO ONE. T HIS CLEARLY SHOWS THAT ASSESSEE HAD ITSELF CONVERTED THE TWO FLATS IN TO ONE WHICH BECOMES FURTHER CLEAR FROM THE STATEMENT RECORDED F ROM VARIOUS PARTIES, E.G. IN THE CASE OF STATEMENT RECORDED FRO M SHRI DAVIES K. THALAKOTTUR. IN RESPONSE TO QUESTION WHETHER ANY IN TERNAL STRUCTURAL CHANGES WERE MADE TO THE FLATS, IT WAS STATED THAT INTERNAL CHANGES WERE MADE THROUGH AGREEMENT WITH VATSALYA ENGG. PVT . LTD. WHICH IS A SISTER CONCERN OF THE ASSESSEE. HE THEN REFERRED TO THE STATEMENT OF SHRI ANANT GUPTA AT PAGE 75 WHEREIN IN RESPONSE TO QUESTION NO.15 WHETHER THE IDEA OF PURCHASING TWO UNITS WAS HIS OW N OR OF THE BUILDERS, IT WAS STATED THAT IT WAS BUILDERS IDEA . THIS CLEARLY SHOWS THAT BUILDER HAD PLANED BOTH THE FLATS TOGETHER AND GAVE IDEAS TO THE BUYERS FOR PURCHASE THE ADJACENT FLATS. HE THEN REF ERRED TO THE STATEMENT OF SHRI SUMIT SHAH, COPY OF WHICH IS AT P AGE 84 OF THE PAPER BOOK WHEREIN IN RESPONSE TO QUESTION NO.5 WHETHER A NY INTERNAL STRUCTURAL CHANGES WERE MADE TO THE FLATS, THE ANSW ER WAS NO STRUCTURAL CHANGES WERE MADE. THIS CLEARLY SHOWS TH AT EVEN WITHOUT INTERNAL STRUCTURAL CHANGES TWO ADJACENT FLATS COUL D BE USED AS ONE. IN TURN, THIS COULD ONLY LEAD TO THE INFERENCE THAT, I N FACT, ONLY ONE FLAT WAS CONSTRUCTED AND THE SAME WAS SHOWN AS TWO FLATS ONLY ON PAPER. 24. HE ALSO SUBMITTED THAT IT IS NOT THE CASE OF TH E DEPARTMENT THAT ASSESSEE HAS SOLD TWO FLATS TO THE SAME BUYERS, THE REFORE, DEDUCTION SHOULD BE DENIED. THE CASE OF THE REVENUE IS THAT T HE ASSESSEE HAD ACTUALLY NEVER CONSTRUCTED THE FLATS WHICH WERE LES S THAN 1500 SQ.FT. 22 THE ASSESSEE HAS, IN FACT, CONSTRUCTED A SINGLE FLA T WHICH WAS MORE THAN 1500 SQ.FT. BUT SAME WAS SHOWN ONLY ON PAPER B EING LESS THAN 1500 SQ.FT. BY MANIPULATING VARIOUS RECORDS. 25. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE HAVE ALSO PERUSED THE VARIOUS DOCUMENTS FILED IN THE PAP ER BOOK. THE CASE OF THE REVENUE FOR DENYING DEDUCTION U/S.80IB[10] I S THAT ASSESSEE HAS NOT ACTUALLY CONSTRUCTED THE FLATS WHICH WERE L ESS THAN 1500 SQ.FT. AS PER THE CONDITION UNDER CL.(C). WE FIND FORCE IN THE SUBMISSIONS OF THE LD.DR. WE HAVE ALREADY EXTRACTED THE ORDER OF T HE LD. CIT(A) IN THE ABOVE NOTED PARAS WHICH CLEARLY GIVE DETAILED REASO NS FOR HOLD THAT FLATS CONSTRUCTED WERE OF MORE THAN 1500 SQ.FT.. TH E FIRST OBJECTION RAISED IS THAT ASSESSEE HAD ONLY ONE ELECTRICITY ME TER FOR TWO ADJACENT FLATS. IF ASSESSEE REALLY WANTED TO CONSTRUCT EACH OF THE FLATS INDEPENDENTLY THEN WHY ONLY ONE ELECTRIC METER WAS TAKEN FOR TWO ADJACENT FLATS IS NOT CLEAR. THOUGH THE LD.COUNSEL OF THE ASSESSEE TRIED TO RAISE CERTAIN DOUBTS IN OUR MIND WITH REFERENCE TO LETTER DATED 16- 10-07 OF DY. EXECUTIVE ENGINEER, AUNDH SUB-DIVISION MAHA DISCOM, PUNE BY POINTING OUT HOW THIS LETTER COULD BE ATTAC HED WITH THE ENQUIRY REPORTED DATED 27-2-03, IT MAY BE A SIMPLY TYPOGRAP HICAL MISTAKE IN WRITING THE DATE AS THE ACTUAL LETTER HAS NOT BEEN PRODUCED BY EITHER OF THE AUTHORITIES. HOWEVER, WE HAD RAISED A SPECIFIC QUERY WHETHER ASSESSEE HAD ANY EVIDENCE TO SHOW THAT THERE WAS SE PARATE METER FOR ADJACENT FLATS AND THE LD.COUNSEL OF THE ASSESSEE H AD SHOWN HIS INABILITY TO PRODUCE ANY EVIDENCE TO SHOW THAT SEPA RATE ELECTRIC METER 23 WAS PROVIDED. IT WAS NOT DIFFICULT IF ASSESSEE ACTU ALLY HAD SEPARATE METER IN EACH OF THE FLATS. THE SECOND OBJECTION IS THAT PHYSICAL EXAMINATION ITSELF SHOWS THAT ADJACENT FLATS WERE M EANT TO BE ONLY ONE UNIT. IN THIS REGARD IN THE ENQUIRY REPORT DATED 23 -1-07, COPY OF WHICH HAS BEEN FILED BY THE ASSESSEE AT PAGES 45-46 OF TH E PAPER BOOK, PARA- 3 IS RELEVANT AND READS AS UNDER: 3. THE KITCHEN SHOWN IN THE LAYOUT OF EVERY UNIT I S IN FACT A BEDROOM K- NEITHER THERE IS ANY DRAINAGE NOR IS THE RE ANYTHING TO SUGGEST THAT THE KITCHEN HAS BEEN SO CONVERTED. THI S SHOWS THAT THOUGH IN EACH UNIT THE SPACE HAS BEEN EARMARKED AS KITCHE N BUT IN ACTUAL CONSTRUCTION OR CONSTRUCTION PLAN IT WAS NEVER MEAN T TO BE A KITCHEN. THE WING-WISE OBSERVATIONS MADE WILL MAKE THIS FACT AMPLY CLEAR. THE ABOVE CLEARLY SHOWS THAT THE ADJACENT FLATS WER E ACTUALLY PHYSICALLY ONE UNIT. WE AGREE WITH THE SUBMISSIONS OF THE LD.D R THAT IF SOME DRAINAGE PIPES WERE LAID WITHOUT WHICH THE KITCHEN CANNOT FUNCTION, THEN THE PIPES COULD NOT HAVE BEEN REMOVED LATER ON . THE LD.COUNSEL OF THE ASSESSEE SIMPLY STATED THAT THE SPOT ENQUIRI ES WERE MADE IN 2007 BY WHICH DRAINAGE PIPES COULD HAVE BEEN REMOVE D, WHICH IS NOT POSSIBLE. IN ANY CASE, IN THE LETTER WRITTEN BY THE ASSESSEE TO THE AO DURING REMAND PROCEEDINGS ON 31-3-06 IT IS MENTIONE D AT PARA-8 AS UNDER: 8. FURTHER, THE SIZE AND THE LAYOUT OF THE KITCHEN WHICH IS DIRECTLY OPENING TO TOILET, LIVING AND BEDROOM AND DINING CL UBBED INTO ONE BIG HALL WITH A VIDE BALCONY IN ONE UNIT AND WITH ADJOI NING UNIT HAVING PROPER KITCHEN, BEDROOM, ETC. ITSELF PROVES THAT TH ERE WERE TWO UNITS BEING CONSTRUCTED AND WHICH HAS BEEN COMBINED TOGET HER TO SUIT THE NEEDS OF THE BUYER. IT IS SUBMITTED THAT THE FACT T HAT THERE ARE TWO KITCHENS, 2 TOILETS AND 2 LIVINGS/BEDROOMS, ALL BEI NG DIFFERENTLY AND DISTANTLY LOCATED IN BOTH THE UNITS AND THAT NONE O F THE SAID SUB-UNITS ARE CLOSELY AND LOCATED ADJOINING; ITSELF PROVES TH AT THE 2 FLATS THOUGH PURCHASED BY SINGLE BUYER WERE IN EFFECT 2 DIFFEREN T FLATS.: 24 IN FACT, IN THE ABOVE PARA IT HAS BEEN ADMITTED THA T THESE FLATS WERE COMBINED TO SUIT THE NEEDS OF THE BUYERS. FURTHER I T IS MENTIONED THAT KITCHEN IN ONE OF THE FLATS WAS DIRECTLY OPENING TO TOILETS, WHICH IS NOT POSSIBLE, BECAUSE KITCHEN IN A HOUSE WOULD NEVER OP EN TO A TOILET. THOUGH ASSESSEE TRIED TO EXPLAIN TO US THROUGH THE MAPS THAT TWO UNITS WERE COMBINED AND IT IS VERY DIFFICULT TO JUDGE THE ACTUAL LAY OUT OF THE FLATS ON A SMALL PLAN BUT IF WE READ THIS PLAN ALON G WITH THE ABOVE ENQUIRY REPORT, THEN IT SEEMS THAT BOTH THE FLATS W ERE ONLY ONE UNIT AND PLANNING WAS RIGHT FROM THE BEGINNING TO HAVE ONE U NIT. THIS IS FURTHER CORROBORATED BY THE FACT THAT ALL THE 104 UNITS HAV E BEEN SOLD IN ADJOINING PAIRS TO 52 FAMILIES AND THE BUYERS HAVE BEEN SHOWN EITHER SAME PERSON OR HUSBAND AND WIFE. IN THIS REGARD ALS O AGAIN IN THE LETTER DATED 31-3-06 THE ASSESSEE STATED VIDE PARA 4 BEFORE THE AO AS UNDER: 4. WITHOUT PREJUDICE OF YOUR GOODSELF IN THE SAID LETTER ARE DEVOID OF MERITS. AT THE OUTSET, YOUR GOODSELF HAS STATED THAT THE ADJOINING FLATS HAVE BEEN SOLD BY THE ASSESSEE ONLY TO A SINGLE BUY ER. HOWEVER, THIS FACT CANNOT LEAD TO ANY INFERENCE THAT THE UNIT IS OF SIZE LARGER THAN 1,500 SQ.FT. IT IS SUBMITTED THAT 2 FLATS HAVE BEEN SOLD TO SINGLE BUYER ONLY BECAUSE IT SUITS THEIR NEEDS. IT IS SUBMIT THA T THE PROJECT WAS DEVELOPED WITH THE INTENTIONS THAT THE MIDDLE CLASS SOCIETY ALSO GETS TUNED TO THE FACILITIES OF THE HIGHER CLASS AND HEN CE THE FLATS OF SMALLER SIZES [I.E. LESS THAN 1,599 SQ.FT.] WERE DEVELOPED WITH THE OBJECTIVE THAT THE MIDDLE CLASS SOCIETY COULD AFFORD THE COST OF F LATS. HOWEVER, CONSIDERING THE LOCALITY OF THE PROJECT AND THE NAT URE OF CONSTRUCTIONS, THE ASSESSEE RECEIVED MORE AND MORE BOOKING FOR PUR CHASE OF TWO FLATS ADJOINING TO EACH OTHER. SINCE THE DEMAND FOR 2 ADJ OINING FLATS INCREASED, THE ASSESSEE WAS FORCED TO SELL THE FLAT S TOGETHER AND ALSO ALLOW THE UNIT HOLDERS/PROSPECTIVE PURCHASERS TO MA KE NECESSARY CHANGES IN THE INTERNAL CONSTRUCTION OF THEIR RESPE CTIVE UNITS. IT IS SUBMITTED THAT THERE ARE AMPLE EVIDENCE TO PROVE TH AT 2 FLATS WERE SOLD TOGETHER TO EACH BUYER BY THE ASSESSEE ONLY TO STOC K-IN-TRADE SUIT THE NEEDS OF THE BUYERS AND BECAUSE IT WAS INSISTED UPO N BY THE BUYERS. IN FACT BECAUSE SOME OF BUYERS PURCHASED 2 FLATS TOGET HER, THE NEW AND 25 PROSPECTIVE BUYERS ALSO OPTED FOR THE SAME LOOKING AT THE EARLIEST PROPOSALS. THIS WAS HOW THE ADJOINING FLATS CAME TO BE SOLD TO A SINGLE BUYER. THEREFORE, IT WAS CLEARLY ADMITTED THAT ALL THE ADJ ACENT FLATS WERE SOLD TO THE SAME BUYERS. THERE IS A FURTHER FINDING BY T HE LD. CIT(A) THAT IN THE BROUCHER ONLY ONE ENTRY WAS SHOWN FOR TWO FLATS AND THIS WAS NOT REBUTTED BY THE LD.COUNSEL OF THE ASSESSEE AND EVEN COPIES OF THE BROACHERS HAVE NOT BEEN FILED BEFORE US. 27. COMING TO THE TWO AFFIDAVITS FROM SHRI SADANAND DATTATREY BAPAT AND SHRI CHITTARANJAN BEHEL PLACED AT PAGES 6 4-65 OF THE PAPER BOOK, BOTH THESE AFFIDAVITS HAVE IDENTICAL NINE CLA USES. THE VARIOUS CLAUSES READ AS UNDER: 1) I SAY THAT I AM A RESIDENT OF THE PARADISE TOWERS S OCIETY LTD. I SAY THAT THAT THE SAID FLAT WAS PURCHASED BY ME FROM M/S THISTLE PROPERTIES PVT. LTD. DURING THE YEAR 2002-2 003. 2) I SAY THAT I WAS IN SEARCH OF THE BIGGER PREMISES F OR MY RESIDENT. AT THE TIME WHEN I APPROACHED THE SITE OF FICE OF A BUILDING [M/S THISTLE PROPERTIES LTD.], I FOUND THA T THE PROJECT WAS MEANT FOR SMALLER FLATS. 3) I SAY THAT UPON INQUIRY WITH THE SALE STAFF, I WAS TOLD THAT THE FLATS ARE OF SIZE LESS THAN 1,500 SQ.FT. 4) I SAY THAT SINCE I AM NOT IN NEED OF TWO SEPARATE F LATS, I ASKED THEM IF I PURCHASED TWO FLATS, WOULD IT BE POSSIBLE FOR THEM TO COMBINE THE SAME INTO ONE AS PER MY SPECIFICATION. 5) I SAY THAT I WAS TOLD BY THEM THE FLATS COULD BE CO MBINED INTO ONE, BUT THE SAME WILL CONTINUE TO BE HELD AS TWO F LATS FOR LEGAL PURPOSES AS WELL AS FOR THE PURPOSE OF REGISTRATION . 6) I SAY THAT SINCE I HAD NO OBJECTION IN REGISTERING TWO FLATS INDEPENDENTLY, I AGREED TO PURCHASE THE SAME. 7) I SAY THAT THE SAMPLE FLAT SHOWN TO ME WAS OF SMALL ER SIZE AS COMPARED TO THE ONE OWNED BY ME. ALMOST ALL THE FLA TS WERE STATED TO BE OF THE IDENTICAL SIZE LESS THAN 1500 S Q.FT. I WAS TOLD THAT IF THE TWO FLATS ARE TO BE PURCHASED, I WILL B E PROVIDED TWO ADJACENT FLATS SO THAT THE SAME COULD BE COMBINED. 8) I SAY THAT THE TWO FLATS CHOSEN BY ME WERE TWO INDE PENDENT FLATS IN ALL RESPECT AND THEY WERE COMBINED AT MY S PECIFIC REQUEST. 26 9) I SAY THAT WHATEVER IS STATED ABOVE IS TRUE TO BEST OF MY KNOWLEDGE AND BELIEF. CLAUSES 4, 5 AND 6 CLEARLY SHOW THAT BUYERS WERE LO OKING FOR BIGGER PLACE AND ASSESSEE EVEN OFFERED HELP IN CONVERTING TWO ADJACENT FLATS INTO ONE. IN ANY CASE, THESE AFFIDAVITS CAN AT BEST BE DESCRIBED AS SELF SERVING DOCUMENTS. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. DURGA PRASAD MORE [82 ITR 540] HAS OBSERVED AS UNDE R: (III) THAT THOUGH AN APPARENT STATEMENT MUST BE CO NSIDERED REAL UNTIL IT WAS SHOWN THAT THERE WERE REASONS TO BELIE VE THAT THE APPARENT WAS NOT THE REAL, IN A CASE WHERE A PARTY RELIED ON SELF- SERVING RECITALS IN DOCUMENTS, IT WAS FOR THAT PART Y TO ESTABLISH THE TRUTH OF THOSE RECITALS: THE TAXING AUTHORITIES WERE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY OF SUCH RECITALS. WE FURTHER FIND NO FORCE IN THE ARGUMENT OF THE LD. COUNSEL OF THE ASSESSEE THAT IN THE STATEMENT OF SHRI DAVIES K. TH ALAKOTTUR, TWO FLATS WERE PURCHASED BY THAT PARTY TO AVAIL LARGE SPACE T O QUESTION NO.9 THE ANSWER IS AS UNDER: Q.9: I THE ADJACENT FLAT OWNER IS A CLOSE RELATIVE, WHAT WAS THE PURPOSE BEHIND MAKING TWO SEPARATE AGREEMENTS AND P URCHASING SEPARATE FLATS? N.A. TO AVAIL OF LARGER SPACE IF THIS ANSWER IS EXAMINED IN THE OVER ALL CIRCUMST ANCES, THEN IT BECOMES CLEAR THAT THE BUYER WAS LOOKING FOR A LARG E PLACE AND ASSESSEE SOLD LARGE FLATS IN THE GUISE OF TWO FLATS . SIMILARLY, PAYMENT OF MUNICIPAL TAXES FOR EACH OF THE FLATS SEPARATELY WI LL NOT PROVE ANYTHING. 28. ON THE OTHER HAND, IN THE STATEMENT RECORDED FR OM SHRI ANAND GUPTA ANSWER TO QUESTION NO.15 IS AS UNDER: 27 Q.15: WHETHER THE IDEA OF PURCHASING TWO UNITS WAS YOUR OWN OR YOUR BUILDERS? ANS: BUILDERS. THE ENTIRE SOCIETY HAS SIMILAR FLAT S . THE ABOVE CLEARLY SHOWS THAT BUILDER HIMSELF PUT ON SALE TWO ADJACENT FLATS TO INDIVIDUAL FAMILIES OTHERWISE ALL THE 52 A DJACENT FLATS COULD NOT HAVE BEEN SOLD TO SAME FAMILIES. IN FACT, IN THE ST ATEMENT OF SHRI AMIT SHAH IN RESPONSE TO QUESTION NO.5 IT WAS STATED AS UNDER: Q.5 WERE THERE ANY ALTERNATIONS/STRUCTURAL CHANGES, MADE TO THE FLAT? IF SO, GIVE DETAILS REGARDING THE DATE/MONTH IN WHICH SUCH CHANGES WERE MADE< ANS: NO STRUCTURAL CHANGES WERE MADE. THE ABOVE CLEARLY SHOWS THAT TWO ADJACENT FLATS COU LD BE USED EVEN WITHOUT MAKING ANY INTERNAL CHANGES. THIS FURTHER P ROVES THAT BOTH THE ADJACENT FLATS WERE ORIGINALLY PLANNED AND DESIGNED AND CONSTRUCTED AS A SINGLE UNIT. 29. THOUGH LD.COUNSEL OF THE ASSESSEE HAS REFERRED TO CLAUSES [E] AND [F] TO SEC.80IB[10][C] WHICH HAS BEEN INTRODUCE D BY THE FINANCE ACT, 2009 W.E.F. 1-4-2010 WHEREBY IT IS PROVIDED TH AT DEDUCTION WILL NOT BE AVAILABLE IF MORE THAN ONE RESIDENTIAL UNIT IS A LLOTTED TO ANY ONE SINGLE PERSONS. THOUGH THIS PROVISION COULD NOT BE ATTRACTED IN THE CASE OF THE ASSESSEE, BUT AS WE HAVE NOTED EARLIER REVEN UES CASE IS THAT ASSESSEE NEVER CONSTRUCTED THE FLATS WHICH WERE LES S THAN 1500 SQ.FT. AS PER THE REQUIREMENT OF LAW U/S.80IB[10]. THE FLA TS HAVE BEEN MERELY SHOWN IN THE MUNICIPAL PLAN TO BE ONE, WHERE AS ON PHYSICAL EXAMINATION AND ALL THE SURROUNDING CIRCUMSTANCES W HICH WE HAVE DISCUSSED IN DETAIL ABOVE, SHOW THAT ADJACENT FLAT WAS MEANT TO BE 28 SINGLE UNIT ONLY. IN THESE CIRCUMSTANCES, WE FIND N OTHING WRONG IN THE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 30. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 /4/2011. SD/- SD/- (ASHA VIJAYARAGHAVAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 1/4/2011. P/-* FIT FOR PUBLICATION SD/- SD/- (AVR JM) (T.R.S AM)