M/s Motia Constructions Ltd., Zirakpur V. DCIT, Patiala

ITA 1228/CHANDI/2012

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0032 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 26-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE
• Keywords: Business income; Income from undisclosed sources
• Section: 80IB; 195; 131; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH , ! '# $ % & '# , () BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ./ ITA NO. 1228/CHD/2012 / ASSESSMENT YEAR : 2009-10 M/S MOTIA CONSTRUCTION LIMITED, CHANDIGARH DELHI HIGHWAY, ROYAL ESTATE, NAC ZIRAKPUR THE DCIT, CENTRAL CIRCLE, PATIALA ./PAN NO: AADCM6576B / APPELLANT /RESPONDENT ! /ASSESSEE BY : SHRI SUDHIR SEHGAL, ADVOCATE ' ! / REVENUE BY : SHRI G. S. PHANI KISHORE, CIT D R # $ % /DATE OF HEARING : 31.10.2019 &'() % / DATE OF PRONOUNCEMENT : 27.12.2019 (*/ ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 20.09.2012 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-1, LUDHIANA [HEREINAFTER REFERRED TO AS CIT (A)] 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS INVOLVED IN THE REAL ESTATE BUSINESS. A SEARCH ACTI ON U/S 132 OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') WAS CARRI ED OUT AT THE PREMISES OF ONE SHRI R.M.SINGLA IN LUDHIANA ON 7.5.2008, WH O WAS HAVING ITA NO. 1228-CHD-2012- M/S MOTIA CONSTRUCTION LTD, ZIRAKPUR 2 BUSINESS RELATION WITH THE THEN DIRECTOR OF THE CO MPANY SHRI PAWAN BANSAL. DURING SEARCH ACTION, CASH WORTH RS. 62,7 5,000/- WAS FOUND AT HIS PREMISES. APART FROM THAT, CERTAIN INCRIMINATIN G DOCUMENTS EVIDENCING UNACCOUNTED TRANSACTIONS OF ASSESSEE COM PANY IN RESPECT OF DIFFERENCE IN CONSTRUCTION / SALE OF FLATS WERE A LSO FOUND. THE STATEMENT OF SHRI R.M. SINGLA WAS RECORDED DURING THE SEARCH ACTION AND IN HIS STATEMENT RECORDED ON 7.5.2008, HE STATED THAT OUT OF THE CASH FOUND AT HIS PREMISES, RS. 40 LACS BELONGED TO THE ASSESSEE COMPANY. SUMMONS WERE ALSO ISSUED U/S 131 OF THE ACT TO SHRI PAWAN B ANSAL, THE THEN DIRECTOR OF THE ASSESSEE COMPANY, WHOSE STATEMENT W AS ALSO RECORDED ON 10.5.2008, WHEREIN, HE CONFIRMED THAT CASH OF RS. 40 LACS FOUND AT THE PREMISES OF SHRI R.M. SINGLA BELONGED TO THE ASSESS EE COMPANY. WHEN CONFRONTED WITH OTHER DOCUMENTS FOUND, SHRI PAWAN B ANSAL, SURRENDERED A SUM OF RS. 150 LACS AS ADDITIONAL INCOME OF THE C OMPANY WHICH INCLUDED CASH OF RS. 40 LACS OWNED UP BY SHRI PAWA N BANSAL ON BEHALF OF THE ASSESSEE COMPANY. THEREFORE, TOTAL SURRENDER BY SHRI PAWAN BANSAL, ON BEHALF OF THE ASSESSEE WAS AT RS. 150 L ACS I.E. RS. 40 LACS FOUND CASH WITH SHRI R.M. SINGLA PLUS RS. 110 LACS ON ACCOUNT OF UNEXPLAINED TRANSACTIONS RELATING TO THE CONSTRUCTI ON AND SALE OF FLATS. THEREAFTER, A SEARCH ACTION WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE COMPANY ALSO ON 25.2.2009 DURING WHICH TH E ASSESSEE COMPANY AGAIN SURRENDERED THE ADDITIONAL SUM OF RS. 85 LACS ON ACCOUNT OF DIFFERENCE IN SALE AND CONSTRUCTION OF FLATS. TH EREAFTER, THE ASSESSEE ITA NO. 1228-CHD-2012- M/S MOTIA CONSTRUCTION LTD, ZIRAKPUR 3 COMPANY FILED RETURN OF INCOME FOR THE ASSESSMENT Y EAR UNDER CONSIDERATION AND DISCLOSED THE SURRENDERED AMOUNT AT RS. 1.95 CRORES INSTEAD OF TOTAL SURRENDER OF RS. 2.35 CRORES. THE ASSESSEE COMPANY DID NOT ADD AMOUNT OF RS. 40 LACS WHICH WAS FOUND AT TH E PREMISES OF SHRI R.M. SINGHA BUT OWNED BY THE ASSESSEE COMPANY THROU GH ITS DIRECTOR. THE ASSESSEE COMPANY FURTHER CLAIMED DEDUCTION U/S 80IB IN RESPECT OF THE SURRENDERED INCOME OF RS. 1.95 CRORES REFLECTED IN THE PROFIT & LOSS ACCOUNT. 3. ON BEING ASKED TO EXPLAIN BY THE ASSESSING OFFIC ER IN THIS RESPECT, THE ASSESSEE EXPLAINED THAT THE CASH GIVEN TO SHRI R.M. SINGLA WAS OUT OF THE CASH AVAILABLE IN THE BOOKS OF THE COMPANY. THAT THE ASSESSEE NEVER CHANGED ITS STAND THAT THE CASH OF RS. 40 LAC S WAS GIVEN TO SHRI R.M.SINGLA BY THE ASSESSEE COMPANY, HOWEVER, THE SA ME WAS INADVERTENTLY SURRENDERED AS UNACCOUNTED, WHEREAS, THE SAME WAS DULY ACCOUNTED FOR IN THE ACCOUNT BOOKS OF THE COMPANY. IN RESPECT OF THE CLAIM OF DEDUCTION U/S 80IB OF THE ACT, IT WAS SUBM ITTED THAT THE SURRENDERED INCOME REPRESENTED THE BUSINESS INCOME OF THE ASSESSEE. THAT SINCE THE ASSESSEE WAS INVOLVED IN HOUSING DEV ELOPMENT BUSINESS AND THE SAID INCOME WAS DERIVED FROM BUSINESS OF D EVELOPING HOUSING PROJECT, HENCE, THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION U/S 80IB(1) OF THE ACT ON THE SAID SURRENDERED INCOME. THE ASSE SSING OFFICER, HOWEVER, DID NOT AGREE WITH THE AFORESAID CONTENTIO N RAISED BY THE ITA NO. 1228-CHD-2012- M/S MOTIA CONSTRUCTION LTD, ZIRAKPUR 4 ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT THE D IRECTOR OF THE ASSESSEE IN HIS STATEMENT HAD ADMITTED THAT THE AF ORESAID AMOUNT FOR RS. 40 LACS FOUND FROM THE PREMISES OF SHRI R.M. SINGLA , WAS UNACCOUNTED INCOME OF THE ASSESSEE COMPANY. FURTHER, IN RESPECT OF CLAIM OF DEDUCTION U/S 80IB, THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT UNLESS THE ASSESSEE ESTABLISHES A CLEAR LINK BETWEEN UNACCOUNTED INCOME AND ITS HOUSING PRO JECT, THE SAME WOULD NOT BE ELIGIBLE FOR DEDUCTION U/S 80IB OF THE ACT. 4. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), HOWEVE R, THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY UPHOLDING T HE FINDINGS OF THE ASSESSING OFFICER. THE ASSESSEE, THUS, HAS COME IN APPEAL BEFORE US, WITH THE FOLLOWING GROUNDS OF APPEAL:- 1. A) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CONFIRM ING ADDITION OF RS. 40 LACS UNDER THE FACTS & CIRCUMSTANCES OF THE CASE . B) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT ACC EPTING THE BOOK RESULTS IN WHICH ENTRIES OF SUCH CASH OF RS. 40 LAC SS WAS DULY RECORDED. C) WITHOUT PREJUDICE TO ABOVE, (I) THE APPELLANT DISPUTES THE QUANTUM OF ADDITION. (II) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN NOT A LLOWING THE DEDUCTION U/S. 80-IB (10) ON ADDITION OF RS. 40 LAC S BEING ELIGIBLE FOR DEDUCTION. ITA NO. 1228-CHD-2012- M/S MOTIA CONSTRUCTION LTD, ZIRAKPUR 5 2. A) THAT THE LD. CIT (A) IS NOT JUSTIFIED IN CON FIRMING THE DISALLOWANCE OF DEDUCTION U/S. 80-IB (10) ON THE SU RRENDERED AMOUNT OF RS. 195 LACS. B) THAT THE ID. CIT (A) IS NOT JUSTIFIED IN NOT TRE ATING THE SURRENDERED AMOUNT OF RS. 195 LACS AS INCOME FROM H OUSING PROJECT BEING ELIGIBLE FOR DEDUCTION U/S. 80-IB (1) . C) WITHOUT PREJUDICE TO ABOVE, THE APPELLANT DISPUT ES THE QUANTUM OF DEDUCTION U/S. 80-IB (10). 3. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITIO N, DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE LD. A UTHORIZED REPRESENTATIVES OF BOTH THE PARTIES AND HAVE GONE T HROUGH THE RECORD. 6. GROUND NO.1 : VIDE THIS GROUND, THE ASSESSEE HAS CONTESTED THE ADDITION OF RS. 40 LACS WHICH WAS FOUND IN CASH FRO M THE PREMISES OF ONE SHRI R.M. SINGLA AND FURTHER OWNED UP BY THE AS SESSEE COMPANY THROUGH ITS DIRECTOR. THE LD. COUNSEL FOR THE ASSE SSEE IN THIS RESPECT HAS INVITED OUR ATTENTION TO PAGE 10 OF THE PAPER B OOK WHICH IS COPY OF THE REPLY FILED TO THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. IN PARA 2 OF THE SAID REPLY, IT HAS BE EN STATED THAT AFTER SEARCH, THE ASSESSEE COMPANY RECONCILED THE AMOUNT OF CASH FOUND WITH SHRI R.M. SINGLA AND NOTED THAT THE SAID AMOUNT WA S DULY RECORDED AS AN IMPREST GIVEN TO SHRI PAWAN BANSAL, THE THEN M ANAGING DIRECTOR OF THE COMPANY IN THE BOOKS OF ACCOUNT OF THE COMPANY AND THE SURRENDER ITA NO. 1228-CHD-2012- M/S MOTIA CONSTRUCTION LTD, ZIRAKPUR 6 OF RS. 40 LACS WAS WRONGLY MADE AS THE SAME WAS D ULY VERIFIABLE AND EXPLAINABLE. THE LD. COUNSEL IN THIS RESPECT HAS SU BMITTED THAT THE SAID AMOUNT OF RS. 40 LACS WAS FURTHER GIVEN BY SHRI PAW AN BANSAL TO SHRI R.M. SINGHLA FOR PURCHASE OF THE PROPERTY. THAT THE RE WAS NO DISCREPANCY BETWEEN THE STATEMENTS OF SHRI R.M.SING LA AND SHRI PAWAN BANSAL RECORDED DURING THE COURSE OF SEARCH AND INV ESTIGATION PROCEEDINGS. DURING THE COURSE OF SEARCH OF PROCEE DINGS ON 7.5.2008, SHRI R.M. SINGLA STATED THAT CASH OF RS. 40 LACS BE LONGED TO THE ASSESSEE COMPANY WHICH WAS GIVEN TO HIM BY SHRI PAWAN BANSAL . WHEN SHRI PAWAN BANSAL WAS CONFRONTED, HE DULY ADMITTED THAT HE HAD PAID RS. 40 LACS TO SHRI R.M. SINGLA, ON BEHALF THE COMPANY. HO WEVER, SHRI PAWAN BANSAL SURRENDERED THE SAID AMOUNT AS UNEXPLAINED INCOME BUT LATER ON WHEN THE ACCOUNTS WERE RECONCILED, IT WAS FOUND TH AT THE SAID AMOUNT OF CASH WAS DULY RECORDED IN THE BOOKS OF ACCOUNT OF T HE COMPANY AND SHOWN TO BE PAID TO SHRI PAWAN BANSAL AND HAD NEVER BEEN USED FOR OTHER PURPOSES. HOWEVER, THE SAME HAS NOT BEEN RECE IVED BACK TILL DATE AS THE SAME WAS SEIZED BY THE DEPARTMENT. IT, HAS THEREFORE, BEEN SUBMITTED THAT ONLY BECAUSE DURING THE STATEMENT OF SHRI PAWAN BANSAL, HE INADVERTENTLY UNDER THE WRONG IMPRESSION WITHOU T CONSULTING THE ACCOUNTS HAD OFFERED THE SAID AMOUNT ADDITION INCOM E OF THE ASSESSEE, HOWEVER, THE SOURCE OF THE SAID AMOUNT HAD BEEN DU LY EXPLAINED BY THE ASSESSEE COMPANY FROM ITS BOOKS OF ACCOUNT / CASH BOOK. ITA NO. 1228-CHD-2012- M/S MOTIA CONSTRUCTION LTD, ZIRAKPUR 7 7. THE LD. DR ON THE OTHER HAND, HAS SUBMITTED THA T THERE IS NO ALLEGATION THAT THE STATEMENT OF SHRI PAWAN BANSAL RECORDED IN THE COURSE OF POST SURVEY ACTION / PROCEEDINGS WAS REC ORDED UNDER ANY THREAT OR COERCION. THAT HE HIMSELF HAD SURRENDERED THE SAID AMOUNT AS UNACCOUNTED INCOME OF THE COMPANY. HE THEREFORE, HAS RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE RECORD IN THIS CASE, THERE IS NO DISCREPANCY OR CONTRADICT ION IN THE STATEMENT OF SHRI R.M. SINGLA AND SHRI PAWAN BANSAL, THE THEN MA NAGING DIRECTOR OF THE COMPANY. SHRI R.M.SINGLA DURING THE SEARCH ACTI ON STATED THAT AMOUNT FOR RS. 40 LACS BELONGED TO THE ASSESSEE C OMPANY WHICH WAS PROMPTLY CONFIRMED BY SHRI PAWAN BANSAL THAT THE SA ID AMOUNT BELONGED TO THE ASSESSEE COMPANY. HOWEVER, WHEN THE ACCOUNTS OF THE COMPANY WERE CONSULTED, IT WAS FOUND THAT THE SAID AMOUNT O F CASH WAS DULY RECORDED AS AN IMPREST GIVEN TO SHRI PAWAN BANSAL WHICH WAS FURTHER HANDED OVER BY SHRI PAWAN BANSAL TO SHRI R.M.SINGLA . SEARCH ACTION LATER ON WAS ALSO CONDUCTED AT THE PREMISES OF THE ASSESSEE COMPANY AND NO OTHER CASH WAS FOUND DURING THE COURSE OF S EARCH ACTION. THERE IS NO EVIDENCE THAT THE CASH AMOUNT OF RS. 40 LACS GIVEN AS AN IMPREST TO SHRI PAWAN BANSAL HAS BEEN USED FOR SOME OTHER P URPOSES. SHRI PAWAN BANSAL ON THE DATE OF SEARCH, DURING THE SEA RCH ACTION AT THE PREMISES OF SHRI R.M.SINGLA PROMPTLY ADMITTED THAT THE CASH OF RS. 40 ITA NO. 1228-CHD-2012- M/S MOTIA CONSTRUCTION LTD, ZIRAKPUR 8 LACS HAS BEEN GIVEN BY HIM TO SHRI R.M. SINGLA ON B EHALF OF THE ASSESSEE COMPANY. ALL THE FACTS RELATING TO THE AFORESAID CA SH OF RS. 40 LACS HAVE BEEN DULY EXPLAINED AND FURTHER THE EXPLANATION GIV EN BY THE ASSESSEE IN THIS RESPECT INSPIRES CONFIDENCE AS NEITHER THERE I S ANY DIFFERENCE IN RESPECT OF THE AMOUNT IN QUESTION NOR IN RESPECT OF THE SOURCE OF THE SAME. THE BOOKS OF ACCOUNT OF THE ASSESSEE ARE DUL LY AUDITED BY THE AUDITOR AND NO DEFECT HAS BEEN FOUND IN THE SAME BY THE REVENUE AUTHORITIES. IN VIEW OF THIS, THE ASSESSEE RIGHTLY DID NOT OFFER THE SAID AMOUNT OF RS. 40 LACS AS ITS ADDITIONAL INCOME. THE ADDITI ON MADE / CONFIRMED BY THE LOWER AUTHORITIES IN RESPECT OF THE AFORESAI D AMOUNT, THEREFORE, IS NOT SUSTAINABLE IN THE EYES OF LAW AND THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. 9. GROUND NO.2 : IN THIS GROUND, THE ASSESSEE HAS AGITATED THE ACTION OF THE LOWER AUTHORITIES IN NOT ALLOWING DED UCTION U/S 80IB (10) OF THE ACT IN RESPECT OF THE SURRENDERED AMOUNT OF RS. 195 LACS . IT IS UNDISPUTED FACT THAT THE SURRENDERED AMOUNT OF RS. 195 LACS WAS NOT ON ACCOUNT OF ANY CASH OR OTHER VALUABLE ARTICLE OR TH ING FOUND AT THE PREMISES OF THE ASSESSEE COMPANY, RATHER, THE SAID SURRENDERED WAS MADE ON ACCOUNT OF CERTAIN DOCUMENTS FOUND SHOWING UNACCOUNTED CONSTRUCTION / SALES OF FLATS. IT HAS ALSO NOT BE EN DISPUTED THAT THE ASSESSEE HAS BEEN CONSTRUCTING A HOUSING PROJECT WH ICH WAS ELIGIBLE FOR ITA NO. 1228-CHD-2012- M/S MOTIA CONSTRUCTION LTD, ZIRAKPUR 9 DEDUCTION U/S 80IB OF THE ACT. THE DOCUMENTS FOUND DURING SEARCH ACTION CLEARLY REVEALED THAT THE SAME RELATED TO TH E BUSINESS ACTIVITY / BUSINESS PROFITS OF THE ASSESSEE COMPANY. THERE IS NO EVIDENCE TO LINK THE AFORESAID SURRENDER WITH ANY OTHER INCOME FROM ANY OTHER SOURCE OF THE ASSESSEE, AS THE NATURE OF THE INCOME / SURREND ER IS DULY REVEALED FROM THE DOCUMENTS FOUND AND SEIZED DURING THE SEAR CH ACTION. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO INVITED OUR ATTEN TION TO THE PAGE 6 OF THE PAPER BOOK, WHICH IS A LETTER OF SURRENDER, WHE REIN, IT HAS BEEN CLEARLY STATED THAT RS. 85 LACS HAVE BEEN SURRENDER ED TO COVER UP DISCREPANCY FOUND DURING THE COURSE OF SEARCH INCLU DING THE DIFFERENCE IN SALE OF FLATS / CONSTRUCTION. THE FACTS ON THE FILE ITSELF SPEAKS THAT THE AFORES AID SURRENDER WAS OUT OF THE UNEXPLAINED PROFITS OF THE ASSESSEE COMP ANY FROM ITS HOUSING PROJECTS. THERE IS NO ALLEGATION THAT THE SAID INCO ME IS BELONGING TO ANY OTHER PROJECT OR ACTIVITY OF THE ASSESSEE. THE DI SCREPANCY, IF ANY, FOUND WAS IN RESPECT OF THE ACCOUNTS OF THE HOUSING PROJE CT OF THE ASSESSEE BECAUSE OF WHICH THE AFORESAID SURRENDER WAS MADE. HENCE, THE SAID INCOME CAN SAFELY BE SAID TO BE BELONGED TO THE HOU SING PROJECT BUSINESS OF THE ASSESSEE. HAVING HELD SO, THE ASSESSEE I S ACCORDINGLY ELIGIBLE TO CLAIM EXEMPTION U/S 80IB OF THE ACT ON THE SAI D INCOME. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATION ON THE PAR T OF THE LOWER AUTHORITIES FOR DENYING DEDUCTION OF THE ASSESSEE I N RESPECT OF THE AFORESAID INCOME. THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE IS SET ITA NO. 1228-CHD-2012- M/S MOTIA CONSTRUCTION LTD, ZIRAKPUR 10 ASIDE AND THE ASSESSING OFFICER IS ACCORDINGLY DIRE CTED TO ALLOW DEDUCTION U/S 80IB OF THE ACT TO THE ASSESSEE ON TH E AFORESAID AMOUNT OF RS. 195 LACS. 10. GROUND NO.3 : GROUND NO.3 IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. IN VIEW OF OUR DISCUSSION MADE ABOVE, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.12.2019. SD/- SD/- ( $ % & '# / ANNAPURNA GUPTA) () / ACCOUNTANT MEMBER ( / SANJAY GARG) / JUDICIAL MEMBER DATED : 27.12.2019 .. '+ ,-.- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT 4. # / ( )/ THE CIT(A) 5. -01 2 , %2 , 34516 / DR, ITAT, CHANDIGARH 6. 157$ / GUARD FILE '+ # / BY ORDER, 8' / ASSISTANT REGISTRAR