The ACIT, Circle-9, Surat V. M/s. Shree Nidhi Corporation, Surat

ITA 1635/AHD/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0746 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 22-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R N VEPARI
• Keywords: Unexplained cash credit; Unexplained investment; Unexplained expenditure; Business income; Income from undisclosed sources; Salary income; Principle of natural justice; Deemed to accrue or arise in india; Retrospective amendment; Additional evidence; Corroborative evidences; Non compliance; Onus to prove
• Section: 69C; 142(1); 133A; 80IB; 133(6); 68; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO. 1635/AHD/2011 / ASSESSMENT YEAR : 2008-09 ACIT, CIRCLE-9, SURAT VS M/S. SHREE NIDHI CORPORATION, BLOCK NO.204, SATELLITE ROAD, VARACHHA ROAD, SURAT PAN : ABJFS 3086 N / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI SANJAY KUMAR, SR DR ASSESSEE BY : SHRI R.N. VEPARI, AR / DATE OF HEARING : 22/06/2016 / DATE OF PRONOUNCEMENT: 26/08/2016 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, SURAT DATED 28.02.2011 FOR AY 2008-09. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL:- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO AT RS .74,00,000/- DESPITE THE FACT THAT THE AO HAS RIGHTLY HELD THAT NO CLAIM OF DEDUCTION U/S 80IB(10) CAN BE ALLOWED AS THE UNACCOUNTED INCOME O FFERED BY THE APPELLANT IS NOT ITS REGULAR INCOME DISCLOSED IN IT S BOOKS OF ACCOUNTS UP TO THE DATE OF SURVEY AND THEREFORE IN THE NATURE OF D EEMED INCOME AGAINST WHICH NO DEDUCTION OR SET OFF IS AVAILABLE. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN FACTS AND IN DELETING THE ADDITION MADE BY THE AO AT RS.1,32,99,175/- ON ACCOUNT OF CURRENT LIABILITY DE SPITE THE FACT THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TRA NSACTIONS. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN NOT CALLING FOR A REMAND REPORT ON FURTHER SUBMISSIONS FILED BY THE ASSESSEE BEFORE THE APPELLATE AUTHORITY WHICH I S IN CLEAR VIOLATION OF RULE 46A OF I.T. RULES. ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 2 3. THE BRIEF FACTS ARE THE ASSESSEE, PARTNERSHIP FIRM WAS CREATED BY A PARTNERSHIP DEED EXECUTED ON 07.02.2007, WITH FOLLO WING CONSTITUTION:- I) SHRI HITESH BHIKHABHAI SUTARIA - 95% II) SHRI ISWARBHAI GULABBHAI DESAI - 5% THE FIRM CLAIMS TO BE ENGAGED IN DEVELOPMENT AND CO NSTRUCTION OF RESIDENTIAL HOUSING PROJECT. 3.1 A SURVEY U/S 133A WAS CONDUCTED ON 12.09.2007, WHERE SOME INCRIMINATING MATERIALS WERE FOUND; ON CONFRONTATIO N THEREOF, THE ASSESSEE MADE A VOLUNTARY DECLARATION OF INCOME OF RS.74,00, 000/- WHILE ANSWERING QUESTION NO.28 OF THE STATEMENT RECORDED DURING THE COURSE OF SEARCH. THE INCOME WAS DECLARED AS THE UNACCOUNTED INCOME OF SH RINIDHI CORPORATION FOR THE CURRENT YEAR. IT MAY BE MENTIONED THAT THE INCOME WAS NOT DECLARED AS ATTRIBUTABLE TO ANY PARTICULAR PROJECT. 3.2 RETURN OF INCOME FOR AY 2008-09 THOUGH WAS FILE D AT NIL INCOME, CLAIMING INCOME TAX REFUND OF RS.11,00,000/-. IN S CHEDULE F, APPENDED WITH THE AUDIT REPORT FILED WITH THE RETURN, IN ITEM NO. 4, FOLLOWING WAS MENTIONED:- THE PROJECT DEVELOPMENT SITE OF THE FIRM WAS SURVE YED BY INCOME TAX OFFICIALS DURING THE YEAR UNDER CONSIDERATION. THE FIRM HAD MADE DISCLOSURE IN SURVEY OF UNACCOUNTED RECEIPTS OF RS.74 LACS EAR NED FROM THE SAID PROJECT. IN VIEW OF THE FACT THAT THE FIRM HAS ADOPTED PROJE CT COMPLETION METHOD OF ACCOUNTING, THE UNACCOUNTED RECEIPTS OF RS.74 LACS IS SHOWN UNDER THE ACCOUNT HEAD UNACCOUNTED BOOKING RECEIPTS ON LIAB ILITY SIDE OF THE BALANCE SHEET AND WILL BE OFFERED TO INCOME IN THE YEAR IN WHICH THE ENTIRE PROJECT IS COMPLETED. THIS IS DONE IN CONFORMITY OF THE PROVI SIONS OF THE ACT AND IN ACCORDANCE WITH THE GENERALLY ACCEPTED ACCOUNTING P RINCIPLES, PRACTICES AND PROCEDURES. QUERIES WERE RAISED IN THIS BEHALF BY LD. AO AND T HE ASSESSEE HAS MADE FURTHER SUBMISSIONS AS UNDER:- ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 3 SUBMISSION DATED 17.02.2010 OUR FIRM HAS SHOWN NIL INCOME DURING THE YEAR UNDE R CONSIDERATION. OUR FIRM HAS ACCOUNTED FOR DISCLOSURE OF 'UNACCOUNTED B OOKING RECEIPTS' OF RS.74,00,000/- MADE DURING THE COURSE OF SURVEY U/S 133A OF THE ACT. HOWEVER, SINCE OUR FIRM IS FOLLOWING PROJECT COMPLE TION METHOD OF ACCOUNTING AND PROJECT HAS JUST COMMENCED DURING TH E SUBJECT YEAR, THE AFORESAID DISCLOSURE OF RS. 74 LACS IS DISCLOSED UN DER THE HEAD 'CURRENT LIABILITIES' IN THE BALANCE SHEET UNDER THE HEAD BO OKING RECEIPTS. SUBMISSION DATED 22.11.2010 IN THIS REGARD, WE HAVE TO SUBMIT THAT IN THE STAT EMENT RECORDED IN SURVEY ON 12.09.2007 OF SHRI HITESH BHIKHABHAI SUTARIA, TH E PARTNER OF THE FIRM HE HAD SPECIFICALLY STATED AS FOLLOWS. (ENGLISH TRANSLATION OF THE EXTRACTS OF STATEMENT R ECORDED IN SURVEY) 'Q.28 IN ADDITION TO WHAT HAS BEEN STATED HEREIN AB OUT, DO YOU WANT TO SUBMIT ANYTHING ELSE? ANS. I DISCLOSE THE SUM OF RS 74 LACS (RUPEES SEVENT Y FOUR LACS) INCLUDING UNACCOUNTED CASH OF RS.10,000/- FOUND DURING THE SU RVEY. THE SAID DISCLOSURE OF INCOME IS IN RESPECT OF UNACCOUNTED A ND UNDISCLOSED INCOME OF OUR FIRM M/S SHRINIDHI CORPORATION, WHICH IS EARNED OUT OF AND THROUGH THE CONDUCT OF BUSINESS IN THE SAID FIRM. FROM THE ABOVE STATEMENT YOUR HONOUR MAY KINDLY APP RECIATE THAT - - THE DISCLOSURE MADE BY THE PARTNERS OF THE FIRM IN SURVEY IS THE ONLY BASE OF OFFERING UNACCOUNTED BUSINESS RECEIPTS. - THE DISCLOSURE HAS BEEN MADE SPECIFICALLY OF 'UNA CCOUNTED BUSINESS RECEIPTS' OUT OF AND THROUGH THE DEVELOPMENT OF RES IDENTIAL HOUSING PROJECT CARRIED ON BY OUR FIRM. - SINCE THE FIRM IS ENGAGED ONLY IN UNDERTAKING B USINESS OF DEVELOPMENT OF HOUSING PROJECTS, THE UNACCOUNTED RECEIPTS DISCLOSE D IN SURVEY HAS RESULTED IN GENERATION OF BUSINESS RECEIPTS OF RS.7 4 LACS OF THE FIRM. - THE FIRM WAS CARRYING OUT ONLY ONE BUSINESS ACTIVITY OF DEVELOPING RESIDENTIAL HOUSING PROJECTS DURING THE YEAR AND THE PERIOD WHEN SURVEY WAS CONDUCTED. - THE SURVEY WAS CONDUCTED BY THE DEPARTMENT AT TH E BUSINESS PREMISES I.E. THE DEVELOPMENT SITE OF OUR FIRM. FURTHER EXCEPT TH E BUSINESS RELATED BOOKS, VOUCHERS AND ANCILLARY RECORDS, NO OTHER DET AILS WERE FOUND BY THE SURVEY TEAM. HOWEVER SINCE OUR FIRM HAVE FOLLOWED COMPLETED CONT RACT METHOD (PROJECT COMPLETION METHOD OF ACCOUNTING) FOR THE PROJECT DEV ELOPMENT ACTIVITY, THE SAID DISCLOSURE WAS SHOWN UNDER THE HEAD UNACCOUNT ED BOOKING RECEIPTS DISCLOSED IN SURVEY' IN THE BALANCE SHEET UNDER THE SCHEDULE 'CURRENT ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 4 LIABILITIES' ALONG WITH OTHER LIABILITIES IN F ORM OF BOOKING DEPOSITS RECEIVED FROM THE CUSTOMERS. THE SAME SHALL BE OFFERED TO TAX AS INCOME ON THE S UBSTANTIAL COMPLETION OF THE PROJECT, ALONG WITH THE PROFIT FROM THE ACTIVIT Y OF BUILDING AND DEVELOPMENT OF RESIDENTIAL HOUSING PROJECT, IT BEIN G IN THE SAME NATURE AS THAT OF THE REGULAR PROFIT FROM SALE OF RESIDENTIAL UNITS IN THE PROJECT. 25.2 WITHOUT PREJUDICE TO WHAT HAS BEEN SUBMITTED H EREIN ABOVE AND WITHOUT ADMITTING TO CONTENTIONS OF YOUR HONOUR, WE HAVE TO SUBMIT THAT IN CASE IF THE AMOUNT OF RS. 74 LACS IS TAXED BY YOUR HONOUR A S INCOME OF THE SUBJECT YEAR, THEN IN VIEW OF THE FACT THAT THE SAME PERTAI NS TO THE BUSINESS OF DEVELOPMENT CARRIED ON BY OUR FIRM, IT WOULD BE TRE ATED AS 'BUSINESS INCOME' AND ACCORDINGLY WOULD ALSO BE SUBJECT TO THE CLAIM OF DEDUCTION U/S 80-IB(10) OF THE ACT. 3.3 THE ASSESSING OFFICER FURTHER FOUND THAT ASSESS EE HAD SHOWN CURRENT LIABILITIES AND PROVISIONS TOTALING TO RS.3,92,44,3 65/- OUT OF WHICH RS.3,04,33,175/- WAS CLAIMED TO BE FOR BOOKING DEPO SITS WHICH ARE LISTED AT PAGE NOS.6-7 OF THE ASSESSMENT ORDER. ASSESSING O FFICER PROBED THE MATTER FURTHER AND VIDE LETTER DATED 16.12.2010 ASKED THE FOLLOWING QUERIES:- (I) IN THE SUBMISSION FILED BY YOU DATED 22.11.201 0, YOU HAVE STATED THAT THE DEVELOPMENT OF THE PROJECT WAS COMMENCED DURING F.Y. 2007-08 AND THUS THIS IS THE FIRST YEAR OF DEVELOPMENT OF THE PROJEC T. IN THE SUBMISSION FILED BY YOU IN DECEMBER 2010, YOU HAVE ENCLOSED COPY OF PAR TNERSHIP DEED AS ANNEXURE-20. IT IS FOUND THAT THE PARTNERSHIP DEED H AS BEEN EXECUTED ON 07.02.2007. HOWEVER, IN SCHEDULE-F ON NOTES FORMING PART OF ACCOUNTS FILED WITH YOUR AUDIT REPORT FOR F.Y. 2007-08, IT IS MENT IONED THAT THE FIRM HAS COMMENCED ITS PROJECT IN F.Y. 2006-07. FURTHER, THE AUDITED ACCOUNTS FOR F.Y. 2006-07 ALSO SHOWS WORK-IN-PROGRESS OF RS.1,54 ,03,688/. PLEASE EXPLAIN THE ABOVE DISCREPANCY IN YOUR SUBMISSION AND ALSO S UBMIT NECESSARY SUPPORTING EVIDENCES VIZ. APPROVALS OBTAINED FROM T HE RELEVANT AUTHORITIES FOR COMMENCEMENT OF THE PROJECT. ALSO EXPLAIN THE ST ATUS OF THE CONCERN AT THE TIME OF COMMENCEMENT OF BUSINESS ACTIVITY BEFORE EX ECUTION OF PARTNERSHIP DEED. PLEASE ALSO FURNISH NECESSARY EVIDENCES FOR S OURCE OF FUNDS DEPLOYED FOR INCURRING EXPENSES FOR THE WORK-IN-PROGRESS OF RS. 1,54,03,688/- ALONG WITH DETAILED COPY OF CAPITAL ACCOUNT OF THE PARTNERS FO R F.Y. 2006-07 ALONG WITH THEIR BANK STATEMENTS FOR F.YS. 2006-07 AND 2007-08 . (II) ON PERUSAL OF THE BANK STATEMENTS FILED BY YO U, IT IS FOUND THAT THE BANK ACCOUNT IN COSMOS CO-OP. BANK HAD BEEN OPENED ON 28 .09.2007 AND SBI, STATION ROAD BRANCH ON 23.09.2008. YOU ARE REQUESTE D TO EXPLAIN AS TO HOW THE FIRM CARRIED ON ITS ACTIVITIES SINCE F.Y. 2006- 07 IN THE ABSENCE OF ANY ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 5 BANK A/C. AND HOW TRANSACTIONS VIZ. RECEIPTS AND PA YMENTS HAVE BEEN CARRIED ON RELATED TO THE CONSTRUCTION ACTIVITIES. (III) YOU ARE REQUESTED TO PLEASE FURNISH COPY OF PARTNERS' CAPITAL ACCOUNT IN RESPECT OF ALL PAYMENTS INCURRED BY THEM ON BEHA LF OF THE FIRM IN F.YS. 2006-07 & 2007-08. (IV) YOU ARE REQUESTED TO SUBMIT THE BUC CERTIFICATE RECEIVED IN RESPECT OF WORK ALREADY COMPLETED AND DETAILS OF PRESENT STATU S OF THE REMAINING WORK IN THE PROJECT AND ITS LIKELY DATE OF COMPLETION. (V) IN THE STATEMENT RECORDED FROM SHRI HITESHBHAI BIKHABHAI SUTHARIA DURING THE COURSE OF SURVEY PROCEEDINGS ON 12.09.20 07, IN REPLY TO QUESTION NO.28, HE HAD STATED AS UNDER (ENGLISH TEXT OF GUJARATI TRANSLATION):- 'ON BEHALF OF PROJECT THE AMOUNT OF RS.74 LACS INCL USIVE OF RS.10,000/- CASH RECEIVED IN MY FIRM, SHIRINIDHI CORPORATION, W HICH IS NOT ACCOUNTED FOR IN THE BOOKS OF THE FIRM, IS DECLARED AS THE UN ACCOUNTED INCOME OF SHRINIDHI CORPORATION OF THE CURRENT YEAR. THE DETA ILS THEREOF WILL BE GIVEN IN TWO DAYS.' HOWEVER, IT IS FOUND THAT NO SUCH DETAILS REGARDING SOURCE OF DECLARATION OF UNACCOUNTED INCOME HAS BEEN GIVEN TILL DATE. IN THI S CONNECTION, IT IS PERTINENT TO POINT OUT THAT THE ONUS LIES ON YOU TO SUBSTANTIATE THE DECLARATION MADE BY YOU TO PROVE THAT THE SAME PERT AINS TO THE 'BUSINESS RECEIPTS' AS STATED BY YOU IN YOUR SUBMISSIONS FILE D DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HENCE, YOU ARE REQUESTED TO FURNISH THE FULL NAME. ADDRESS AND CONFIRMATIONS OF PAYMENT OF UNACCOUNTED MONEY ALONG WITH PAN AND I.T. FILING DETAILS OF ALL SUCH PERSONS FROM WHOM YOU HAVE CLAIMED TO HAVE RECEIVED UNACCOUNTED BUSINESS RECEIPTS IN T HE FORM OF BOOKING DEPOSITS IN ORDER TO ACCEPT YOUR CLAIM THAT THE SAM E PERTAINS TO THE BUSINESS ACTIVITY CARRIED ON BY YOU SINCE IT IS ALSO FOUND I N THE PARTNERSHIP DEED DATED 07.02.2007 THAT THE FIRM CAN IN ADDITION TO C ONSTRUCTION ACTIVITY, CARRY ON ANY OTHER ACTIVITY WITH THE MUTUAL CONSENT OF TH E PARTNERS. YOU ARE ALSO INFORMED THAT YOUR SUBMISSION DATED DECEMBER 2010 M ENTIONING THAT MINUTE DETAILS OF RECEIPT OF UNACCOUNTED BUSINESS R ECEIPTS IN THE FORM OF BOOKING DEPOSITS RECEIVED FROM PARTICULAR PERSONS T O WHOM FLATS HAVE BEEN SOLD AND THE DATE OF RECEIPT IS NOT RETAINED BY YOU WILL NOT SUFFICE TO PROVE THE GENUINENESS OF SUCH GROUNDS OF DECLARATION MADE BY YOU. IN THE EVENT OF YOUR FAILURE TO DO SO, YOU ARE REQUIRED TO SHOW-CAUSE AS TO WHY THE DECLARATION OF RS.74 LACS SHOULD NOT BE TAXED U/S.69A OF THE I.T. ACT IN THE YEAR UNDER ASSESSMENT. (VI) IN YOUR SUBMISSION DATED 12.11.2010 IN ANNEXURE -11, YOU HAVE FURNISHED DETAILS OF ADVANCE BOOKING FROM 78 PERSON S. HOWEVER, DURING THE COURSE OF INQUIRY IT IS FOUND THAT MAJORITY OF THE PERSONS ARE NOT AVAILABLE AT THE GIVEN ADDRESS. HENCE, YOU ARE REQUESTED TO PRO DUCE THE PARTIES WHOSE NAMES ARE MENTIONED BY YOU IN THE DETAILS OF ADVANC E BOOKING FURNISHED BY ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 6 YOU ALONG WITH SUPPORTING EVIDENCES, VIZ. PROOF OF IDENTITY, COPY OF THE THEIR BANK STATEMENTS EVIDENCING SUCH PAYMENTS MADE, IT. ACKNOWLEDGMENT, COMPUTATION OF INCOME AND BALANCE SHEET, BEFORE THE UNDERSIGNED FOR VERIFICATION IN ORDER TO PROVE THE GENUINENESS OF S UCH CURRENT LIABILITIES OF RS.3,04,34,175/- SHOWN IN YOUR BALANCE SHEET AND FA ILING WHICH TO SHOW- CAUSE AS TO WHY THE SAME SHOULD NOT BE CONSIDERED A S UNEXPLAINED CASH CREDITS U/S.68 OF THE IT. ACT PERTAINING TO THE YEAR UNDER ASSESSMENT. ASSESSEE VIDE LETTER DATED 24.12.2010 FILED A REPL Y IN THIS BEHALF, WHICH, ACCORDING TO ASSESSING OFFICER DID NOT EXPLA IN THE SPECIFIC QUERIES RAISED BY THE ASSESSING OFFICER AND FOLLOWING OBSER VATIONS WERE MADE IN THIS BEHALF:- 3.11 THE REPLY OF THE ASSESSEE TO THE SHOW-CAUSE LETTER IS DULY PERUSED. ON THE ISSUE OF DECLARATION OF UNACCOUNTED INCOME OF R S.74 LACS, THE ASSESSEE WAS SPECIFICALLY REQUESTED TO FURNISH THE FULL NAME, AD DRESS AND CONFIRMATIONS OF PAYMENTS OF UNACCOUNTED MONEY ALONG WITH BANK AND I T FILING DETAILS OF ALL SUCH PERSONS FROM WHOM ASSESSEE HAD CLAIMED TO HAVE RECEIVED UNACCOUNTED BUSINESS RECEIPTS IN THE FORM OF BOOKING RECEIPTS, IN ORDER TO ACCEPT THE ASSESSEES CLAIM THAT THE SAME PERTAINED TO THE BUS INESS ACTIVITY CARRIED ON BY THE ASSESSEE. HOWEVER, IT IS FOUND THAT THE ASSESSE E HAS ONLY MERELY REPEATED HIS EARLIER SUBMISSION DATED 07-12-2010 WHEREIN IT WAS STATED THAT THE MINUTE DETAILS OF RECEIPTS OF THE SAME WITH REGARD TO EXACT AMOUNT RECEIVED FROM A PARTICULAR PERSON TO WHOM FLATS HAVE BEEN SO LD AND THE DATE OF ITS RECEIPTS IS NOT RETAINED. THE ABOVE CONTENTIONS OF THE ASSESSEE CANNOT BE ACC EPTED. MOREOVER, EVEN IN THE STATEMENT RECORDED FROM SHRI HITESH B. SUTARIA, PARTNER ON 12-09-2007 DURING THE COURSE OF SURVEY PROCEEDINGS IN REPLY TO QUESTION NO. 28 HE HAS STATED THAT DETAILS OF DISCLOSURE OF RS.74 LACS WIL L BE SUBMITTED IN TWO DAYS WHICH HE HAD FAILED TO DO SO. 3.4 RELYING ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHAMED HAJI HASAN VS. CIT (2001) 247 ITR 290 (GUJ.), LD. ASSESSING OFFICER HELD AS UNDER:- THE SCHEME OF SS. 69, 69A, 69B AND 69C WOULD SHOW THAT IN CASES WHERE THE NATURE AND SOURCE OF INVESTMENTS MADE BY THE ASSESS EE OR THE NATURE AND SOURCE OF ACQUISITION OF MONEY, BULLION ETC. OWNED BY THE ASSESSEE OR THE SOURCE OF EXPENDITURE INCURRED BY THE ASSESSEE ARE NOT EXPLAINED AT ALL, OR NOT SATISFACTORILY EXPLAINED, THEN, THE VALUE OF SUCH I NVESTMENTS AND MONEY, OR VALUE OF ARTICLES NOT RECORDED IN THE BOOKS OF ACCO UNTS OR THE UNEXPLAINED ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 7 EXPENDITURE MAY BE DEEMED TO BE THE INCOME OF SUCH ASSESSEE. IT FOLLOWS THAT THE MOMENT A SATISFACTORY EXPLANATION IS GIVEN ABOU T SUCH NATURE AND SOURCE BY THE ASSESSEE, THEN THE SOURCE WOULD STAND DISCLO SED AND WILL, THEREFORE, BE KNOWN AND THE INCOME WOULD BE TREATED UNDER THE APP ROPRIATE HEAD OF INCOME FOR ASSESSMENT AS PER THE PROVISIONS OF THE ACT. HOW EVER, WHEN THESE PROVISIONS APPLY BECAUSE NO SOURCE IS DISCLOSED AT ALL ON THE BASIS OF WHICH THE INCOME CAN BE CLASSIFIED UNDER ONE OF THE HEADS OF INCOME UNDER S. 14, IT WOULD NOT BE POSSIBLE TO CLASSIFY SUCH DEEMED INCOM E UNDER ANY OF THESE HEADS INCLUDING INCOME FROM 'OTHER SOURCES' WHICH H AVE TO BE SOURCES KNOWN OR EXPLAINED. WHEN THE INCOME CANNOT BE SO CL ASSIFIED UNDER ANY ONE OF THE HEADS OF INCOME UNDER S. 14, IT FOLLOWS THAT THE QUESTION OF GIVING ANY DEDUCTIONS UNDER THE PROVISIONS WHICH CORRESPOND TO SUCH HEADS OF INCOME WILL NOT ARISE. IF IT IS POSSIBLE TO PEG THE INCOME UNDER ANY ONE OF THOSE HEADS BY VIRTUE OF A SATISFACTORY EXPLANATION BEING GIVEN , THEN THESE PROVISIONS OF SS. 69, 69A, 69B AND 69C WILL NOT APPLY, IN WHICH E VENT, THE PROVISIONS REGARDING DEDUCTIONS, ETC. APPLICABLE TO THE RELEVA NT HEAD OF INCOME UNDER WHICH SUCH INCOME FALLS WILL AUTOMATICALLY BE ATTRA CTED. THE OPENING WORDS OF S. 14 'SAVE AS OTHERWISE PROVIDED BY THIS ACT' CL EARLY LEAVE SCOPE FOR 'DEEMED INCOME' OF THE NATURE COVERED UNDER THE SCH EME OF SS. 69, 69A, 69B AND 69C BEING TREATED SEPARATELY, BECAUSE SUCH DEEM ED INCOME IS NOT INCOME FROM SALARY, HOUSE PROPERTY, PROFITS AND GAINS OF B USINESS OR PROFESSION, OR CAPITAL GAINS, NOR IS IT INCOME FROM 'OTHER SOURCES ' BECAUSE THE PROVISIONS OF SS. 69, 69A, 69B AND 69C TREAT UNEXPLAINED INVESTME NTS, UNEXPLAINED MONEY, BULLION ETC. AND UNEXPLAINED EXPENDITURE AS DEEMED INCOME WHERE THE NATURE AND SOURCE OF INVESTMENT, ACQUISITION OR EXPENDITURE, AS THE CASE MAY BE, HAVE NOT BEEN EXPLAINED OR SATISFACTORILY E XPLAINED. THEREFORE, IN THESE CASES, THE SOURCE NOT BEING KNOWN, SUCH DEEME D INCOME WILL NOT FALL EVEN UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. TH EREFORE, THE CORRESPONDING DEDUCTIONS, WHICH ARE APPLICABLE TO T HE INCOMES UNDER ANY OF THESE VARIOUS HEADS, WILL NOT BE ATTRACTED IN CASE OF DEEMED INCOMES WHICH ARE COVERED UNDER THE PROVISIONS OF SS. 69, 69A, 69B AN D 69C IN VIEW OF THE SCHEME OF THOSE PROVISIONS. FROM THE AFORESAID, IT FOLLOWS THAT SUCH AMOUNTS AS SESSED BY VIRTUE OF THE DEEMING PROVISIONS OF SECTION 68, 69, 69A, 69B AND 69C ALSO DO NOT FORM PART OF 'BOOK PROFIT' AS DEFINED IN EXPLANATION -3 BELOW SECTION 40(B), WHICH HAS TO BE COMPUTED UNDER THE HEAD 'PROFITS AND GAIN S OF BUSINESS OR PROFESSION.' THAT BEING THE CASE, SUCH INCOME WILL ALSO NOT ENTER INTO THE COMPUTATION OF THE AMOUNT OF SALARY OF PARTNERS ALL OWABLE U/S 40(B)(V) IN THE ASSESSMENT OF PARTNERSHIP FIRMS. SIMILARLY, ANY BRO UGHT FORWARD LOSS ALSO CANNOT BE SET OFF AGAINST THE AMOUNT ASSESSED U/S 6 8, 69.69A, 69B AND 69C AS INCOME. 3.5. THEREAFTER, LD. ASSESSING OFFICER MADE FOL LOWING OBSERVATIONS:- ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 8 (I) IT MAY BE ADDED THAT BY AN AMENDMENT MADE BY THE FI NANCE (NO.2) ACT, 1998 WITH EFFECT FROM 01.4.1999, INSERTING A P ROVISO TO SECTION 69C, IT HAS BEEN SPECIFICALLY ENJOINED THAT ANY EXP LAINED EXPENDITURE WHICH IS DEEMED TO BE INCOME OF THE ASSESSEE U/S 69 C SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME. T HE EFFECT OF THE GUJARAT HIGH COURT DECISION IS THAT IT APPLIES THE SAME PRINCIPLES IMBIBED IN THE PROVISO TO SECTION 69C TO ALL SECTIO NS IN CHAPTER VI DEALING WITH DEEMED INCOME. THE FACT IS THAT NO S PECIFIC PROVISION AKIN TO THE PROVISO TO SECTION 69C WAS NECESSARY IN RESPECT OF OTHER SECTIONS IN THIS CHAPTER BECAUSE THE INCOME ADDED T HEREIN AS UNEXPLAINED INVESTMENT, UNEXPLAINED VALUABLES ETC. IS EVEN OTHERWISE NOT ALLOWABLE AS DEDUCTION, UNLIKE UNEXPLAINED EXPE NDITURE WHICH IS OTHERWISE ALLOWABLE AS DEDUCTION. (II) SINCE THE ASSESSEES TRANSACTIONS AND BUSINESS ACTI VITIES WERE NOT RELIABLE, THE INCOME OF EACH YEAR WAS TO BE COMPUTE D AND TAXED WITHOUT WAITING FOR THE COMPLETION OF PROJECTS. 3.6 LD. ASSESSING OFFICER FURTHER RELIED ON THE DEC ISION OF LD. CIT(A) IN THE CASE OF M/S. D.R. CONSTRUCTION, BY FOLLOWING OB SERVATIONS:- 3.12. THE FACTS IN THE CASE OF THE ASSESSEE IS EXA CTLY SIMILAR TO THE ISSUE DISCUSSED IN THE APPELLATE ORDER OF THE CIT(A) IN TH E CASE OF M/S.D.R. CONSTRUCTION. AS HELD BY THE LD.CIT(A) IN THE CASE OF M/S.D.R. CONSTRUCTION, THE INCOME OFFERED BY THE ASSESSEE AS UNACCOUNTED INCOME DURING THE COURSE OF SURVEY IS ALSO IN THE NATURE O F 'DEEMED INCOME'. THE ISSUE OF HEAD OF DEEMED INCOME U/S.69, 69A, 69B & 6 9C HAS ALSO BEEN CONSIDERED IN THE GUJARAT HIGH COURT DECISION IN TH E CASE OF FAKIR MOHMAD HAJI HASAN VS. CIT (2001) 247 ITR 290 (GUJ.). HENCE, DECLARATION OF UNACCOUNTED INCOME SHOWN BY THE ASSESSEE IS TAXED U /S.69A OF THE IT. ACT. FURTHER, AS HELD BY THE LD.CIT(A) NO EXPENSES CAN B E CLAIMED IN ANY MANNER WHATSOEVER, VIZ. BY DEBITING CORRESPONDING EXPENSES ACCOUNT AND TRANSFERRING IT TO WIP A/C. AS DONE BY THE ASSESSEE . 3.13. THE ASSESSEE'S CLAIM IN ITS SUBMISSION DATED 22-11-2010 THAT IN CASE THE AMOUNT OF RS.74 LACS IS TAXED AS INCOME OF THE YEAR THEN, IT WOULD BE ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 9 SUBJECT TO THE CLAIM OF DEDUCTION U/S.80-IB (10) IS ALSO NOT SUSTAINABLE AS THE UNACCOUNTED INCOME OFFERED BY THE APPELLANT IS NOT THE INCOME FROM THE REGULAR BOOKS OF ACCOUNT UPTO THE DATE OF THE SURVE Y AND, THEREFORE, IN THE NATURE OF DEEMED INCOME AGAINST WHICH, NO DEDUCTION OR SET-OFF IS AVAILABLE. 4. ON PERUSAL OF THE BALANCE SHEET, IT IS FOUND THA T THE ASSESSEE HAS SHOWN BOOKING DEPOSITS TOTALING RS.3,04,34,175/- UNDER CU RRENT LIABILITIES. IN THE ANNEXURE ATTACHED TO NOTICE U/S. 142(1) DATED 29-10-2 010, THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF ALL CURRENT LIABILITIES PERTAINING TO BOOKING ADVANCES SHOWN OF RS.3,04,34,175/-. THE ASSESSEE IN HIS SUBMISSION DATED 22-11-2010 HAD FURNISHED DETAILS OF ADVANCE BOOKING VIZ. COST OF FLAT, AMOUNT RECEIVED, BALANCE OUTSTANDING WITH NAME & ADDRESS O F THE PARTIES. THEREAFTER, NOTICE U/S. 133(6) WAS ISSUED IN THE BASIS OF THE PA RTIES. HOWEVER, IT WAS FOUND THAT IN SEVERAL CASES THE PARTIES WERE UNAVAI LABLE/FLAT WERE FOUND TO BE LOCKED. INSPECTOR WAS ALSO DEPUTED FOR VERIFICATION AND THE REPORT FURNISH ALSO SHOWED THAT IN SEVERAL CASES PARTIES WERE UNAVAILAB LE AT THE GIVEN ADDRESSES. NOTICES U/S. 133(6) ISSUED AND SERVED ALSO ELICITED VERY POOR RESPONSE AS NO REPLIES WERE FILED IN MOST OF THE CASES. BESIDES, THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT THE ON-MONEY TRANSACTIONS AS CLAIMED WILL AMOUNT TO UNDISCLOSED RECEIPTS IN THE HANDS OF THE ASSESSEE AND WILL CONSTITUTE UNACCOUNTED MONEY OR BLACK-MONEY IN THE HANDS OF THE ALLEGED FLAT PURCHASERS. ACCORDING TO ASSESSING OFFICER, THE ASSESSEE DID NOT FURNISH COMPLETE INFORMATION AND S USTAINED THE ADDITION BY FOLLOWING OBSERVATIONS:- 4.3. HOWEVER, IT IS TO BE NOTED THAT THE ASSESSEE WAS EXPRESSLY CONVEYED BY THIS OFFICE SHOW-CAUSE LETTER DATED 16-12-2010 TO F URNISH PROOF OF IDENTITY, COPY OF BANK STATEMENT AND ALSO TO PRODUCE THE PART IES IN ORDER TO ASCERTAIN GENUINENESS THE LIABILITIES SHOWN BY THE ASSESSEE. MERE FURNISHING OF CONFIRMATION WITHOUT ANY SUPPORTING EVIDENCE VIZ. B ANK STATEMENT, I.T. FILING DETAILS AND COPY OF ACCOUNTS, DOES NOT PROVE EITHER THE CREDITWORTHINESS OF THE PARTIES OR THE GENUINENESS OF THE TRANSACTIO NS. THE ASSESSEE FAILED TO PRODUCE EVEN A SINGLE PARTY FOR EXAMINATION AS CALL ED FOR VIDE THIS OFFICE LETTER DATED 16-12-2010 AND THUS FAILED TO COMPLY WITH THE TERMS OF THE SHOW-CAUSE LETTER. OUT OF TOTAL BOOKING LIABILITY SHOWN OF RS. 3,04,34,175/-, THE ASSESSEE HAS DISCHARGED THE ONUS OF PROVING THE GENUINENESS OF SUCH CURRENT LIABILITY TO THE EXTENT OF RS.154.10 LACS BY FURNISHING SALES DEEDS. IN RESPECT OF THE REMAINING BALANCE OF RS.1,50,24,175/- NO SUPPORTING EVIDENCES AS CALLED FOR ARE FURNISHED TO PROVE THE SAME. HOWEVER, IN RESPON SE TO LETTERS U/S. 133(6) ISSUED, THE FOLLOWING PARTIES HAVE CONFIRMED THE TR ANSACTIONS BY PRODUCING SUPPORTING EVIDENCES :- ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 10 [1] F-301 VITHALBHAI JERAM CHHODAVADIYA RS. 20,0 00/- [2] F-304 VITHALBHAI JERAM CHHODAVADIYA RS. 20,0 00/ [3] F-803 VIJYABEN ASHOKBHAI JAGANI RS. 4,70,000/- [4] H-604 PARIXIT NATTHUBHAI MENDPARA RS. 5,95,000 /- [5] G-603 PUJABEN PARIXITBHAI MENDPARA RS. 6.20,0 00/- TOTAL RS.17,25,000/- IN THE LIGHT OF THE CONFIRMATIONS FILED BY THE ABOV E PARTIES, LIABILITIES SHOWN TO THE EXTENT OF RS.17,25,000/- IS ALSO ACCEPTED. HENC E, REMAINING LIABILITIES TO THE EXTENT OF RS. 1,32,99,175/- IS NOT PROVED. 4.4 THE ONUS TO PROVE THE GENUINENESS OF CASH CREDI T LIES ON THE ASSESSEE. SUCH PROOF INCLUDES PROOF OF IDENTITY OF THE CREDIT OR, CAPACITY OF SUCH CREDITORS TO ADVANCE THE MONEY AND THE GENUINENESS OF THE TRANSACTION. IN THE CASE OF CASH CREDITS, THE CONCLUSIVE FINDINGS HAVE BEEN GIVEN BY THE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS. CIT 214 ITR 8 01 (1995) THAT THE ONUS TO PROVE THE GENUINENESS OF CREDIT LIES ON THE ASSE SSEE. THE FINDINGS ARE AS GIVEN BELOW: 'IN VIEW OF SECTION 68, WHERE ANY SUM IS FOUND CRED ITED IN THE BOOKS OF THE ASSESSEE FOR ANY PREVIOUS YEAR THE SAME MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR IF THE EXPLANATION OFFERED BY THE ASSESSEE ABOUT THE NATURE AND SOURCE THEREOF IS, IN THE OPINION OF THE ASSESSING OFFICER, NOT SATISFACTORY. IN SUCH A CASE THERE IS, PRIMA FACIE, EVIDENCE AGAINST THE ASSESSEE, VIZ., T HE RECEIPT OF MONEY, AND IF HE FAILS TO REBUT, THE SAID EVIDENCE BEING UNREB UTTED, CAN BE USED AGAINST HIM BY HOLDING THAT IT WAS A RECEIPT OF ANY INCOME NATURE.' 4.5 IN THE INSTANT CASE, THE ASSESSEE HAS FAILED TO ESTABLISH THE GENUINENESS OF THE CREDIT AS DISCUSSED ABOVE EVEN THOUGH HE WAS GIVEN SUFFICIENT TIME AND OPPORTUNITY TO PROVE THE SAME. HOWEVER, HE HAS FAILED TO DO SO. HENCE, CURRENT LIABILITY TO THE EXTENT OF RS.1,32,9 9,175/- AS DISCUSSED ABOVE THE GENUINENESS OF WHICH IS NOT PROVED BY THE ASSESSEE IS STATED AS UNEXPLAINED CASH CREDITS U/S.68 PERTAINING TO THE Y EAR UNDER ASSESSMENT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. PENA LTY PROCEEDINGS U/S.271(L)(C) ARE INITIATED FOR CONCEALMENT OF INCOME . 4. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WHER E LD. CIT(A) DELETED ALL THE ADDITIONS. 5. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENU E IS NOW IN APPEAL BEFORE US. ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 11 6. LD. DR VEHEMENTLY CONTENDS THAT LD. CIT(A) WHILE GIVING COMPLETE RELIEF TO THE ASSESSEE HAS NEITHER CONSIDERED THE R ELEVANT FACTS OF THE CASE NOR ADHERED TO THE PRINCIPLES OF NATURAL JUSTICE AND ON SUMMARY CONSIDERATIONS, THE APPEAL HAS BEEN ALLOWED. 6.1 ADVERTING TO REVENUE GROUND NO.3 REGARDING VIOL ATION OF RULE 46A AND NOT CALLING THE REMAND REPORT FROM ASSESSING OF FICER, IT IS CONTENDED THAT ASSESSEE HAS NOWHERE RAISED A GRIEVANCE THAT P ROPER OPPORTUNITY OF HEARING WAS NOT GIVEN BY LD. AO. A PERUSAL OF THE AOS ORDER WILL REVEAL THAT THE ASSESSEE WAS REPEATEDLY ASKED TO PRODUCE T HE NAME OF THE PERSONS WHO PAID THE ALLEGED ON-MONEY AND THE VERIFIABLE DE TAILS OF THE CREDITORS APPEARING IN THE SCHEDULE OF CURRENT LIABILITIES. THE ASSESSEE CONDUCTS A WELL ORGANIZED FULL-FLEDGED BUSINESS, MAINTAINS ACCOUNTS WHICH ARE AUDITED. IT IS UNTHINKABLE THE DETAILS ABOUT THE PERSONS WHO BOOKE D THE FLATS DID IT WITHOUT NECESSARY PAPER WORK AND TRANSACTIONS WITH CREDITORS WHO OWED HUGE INTEREST BEARING MONEY FROM ASSESSEE WILL BE W ITHOUT CORRESPONDENCE OR PAPER WORK. ASSESSEE WENT ON FEIGNING IGNORANCE AND NON AVAILABILITY OF DOCUMENTS AND FILED ONLY SELECTIVE EVIDENCE. THE DO CUMENTS AND DETAILS OF ASSESSEES BUSINESS AFFAIRS ARE IN THE ABSOLUTE KNO WLEDGE AND POSSESSION OF THE ASSESSEE. LAW CREATES AN ONUS ON THE ASSESSEE T O COME FORWARD, COOPERATE IN ASSESSMENT PROCEEDINGS BY COMPLYING WI TH WHAT IS ASKED BY AO IN DISCHARGE OF HIS STATUTORY DUTIES. SINCE ASSE SSEE WAS NOT FURNISHING RELEVANT INFORMATION, IN THESE CIRCUMSTANCES AO WAS CONSTRAINED TO LEGITIMATELY DRAW ADVERSE INFERENCE CONSEQUENTLY TH E ADDITIONS WERE MADE BASED ON THE MATERIAL AVAILABLE ON RECORD, SURROUND ING CIRCUMSTANCES AND HUMAN CONDUCT AS ORDAINED BY HONBLE SUPREME COURT IN THE CASE SUMATI DAYAL. 6.2 THE ASSESSMENT IN QUESTION WAS FRAMED BY PRECED ING SURVEY OPERATIONS WHICH RESULTED IN DISCOVERY OF INCRIMINA TING MATERIAL. IT IS CONTENDED THAT THE ACCORDING TO INCOME TAX ACT LD. AO IS AN INVESTIGATION ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 12 OFFICER WITH AN OBLIGATION TO CONDUCT PROPER INQUIR IES. W HEN THE RELEVANT INQUIRIES ARE UNDERTAKEN BY AO ABOUT ASSESSEES OWN BUSINESS WHOSE AFFAIRS ARE IN THE KNOWLEDGE OF ASSESSEE ONLY, IT I S THE OBLIGATION OF THE ASSESSEE TO CO-OPERATE IN THE PROCEEDINGS IN ORDER TO ENSURE THAT THE ENQUIRIES INITIATED BY AO ARE BROUGHT TO A LOGICAL CONCLUSION. ASSESSEE FAILED TO DISCHARGE ITS ONUS IN THIS BEHALF BY NOT FURNISHING THE DETAILS ABOUT ITS OWN BUSINESS, WHICH WERE IN ITS EXCLUSIVE KNOWL EDGE. ASSESSEE ON ONE HAND CANNOT REMAIN SILENT ABOUT THE IMPORTANT TRANS ACTIONS OF ITS BUSINESS BEFORE AO AND ON OTHER HAND RAISE GRIEVANCE BEFORE CIT(A) THAT ADDITIONS WERE WRONGLY MADE . 6.3 ADVERTING TO THE ADMISSION OF DISCLOSURE OF RS. 74 LACS DURING THE COURSE OF SURVEY, ASSESSEE HAS NOWHERE CLAIMED THAT THE ADDITIONAL INCOME PERTAINS TO ANY PARTICULAR PROJECT, OR CONSTRUCTION ACTIVITY WHICH WAS ELIGIBLE FOR DEDUCTION U/S 80IB. THE DECLARATION OF INCOME WAS QUA THE BUSINESS OF THE FIRM. ASSESSEE HAS NOT DENIED THE STATEMENT ANY WHERE HOWEVER ITS TRUE PURPORT IS BEING TWISTED BY PUTTING FORTH A CONVENI ENT INTERPRETATION OF THE STATEMENT THAT IT AMOUNTS TO BEING FROM SPECIFIC HO USING PROJECT, ELIGIBLE FOR SEC. 80(IB) AND FURTHER THE INCOME IS NOT CREDITED TO P & L A/C BUT TO WORK IN PROGRESS ACCOUNT AND THE FINAL RESULT I.E. PROFI T OR LOSS FROM THE PROJECT WILL BE DETERMINED ON THE BASIS OF PROJECT COMPLETI ON METHOD. THE ASSESSEE CANNOT BE AWARDED PREMIUM ON HIS DEFAULTS, CANNOT B LOW HOT AND COLD ON A STATEMENT WHICH IS ACCEPTED BY IT ALBEIT TWISTED TO SUIT ITS AGENDA OF CARRYING OUT UNACCOUNTED ACTIVITIES WHICH HELP IN GENERATION OF BLACK MONEY. THEREFORE THERE IS NO MERIT IN ASSESSEES SELF SERV ING INTERPRETATIONS AND EVASIVE CONTENTION RELIED ON BY LD. CIT(A) WHILE AW ARDING SUBSTANTIAL RELIEF WITHOUT GIVING PROPER OPPORTUNITY TO LD. AO. 6.4 IT IS FURTHER CONTENDED THAT THE INCOME WAS DEC LARED NOT FROM ANY PARTICULAR PROJECT BUT FROM THE UNDISCLOSED INCOME OF THE FIRM M/S. SHREE ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 13 NIDHI CORPORATION. THE AO ASKED PERTINENT QUERIES AND ASSESSEE CHOSE TO REMAIN SILENT. THEREFORE, AO WAS PERFECTLY JUSTIFI ED IN TAKING PROPER ADVERSE INFERENCE OF NON COMPLIANCE, RECORD, SURVEY MATERIAL AND THEREBY MAKING THE ADDITIONS IN THIS BEHALF BY RELYING O PR OPER JUDICIAL PRECEDENTS WHICH HAVE NOT BEEN CONTROVERTED BY LD. CIT(A). TH E ASSESSEE HAS ACTED IN A VERY CLEVER MANNER BY CREDITING THIS AMOUNT TO WORK -IN-PROGRESS ACCOUNT AND THEREBY NOT OFFERING EVEN A RUPEE FOR TAX IN TH IS YEAR AND ON THE OTHER HAND CLAIMING REFUND OF RS.11 LACS FROM INCOME-TAX. THE ASSESSEE, WHICH IS NECK DEEP INTO DUBIOUS DEAL AND NOT MAINTAINING ITS BOOKS OF ACCOUNTS BY RECORDING PROPER ENTRIES, CANNOT BE AWARDED BENEFIT OF PROJECT COMPLETION METHOD AS HAS BEEN RIGHTLY HELD BY AO. THE ACCOUNT ING STANDARD A-7 AS PRESCRIBED BY ICAI APPLIES TO A BUSINESS WHICH IS C ARRIED OUT BY RECORDING OF THE TRANSACTIONS IN A LEGITIMATE MANNER AND CANN OT BE ACCORDED TO A BUSINESS WHICH IS CARRIED ON TO GENERATE BLACK MONE Y. THEREFORE, THE AO WAS RIGHT IN HOLDING THAT THE PROJECT COMPLETION ME THOD AS ENVISAGED IN THE ACCOUNTING STANDARD AS-7 CANNOT BE USED TO POSTPO NE THE COMPUTATION OF INCOME AND CHARGE OF TAX. WHEN ASSESSEE IN SURVEY S TATEMENT DID NOT EVEN NAME THE PROJECT, THERE IS NO JUSTIFICATION IN ASSU MING THAT IT WAS FOR A BUILDING PROJECT, ELIGIBLE FOR BENEFITS OF SEC. 80I B AND TAXATION TO BE DEFERRED TO UNCERTAINTY ON COMPLETION OF UNNAMED PROJECT. AL L THESE CLEVER MANEUVERS ARE AFTERTHOUGHT TO SOMEHOW DODGE THE DUE TAX AND GET RID OF OPEN AND SHUT CASE OF INDULGING IN DUBIOUS DEALS GE NERATING BLACK MONEY. LD. AO HAS RIGHTLY RELIED ON HONBLE GUJARAT HIGH C OURT JUDGMENT IN THE CASE OF FAKIR MOHAMED HAJI HASAN VS. CIT (SUPRA) AN D OTHER JUDGMENTS. 6.5 SIMILARLY, IN RESPECT OF CURRENT LIABILITIES AL SO THE AMOUNT OF CASH CREDITS IN THE BOOKS OF THE ASSESSEE, THEY ARE NOT PROVED BY THE ASSESSEE BY PROPER EVIDENCE THUS FAILING TO DISCHARGE ITS BURDE N IN TERMS OF SECTION 68 HAVE BEEN RIGHTLY ADDED. ORDER OF AO IS RELIED ON. ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 14 6.6 ADVERTING TO LD. CIT(A)S ORDER, IT IS CONTENDE D THAT IN THE ENTIRE ORDER OF THE LD. CIT(A) THERE IS NO MENTION OF ANY APPLICATION FOR ADDITIONAL EVIDENCE OR ASSESSEES CLAIM ABOUT BEING PREVENTED BY SUFFICIENT CAUSE IN ADMITTING ANY ADDITIONAL EVIDENCE. RULE 46A MANDA TES THAT BEFORE ADMISSION OF ANY ADDITIONAL EVIDENCE, LD. CIT(A) IS UNDER OBLIGATION TO COMPLY WITH THE MANDATORY CONDITIONS MENTIONED THER EIN. IN THIS CASE, LD. CIT(A) HAS FAILED TO EXERCISE HIS QUASI-JUDICIAL PO WER IN A JUDICIOUS MANNER ON FOLLOWING COUNTS:- I) IN FAILING TO REFER TO ANY APPLICATION FOR ADDITION AL EVIDENCE BEFORE ADMITTING THE SAME; II) IN FAILING TO GIVE ANY FINDING THAT THE ASSESSEE WA S PREVENTED BY A SUFFICIENT CAUSE IN PRODUCING THE SAME BEFORE THE A O; III) WITHOUT CALLING A REMAND REPORT FROM THE LD. AO, TH US GROSSLY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. RELIANCE IS PLACED ON HONBLE DELHI HIGH COURT JUDG MENT IN THE CASE OF CIT VS. MANISH BUILD WELL (P) LTD, (2011) 245 CTR 0 397, WHICH LAYS DOWN THAT CONDITIONALITYS OF RULE 46A ARE MANDATORILY A ND TO BE SATISFIED BEFORE ADMITTING THE ADDITIONAL EVIDENCE. THUS, LD. CIT(A) HAS ENDEAVORED TO IMPROVE THE CASE OF THE ASSESSEE BASED ON EVIDENCE WHICH WAS PRODUCED BY A CLEVER DE SIGN BY ASSESSEE TO CANVASS ITS THEORY WHICH WAS BELIEVE IN NATURE WHIC H IS ACCEPTED AND RELIED ON BY LD. CIT(A) WITHOUT LEGAL JUSTIFICATION. THER EFORE, THE LD. CIT(A)S ORDER SUFFERS FROM FUNDAMENTAL INFIRMITIES AND RELI EF AWARDED THEREON IS UNTENABLE. ON MERITS, LD. AO HAS CATEGORICALLY HEL D THAT :- A) THE ASSESSEE WHEN CONFRONTED WITH INCRIMINATING EVI DENCES FOUND DURING THE COURSE OF SURVEY, ASSESSEE REQUESTED NOT TO PROCEED WITH FURTHER INQUIRIES AND OFFERED RS. 74 LACS AS INCOME TOWARDS THE BUSINESS OF THE FIRM. ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 15 B) THE STATEMENT DOES NOT REFER TO ANY PROJECT, PROJEC T COMPLETION METHOD OR SEC. 80IB CLAIM. IT MERELY REFERS TO ASSESSEE-FI RM BUSINESS. IT MAY INCLUDE ANY OTHER BUSINESS WHICH MAY NOT HAVE BEEN DISCLOSED BY THE FIRM, PARTNERS DUBIOUS CAPITAL OR ANY OTHER SOURCE WHICH WAS FOR THE ASSESSEE TO EXPLAIN AS THE FACTS WERE IN ITS EXCLUS IVE KNOWLEDGE. IF ASSESSEE FAILS TO DISCHARGE ITS ONUS AND FULLY EXPL AIN ITS OWN BUSINESS DETAILS AN ADVERSE INFERENCE BECOMES INEVITABLE. TH EREFORE, THE SATISFACTION EXPRESSED BY LD. CIT(A) ON THE SPECIOU S PLEAS OF THE ASSESSEE THAT INCOME BELONGS TO PARTICULAR PROJECT WHICH FOLLOWS PROJECT COMPLETION METHOD AS PER AS7 AND ASSESSEE S PECIFICALLY DECLARED THE ADDITIONAL INCOME TOWARDS THE SPECIFIC BUILDING PROJECT HAS NO LEGS TO STAND. THEREFORE, THE ASSESSEES CA MOUFLAGE TACTICS TO INTRODUCE THE SURRENDERED AMOUNT IN WORK-IN-PROGRES S A/C IS AN ACT OF DELIBERATELY AND CUNNINGLY EVADING THE TAX WITH IRO NY OF CLAIMING REFUND WHERE IT OUGHT TO HAVE PAID TAX. THUS IS A C ASE WHERE SURVEY OPERATIONS HAVE COME TO HELP THE ASSESSEE INSTEAD OF PAYING TAX, CLAIM A REFUND. LD. CIT(A) GLOSSED OVER THE ENTIRE SET O F FACTS, CIRCUMSTANCES AND DESIGNS OF THE ASSESSEE AND MISDIRECTED HIMSELF BY RELYING ON INADMISSIBLE EVIDENCE AND AWARDING MASSIVE RELIEF. 6.7 APROPOS THE ADDITION OF CURRENT LIABILITIES U/S 68, IT EMERGES VERY CLEARLY FROM RECORD THAT THE ASSESSEE FAILED TO DIS CHARGE ITS ONUS IN TERMS OF SECTION 68 IN PROVING THE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS IN THE BOOKS OF ACCOUNTS, THEN THE AMOUNT S ARE LIABLE TO BE ADDED U/S 68. SINCE BEFORE THE LD. AO THE ASSESSEE FAILE D TO DISCHARGE ITS BURDEN, THERE WAS NO ALTERNATIVE LEFT BUT TO ADD THE SAME U /S 68/69 AS ORDAINED BY LAW. FURTHER RELIANCE IS PLACED ON HONBLE GUJARAT HIGH COURT JUDGMENT IN THE CASE OF FAKIR MOHAMED HAJI HASAN (SUPRA). ASSES SEES INABILITY TO DISCHARGE ITS BURDEN CANNOT BE CURED BY LD. CIT(A) BY IMPROVING ITS CASE BASED ON UNRELIABLE EVIDENCE. ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 16 7. IN REPLY, LD. COUNSEL FOR THE ASSESSEE RELIED ON FOLLOWING JUDGMENTS:- I). MY HOME DEVELOPERS VS. ITO, [2015] 155 ITD 335 (AHD TRIB.) IT IS EVIDENT THAT, AS PER REVENUE, THE NOTING IN THE DIARY WHICH WAS FOUND DURING COURSE OF SURVEY IS THE DETAILS OF ON-MONEY RECEIVED FOR BOOKING OF THE FLAT IN ORNATE HOUSE PROJECT AND THE TOTAL OF SUCH RECEIPT IS RS. 76.25 LAKHS. THE ASSESSEE WAS ASKED TO STATE HOW IT IS REFLECTED IN THE ASSESSEE'S BOOKS OF ACCOUNT. IN RESPONSE TO WHICH THE ASSESSEE ADMITTED THE RECEIPT WAS ON- MONEY RELATING TO BOOKING IN THE PROJECT ORNATE HOU SE, WHICH THE ASSESSEE DECLARED AS UNDISCLOSED INCOME OF THE ASSESSEE-FIRM FOR THE CURRENT YEAR. THE SUM OF RS. 76.25 LAKHS IS CREDITED IN THE ASSESSEE' S PROFIT AND LOSS ACCOUNT AS BUSINESS INCOME. THE ABOVE FACTS HAVE NOT BEEN DISP UTED BY THE REVENUE. THUS, FROM THE ABOVE STATEMENT, IT IS EVIDENT THAT THE SUM OF RS. 76.25 LAKHS FOUND RECORDED IN THE DIARY WAS ACCEPTED TO BE THE NOTING RELATING TO RECEIPT OF ON-MONEY FOR THE BOOKING OF FLAT IN ORNATE HOUSE BY THE REVENUE AUTHORITIES AS WELL AS THE ASSESSEE. NOW, THE REVEN UE IS TAXING THE SUM OF RS. 76.25 LAKHS BUT INSTEAD OF BUSINESS INCOME, TREATIN G THE SAME AS INCOME FROM OTHER SOURCES. THERE IS NO JUSTIFICATION FOR THE DI FFERENT STAND OF THE REVENUE AUTHORITIES - ONE AT THE TIME OF SURVEY AND ANOTHER AT THE TIME OF REGULAR ASSESSMENT. DURING THE COURSE OF SURVEY, THE REVENU E AUTHORITIES THEMSELVES HAVE CONSIDERED THE RECEIPT NOTED IN THE DIARY TO B E ON-MONEY RECEIVED FOR BOOKING OF THE FLATS IN ORNATE HOUSE. THE ASSESSEE ADMITTED THE SAME AND SURRENDERED THE SUM OF RS. 76.25 LAKHS AS ITS INCOM E FROM ORNATEHOUSE.- PROJECT. ADMITTEDLY, THE ASSESSEE DID NOT HAVE ANY O THER BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION. CONSIDERING TH E TOTALITY OF THESE FACTS AND THE ARGUMENTS OF BOTH THE SIDES, THERE WAS NO J USTIFICATION FOR THE ASSESSING OFFICER TO HOLD THAT THE SUM OF RS. 76.25 LAKHS WAS THE INCOME FROM OTHER SOURCES AND NOT THE INCOME FROM ORNATE H OUSE PROJECT. [PARA 12] II). MADHAV CORPORATION VS. ACIT, [2015] 44 ITR (T RIB) 193 (AHD) THE ASSESSEE CLAIMED EXEMPTION UNDER SECTION 80-I B OF THE ACT ON ADDITIONAL INCOME SHOWN IN THE BLOCK RETURN. THE AU THORITIES MADE ADDITION ON ADDITIONAL CLAIM OF DEDUCTION ON THE BASIS OF SE IZED RECORDS. ON APPEAL: HELD, ALLOWING THE APPEAL, THAT THE ASSESSEE HAD EA RNED ADDITIONAL INCOME WHICH WAS DISCLOSED CONSEQUENT UPON THE SEARCH. HEN CE IT PARTOOK OF THE CHARACTER OF BUSINESS INCOME AND THE ASSESSEE HAD A DMITTED THAT THE AMOUNT A PART OF INCOME EARNED FROM THE HOUSING PROJECT UNDE RTAKEN BY IT. SINCE THE AMOUNT HAD DIRECT AND PROXIMATE CONNECTION WITH THE NORMAL BUSINESS ACTIVITIES, IT WAS BUSINESS INCOME AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80- IB OF THE ACT. ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 17 THE ASSESSEE CLAIMED DEDUCTION ON ADDITIONAL INCOME UNDER SECTION 80-IB(10) OF THE ACT. THE COMMISSIONER (APPEALS) REJECTED THE C LAIM OF THE ASSESSEE ON THE GROUND THAT THE ON MONEY NOT SHOWN IN REGULAR B OOKS OF ACCOUNT COULD NOT BE CONSIDERED FOR THE PURPOSE OF DEDUCTION UNDE R SECTION 80-IB(10) OF THE ACT. ON APPEAL : HELD, ALLOWING THE APPEAL, THAT ON MONEY WAS RELATA BLE TO BUSINESS INCOME. ADMITTEDLY, THERE WAS NO BUSINESS ACTIVITY UNDERTAKE N BY THE ASSESSEE OTHER THAN THE HOUSING DEVELOPMENT PROJECT. HENCE THE ASS ESSEE WAS ENTITLED TO DEDUCTION IN RESPECT OF ADDITIONAL INCOME DETECTED CONSEQUENT TO SEARCH UNDER SECTION 80-IB(10) OF THE ACT. III). CIT VS. SHETH DEVELOPERS (P) LTD, (2012) 77 D TR (BOM) 249 HELD : EXPLANATION TO SUB-S. (1) OF S. 158BB WAS AMENDED BY THE FINANCE ACT, 2002 WITH RETROSPECTIVE EFFECT FROM 1ST JULY, 19 95. PRIOR TO THE AMENDMENT, ACCORDING TO THE EXPLANATION, THE TOTAL INCOME OR LOSS WAS TO BE COMPUTED IN ACCORDANCE WITH CHAPTER IV. CONSEQUENT TO THE AMENDMENT BY FINANCE ACT, 2002 WITH RETROSPECTIVE EFFECT FROM 1S T JULY, 1995, THE TOTAL INCOME OR LOSS HAS TO BE COMPUTED IN ACCORDANCE WIT H THE PROVISIONS OF THIS ACT. CONSEQUENTLY, W.E.F. 1ST JULY, 1995 THE TOTAL IN COME/LOSS FOR THE BLOCK PERIOD HAS TO BE COMPUTED IN ACCORDANCE WITH THE PRO VISIONS OF THE ACT AND- THE SAME WOULD INCLUDE CHAPTER VI-A. SEC. 80-IB IS A PART OF CHAPTER VI-A. IN VIEW OF THE ABOVE, WHILE COMPUTING THE UNDISCLOS ED INCOME FOR THE BLOCK PERIOD THE RESPONDENT-ASSESSEE IS ENTITLED TO CLAIM DEDUCTION FROM ITS INCOME UNDER S. 80-IB. IT IS NOT THE CASE OF THE REVENUE T HAT THE MONEY FOUND IN POSSESSION OF THE ASSESSEE COULD NOT BE EXPLAINED A ND/OR ITS SOURCE COULD NOT BE EXPLAINED TO THE SATISFACTION OF THE AO. IN THE P RESENT CASE UNDISCLOSED INCOME FOUND IN THE FORM OF CASH WAS EXPLAINED AS H AVING BEEN ACQUIRED WHILE CARRYING ON BUSINESS AS A BUILDER AND THIS EX PLANATION WAS ACCEPTED BY THE AO BY HAVING ASSESSED THE UNDISCLOSED INCOME FOR THE BLOCK PERIOD AS INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFES SION. IN THE PRESENT CASE, NO QUESTION OF APPLICATION OF SS. 68, 69 AND 69A, 6 9B AND 69C ARISES AS THE SAME HAS NOT BEEN INVOKED BY THE DEPARTMENT. IT IS AN ADMITTED POSITION BETWEEN THE PARTIES AS REFLECTED EVEN IN THE ORDER OF THE AO THAT UNDISCLOSED INCOME WAS IN FACT RECEIVED BY THE ASSESSEE IN THE COURSE OF CARRYING OUT ITS BUSINESS ACTIVITIES AS A BUILDER. ANBU TEXTILES VS. ASSTT. CIT (2004) 187 CTR (MAD) 646 : (2003) 262 ITR 684 (MAD) CONCURRED WI TH; FAKIR MOHMED HAJI HASAN VS. CIT (2001) 165 CTR (GUJ) 111: (2001) 24 7 ITR 290 (GUJ) DISTINGUISHED. 7.1 LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ASSESSEE HAD MADE VOLUMINOUS SUBMISSIONS AND FILED ALL NECESSARY PAPE RS AND HAD DISCHARGED ITS BURDEN. IT HAS NOT BEEN DISPUTED THAT THE ASSE SSEE IS INTO BUILDING CONSTRUCTION, THE DISCLOSURE WAS ONLY QUA THE BOOKI NGS OF FLATS, AND AS ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 18 ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD IN ACCORDANCE WITH AS7, THE AMOUNT WAS RIGHTLY CREDIT TO WIP A/C. NO QUESTI ON WAS ASKED DURING SURVEY ABOUT THE PROJECT. SINCE ASSESSEE HONOURED I TS DISCLOSURE BY WAY OF ADDITIONAL INCOME OF RS.74 LACS IN WIP A/C, IT BECO MES PART OF THE SALES PROCEEDS OF ONGOING BUILDING PROJECT. THE ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD. SINCE THE AMOUNT OF RS.74 LACS STANDS INCLUDED IN THE WIP, IT IMPLIEDLY MEANS THAT THE ASSESSEE HAS HONOU RED THE DISCLOSURE AND OFFERED IT AS INCOME. 7.2 APROPOS CURRENT LIABILITIES, THE LD. AO HAS FAI LED TO APPRECIATE THAT THESE ARE THE ADVANCES RECEIVED BY THE ASSESSEE FOR PURCHASE OF FLATS; THEREFORE, THEY CANNOT BE ADDED AS CASH CREDITS. O RDER OF LD. CIT(A) WAS RELIED ON. 7.3 AT THE END OF ARGUMENTS LD. COUNSEL FAIRLY CONC EDED THAT ALL THE DETAILS WERE NOT FILED BEFORE THE AO AND THE REMAIN ING DOCUMENTS WERE FILED BEFORE THE LD. CIT(A) WHICH WERE DULY PERUSED AND CONSIDERED BY HIM. LD. CIT(A) HAS COTERMINOUS POWERS AS OF AO AND HAS POWERS TO CALL FOR ANY INFORMATION AND CONDUCT ENQUIRIES, THE ADDITIONAL P APERS HAVE BEEN RELIED ON IN ACCORDANCE WITH LAW AND THE RELIEF HAS BEEN G RANTED BASED ON JUST AND PROPER CONSIDERATIONS. HIS ORDER IS RELIED ON. 8. LD. DR, IN REPLY, VEHEMENTLY CONTENDS THAT ALL T HE CASE-LAWS RELIED ON BY THE ASSESSEE ARE RENDERED ON THE PECULIAR FACTS WHICH ARE DISTINGUISHABLE FROM ASSESSEES CASE. I) IN THE CASE OF MY HOME DEVELOPERS (SUPRA), THE DIAR Y ITSELF REVEALED THAT THE ON-MONEY RECEIVED FROM BOOKING OF FLATS. IN THIS CASE, THE ASSESSEE, WHEN CONFRONTED WITH THE INCRIM INATING MATERIAL, NEITHER POINTED OUT ANY ON-MONEY OR MADE ANY STATEMENT THAT THEY REPRESENT ANY ON-MONEY; RATHER ASSESSEE H AS SPECIFICALLY ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 19 STATED THAT IT IS THE ADDITIONAL INCOME EARNED BY T HE ASSESSEE-FIRM BUSINESS. IN CASE IT WAS NOT THE INCOME AND ONLY P ART OF WIP, NOBODY STOP THE ASSESSEE IN MAKING CLEAR STATEMENT TO THIS EFFECT. THE STATEMENT HAS NOT BEEN DENIED BY THE ASSESSEE., LD. COUNSEL HAS NOT BEEN ABLE TO ANSWER TO THE QUERY OF THE BENCH A S TO HOW MANY PROJECTS WERE UNDERTAKEN BY THE FIRM AND THE ON-MON EY AND THE ADDITIONAL INCOME WAS DECLARED FROM WHICH BUSINESS OR WHICH BUILDING PROJECT. II) IN THE CASE OF MADHAV CORPORATION (SUPRA), IT PERTA INS TO A CASE WHERE THERE IS A DEFINITE PROJECT TO WHICH 80IB WAS HELD AS CLEARLY APPLICABLE. SINCE ASSESSEE NEITHER ATTRIBUTED THE INCOME TOWARDS ANY PROJECTS NOR PUT UP A CLAIM U/S 80IB DURING THE COURSE OF STATEMENT, THE FACTS OF MADHAV CORPORATION ARE CLEA RLY DISTINGUISHABLE. III) IN THE CASE OF SHETH DEVELOPERS (P) LTD, HONBLE BO MBAY HIGH COURT WAS DEALING OF A CASE U/S 158BB, I.E., SEARCH ASSESSMENT; WHEREAS ASSESSEES CASE IS OF SURVEY. BESIDES, IN THAT CASE REVENUE COULD NOT DEMONSTRATE THAT ASSESSEE FAILED TO EXPLA IN THE SOURCES OF THE MONIES FOUND IN ITS POSSESSION. WHEREAS, IN ASS ESSEES CASE NOT ONLY DURING THE COURSE OF SURVEY BUT DURING THE COU RSE OF ASSESSMENT, ASSESSEE FAILED TO DISCHARGE ITS BURDEN . SINCE ALL THESE CASES ARE NOT APPLICABLE TO THE ASSESSEES CASE, TH E ORDER OF THE LD. CIT(A) DESERVES TO BE REVERSED AS THE RELIEF HAS BE EN GRANTED WITHOUT GETTING INTO THE FACTS OF THE CASE OR CRUCI AL POINTS NECESSARY FOR GIVING DECISION ON THE SPECIFIC FACTS OF THE CA SE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. IN OUR CONSIDERED VIEW, REVENUE HAS LAID OUT A CLEAR CASE THAT:- ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 20 (A) THE ADDITIONAL EVIDENCE WAS RELIED ON BY LD. CIT(A ) HAS BEEN ADMITTED IN GROSS CONTRAVENTION OF MANDATORY PROVIS IONS OF RULE 46A. RELYING ON THE JUDGMENT OF HONBLE DELHI HIG H COURT IN THE CASE OF MANISH BUILD WELL (P) LTD (SUPRA) WE HOLD THAT THE CIT(A) WAS NOT JUSTIFIED IN ENTERTAINING THE ADDITIONAL EV IDENCE WITHOUT MENTIONING THE APPLICATION IN THIS BEHALF, THE CONT ENTS THEREOF AND WITHOUT GIVING A CLEAR FINDING THAT THE ASSESSEE WA S PREVENTED BY SUFFICIENT CAUSE IN FILING THE EVIDENCE BEFORE THE LD. AO. IT HAS NOT BEEN DISPUTED BY THE ASSESSEE THAT SUFFICIENT OPPOR TUNITIES WERE GIVEN TO HIM BY LD. AO. BESIDES, NO GROUND HAS BEE N RAISED IN THE GROUNDS OF APPEAL BEFORE THE LD. CIT(A) THAT PROPER OPPORTUNITY OF HEARING WAS NOT GIVEN, THEREFORE, THE JUSTIFICATION OF ADMITTING ADDITIONAL EVIDENCE IS CONSPICUOUSLY MISSING. FURTH ERMORE, NON- CALLING OF A REMAND REPORT FROM AO ENDORSES THE CON TENTION OF THE LD. DR THAT LD. CIT(A) FAILED IN THIS BEHALF. IN O UR CONSIDERED VIEW, THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE COULD NOT HAVE BEEN ADMITTED AND RELIED ON BY LD. CIT(A). (B) IN THE STATEMENT GIVEN BY THE ASSESSEE, THERE IS NE ITHER ANY MENTION OF SPECIFIC HOUSING PROJECT. THE DECLARED INCOME N OT BEING TOWARDS A PARTICULAR HOUSING PROJECT, THE SPECIOUS PLEA THA T IT SHOULD BE ASSUMED THAT DECLARED BUSINESS INCOME WAS FOR PARTI CULAR HOUSING PROJECT. SINCE ASSESSEE WAS FOLLOWING THE PROJECT C OMPLETION METHOD AND THEREFORE ASSESSEE HAD NOTHING MORE TO DO THAN CREDIT THE AMOUNT IN WIP ACCOUNT CANNOT BE ACCEPTED. THE ACCO UNTING STANDARD A7 CANNOT BE APPLIED TO UNSCRUPULOUS ASSES SEE WHO INDULGES IN FUDGING OF ACCOUNTS AND WANTONLY PROMOT ING BLACK MONEY TRANSACTIONS. IT CLEARLY EMERGES FROM THE REC ORD THAT ASSESSEE INDULGED IN DUBIOUS ACTIVITIES LEADING TO GENERATIO N OF BLACK MONEY; ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 21 IT WILL BE UNJUSTIFIED TO HOLD THAT THE ACCOUNTING STANDARDS A7 WILL APPLY TO SUCH BUSINESS AND BOOKS WHICH ARE THOROUGH LY UNRELIABLE. CONSEQUENTLY, WE ARE UNABLE TO HOLD THAT THE ASSESS EE DISCHARGED ITS OBLIGATIONS AND MADE A PROPER CASE TO GO BEYOND ITS STATEMENT OF OFFERING ADDITIONAL INCOME. MORE SO IN CLAIMING REF UND OF RS.11 LACS OF PREPAID TAXES. IN THE GIVEN FACTS AND CIRCUMSTAN CES, THE ADDITIONAL INCOME CANNOT BE HELD TO BE PERTAINING TO ANY SPECI FIC BUILDING PROJECT AND THE ALTERNATE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 80IB IS UNJUSTIFIED AND DESERVES NO CREDENCE. (C) APROPOS CURRENT LIABILITIES ALSO WE FIND MERIT IN T HE CONTENTION OF THE LD. DR THAT THE ASSESSEE, DESPITE OPPORTUNITIES, FA ILED TO DISCLOSE THE IDENTITY COUPLED WITH DEMONSTRATION OF OTHER RELEVA NT DETAILS ABOUT FLAT ALLOTMENTS, ALLOTMENT LETTER OR ANY OTHER CORR ESPONDENCE TO ESTABLISH THAT THE AMOUNT LEGITIMATELY CLAIMED AS F LAT BOOKING ADVANCE WAS IN FACT SO. SINCE THE ASSESSEE HAS FAI LED TO DISCHARGE ITS BURDEN IN THIS BEHALF, THE ADDITION HAS BEEN RIGHTL Y MADE BY LD. AO AND THERE IS NO JUSTIFICATION IN CIT(A)S HOLDING T HAT ASSESSEE HAS DISCHARGED ITS BURDEN BASED UN ADMISSION OF UNTENAB LE ADDITIONAL EVIDENCE. IN OUR CONSIDERED VIEW, NEITHER THE ASSE SSEE HAS DISCHARGED ITS BURDEN NOR THE ADDITIONAL EVIDENCE R ELIED BY THE LD. CIT(A) IS TENABLE IN THE EYES OF LAW. THEREFORE, T HE ORDER OF LD. CIT(A) ON THIS ISSUE IS REVERSED. (D) APROPOS THE CASE-LAWS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE, LD. DR HAS SUCCINCTLY COUNTERED THAT CITED CASES HA VE BEEN DECIDED ON DISTINGUISHABLE FACTS WHICH CANNOT BE APPLIED TO ASSESSEES CASE. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES, FOREGOI NG RIVAL CONTENTIONS AND PAPER-BOOK FILED BY THE ASSESSEE, W E ARE OF THE VIEW THAT THE ADDITIONS WERE RIGHTLY MADE BY THE AO. LD . CIT(A) WAS NOT ITA NO. 1635/AHD/2011 ACIT VS. SHREE NIDHI CORPORATION AY : 2008-09 22 JUSTIFIED IN RELYING ON ADDITIONAL EVIDENCE WHICH I S IN GROSS CONTRAVENTION OF RULE 46A. ON MERITS ALSO, THE ADD ITIONS MADE BY LD. AO ARE UPHELD. WE REVERSE THE ORDER OF LD. CIT (A) AND RESTORE THE ORDER OF LD. AO. 10. IN THE RESULT, REVENUES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 26 TH AUGUST, 2016 AT AHMEDABAD. SD/- SD/- ANIL CHATURVEDI (ACCOUNTANT MEMBER) R.P. TOLANI (JUDICIAL MEMBER) AHMEDABAD; DATED 26/08/2016 *BIJU T., PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD