The DCITValsad Circle, Valsad V. M/s. Amar Corporation, Valsad

ITA 2318/AHD/2009

• Counselvise Citation: 231820514 RSA 2009
• Duration Of Justice: 2 year(s) 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-07-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: S N SOPARKAR
• Keywords: Loose papers; Opportunity of being heard
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.2318 / AHD/2009 (ASSESSMENT YEAR 2006-07) ACIT, VALSAD CIRCLE, VALSAD VS. M/S. AMAR CORPORATION 4 TH FLOOR, AMAR CHAMBER, STATION ROAD, VALSAD PAN/GIR NO. : AAGFA8447D (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI B. L. YADAV, SR. DR RESPONDENT BY: SHRI S N SOPARKAR, ADV. DATE OF HEARING: 02.01.2012 DATE OF PRONOUNCEMENT: 19.01.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF LD. CIT (A) VALSAD DATED 26.04.2009 FOR THE ASSESSMENT YEAR 200 6-07. 2. GROUND NO.1 IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY T HE A.O. ON ACCOUNT OF ON MONEY RECEIVED ON SALE OF FLAT AMOU NTING TO RS.44,84,647/- AFTER REJECTING THE BOOK RESULTS AS PER PROVISIONS OF SECTION 145(3) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT (A) IN PARA 1 & 2 OF HIS ORDER AND THE RELEVANT PARAGRAPHS ARE REPRODUCED BELOW: THIS IS REGARDING ADDITION OF RS. 44,84,6477- AS O N-MONEY. IN THE ASSESSMENT ORDER, THE A.O. HAS STATED THAT THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF LAND AND BUILDING ORGANIZER AND CONSTRUCTION WORK. DURING THE YEAR UNDER CONSIDERATION, THE ASSE SSEE HAS SHOWN SALES FROM THE PROJECT CALLED 'AMARDHAM-C'. THIS PR OJECT WAS I.T.A.NO. 2318 /AHD/2009 2 DEVELOPED FROM F.Y. 2001-02 TO F.Y. 2003-04, DURING THE YEAR 8 FLATS OF BUILT UP AREA OF 12,850 SQ. FT. WAS SHOWN FOR SALES OF RS. 57,95,3537-. THE RATE OF SALE PRICE IS RS, 4517- PE R SQ. FT. THE ASSESSEE HAS SHOWN NET PROFIT OF RS. 4,74,6157- AND CLAIMED DEDUCTION U7S. 80IB ON AN EQUAL AMOUNT OF NIL INCOM E FROM THE BUSINESS. THE A.O. HAS STATED THAT A SEARCH OPERATION WAS CAR RIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 18.06.2003. AT THE TIME OF SEARCH PROCEEDINGS, CERTAIN LOOSE PAPERS AND DOCUME NTS/ MATERIALS FOUND, SEIZED AND INVENTORIZED AS PER ANNEXURE-BF-I I OF PANCHNAMA DATED 18.06.2003. THEREAFTER FROM PARA-4.1 ON PAGE-2 TO PARA-6.1(C) O N PAGE-9, THE A.O. HAS DISCUSSED THE LOOSE PAPERS AND OTHER PAPER S FOUND DURING THE COURSE OF SEARCH PROCEEDINGS IN RESPECT OF THE SEARCH CARRIED OUT ON 18.06.2003 WHICH FALLS IN A.Y. 2004-05 WHICH IS PRIOR TO THE CURRENT YEAR. IN VIEW OF THE DISCUSSION OF SEIZ ED MATERIAL THE A.O. CAME TO THE CONCLUSION THAT THE ASSESSEE HAD R ECEIVED 'ON- MONEY' ON SALE OF FLATS IN 'AMARDHAM-C' PROJECT IN THE EARLIER YEARS AND, THEREFORE, THE BOOKS OF ACCOUNT MAINTAIN ED BY THE ASSESSEE FOR THE CURRENT YEAR ALSO DO NOT SHOW CORR ECT PICTURE. IN VIEW OF THE ADDITION MADE IN THE LAST YEAR IN RESPE CT OF 'ON-MONEY' RECEIVED ON 'AMARDHAM-C' PROJECT IN A.Y, 2005-06, T HE A.O. ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY ADDITION BE NOT MADE ON SIMILAR BASIS IN THE CURRENT YEAR ALSO. IN RESPONSE TO THIS SHOW-CAUSE NOTICE, THE ASSESSEE GAVE ITS SUBMISSION PART OF WHICH HAS BEEN DISCUSSED BY THE A.O. IN PARA- 8.1 TO 8.4 OF THE ASSESSMENT ORDER. THE SUM AND SUB STANCE OF THE SUBMISSION OF THE ASSESSEE BEFORE THE A.O. IS THAT THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF SALE OF FLAT OF 'AMAR DHAM-C' DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THAT THESE FLATS WHICH HAVE BEEN SOLD WERE PART OF THE CLOSING STOCK OF TH E LAST YEAR. THE ASSESSEE ALSO STATED THAT THEY HAD GIVEN COMPLETE D ETAILS AND EXPLANATION REGARDING PAGE NOS.L TO 99 OF THE LOOSE FILE INVENTORIZED AS PER ANNEXURE-BF/22 DURING THE ASSES SMENT PROCEEDINGS FOR THE A.Y. 1998-99 TO A.Y. 2004-05. T HE ASSESSEE ALSO STATED THAT THE ADDITIONS MADE BY THE A.O. IN THE EARLIER YEARS BASED ON THE LOOSE PAPERS HAVE REFERRED TO BY THE A .O. WERE DELETED BY THE CIT(A)-H,CENTRAL CIRCLE-I AHMEDABAD VIDE ORDER DATED 05.03.2007 DURING THE APPELLATE PROCEEDINGS F OR THE PERIOD RELEVANT TO A.Y. 1998-99 TO A.Y. 2004-05. I.T.A.NO. 2318 /AHD/2009 3 THE A.O. DID NOT ACCEPT THE ABOVE EXPLANATION OF TH E ASSESSEE AND ON THE BASIS OF SEIZED MATERIALS OF SEARCH CONDUCTE D IN A.Y. 2004- 05-REJECTED THE BOOKS OF ACCOUNT AND MADE ADDITION OF RS. 44,84,647/- AS PER THE CALCULATION GIVEN IN PARA- 9 .2 ON PAGE- 15 & 16 OF THE ASSESSMENT ORDER. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A) WHO HAS DELETED THE ADDITION BY FOLLOWING TH E ORDER OF HIS PREDECESSOR IN ASSESSMENT YEAR 2005-06. NOW, THE R EVENUE IS IN APPEAL BEFORE US. 5. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). IT WAS ALSO SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT IN ASSESSM ENT YEAR 2005-06, THE MATTER WAS CARRIED BY THE REVENUE TO THE TRIBUNAL I N I.T.A.NO. 1844/AHD/2009 AND VIDE ORDER DATED 28.07.2011, THE TRIBUNAL HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. HE SU BMITTED A COPY OF THE TRIBUNAL DECISION AND DRAWN OUR ATTENTION TO PARA 7 OF THE TRIBUNAL DECISION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT A SEARCH WAS CARRIED OUT IN THIS CASE ON 18.06 .2003 I.E. RELEVANT TO ASSESSMENT YEAR 2004-05 AND THE ADDITION OF ON MON EY IS BASED ON THE SEIZED PAPERS OF ESTIMATED SALES, FOR WHICH, THE AD DITION WAS MADE BY THE A.O. FOR THE ASSESSMENT YEAR 1998-99 TO ASSESSMENT YEAR 2004-05 WHICH WAS DELETED BY LD. CIT(A). BUT THERE IS NO MENTION OF THE PRESENT ASSESSMENT YEAR IN THE SEIZED MATERIAL. IN ASSESSM ENT YEAR 2005-06, THE TRIBUNAL HAS DELETED SIMILAR ADDITION IN ASSESSEES OWN CASE BY FOLLOWING THE TRIBUNAL ORDER FOR ASSESSMENT YEAR 2004-05 IN W HICH, IT WAS HELD THAT IN THE ABSENCE OF ANY COGENT EVIDENCE, THERE IS NO SCOPE FOR EXTRAPOLATION. SINCE, IN THE PRESENT YEAR ALSO, THERE IS NO EVIDEN CE REGARDING RECEIPT OF ANY ON MONEY, ADDITION CANNOT BE MADE ON THE BASIS OF SEIZED MATERIAL I.T.A.NO. 2318 /AHD/2009 4 RELATING TO EARLIER YEAR. BY RESPECTFULLY FOLLOWIN G THE TRIBUNAL DECISION IN ASSESSEES OWN CASE, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. THIS GROUND OF REVENUES APPEAL IS REJECTED. 7. GROUND NO.2 OF THE REVENUES APPEAL IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN ALLOWING THE DEDUCTION CLAIMED BY THE ASSESSEE U/S 80-IB OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.4,79,616/. 8. THE BRIEF FACTS OF THE CASE REGARDING THIS ISSUE TILL THE ASSESSMENT STAGE ARE NOTED BY LD. CIT(A) IN PARA 6 OF HIS ORDE R WHICH IS REPRODUCED BELOW: THIS IS REGARDING DISALLOWANCE OF CLAIM OF DEDUCTI ON U/S. 80IB, IN THE ASSESSMENT ORDER, THE A.O. HAS DISALLOWED TH E CLAIM OF DEDUCTION U/S. 80IB FOR THE FOLLOWING REASONS:- (1) THE ASSESSEE IS NOT THE LEGAL OWNER OF THE LAND AND AS PER THE PROVISIONS OF SECTION 80IB(10) R.W.S 80IB(1) THE PR IMARY CONDITION FOR ALLOWING THE DEDUCTION IS THAT THE ASSESSEE SHO ULD BE THE OWNER OF THE LAND. THE A.O. HELD THAT THE ASSESSEE WAS CA RRYING ON THE ACTIVITY OF DEVELOPING AND BUILDING HOUSING PROJECT ON A LAND WHICH IS NOT OWNED BY HIM BUT BY A PERSON WITH WHOM HE ENTERED INTO A DEVELOPMENT AGREEMENT. IN VIEW OF THE ABOVE, THE A.O. CONCLUDED THAT THE ASSESSEE WAS NOT OWNER OF THE LA ND AND, THEREFORE, HE CANNOT THE OWNER OF THE PROJECT ALSO BECAUSE WHEN A DWELLING UNIT, A HOUSING PROJECT IS TRANSFERRED TO THE END USER, THE DOCUMENTS TRANSFERRING THE STRUCTURE AND LAND HAS T O BE THE SAME. ACCORDING TO THE A.O,, THERE IS A COMPLETE IDENTITY BETWEEN THE ASSESSEE REFERRED TO IN SECTION 80IB(S) AND THE UND ERTAKEN REFERRED TO IN SECTION 80IB(10) AND THIS IDENTITY BECOMES FU RTHER CLEAR FROM RULE 18BBB PRESCRIBING THE FORM NO. 10CCB OF AUDIT REPORT TO BE FURNISHED BY THE ASSESSEE BY VIRTUE OF SECTION 80IB (13) R.W.S. 80IA(7). IN VIEW OF THIS, THE A.O. CAME TO THE CONC LUSION THAT IT IS MANDATORY FOR THE ASSESSEE TO OWN THE LAND FOR DEDU CTION TO BE ALLOWED. (2) THIS PROVISION MADE FOR PERMITTING DEVELOPMENT OF LOW COST HOUSING PROJECTS AND ITS TARGETED BENEFICIARIES ARE MIDDLE CLASS INVESTORS AND, THEREFORE, ANY INTERPRETATION WHICH DOES NOT SCALE THE BENEFIT TO ULTIMATE BENEFICIARY WILL DIVIDE THE LEGISLATION. I.T.A.NO. 2318 /AHD/2009 5 (3) THE A.O. STATED THAT EVEN FOR OBTAINING P ROVISIONAL OF LOCAL AUTHORITY THE LAND OWNER HAS TO SUBMIT COMPLETE LET OUT OF USING PROJECT DULY SIGNED BY THE ARCHITECT AND HENCE IT I S THE OWNER OF THE LAND WHO IS ENTITLED TO APPLY AND GET THE APPROVAL OF THIS HOUSE PROJECT AND, THEREFORE, OWNER ONLY CAN GET THE BENE FIT U/S. 80IB. IN VIEW OF THE ABOVE, THE A.O. DISALLOWED THE DEDUC TION U/S. 80IB. 9. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A) WHO HAS DELETED THIS DISALLOWANCE BY FOL LOWING THE ORDER OF HIS PREDECESSOR IN ASSESSMENT YEAR 2005-06. NOW, T HE REVENUE IS IN APPEAL BEFORE US. 10. LD. D.R. SUPPORTED THE ASSESSMENT ORDER WHEREAS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). HE ALSO SUBMITT ED THAT IN ASSESSMENT YEAR 2005-06, THE MATTER WAS RESTORED BACK BY THE T RIBUNAL ON THIS ISSUE TO THE FILE OF LD. CIT(A) WITH A DIRECTION TO DECID E THIS ISSUE AFRESH IN THE LIGHT OF THE TRIBUNAL DECISION RENDERED IN THE CASE OF SHAKTI CORPORATION. HE SUBMITTED THAT IN THE PRESENT YEAR ALSO, THE MAT TER MAY BE RESTORED BACK TO THE FILE OF LD. CIT(A) FOR A FRESH DECISION . HE ALSO SUBMITTED THAT NOW, ON THIS ISSUE, THE HONBLE GUJARAT HIGH COURT S DECISION IS ALSO AVAILABLE AS THE SAME IS PRONOUNCED BUT COPY IS NOT AVAILABLE TILL NOW. LD. CIT(A) MAY BE DIRECTED TO DECIDE THIS ISSUE AFR ESH IN THE LIGHT OF THIS DECISION OF HONBLE GUJARAT HIGH COURT. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT IN ASSESSMENT YEAR 2005-06, IN ASSESSEES OWN CASE, THE MATER WAS RESTORED BACK TO THE FILE OF THE LD. CIT(A) BY THE TRIBUNAL FOR A FRESH DECISION AND THE RELEVANT PARA OF THE TRIBUNAL ORDE R PARA 11.1 IS REPRODUCED BELOW: 11.1 IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THIS ISSUE TO HIS FILE WITH THE DIRECTION THAT HE WILL CONSIDER THE PRINCIPLES LAID DOWN BY THE HONB LE APEX COURT IN THE CASE OF FAQIR CHAND GULATI (SUPRA) AS WELL A S THE DECISION OF I.T.A.NO. 2318 /AHD/2009 6 THE ITAT IN THE CASE OF M/S. SHAKTI CORPORATION (SU PRA) AND READJUDICATE THE CLAIM OF THE ASSESSEE REGARDING AL LOWING OF CLAIM OF DEDUCTION UNDER SECTION 80IB(10), AFTER GIVING O PPORTUNITY OF BEING HEARD TO BOTH SIDES. 12. NOW, IT WAS SUBMITTED BY THE LD. COUNSEL FOR TH E ASSESSEE BEFORE US THAT ON THIS ISSUE, HONBLE GUJARAT HIGH COURT H AS ALREADY PRONOUNCED THE DECISION BUT THE COPY OF THE SAME IS NOT AVAILA BLE BY NOW. IF A COPY OF ANY DECISION OF HONBLE GUJARAT HIGH COURT IS SU BMITTED BEFORE LD. CIT(A) BY THE ASSESSEE, HE SHOULD CONSIDER THAT JUD GMENT OF HONBLE GUJARAT HIGH COURT ALSO AND HE SHOULD DECIDE THE IS SUE AFRESH AS PER THE DIRECTION OF THE TRIBUNAL IN ASSESSMENT YEAR 2005-0 6 AFTER CONSIDERING SUCH DECISION OF HONBLE GUJARAT HIGH COURT ON THIS ISSUE IF SUBMITTED BEFORE HIM. NEEDLESS TO SAY, HE SHOULD PROVIDE REA SONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. THIS GROUND OF THE REVENUE STANDS ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, APPEAL OF THE REVENUE STANDS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. 14. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (G. C. GUPTA) (A. K. GARODIA) VICE PRESIDENT ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD I.T.A.NO. 2318 /AHD/2009 7 1. DATE OF DICTATION 11/01/2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 12/01/2012.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 19/01 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.23/1 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23/01/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .