Karan Tejraj Builders, Pune V. Pr. Commissioner of Income-Tax -2 , Pune

ITA 428/PUN/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1466 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Document seized; Documents seized; Set aside
• Section: 148; 263; 143(3); 80IB; 271D

Judgement Text

आयकर अपीऱीय अधिकरण “ए” न्यायपीठ पुणे में । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI S.S.GODARA, JM AND SHRI DR. DIPAK P. RIPOTE, AM आयकर अपीऱ सं. / ITA No.428/PUN/2020 ननधधारण वषा / Assessment Year : 2010-11 M/s. Karan Tejraj Builders, Unit 501, Karan Tej Bonita, CTS No. 1187/16, Off Ghole Road, Pune – 411 005. PAN : AAIFK1891P .......अपऩलधथी / Appellant बनधम / V/s. Pr. CIT -2, Pune ......प्रत्यथी / Respondent Assessee by : Shri S.N.Puranik Revenue by : Shri Sunil Kumar सपनवधई की तधरऩख / Date of Hearing : 21.06.2022 घोषणध की तधरऩख / Date of Pronouncement : 29.08.2022 आदेश / ORDER PER S. S. GODARA, JM : 1. This assessee’s appeal for A.Y. 2010-11 arises against the Pr.CIT(A)-2, Pune’s order dated 06/03/2020 passed in ITBA/COM/F/17/2019- 20/1026243507(1) involving proceeding u/s. 263 of the Income Tax Act, 1961; in short "the Act”. Heard both the parties. Case file perused. 2 ITA No.428/PUN/2020 A.Y. : 2010-11 M/s. Karan Tejraj Builders, 2. Both the learned representatives invited our attention to the PCIT’s revision directions under challenge reading as follows. “1. The assessee is a partnership firm engaged in the business of Real Estate. The assessee firm filed its original Return of Income u/s. 139(1) for A.Y. 2010-11 on 13.09.2010 declaring Gross Total Income of Rs. 2,49,09,184/- and claimed deduction u/s. 80IB(10) on the entire amount declared. 2. During the course of search proceedings on Anshul Group on 28.03.2016, certain incriminating documents were seized which had a bearing on the determination on the total income of the assessee firm. Mr. Deepak Jagtap, a key person of the group, stated that the cash amount of Rs.25,00,000/- was received by M/s. Karan Tejraj Builders i.e. the assessee and the said cash was later withdrawn by Shri Deepak Jagtap. Thus, the said cash belonged to M/s. Karan Tejraj Builders. 3. A notice u/s. 148 of the I. T. Act, 1961 was sent to the assessee. In response to the notice u/s. 148, the assessee firm filed its ROI on 25.04.2017 showing total income of Rs. 2,74,09,185/- which included cash amount of Rs.25,00,000/- received from one Shri Sagar Bagul for purchase of flat. However, it is seen from the computation that the assessee claimed a total deduction of Rs. 2,74,09,185/- (which was originally Rs. 2,49,09,185/-) u/s. 80IB(10). The Assessing officer had allowed the deduction claimed u/s.80IB(10) on the entire amount of Rs.2,49,09,184/- and accepted the return of income, which included the cash component of Rs.25,00,000/-. Since the assessee was eligible for 100% deduction u/s. 80IB(10), it is incomprehensible and without justification why the firm did not include the cash component in the profit while filing original ROI. Moreover, the statutory auditor in his 3 ITA No.428/PUN/2020 A.Y. : 2010-11 M/s. Karan Tejraj Builders, report had disclosed admissible deduction u/s.80IB (10) at Rs.2,49,09,184/-. 4. A proposal u/s. 263 was submitted by the Jt. CIT, Range-2, Pune for the reason that the Assessing Officer while passing the assessment order had erroneously allowed excess claim of deduction u/s. 80IB(10) at Rs. 2,74,09,185/- instead of Rs. 2,49,09,184/-. In the Profit & Loss Account of the assessee, the sale of flat to the tune of Rs. 25,00,000/- was not recorded by the assessee and the same was only unearthed during the course of search action. 5. Accordingly, a notice u/s. 263 dated 27.12.2019 was issued and duly served on the assessee firm. In response to that Shri Navin Rander, CA and authorized representative attended on 05.02.2020 and also filed submission and explained the case. 6. After going through the submission of the assessee as well as evidences placed on record, it is a fact that the assessee firm had received an amount of Rs.25,00,000/- in cash. However, the claim of the assessee firm that the said amount was received from Shri Sagar Bagul for purchase of flat was not examined by the Assessing Officer at the time of the reassessment proceedings. The AO had not brought on record any independent inquiries regarding the cash received of Rs. 25 lakhs by the assessee firm from Shri Sagar Bagul and whether the same was paid for purchase or a flat or otherwise given. The fact is that the evidences were not found to indict the assessee in receiving the on money in respect of any other flat. Moreover, the Assessing Officer had not recorded the statement of the assessee as well as Shri Sagar Bagul on the basis of information received from the Investigation Wing whether the amount received in cash was a part of the sale or otherwise. Without conducting the aforesaid enquiry, the AO arrived at the conclusion that the receipt of cash was a part of turnover and 4 ITA No.428/PUN/2020 A.Y. : 2010-11 M/s. Karan Tejraj Builders, qualify for deduction u/s. 80IB(10) to the prejudices of revenue. The findings per se prima facie are erroneous in the absence of cogent evidence placed on record. 7. In view of the above, the assessment order dated 29.11.2017 passed by the Assessing Officer u/s. 143(3) r.w.s 147 of the I. T. Act, 1961 is not only erroneous but also prejudicial to the interest of revenue. Therefore, the AO is directed to examine the claim of the assessee vis-a-vis information received from the investigation wing and make fresh assessment. The Assessing Officer is also directed to examine the provisions of 269SS and if found fit, the proposal for initiation of penalty u/s. 271D of the Act be initiated. Hence, the assessment order passed u/s. 143(3) r.w.s.147 of the Act dated 29.11.2017 is set aside.” 3. Learned authorised representative invited our attention to the assessee’s detailed paper book(s) that the PCIT herein has erred in law and on facts in exercising his revision jurisdiction thereby terming the regular assessment in issue dated 29.11.2017 as an erroneous one causing prejudice to interest of the Revenue. He sought to butteress the point in light of page 7 in the paper book containing the Assessing Officer’s re-opening reasons that the sum in question of 25 lakhs had been derived from sale of flats entitled for section 80IB (10) deduction only. He also quotes the (2022) 136 taxmann.com(Mumbai) Reliance Payments Solution Ltd. V/s. PCIT dealing with the issue of exercise of sec. 263 jurisdiction. 4. The Revenue has strongly supported the PCIT’s forgoing revision directions in issue. 5 ITA No.428/PUN/2020 A.Y. : 2010-11 M/s. Karan Tejraj Builders, 5. We have given our thoughtful consideration to the assessee’s vehement contentions and find no merit therein. It emerges during the course of hearing that although the assessee has claimed section 80IB (10) deduction of Rs.25 lakhs as per the seized documents(supra), the fact remains that the alleged payee Mr. Sagar Bagul had nowhere purchased the corresponding residential unit so as to satisfy the clinching “derived from” condition having first degree nexus in light of hon’ble apex court’s landmark decision in Liberty India V/s CIT (2009) 317 ITR 218(SC). This is indeed coupled with the fact that the assessee also could not invite our attention to the Assessing Officers detailed inquiries on the instant issue as well. We thus quote Malabar Industrial Co. V/s. CIT (2000) 243 ITR 83 (SC) that lack of such an inquiry during the assessment itself renders the same to be an erroneous one causing prejudice to interest of the Revenue. We accordingly affirm the Learned PCIT’s revision directions qua the instant former issue. 6. Next comes the PCIT’s directions in para 7 regarding application of section 269(SS) r.w.s 271D penalty. Learned departmental representative could hardly dispute that there is no loan agreement between the assesses and Mr. Bagul which could attract the forming penal provision as such a seized document indeed carries presumption of correctness u/s 292(c ) of the Act. We therefore reverse the impugned revision direction to this effect in para 7 in very terms. Ordered accordingly. 6 ITA No.428/PUN/2020 A.Y. : 2010-11 M/s. Karan Tejraj Builders, 7. Delay of forty four days in filing of the instant appeal instituted on 25.06.2020 stands condoned since falling in Covid-19 pandemic outbreak period. 8. This assessee’s appeal is partly allowed in above terms. Order pronounced in the Open Court on this 29 th day of August, 2022. Sd/- Sd/- (DR.DIPAK P.RIPOTE) (S.S. GODARA) लेखध सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य/JUDICIAL MEMBER पपणे / Pune; ददनधांक / Dated : 29 th August, 2022. Ashwini आदेश की प्रनतनलनप अग्रेनषत / Copy of the Order forwarded to : 1. अपऩलधथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr.CIT-2, Pune. 4. The CIT (concerned), Pune. 5. नवभधगऩय प्रनतनननध, आयकर अपऩलऩय अनधकरण, “ए” बेंच, पपणे / DR, ITAT, “A” Bench, Pune. 6. गधर्ा फ़धइल / Guard File. आदेशधनपसधर / BY ORDER, // True Copy // Senior Private Secretary आयकर अपऩलऩय अनधकरण, पपणे / ITAT, Pune. 7 ITA No.428/PUN/2020 A.Y. : 2010-11 M/s. Karan Tejraj Builders, S.No. Details Date Initials 1 Draft dictated on 22.06.2022 2 Draft placed before author 22.08.2022 3 Draft proposed & placed before the Second Member 4 Draft discussed/approved by Second Member 5 Approved Draft comes to the Sr. PS/PS 6 Kept for pronouncement on 7 Date of uploading of Order 8 File sent to Bench Clerk 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order