AKSHAR DEVELOPERS, NAVI MUMBAI V. ACIT CEN CIR 3, THANE

ITA 6242/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0065 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 21-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Keywords: Unexplained cash credit; Unexplained expenditure; Business income; Search and seizure; Document seized; Peak credit; Additional evidence; Cost of acquisition; Corroborative evidences; Validity of assessment; Retraction; Revised return; Documents seized; Revenue expenditure
• Section: 44AD; 143(3); 54F; 142(1); 153A; 80IB; 132; 11; 139

Judgement Text

1 AKSHAR DEVLOPERS GROUP IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI MAHAVIR SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.6242/MUM/2016 (ASSESSMENT YEAR: 2009-10) & I.T.A NO.2676 TO 2678/MUM/2017 (ASSESSMENT YEARS: 2010-11, 2011-12, 2012-13) AKSHAR DEVELOPERS 225, 2 ND FLOOR, BIG SPLASH PLOT NO.78/79, NEAR NAVRATNA HOTEL, SECTOR 17, VASHI NAVI MUMBAI 400 705 PAN : AAKFA0455B VS ACIT, CENT.CIR.3, THANE I.T.A NOS.6245 & 6246/MUM/2016 (ASSESSMENT YEARS: 2009-10 & 2010-11) & I.T.A NO.2675/MUM/2017 (ASSESSMENT YEAR: 2011-12) BACHUBHAI PATEL 225, 2 ND FLOOR, BIG SPLASH PLOT NO.78/79, NEAR NAVRATNA HOTEL, SECTOR 17, VASHI NAVI MUMBAI 400 705 PAN : ADEPP8750F VS ACIT, CENT.CIR.3, THANE I.T.A NOS.6243 &6244/MUM/2016 (ASSESSMENT YEARS: 2009-10 & 2010-11) & I.T.A. NOS. 2672 & 2673/MUM/2017 (ASSESSMENT YEARS 2011-12 & 2012-13) HARI BACHUBHAI MUJAT 225, 2 ND FLOOR, BIG SPLASH PLOT NO.78/79, NEAR NAVRATNA VS ACIT, CENT.CIR.3, THANE 2 AKSHAR DEVLOPERS GROUP HOTEL, SECTOR 17, VASHI NAVI MUMBAI 400 705 PAN : AFZPM9318P APPELLANTS BY MS RITIKA AGARWAL / SHRI SALMAN BALBALE REVENUE BY SHRI R.P. MEENA DATE OF HEARING 10-01-2018 DATE OF PRONOUNCEMENT 28-02-2018 O R D E R PER G MANJUNATHA, AM : THIS BUNCH OF APPEALS FILED BY DIFFERENT ASSESSES ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A)-11, PUNE DATED 30- 09-2016 AND 13-01- 2017. SINCE FACTS ARE COMMON AND ALSO INTER-CONNEC TED IN SOME CASES, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. ITA NO.6246/MUM/2016 & 2676 TO 2678/MUM/2017 2. THE ASSESSEE HAS TAKEN MORE OR LESS COMMON GROUN DS OF APPEAL FOR ALL THE YEARS. FOR THE SAKE OF BREVITY, THE GR OUNDS OF APPEAL TAKEN UP FOR THE ASSESSMENT YEAR 2010-11 IS REPRODUCED BELOW : THE APPELLANT INDIVIDUAL IS AGGRIEVED BY THE ORDER DATED 30/9/2016 PASSED BY THE LEARNED CIT(A) PUNE 11 U/S 250 OF THE INCOME-TAX ACT, 1961 AND IS IN APPEAL :- 1. BECAUSE, THE ID. CIT(A) HAS ERRED IN HOLDING THA T THE ISSUANCE OF NOTICE U/S 143(2) OF THE ACT IS NOT MAN DATORY FOR CARRYING OUT ASSESSMENT PROCEEDINGS U/S 153A OF THE ACT AND ACCORDINGLY HOLDING THAT THE IMPUGNED ASSESSMENT OR DER IS VALID. 2. BECAUSE, ID. CIT(A) HAS ERRED IN HOLDING THAT TH E APPELLANT WAS NOT ENTITLED TO MAKE FRESH CLAIM IN THE RETURN FILED U/S 153A 3 AKSHAR DEVLOPERS GROUP OF THE ACT EVEN THOUGH THE MATERIAL RELATING TO THE CLAIM WAS AVAILABLE ON RECORD, 3. BECAUSE THE ID. CIT(A) HAS ERRED IN LAW IN REJEC TING THE APPELLANT'S CLAIM FOR DEDUCTION U/S 80IB (10) TO TH E TUNE OF RS.6,78,84,612/- AT THE THRESHOLD ITSELF WITHOUT GO ING INTO THE MERITS OF THE CLAIM. 4. BECAUSE THE ID. CIT(A) HAS ERRED IN LAW IN UPHOL DING THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S,153A ASSES SING TOTAL INCOME AT RS.6,78,99,609/- 3. FROM THESE GROUNDS OF APPEAL, THE ASSESSEE HAS C HALLENGED THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S. 153A OF THE ACT ON THE GROUND THAT THE AO HAS FAILED TO ISSUE NOTICE U /S 143(2) OF THE ACT WHICH IS MANDATORY FOR CARRYING OUT ASSESSMENT PROC EEDINGS U/S 153A OF THE ACT AND ACCORDINGLY THE IMPUGNED ASSESSMENT ORD ER IS BAD IN LAW. THE ASSESSEE ALSO TOOK UP A GROUND CHALLENGING THE ACTION OF THE CIT(A) IN SUSTAINING ADDITION MADE BY THE AO TOWARDS UNACC OUNTED CASH RECEIPTS ON THE BASIS OF ROUGH CASH BOOK FOUND AND SEIZED DURING THE COURSE OF SEARCH AND ALSO ADMISSION OF THE ASSESSEE DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4) OF T HE ACT. THE ASSESSEE ALSO CHALLENGED THE ACTION OF THE LD.CIT(A) IN REJE CTING THE CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT IN RESPECT OF ELI GIBLE HOUSING PROJECT ON THE GROUND THAT NO NEW CLAIM COULD BE MADE IN RETUR N FILED U/S 153A OF THE ACT. 4. THE BRIEF FACTS OF THE CASE EXTRACTED FROM THE A SSESSMENT ORDER FOR AY 2010-11 ARE THAT THE ASSESSEE IS A PARTNERSHIP F IRM ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER. THE ASSESSEE HA S FILED ITS RETURN OF 4 AKSHAR DEVLOPERS GROUP INCOME FOR THE AY 2010-11 ON 30-11-2011 DECLARING T OTAL INCOME AT RS.2,18,00,520. A SEARCH AND SEIZURE ACTION U/S 13 2(1) OF THE ACT WAS CONDUCTED ON 28-11-2011 AT THE BUSINESS PREMISES OF THE ASSESSEE AND ITS PARTNERS. DURING THE COURSE OF SEARCH, CERTAIN INCRIMINATING MATERIALS IN THE FORM OF NOTE BOOKS FOUND AND SEIZED FROM THE RESIDENTIAL PREMISES OF SHRI HARI BACHUBHAI MUJAT (BHARAT PATEL), ONE OF THE MAIN PERSONS AND PARTNER IN THE ASSESSEE FIRM. THE ROUGH CASH B OOKS CONTAINING RECORD OF RECEIPT AND PAYMENTS OF UNACCOUNTED CASH TRANSACTIONS WERE FOUND AND SEIZED. BUNDLE NO.1 CONTAINED WRITTEN PA GES 1 TO 46 AND BUNDLE NO.2 CONTAINED WRITTEN PAGES 1 TO 22. THE E NTRIES RECORDED CONTAINED DATE-WISE DETAILS OF CASH BROUGHT TO THE HOUSE AND CASH TAKEN OUT OF THE HOUSE. THESE ENTRIES ARE THUS UNDER THE COLUMNS IN AND OUT. THE NAME OF THE PERSONS BRINGING THE CASH IN OR TAK ING THE CASH OUT ARE ALSO MENTIONED. INVARIABLY, THESE PERSONS WERE EMP LOYEES OF AKSHAR GROUP. THE ENTRIES IN THE ROUGH CASH BOOK ALSO CON TAINED NARRATION TO THE ENTRY. THERE WERE TWO KINDS OF ENTRIES BEING R ECORDED IN ROUGH CASH BOOK. SOME OF THE ENTRIES INDICATED RECEIPT OF FRE SH CASH BY THE AKSHAR GROUP WHETHER AS SALE PROCEEDS / CASH LOANS OR MONE Y FROM INVESTORS AND CORRESPONDING PAYMENT OF MONEY TO DIFFERENT PER SONS WHETHER AS INVESTMENT OR AS REPAYMENT OF LOAN OR AS EXPENDITUR E. THE SECOND KIND OF ENTRIES WHERE THE EMPLOYEES HAVE BROUGHT THE AVA ILABLE CASH TO HOME AND TAKEN OUT ON THE NEXT DAY OR SHORTLY THEREAFTER . AGAINST THESE 5 AKSHAR DEVLOPERS GROUP ENTRIES, NO NARRATION IS GIVEN AND ONLY THE NAMES O F THE EMPLOYEES IS MENTIONED. DURING THE COURSE OF SEARCH, WHEN THE R OUGH CASH BOOK WAS CONFRONTED TO THE ASSESSEE, THE PARTNER OF THE FIRM SHRI HARI BACHUBHAI MUJAT, IN HIS STATEMENT RECORDED ON 30-09-2011 ADMI TTED THAT THESE ARE ON-MONEY RECEIVED IN HIS REAL ESTATE BUSINESS FROM GROUP FIRMS AND COMPANIES AND ALSO PAYMENT OF MONEY FOR VARIOUS PUR POSES INCLUDING EXPENDITURE AND INVESTMENT WHICH ARE NOT RECORDED I N HIS BOOKS OF ACCOUNT AND ACCORDINGLY AGREED THAT HE WAS NOT IN A POSITION TO COMMENT ON VARIOUS DISCREPANCIES POINTED OUT IN THE ROUGH C ASH BOOK AND HENCE IN ORDER TO BUY PEACE OF MIND AND TO AVOID LITIGATI ON, HE SURRENDERED AN UNDISCLOSED INCOME OF RS.16 CRORES IN VARIOUS BUSIN ESS CONCERNS AND IN THE NAME OF FAMILY MEMBERS. THE PARTNER OF THE FIR M, SHRI HARI BACHUBHYAI MUJAT HAS REITERATED HIS ADMISSION IN TH E STATEMENT RECORDED U/S 132(4) ON 07-10-2011. 5. CONSEQUENT TO SEARCH, NOTICE U/S 153A OF THE INC OME-TAX ACT WAS ISSUED ON 19-01-2013 REQUESTING TO PREPARE A TRUE A ND CORRECT RETURN OF TOTAL INCOME. IN RESPONSE TO THE NOTICE, THE ASSES SEE HAS FILED THE RETURN OF INCOME ON 23-09-2013 DECLARING TOTAL INCOME AT R S.1,54,36,700 AFTER CLAIMING DEDUCTION OF RS.89,94,609 U/S 80IB(10) OF THE INCOME-TAX ACT, 1961. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND NOTICES U/S 143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED. IN RESPONSE TO THE NOTICES, THE AUTHORIZED REPRESENTATIVE OF TH E ASSESSEE APPEARED 6 AKSHAR DEVLOPERS GROUP FROM TIME TO TIME AND FILED VARIOUS DETAILS, AS CAL LED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO OBSERVED FR OM THE RETURN OF INCOME FILED BY THE ASSESSEE THAT THOUGH THE ASSESS EE HAS ADMITTED UNDISCLOSED INCOME OF RS.12,19,50,872 IN RESPECT OF UNACCOUNTED CASH TRANSACTIONS RECORDED IN ROUGH CASH BOOK, FAILED TO ADMIT SUCH UNDISCLOSED INCOME IN THE RETURN OF INCOME U/S 153A OF THE ACT. THEREFORE, CALLED UPON THE ASSESSEE TO EXPLAIN AS T O WHY THE UNDISCLOSED INCOME ADMITTED DURING THE COURSE OF SE ARCH IN THE STATEMENT RECORDED U/S 132(4) CANNOT BE ADDED. IN RESPONSE TO THE SHOWCAUSE NOTICE, ASSESSEE HAS FILED A REPLY IN THE FORM OF A BOOKLET EXPLAINING THE REASONS FOR NOT ADMITTING THE UNDISC LOSED INCOME ADMITTED DURING THE COURSE OF SEARCH. ACCORDING TO THE ASSE SSEE, THERE WAS A MISTAKE IN DISCLOSURE OF RS.14,19,10,000 MADE DURIN G THE COURSE OF SEARCH ON ACCOUNT OF UNACCOUNTED CASH RECEIPTS FOUN D IN ROUGH CASH BOOKS NO.1 & NO.2. THE ASSESSEE ALSO SUGGESTED TWO METHODS OF DETERMINING UNDISCLOSED INCOME, ACCORDING TO WHICH THE ASSESSEE HAS WORKED OUT PEAK CASH THEORY FOR DETERMINING UNDISCL OSED INCOME IN RESPECT OF UNACCOUNTED CASH RECEIPTS AND CASH PAYME NTS AS PER ROUGH CASH BOOK. ALTERNATIVELY, THE ASSESSEE PLEADED FOR A REASONABLE RATE OF PROFIT ON THE RECEIPTS TREATING THE SAME TO BE ON-M ONEY. THE ASSESSEE HAS FILED A WORKING OF GROSS RECEIPTS AS PER THE RO UGH CASH BOOK WHICH WORKED OUT TO RS.27.59 CRORES THE DETAILS OF WHICH HAS BEEN REPRODUCED 7 AKSHAR DEVLOPERS GROUP BY THE AO IN THE ASSESSMENT ORDER AT PARA 5.3 ON PA GES 7 & 8. AS PER THE WORKINGS PROVIDED BY THE ASSESSEE, OUT OF THE T OTAL RECEIPTS OF RS.46.23 CRORES AS RECORDED IN ROUGH CASH BOOKS, TH E ASSESSEE HAS DETERMINED NET CASH RECEIPTS OF RS.27.59 CRORES ATT RIBUTABLE TO ITS BUSINESS RECEIPTS ON WHICH A REASONABLE NET PROFIT OF 10% MAY BE ESTIMATED. IN THE TOTAL CASH RECEIPTS, THE ASSESSE E HAS DEDUCTED CASH DRAWN FROM BANK, CASH WITH EMPLOYEES, LOAN RECEIVED FROM INDIVIDUALS. SIMILARLY, THE ASSESSEE HAS WORKED OUT PEAK CASH TH EORY AS PER THE ROUGH CASH BOOK AND DETERMINED PEAK CASH BALANCE AS ON 02-06-2010 WHICH WORKED OUT TO RS.2,73,87,071/- WHICH HAS BEEN DISTRIBUTED EQUALLY BETWEEN TWO PARTNERS AND SUGGESTED FOR ADDITION. T O SUBSTANTIATE PLEA OF PEAK CASH CREDIT THEORY, THE ASSESSEE HAS FURTHE R ARGUED THAT UNSECURED LOANS FROM VARIOUS INDIVIDUALS ARE NOT ON -MONEY AND THE DETAILS OF THE ABOVE PAYMENTS ARE RECORDED IN RCB B UNDLE NO.1. SIMILARLY, RECEIPT OF ON-MONEY AMOUNTING TO RS.3.82 CRORES FROM DIFFERENT PROJECTS, WHICH HAS BEEN HANDED OVER TO SHRI HARI B ACHUBHAI MUJAT, AS ADMITTED BY SHRI MANOJ B GOGTA AND THE AMOUNT OF RS .2.21 CRORES ARISING FROM HARI BACHUBHAI MUJATS ACCOUNT ALREADY STOOD ACCOUNTED FOR. FOR ADVOCATING PEAK CASH THEORY, THE ASSESSEE HAS GIVEN VARIOUS REASONS AS PER WHICH THE RCB IS A CASH BOOK RECORDI NG INFLOW AND OUTFLOW OF CASH INCLUDING CASH RECORDED IN REGULAR CASH BOOK. THE SAID RCB CONTAINED ENTRY OF CASH FOR CREDIT FOR GROUP AS A WHOLE BUT NOT 8 AKSHAR DEVLOPERS GROUP SPECIFIC TO ANY SINGLE ENTITY IN THE GROUP. THE IN FLOW IS IN THE FORM OF CASH WITHDRAWALS FROM BANK, RECEIPT OF INVESTORS MONEY, SALE PROCEEDS OF LAND, UNSECURED LOAN, RETURN OF PAYMENT FROM EMPLOY EE, ETC. THE OUTFLOW IS IN THE FORM OF CASH DEPOSIT IN BANK, REPAYMENT O F LOAN, MONEY GIVEN TO BROKER OF LAND, REPAYMENT TO INVESTOR, EXPENSES AND MONEY GIVEN TO EMPLOYEES. THE INFLOW AND OUTFLOW MATCHES WITH TOT AL MONEY INFLOW AT RS.41.21 CRORES AND TOTAL MONEY OUTFLOW AT RS.41.73 CRORES. THERE IS NO EVIDENCE TO SUPPORT THE TRUE NATURE OF THESE ENTRIE S AND THIS CAN BE EXPLAINED ONLY THROUGH PERSONAL KNOWLEDGE AND BELIE F. THE CASH FOUND RECORDED IN OTHER SEIZED DOCUMENTS IS ALSO RECORDED IN RCB AND, THEREFORE, THE RCB IS THE BEST DOCUMENT WHICH CONT AINED TOTAL TRANSACTIONS OF THE GROUP AS WELL INCLUDING THE ASS ESSEE FIRM. THEREFORE, IT IS VERY DIFFICULT TO ASCERTAIN TRUE NATURE OF TH ESE ENTRIES AND ACCORDINGLY, A REASONABLE INCOME MAY BE DETERMINED EITHER BY GOI NG ON THE BASIS OF PEAK CASH THEORY OR BY ESTIMATION OF INCOME. 6. THE AO, AFTER CONSIDERING SUBMISSIONS OF THE ASS ESSEE AND ALSO ON ANALYZING THE SEIZED MATERIALS AND STATEMENT RECORD ED FROM THE PARTNER HARI BACHUBHAI MUJAT OBSERVED THAT THE ASSESSEE HAS CATEGORICALLY ADMITTED DURING THE COURSE OF SEARCH THAT THE ENTRI ES CONTAINED IN ROUGH CASH BOOK ARE ON-MONEY RECEIVED FROM ITS REAL ESTAT E BUSINESS AND ALSO PAYMENT TO UNACCOUNTED EXPENDITURE IN RESPECT OF IT S BUSINESS AND ACCORDINGLY, WORKED OUT AN UNDISCLOSED INCOME OF RS .16,04,84,872/- AND 9 AKSHAR DEVLOPERS GROUP OFFERED FOR 3 YEARS VIDE ITS LETTER DATED 17-10-201 1. THESE TRANSACTIONS WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THIS FACT HAS BEEN CONFIRMED IN THE STATEMENT RECORDED U/S 132(4) ON 2 9/9/2011AND 17-10- 2011. THE AMOUNT OF UNEXPLAINED CASH CREDIT THOUGH DISCLOSED BY THE ASSESSEE FIRM DURING THE SEARCH OPERATION, NEITHER WAS THE SAME OFFERED IN THE RETURN OF INCOME NOR DID THE ASSESSEE PAY AN Y TAX ON IT. THEREFORE, THERE IS NO MERIT IN THE CONTENTION OF T HE ASSESSEE THAT THE SOURCE OF SUCH INVESTMENT IS ALREADY EXPLAINED AND NO SEPARATE ADDITION CAN BE MADE. THE AO FURTHER OBSERVED THAT AFTER GO ING THROUGH THE SUBMISSIONS IN RESPECT OF THE PLEA OF PEAK CASH CRE DIT THEORY AS SUGGESTED BY THE ASSESSEE KEEPING IN VIEW THE NATUR E OF TRANSACTIONS, THE ENTRIES REFLECTED IN THE DOCUMENTS FOUND AND SE IZED BY THE SEARCH PARTY, HE WAS OF THE OPINION THAT THE ASSESSEES PL EA FOR PEAK CASH CREDIT THEORY DOES NOT HOLD GOOD AS IT CAN BE APPLIED ONLY WHEN THE ASSESSEE HAS ROTATED ITS CASH AND ALSO THERE WAS FREQUENT WI THDRAWAL AND DEPOSIT OF CASH IN THE BOOKS OF ACCOUNT. THE TRANSACTION R ECORDED IN THE RCB ARE NOT HOMOGENOUS IN NATURE AND REFLECTS RECEIPT O F UNACCOUNTED CASH AND ITS APPLICATION AS INVESTMENT AND EXPENDITURE. THE ENTRIES RECORDED IN RCB-1 AND RCB-2 ARE OUTSIDE THE BOOKS OF ACCOUNT AND HENCE, THERE IS NO MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT P EAK CREDIT THEORY NEEDS TO BE FOLLOWED TO ASCERTAIN CORRECT INCOME. THE AO, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE EXPLAIN ING THE PEAK CASH 10 AKSHAR DEVLOPERS GROUP THEORY AND ALSO ON ANALYSIS OF CASH BOOK PREPARED B Y THE DEPARTMENT ON THE BASIS OF ROUGH CASH BOOK OBSERVED THAT ON ANALY SIS OF ENTRIES FOUND IN THE RCB, THE RECEIPTS ARE MAINLY ON ACCOUNT OF A MOUNT RECEIVED FROM INVESTORS AND PAYMENTS ARE RELATED TO INVESTMENTS M ADE BY THE ASSESSEE, EXPENDITURE IN RESPECT OF ITS PROJECT AND CASH GIVEN TO EMPLOYEES OF THE GROUP. SINCE THE ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE TRUE NATURE OF ENTRIES RECORDED IN THE ROUGH CASH BOOK AND ALSO THE FACT THAT IT HAS ADMITTED UNDISCLOSED INCO ME DURING THE COURSE OF SEARCH AND ALSO IN THE POST SEARCH INVESTIGATION, R EJECTED EXPLANATIONS OF THE ASSESSEE WITH REGARD TO THE PEAK CASH THEORY AN D ESTIMATION OF REASONABLE NET PROFIT OF GROSS PROFIT CONSIDERING I T AS ON-MONEY AND MADE ADDITION OF RS.12,19,50,872 TO THE TOTAL INCOM E OF THE ASSESSEE. 7. SIMILARLY, DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) FOR RS.89,94,609 AND WHICH WAS NOT CLAIMED IN THE ORIGI NAL RETURN OF INCOME FILED U/S 139(1), THEREFORE, CALLED UPON THE ASSESS EE TO EXPLAIN AS TO WHY DEDUCTION CLAIMED U/S 80IB(10) SHALL NOT BE DISALLO WED. IN RESPONSE TO NOTICE, THE ASSESSEE SUBMITTED THAT IT IS IN THE BU SINESS OF DEVELOPMENT OF HOUSING PROJECT AND ITS HOUSING PROJECT HAS FULF ILLED THE TERMS AND CONDITIONS SPECIFIED U/S 80IB(10), THEREFORE, IT HA S CLAIMED DEDUCTION FROM PROFITS AND GAINS OF BUSINESS FROM ELIGIBLE BU SINESS PROJECT. THE ASSESSEE FURTHER SUBMITTED THAT IT HAS DERIVED PROF IT FROM THE PROJECT 11 AKSHAR DEVLOPERS GROUP NAMED, SREEJI HEIGHTS WHICH IS ELIGIBLE FOR DEDUC TION U/S 80IB(10). ORIGINALLY SAID CLAIM WAS NOT MADE IN THE RETURN OF INCOME SINCE THE ASSESSEE WAS UNDER MISTAKEN UNDERSTANDING OF LAW TH AT SINCE THEY HAVE CONSTRUCTED COMMERCIAL UNITS, THEY CANNOT CLAIM BEN EFIT U/S 80IB(10). HOWEVER, THE HONBLE BOMBAY HIGH COURT HAS, IN THE CASE OF BRAHMA ASSOCIATES REPORTED IN (2011 51 DTR 298 (BOM) HELD THAT THE CLAIM IS FULLY ALLOWABLE IN CASE THE PROJECT WAS APPROVED PR IOR TO AMENDMENT MADE IN LAW W.E.F. 01-04-2005. SINCE ITS HOUSING P ROJECT WAS APPROVED ON 16-04-2004, THE PROJECT IS ELIGIBLE FOR BENEFIT U/S 80IB(10) OF THE ACT. THE AO, AFTER CONSIDERING RELEVANT SUBMISSIONS OF T HE ASSESSEE AND ALSO ON ANALYSIS OF THE PROVISIONS OF SECTION 80IB(10) H ELD THAT THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10), AS THE ASSESSEE DID NOT CLAIM SUCH DEDUCTION IN THE RETURN OF INCOME FILED U/S 13 9(1). THE AO FURTHER OBSERVED THAT THE PROVISIONS OF SECTION 153A IS FOR THE BENEFIT OF REVENUE AS SUCH, THE ASSESSEE CANNOT TAKE THE BENEFIT OF RE -ASSESSMENT CONTEMPLATED U/S 153A SO AS TO CLAIM ANY FRESH DEDU CTION WHICH WAS NOT MADE IN THE ORIGINAL RETURN. INSOFAR AS DEDUCTION CLAIMED U/S 80IB(10), AFTER CONSIDERING THE DETAILS FILED BY THE ASSESSEE WITH REGARD TO SREEJI HEIGHTS PROJECT, THE AO HAS OBSERVED THAT THE ASSE SSEE HAS NOT FULFILLED TERMS AND CONDITIONS PRESCRIBED IN SECTION 80IB(10) SO AS TO CLAIM DEDUCTION FROM PROFITS AND GAINS, SINCE THE ASSESSE E HAS CONSTRUCTED CERTAIN FLATS HAVING BUILT UP AREA OF MORE THAN THE SPECIFIED LIMIT PROVIDED 12 AKSHAR DEVLOPERS GROUP U/S 80IB(10) AND ALSO IT HAS SOLD MORE THAN ONE FLA T TO A SINGLE CUSTOMER. THE ASSESSEE HAS DEVELOPED SREEJI HEIGHTS PROJECT ON THE LAND WHICH HAS AN AREA OF MORE THAN ONE ACRE. THE AO HAS DISC USSED THE PROJECT IN THE LIGHT OF DETAILS FILED BY THE ASSESSEE AND BROU GHT OUT CLEAR FACTS THAT THE ASSESSEE HAS NOT COMPLIED WITH ALL THE CONDITIO NS SPECIFIED IN SECTION 80IB(10), THEREFORE, NOT ELIGIBLE FOR DEDUCTION U/S 80IB(10) IN RESPECT OF PROFITS AND GAINS. SINCE THE ASSESSEE FIRM HAS FAI LED TO CLAIM DEDUCTION IN ORIGINAL RETURN FILED U/S 139(1) AND ALSO ITS CL AIM IS NOT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 80IB(10), THEREFORE, REJECTED THE CLAIM MADE BY THE ASSESSEE AND MADE ADDITION OF RS.89,94, 609 TO THE TOTAL INCOME. 8. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE HAS TAKEN UP A LEGAL PLEA INASMUCH AS THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S. 153A IS BAD IN LAW AS THE AO HAS NOT ISSUED MANDATORY NOTICE WHICH WAS REQUIRED TO BE ISSUED MANDATORILY U/S 143 (2), THEREFORE, THE ASSESSMENT ORDER PASSED BY THE AO IS NULL AND VOID. IN THIS REGARD ASSESSEE RELIED UPON CERTAIN JUDICIAL PRECEDENTS. AS REGARDS ADDITION MADE BY THE AO TOWARDS UNACCOUNTED CASH TRANSACTION S, THE ASSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE AO T O ARGUE THAT THE PARTNER HAS ADMITTED UNDISCLOSED INCOME AT THE TIME OF SEARCH WITHOUT EXAMINING THE SEIZED MATERIAL. HOWEVER, ON VERIFIC ATION OF THE SEIZED 13 AKSHAR DEVLOPERS GROUP MATERIAL FOUND DURING THE COURSE OF SEARCH IT HAS W ORKED OUT EACH AND EVERY ENTRY APPEARING IN THE ROUGH CASH BOOK NOS.1 & 2 AND FOUND THAT MANY ENTRIES ALREADY STOOD RECORDED IN THE REGULAR BOOKS OF ACCOUNT IN THE FORM OF CASH WITHDRAWAL FROM BANK AND CASH DEPO SITS. THEREFORE, THE ASSESSEE HAS SUGGESTED FOR A PEAK CREDIT THEORY TO DETERMINE THE UNDISCLOSED INCOME IN RESPECT OF ON-MONEY RECEIVED FROM CONSTRUCTION BUSINESS AS THE RCB CONTAINS TOTAL CASH RECEIPTS AN D CASH PAYMENTS OF THE GROUP AS A WHOLE WHICH IS OPERATING MORE THAN 5 -6 FIRMS AND ALL ARE INVOLVED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT . THE ASSESSEE FURTHER SUBMITTED THAT THOUGH IT HAS ADMITTED UNDIS CLOSED INCOME IN THE STATEMENT RECORDED U/S 132(4), SUCH ADMISSION IS NO T BASED ON ANY EVIDENCE. THEREFORE, THERE IS NO REASON FOR THE AO TO MAKE ADDITION ONLY ON THE BASIS OF ADMISSION OF THE ASSESSEE THAT THE RCB IS A CASH BOOK RECORDING INFLOW AND OUTFLOW OF CASH INCLUDING CASH RECORDED IN REGULAR CASH BOOK AND THE SAID RCB CONTAINS ENTRY OF CASH O F THE GROUP AS A WHOLE NOT SPECIFIC TO ANY SINGLE ENTITY IN THE GROU P. THE ASSESSEE FURTHER SUBMITTED THAT EVEN ON ANALYSIS OF THE CASH BOOK PR EPARED BY THE DEPARTMENT IN TALLY SOFTWARE CLEARLY REVEALS THAT T HE AO IS NOT ABLE TO ASCERTAIN THE TRUE NATURE OF TRANSACTIONS RECORDED IN RESPECT OF RECEIPTS AS WELL AS PAYMENTS. THEREFORE, HE ERRED IN NOT CO NSIDERING THE METHOD SUGGESTED BY THE ASSESSEE TO DETERMINE THE UNDISCLO SED INCOME. THE ASSESSEE ALSO SUGGESTED FOR ESTIMATION OF REASONABL E NET PROFIT ON TOTAL 14 AKSHAR DEVLOPERS GROUP RECEIPTS FROM THE CASH BOOK FOR WHICH A SEPARATE WO RKING HAS BEEN FURNISHED AS PER WHICH TOTAL RECEIPTS AS PER THE RC B IS WORKED OUT AT RS.27.59 CRORES. 9. INSOFAR AS DEDUCTION CLAIMED U/S 80IB(10), THE A SSESSEE HAS REITERATED ITS SUBMISSIONS MADE BEFORE THE AO TO AR GUE THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR IN QUESTION IS A BATED AS ON THE DATE OF SEARCH WHICH IS EVIDENT FROM THE FACT THAT THE D UE DATE FOR ISSUE OF NOTICE U/S 143(2) FOR THE AY 2010-11 WOULD BE EXPIR ED ON 30-09-2011 WHEREAS THE SEARCH TOOK PLACE ON 29-09-2011. WHEN THE SEARCH TOOK PLACE, THE ASSESSMENT HAS BEEN ABATED, THEREFORE, T HE ASSESSEE CAN MAKE ANY CLAIM WHICH WAS NOT MADE IN THE ORIGINAL R ETURN FILED U/S 139(1) AND ACCORDINGLY, THE AO WAS ERRED IN REJECTING THE CLAIM OF THE ASSESSEE EVEN THOUGH ITS CLAIM IS IN ACCORDANCE WITH PROVISI ONS OF SECTION 80IB(10) OF THE ACT. INSOFAR AS MERITS OF THE CASE , THE ASSESSEE HAS SUBMITTED THAT IT HAS FULFILLED ALL CONDITIONS SPEC IFIED UNDER SECTION 80IB(10) SO AS TO CLAIM DEDUCTION. THEREFORE, THE AO WAS INCORRECT IN REJECTING ITS CLAIM EVEN THOUGH THE ASSESSEE HAS M ADE A CLAIM ON THE BASIS OF DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) WHEREIN IT WAS CATEGORICALLY HEL D THAT THE REQUIREMENT OF CONSTRUCTION OF COMMERCIAL SPACE WITHIN THE SPEC IFIED LIMIT IS APPLICABLE FOR THE PROJECT WHICH HAVE BEEN APPROVED ON OR AFTER 01-04- 2005 WHEREAS ASSESSEES PROJECT HAS BEEN APPROVED O N 16-10-2004. 15 AKSHAR DEVLOPERS GROUP INSOFAR AS OTHER CONDITIONS THAT IT HAS CONSTRUCTED CERTAIN FLATS OVER AND ABOVE THE SPECIFIED LIMIT FIXED FOR CONSTRUCTION OF EACH FLAT EVEN IF THERE ARE CERTAIN FLATS WHICH ARE CONSTRUCTED OVER AND AB OVE THE SPECIFIED SUPER BUILT UP ARE, THERE IS NO BAR IN CLAIMING DED UCTION TOWARDS ELIGIBLE PROJECT ON PROPORTIONATE BASIS. 10. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSI ONS OF THE ASSESSEE AND ALSO RELYING UPON PLETHORA OF JUDGEMENTS OBSERV ED THAT THE ASSESSEE HAS ADMITTED UNDISCLOSED INCOME IN RESPECT OF TRANSACTIONS RECORDED IN ROUGH CASH BOOK NOS.1 & 2 DURING THE CO URSE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4), FURTHER FOLLOWED BY SECOND STATEMENT RECORDED ON 17-10-2011, WHEREIN IT WAS ONCE AGAIN C LARIFIED THAT UNDISCLOSED INCOME ADMITTED DURING THE COURSE OF SE ARCH IS VOLUNTARY AND ALSO ON THE BASIS OF INCRIMINATING MATERIALS FO UND AS A RESULT OF SEARCH. THE ABOVE STATEMENTS GIVEN DURING THE COUR SE OF SEARCH HAVE NOT BEEN RETRACTED SO FAR. THERE IS NO ALLEGATION THAT THE STATEMENTS WERE RECORDED UNDER DURESS OR COERCION. THEREFORE, THERE IS NO REASON FOR THE ASSESSEE TO GO BACK FROM THE ADMISSION OF U NDISCLOSED INCOME WHILE FILING RETURN OF INCOME. THE CIT(A), FURTHER OBSERVED THAT EVEN GOING BY THE FACTS OF THE CASE IT WAS ABUNDANTLY CL EAR THAT ENTRIES CONTAINED IN RCBS 1 & 2 WERE MAINLY RELATED TO ASSE SSEES CONSTRUCTION BUSINESS WHERE IT IS COMMON TO RECEIVE ON-MONEY IN RESPECT OF SALE AND PURCHASE OF PROPERTIES. ACCORDINGLY, THE ASSESSEE HAS RECORDED ALL CASH 16 AKSHAR DEVLOPERS GROUP TRANSACTIONS RELATING TO RECEIPT OF ON-MONEY AND PA YMENT OF UNACCOUNTED EXPENDITURES. EVEN ON GOING BY THE ENTRIES IN THE RCBS WHICH HAVE BEEN ANALYSED IN TALLY SOFTWARE BY THE DEPARTMENT, THE TRIAL BALANCE EXTRACTED FROM THE TALLY SOFTWARE CLEARLY ESTABLISH ES THE FACT THAT THE RECEIPT OF CASH PREDOMINATELY RELATES TO AMOUNTS RE CEIVED FROM INVESTORS AND THE PAYMENTS ARE RELATED TO AMOUNTS PAID FOR IN VESTMENTS, EXPENSES, DEPARTMENT PAYMENTS AND THE REMAINING AMO UNT IS SHOWN AS ADVANCE TO THE EMPLOYEES. THE ASSESSEE HAS FAILED TO EXPLAIN THE TRUE NATURE OF TRANSACTION EITHER IN RESPECT OF RECEIPTS OR IN RESPECT OF PAYMENTS. UNDER THESE CIRCUMSTANCES, IT IS NATURAL FOR GOING ON THE BASIS OF ADMISSION OF THE ASSESSEE AS THE ASSESSEE BEST KNOW THE TRANSACTION RECORDED IN ITS BOOKS OF ACCOUNT. THE ASSESSEE HAS CONSCIOUSLY ADMITTED UNDISCLOSED INCOME AFTER ANALY SING THE SEIZED BOOKS OF ACCOUNT. THEREFORE, THE AO WAS RIGHT IN R EJECTING ASSESSEES PEAK CREDIT THEORY AND ESTIMATION OF REASONABLE NET PROFIT AS BOTH ARE APPLICABLE UNDER DIFFERENT SET OF FACTS. THE CIT(A ) ALSO REJECTED THE ALTERNATIVE PLEA OF THE ASSESSEE THAT THE UNACCOUNT ED INCOME SHOULD BE TAXED IN THE HANDS OF THE PARTNERS OF THE FIRM AS T HE ASSESSEE HAS OFFERED THE INCOME IN THE NAME OF THE FIRM AT THE T IME OF SEARCH. THEREFORE, THE AO HAS RIGHTLY MADE ADDITION IN ASSE SSEES CASE. 11. INSOFAR AS DEDUCTION CLAIMED U/S 80IB(10), THE CIT(A) OBSERVED THAT IN VIEW OF THE FACT THAT THE ASSESSEE HAS NOT MADE ANY CLAIM IN 17 AKSHAR DEVLOPERS GROUP RESPECT OF DEDUCTION U/S 80IB(10) IN ORIGINAL RETUR N FILED U/S 139(1) AND ALSO THE FACT THE ASSESSEE CANNOT MAKE NEW AND FRES H CLAIMS IN THE RETURNS FILED U/S 153A, THE CLAIM MADE BY THE ASSES SEE U/S 80IB(10) IS NOT ALLOWABLE. THE CIT(A), AFTER CONSIDERING THE F ACTS AND ALSO ON ANALYSIS OF CERTAIN JUDICIAL PRECEDENTS, INCLUDING DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CONTINENTA L WAREHOUSING CORPORATION (NAVA SHEVA) (2015) 58 TAXMAN.COM 78 AN D IN THE CASE OF MURLI AGRO PRODUCTS ITA NO.36 OF 2009 JUDGEMENT DAT ED 29-10-2010 HELD THAT THE ASSESSEE CANNOT MAKE ANY FRESH CLAIM IN RESPECT OF ASSESSMENT YEARS WHICH HAVE BEEN UNABATED AS ON THE DATE OF SEARCH. INSOFAR AS MERITS OF THE DEDUCTION CLAIMED U/S 80IB (10), THOUGH THE CIT(A) HAS NOT DISCUSSED THE ALLOWABILITY OF DEDUCT ION U/S 80IB(10) IN AY 2010-11, DISCUSSED THE ISSUE IN THE ASSESSMENT YEAR 2011-12 AND OBSERVED THAT THE ASSESSEE IS ELIGIBLE FOR PROPORTI ONATE DEDUCTIONS IN RESPECT OF HOUSING PROJECT WHERE THE ASSESSEE HAS F ULFILLED THE CONDITIONS IN RESPECT OF SIZE OF FLAT. SIMILARLY, THE CIT(A) HAS DISCUSSED THE ISSUE OF CONSTRUCTION OF COMMERCIAL AREA IN THE HOUSING PROJECT AND HELD THAT THE PROVISION INSERTED BY FINANCE (NO.2) ACT, 2004 WITH EFFECT FROM 01-04-2005 IS NOT APPLICABLE IN ASSESSEES CA SE AS THE ASSESSEES PROJECT WAS APPROVED ON 16-10-2004. INSOFAR AS TWO FLATS SOLD TO ONE INDIVIDUAL, THE CIT(A) OBSERVED THAT CLAUSES (E) AN D (F) HAVE BEEN INSERTED WITH EFFECT FROM 01-04-2010, WHEREAS THE O CCUPANCY CERTIFICATE 18 AKSHAR DEVLOPERS GROUP IN RESPECT OF THE SAID PROJECT WAS RECEIVED ON 22-0 9-2008. THEREFORE, THE PROVISIONS OF CLAUSES (E) AND (F) CANNOT BE APP LIED TO THE ASSESSEES PROJECT. INSOFAR AS PROPORTIONATE DEDUCTION TOWARD S PROJECT WHICH FULFILS THE CONDITIONS PRESCRIBED U/S 80IB(10), CIT(A) OBSE RVED THAT MERELY BECAUSE ONE BUILDING, I.E. B-WING DOES NOT SATISFY THE REQUIREMENT OF SECTION 80IB(10) WOULD NOT RESULT IN NULLIFYING THE CLAIM OF THE ASSESSEE FOR THE ENTIRE PROJECT. SIMILARLY, THE CIT(A) HAS DISCUSSED THE APPLICABILITY OF JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) AND OBSERVED THAT THE AO WAS WRO NG IN NOT FOLLOWING THE DECISION ON THE GROUND THAT SLP WAS FILED AGAIN ST THE DECISION DOES NOT STOP THE APPLICABILITY OF THE RATIO LAID DOWN B Y THE COURTS. THE CIT(A) FURTHER OBSERVED THAT THOUGH THE ASSESSEE HAS FULFI LLED THE ABOVE CONDITIONS COULD NOT ABLE TO COUNTER, THE AOS FINDI NG WITH REGARD TO THE PROJECT SREEJI HEIGHTS THAT THE PROJECT WAS SITUA TED WITHIN A DISTANCE OF 25 KMS FROM MUMBAI METROPOLITAN LIMITS. ACCORDINGL Y, THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE AO AND DIRECTED H IM TO ALLOW THE DEDUCTION U/S 80IB(10) ON THE FLATS NOT EXCEEDING T HE LIMITS OF BUILDING OR AS PRESCRIBED IN THE ACT ON A PROPORTIONATE BASIS A FTER SATISFYING HIMSELF ABOUT ALL OTHER CONDITIONS SPECIFIED IN THE SECTION . AGGRIEVED BY THE ORDER OF CIT(A), ASSESSEE IS IN APPEAL BEFORE US. 19 AKSHAR DEVLOPERS GROUP 12. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION FROM GROUND 1 IS CHALLENGING THE VALIDITY OF ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S. 153A ON THE GROUND THAT THE AO HAS NO T ISSUED NOTICE U/S 143(2) OF THE ACT WHICH IS MANDATORY FOR CARRYING O UT ASSESSMENT PROCEEDINGS AND ACCORDINGLY, THE IMPUGNED ASSESSMEN T ORDER IS INVALID. THE LD.AR FOR THE ASSESSEE, AT THE TIME OF HEARING SUBMITTED THAT SHE DID NOT WANT TO PRESS THE GROUND AND HENCE GROUND N O.1 IS DISMISSED, AS NOT PRESSED. 13. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS ADDITION MADE BY THE AO TOWARDS UNDISCLOSED UNACCOUNTED CASH TRAN SACTIONS OF RS.12,19,50,872 ON THE BASIS OF ROUGH CASH BOOKS 1 & 2 FOUND AND SEIZED DURING THE COURSE OF SEARCH AND ALSO ON THE BASIS OF ADMISSION OF THE ASSESSEE IN THE STATEMENT RECORDED U/S 132(4) O F THE ACT. DURING THE COURSE OF SEARCH TWO NOTEBOOKS INVENTORISED AS BUNDLE NO.1 & 2 WERE FOUND AND SEIZED FROM THE RESIDENTIAL PREMISES OF SHRI HARI BACHUBHAI MUJAT WHEREIN CERTAIN CASH TRANSACTIONS I N RESPECT OF RECEIPTS AND PAYMENTS WERE RECORDED. WHEN THE RCBS 1 & 2 HA VE BEEN CONFRONTED TO THE ASSESSEE, THE PARTNER OF THE FIRM ADMITTED THAT THE TRANSACTIONS RECORDED IN RCBS 1 & 2 ARE UNACCOUNTED TRANSACTIONS IN RESPECT OF ON-MONEY RECEIVED TOWARDS SALE OF FLATS, UNSECURED LOAN RECEIVED FROM VARIOUS PARTIES, CASH WITHDRAWAL FROM BANK AND PAYMENT 20 AKSHAR DEVLOPERS GROUP TOWARDS VARIOUS EXPENSES IN RELATION TO PROJECTS EX ECUTED, CASH DEPOSIT IN BANK AND AMOUNT PAID FOR PURCHASE OF PROPERTIES AND REPAYMENTS OF LOANS. DURING THE COURSE OF SEARCH, IN THE STATEME NT RECORDED U/S 132(4), SHRI HARI BACHUBHAI MUJAT ADMITTED THAT HE WAS UNABLE TO FIND OUT EXACT NATURE OF TRANSACTIONS RECORDED IN THE RC B 1 & 2 AND ACCORDINGLY CAME FORWARD TO ADMIT ADDITIONAL UNDISC LOSED INCOME OF RS.16,04,84,872 SPREAD OVER TO 3 ASSESSMENT YEARS S TARTING FROM A.Y. 2010-11 AS PER THE STATEMENTS DATED 29-09-2011 AND 127-10-2011. THE AO MADE ADDITIONS TOWARDS UNACCOUNTED CASH TRANSACT IONS ON THE GROUND THAT THE ASSESSEE HAS FAILED TO OFFER ANY EX PLANATIONS FOR NOT ADMITTING UNDISCLOSED INCOME IN THE RETURN OF INCOM E FILED U/S 153A, THOUGH IT HAS BEEN ADMITTED IN THE STATEMENT RECORD ED U/S 132(4). THE AO ALSO REJECTED ASSESSEES PLEA FOR DETERMINATION OF UNDISCLOSED INCOME ON THE BASIS OF PEAK CREDIT THEORY AND ALSO ESTIMATION OF REASONABLE NET PROFIT ON TOTAL RECEIPTS. 14. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE L D.CIT(A) ERRED IN NOT ACCEPTING THE PEAK THEORY ADOPTED BY THE ASSESS EE AND OFFERED AS INCOME BY THE PARTNERS OF THE ASSESSEE FIRM WITHOUT APPRECIATING THE FACT THAT IT IS VERY DIFFICULT TO ASCERTAIN TRUE NATURE OF TRANSACTIONS RECORDED IN ROUGH CASH BOOKS NO.1 & 2 AS THE SAID SEIZED RCBS 1 & 2 CONTAINED TOTAL CASH RECEIPTS AND PAYMENT OF AKSHAR GROUP AS A WHOLE, BUT NOT 21 AKSHAR DEVLOPERS GROUP CONFINED TO THE ASSESSEE FIRM ALONE. THE LD.AR FUR THER REFERRING TO THE PAPER BOOK FILED DURING THE COURSE OF HEARING SUBMI TTED THAT THE ASSESSEE FIRM HAS WORKED OUT PEAK CREDIT THEORY ON THE BASIS OF RCBS 1 & 2 AND ANALYSED TOTAL TRANSACTIONS RECORDED IN REC EIPTS AS WELL AS PAYMENTS IN RESPECT OF ALL THE PAYMENTS AND DETERMI NED PEAK CASH AS ON 02-06-2010 WHICH WORKED OUT TO RS.2,73,83,071 WH ICH HAS BEEN DISTRIBUTED EQUALLY BETWEEN TWO PARTNERS AND CONSID ERED IN THEIR INDIVIDUAL HANDS. THE LD.AR FURTHER SUBMITTED THAT EVEN GOING BY THE ANALYSIS OF ROUGH CASH BOOK 1 & 2 MADE BY THE AO BY ENTERING INTO THE TRANSACTION IN TALLY SOFTWARE, IT IS ABUNDANTLY CLE AR THAT THE AO FAILED TO ESTABLISH THE TRUE NATURE OF TRANSACTIONS AND HENCE MADE ADDITIONS ONLY ON THE BASIS OF SURRENDER MADE DURING THE COURSE OF SEARCH IGNORING THE FACT THAT THE SURRENDER WAS MADE WITHOUT GOING THRO UGH THE SEIZED MATERIALS. THE LD.AR FURTHER SUBMITTED THAT THE TR ANSACTIONS RECORDED IN RCB 1 & 2 RELATE TO TOTAL GROUP WHICH INCLUDED ON-M ONEY RECEIVED FROM SALE OF FLATS, UNSECURED LOAN BORROWED FROM CERTAIN PERSONS AND ALSO CASH WITHDRAWALS FROM BANK. CERTAIN TRANSACTIONS H AVE ALREADY BEEN RECORDED IN REGULAR BOOKS OF ACCOUNT. THEREFORE, M AKING ADDITION ONLY ON THE BASIS OF ADMISSION WITHOUT ANY CORROBORATIVE EVIDENCE TO ESTABLISH THAT IT REPRESENTS UNDISCLOSED INCOME OF THE ASSESSEE IS INCORRECT. THE LD.AR FURTHER SUBMITTED THAT WHEN I T IS NOT POSSIBLE TO ASCERTAIN TO ANY TRUE NATURE OF TRANSACTION, THE BE ST METHOD TO DETERMINE 22 AKSHAR DEVLOPERS GROUP UNDISCLOSED INCOME IS TO PEAK CREDIT THEORY WHICH H AS BEEN ACCEPTED BY THE COURTS, INCLUDING THE HONBLE ANDHRA PRADESH HI GH COURT IN THE CASE OF CIT VS PURSHOTTAM JHAWAR (2013) 40 TAXMAN.COM 53 3 WHEREIN THE COURT HELD THAT APPLICATION OF PEAK CREDIT CONCEPT FOR QUANTIFYING THE UNDISCLOSED INCOME IS NOT CONTRARY TO THE PROVISION S OF THE ACT. THE LD.AR FURTHER SUBMITTED THAT IN CASE, THE PEAK CRED IT THEORY IS NOT ACCEPTABLE, THEN THE SECOND METHOD FOR DETERMINATIO N OF UNDISCLOSED INCOME IS ESTIMATION OF REASONABLE NET PROFIT ON TO TAL RECEIPTS RECORDED IN UNDISCLOSED ROUGH CASH BOOK. THEREFORE, REQUESTED FOR ESTIMATION OF NET PROFIT OF 10% ON TOTAL RECEIPTS QUANTIFIED ON THE B ASIS OF THOSE CASH BOOK AT RS.27.59 CRORES. 15. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTE D THE ORDER OF THE CIT(A) AND SUBMITTED THAT THE ASSESSEE HAS FAILED T O ADMIT UNDISCLOSED INCOME ADMITTED DURING THE COURSE OF SEARCH IN THE STATEMENTS RECORDED U/S 132(4) WHICH WAS FURTHER SUPPORTED BY INCRIMINA TING MATERIAL IN THE FORM OF RCB 1 & 2 WHICH CONTAINED UNACCOUNTED RECEI PTS FROM BUSINESS AND PAYMENT IN RESPECT OF EXPENDITURE AND ON THAT B ASIS, THE ASSESSEE HAS ADMITTED UNDISCLOSED INCOME. THEREFORE, THE AO WAS RIGHT IN MAKING ADDITION ON THE BASIS OF ADMISSION OF THE AS SESSEE WHICH WAS NOT RETRACTED BY FILING ANY LETTER. THE LD.DR FURT HER SUBMITTED THAT ADMISSION IS BEST PIECE OF EVIDENCE WHICH CAN BE RE LIED UPON BY THE 23 AKSHAR DEVLOPERS GROUP AUTHORITIES WHEN SUCH ADMISSION IS CORROBORATED BY SUFFICIENT EVIDENCE IN THE FORM OF INCRIMINATING MATERIALS. IN THIS CA SE, ADMITTEDLY, THE SEARCH PARTY FOUND AND SEIZED ROUGH CASH BOOK WHERE IN VARIOUS UNACCOUNTED TRANSACTIONS HAVE BEEN RECORDED AND WHE N THESE HAVE BEEN CONFRONTED TO THE ASSESSEE, THE ASSESSEE HAS A DMITTED UNDISCLOSED INCOME, THEREFORE, THERE IS NO REASON F OR THE ASSESSEE TO GO BACK FROM ITS ADMISSION. THE LD.DR FURTHER SUBMITT ED THAT EVEN GOING BY THE ANALYSIS OF ROUGH CASH BOOK MADE BY THE AO B Y ENTERING INTO TRANSACTIONS RECORDED IN RCBS 1 &2 IN TALLY SOFTWAR E, IT WAS ABUNDANTLY CLEAR THAT MOST OF THE TRANSACTIONS RELATE TO ON-MO NEY RECEIVED FROM SALE OF FLATS WHICH IS ACCOUNTED FOR UNDER THE HEAD REC EIPTS FROM INVESTORS AND PAYMENTS ARE RELATED TO EXPENSES AND AMOUNT SHO WN AS ADVANCE TO EMPLOYEES. TAKING INTO ACCOUNT THE ADMISSION OF THE ASSESSEE AND ANALYSIS OF ROUGH CASH BOOK, THE AO HAS RIGHTLY COM E TO THE CONCLUSION THAT THE ASSESSEES ADMISSION IN RESPECT OF UNDISCL OSED INCOME IS SUPPORTED BY INCRIMINATING MATERIAL AND HENCE, THE ORDER OF THE AO SHOULD BE UPHELD. 16. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE FACTS WITH REGARD TO THE SEIZURE OF TWO RCBS 1 & 2 AND ADMISSI ON OF ADDITIONAL INCOME ON THE BASIS OF ROUGH CASH BOOK IS NOT DISPU TED. THE ASSESSEE 24 AKSHAR DEVLOPERS GROUP HAS ADMITTED THE FACT THAT TRANSACTIONS RECORDED IN SEIZED MATERIALS RELATE TO ITS BUSINESS ACTIVITY AND AMOUNT RECEIVED FROM PARTIES TOWARDS ON-MONEY RECEIVED FOR SALE OF FLATS AND ALSO PAYMEN TS TOWARDS UNACCOUNTED EXPENSES IN RESPECT OF ITS PROJECT. TH E PARTNER OF THE FIRM, SHRI HARI B MUJAT HAS ADMITTED THE FACT THAT ENTRIE S RECORDED IN RCBS 1 & 2 ARE UNACCOUNTED TRANSACTIONS IN RESPECT OF RECE IPTS AND PAYMENTS AND ACCORDINGLY VOLUNTARILY ADMITTED UNDISCLOSED IN COME OF RS.16,04,84,872 SPREAD OVER TO 3 ASSESSMENT YEARS I N THE STATEMENT RECORDED U/S 132(4) ON 29-09-2011 AND 17-10-2011. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE HAS FILED LETTER ON 02-09-2013 IN THE FORM OF A SEPARATE BOOKLET WHICH CONTAINS 16 PAGES WHERE IN IT WAS SUBMITTED BEFORE THE AO THAT DISCLOSURE MADE DURING THE COURS E OF SEARCH IN RESPECT OF UNDISCLOSED INCOME WAS MADE WITHOUT GOIN G THROUGH THE SEIZED MATERIALS AND AFTER ANALYSIS OF THE SEIZED M ATERIALS IT HAS COME TO THE NOTICE THAT THERE WAS A MISTAKE IN DISCLOSURE O F RS.14,19,10,000 AND ACCORDINGLY SUGGESTED 2 METHODS TO COMPUTE THE UNDI SCLOSED INCOME I.E. ONE ON THE BASIS OF PEAK CASH THEORY WHERE THE ASSESSEE HAS ARRIVED AT PEAK CASH BALANCE OF RS.2,73,87,071 ON 0 2-06-2010 AND SECOND, ESTIMATION OF REASONABLE NET PROFIT ON TOTA L RECEIPTS RECORDED IN RCB EXCLUDING CASH WITH EMPLOYEES AND CASH DRAWN FR OM BANK WHICH WORKED OUT TO RS.27.89 CRORES. TO SUBSTANTIATE THE PLEA OF PEAK CASH CREDIT THEORY, THE ASSESSEE FIRM FURTHER SUBMITTED THAT THE ASSESSEE HAS 25 AKSHAR DEVLOPERS GROUP ANALYSED THE TRANSACTIONS AND AS PER WHICH CERTAIN CREDITS APPEARED IN RCB ARE UNSECURED LOAN RECEIVED FROM SMT. JANAKI SH AH OF RS.45 LAKHS, PROFIT ON SALE OF ULVE LAND OF RS.1.27 CRORE , TRANSACTION WITH RAMESHBHAI RS.78.58 LAKHS AND TRANSACTION WITH SHRI ML SHAH OF RS.1.05 CRORE AND ALL THESE ARE NOT ON-MONEY RECEI PTS AND THE DETAILS OF THE ABOVE PAYMENTS ARE RECORDED IN RCB 1. THE ASSE SSEE FURTHER SUBMITTED THAT RECEIPT OF ON-MONEY AMOUNTING TO RS. 3.82 CRORES FROM DIFFERENT PROJECTS AND RS.2.21 CRORES ARISING FROM HARI MUJAT ACCOUNT ALREADY STOOD ACCOUNTED FOR IN RCB. THEREFORE, NO SEPARATE ADDITION FOR THE AFORESAID AMOUNT IS REQUIRED. THE SUM AND SUBS TANCE OF THE ARGUMENTS OF THE ASSESSEE IS THAT ADMISSION OF ADDI TIONAL INCOME DURING THE COURSE OF SEARCH IN THE STATEMENT RECORDED U/S 132(4) IS NOT CORRECT AND WHICH IS NOT SUPPORTED BY ANY MATERIALS AND HEN CE, DETERMINATION OF INCOME SHOULD BE ON THE BASIS OF PEAK CREDIT THEORY OR ESTIMATION OF REASONABLE NET PROFIT FROM TOTAL RECEIPTS. 17. THE AO HAS MADE ADDITION ON THE BASIS OF ADMISS ION OF THE ASSESSEE DURING THE COURSE OF SEARCH. ACCORDING TO THE AO, ADMISSION IS THE BEST PIECE OF EVIDENCE AND HENCE, THE ASSES SEE CANNOT GO BACK FROM ITS ADMISSIONS WITHOUT ANY VALID RETRACTION WI TH SUPPORTING EVIDENCE. THE AO FURTHER WAS OF THE OPINION THAT E VEN GOING BY THE ANALYSIS OF RCB 1 ON THE BASIS OF TRIAL BALANCE PRE PARED IN TALLY SOFTWARE, THOUGH THE RECEIPTS AND PAYMENTS ARE ALMOST EQUAL, THE RECEIPT SIDE 26 AKSHAR DEVLOPERS GROUP COMPRISE OF MAJOR AMOUNT RECEIVED FROM INVESTORS WH ICH IS NOTHING BUT ON-MONEY RECEIVED FROM SALES AND PAYMENT SIDE CONSI STS OF EXPENSES INCURRED FOR PROJECTS AND AMOUNT GIVEN TO EMPLOYEES . THEREFORE, HE OPINED THAT ADMISSIONS MADE BY THE ASSESSEE IS ON T HE BASIS OF INCRIMINATING MATERIAL FOUND AS A RESULT OF SEARCH IN THE FORM OF RCB. NO DOUBT, ADMISSION IN THE COURSE OF SEARCH BY WAY OF A STATEMENT U/S 132(4) IS THE BEST PIECE OF EVIDENCE, BUT NOT CONCL USIVE ONE. UNLESS THE ADMISSION IS CORROBORATED BY FURTHER EVIDENCES IN T HE FORM OF INCRIMINATING MATERIAL, THE AO CANNOT MAKE ADDITI ON ONLY ON THE BASIS OF ADMISSION BY THE ASSESSEE. WE FURTHER NOTICE TH AT THE ASSESSEE HAS ANALYSED RCB 1 & 2 AND AS PER WHICH THE RCB IS A CA SH BOOK RECORDING INFLOW AND OUTFLOW OF CASH INCLUDING CASH TRANSACTI ONS RECORDED IN REGULAR CASH BOOK. THE SAID RCB CONTAINS ENTRY OF CASH FOR GROUP AS A WHOLE, BUT NOT SPECIFIC TO ANY SINGLE ENTITY IN THE GROUP. THE INFLOW IS IN THE FORM OF WITHDRAWALS FROM BANK, RECEIPTS FROM IN VESTORS MONEY, SALE PROCEEDS OF LAND, RETURN OF PAYMENT FROM EMPLOYEES, ETC. THE OUTFLOW IS IN THE FORM OF CASH DEPOSIT TO BANK, REPAYMENT OF L OAN, MONEY GIVEN TO BROKER, LAND COST, REPAYMENT TO INVESTORS, EXPENSES AND MONEY GIVEN TO EMPLOYEES. THE INFLOW AND OUTFLOWS ARE CLOSELY MAT CHES WITH TOTAL MONEY IN WHICH IS AT RS.41.27 CRORES AND TOTAL MONE Y OUT IS AT RS.41.37 CRORES. THERE IS NO EVIDENCE TO SUPPORT T HE TRUE NATURE OF THESE ENTRIES AND THIS CAN BE EXPLAINED ONLY THROUG H PERSONAL 27 AKSHAR DEVLOPERS GROUP KNOWLEDGE AND BELIEF. EVEN GOING BY THE ANALYSIS O F THE AO ON THE BASIS OF TRIAL BALANCE PREPARED ON THE BASIS OF RCB 1 & 2, THE AO IS UNABLE TO IDENTIFY TRUE NATURE OF TRANSACTIONS RECO RDED IN RCB 1 & 2. THE TRIAL BALANCE EXTRACTED BY THE AO IS PART OF AS SESSMENT ORDER AT PARA 4.1 ON PAGES 4 TO 6. ON ANALYSIS OF THE TRIAL BALANCE PREPARED BY THE AO, WE FIND THAT THE CREDIT SIDE REPRESENTS AMO UNT RECEIVED FROM INVESTOR. THE PAYMENT SIDE REPRESENTS AMOUNT PAID FOR INVESTMENTS, EXPENSES FOR THE PROJECT, CASH DEPOSITS TO BANK, DE PARTMENTAL PAYMENTS AND AMOUNT PAID TO EMPLOYEES. THE ASSESSEE EXPLAIN S THAT THE AMOUNT PAID TO EMPLOYEES REPRESENTS AMOUNT TAKEN BY THE GR OUP EITHER FOR EXPENSES OR PAYMENTS FOR PURCHASE OF PROPERTIES. T HEREFORE, WE ARE OF THE CONSIDERED VIEW THAT IT IS VERY DIFFICULT TO AS CERTAIN THE TRUE NATURE OF TRANSACTIONS RECORDED IN ROUGH CASH BOOK 1 & 2 ON T HE BASIS OF ANALYSIS MADE BY THE AO. UNDER THESE CIRCUMSTANCES WHAT WOU LD BE THE METHOD TO DETERMINE UNDISCLOSED INCOME FROM THESE TRANSACT IONS. THE ASSESSEE ARGUED FOR PEAK CREDIT THEORY. THE ASSESS EE HAS ARRIVED AT A PEAK CASH CREDIT AS ON 02-06-2010 AT RS.2,73,87,071 WHICH WAS DISTRIBUTED EQUALLY BETWEEN TWO PARTNERS. THE ASSE SSEE ALSO WORKED OUT GROSS RECEIPTS RECORDED IN RCB AND AFTER REDUCI NG CASH WITH FOR EMPLOYEES AND CASH DRAWN FROM BANK, DETERMINED TOTA L RECEIPTS OF RS.27.59 CRORES. PEAK CASH CREDIT THEORY ADVOCATED BY THE ASSESSEE CANNOT BE ACCEPTED AS IT APPLIES ONLY IN A CASE WHE RE THE CASH HAS BEEN 28 AKSHAR DEVLOPERS GROUP ROTATED SEVERAL TIMES BY DEPOSITING AND WITHDRAWING FROM BANKS OR USED IN THE BUSINESS. THE BASIC IDEA BEHIND THE PEAK CR EDIT THEORY IS TO AVOID DOUBLE ADDITION AND TO BRING ONLY THE ACTUAL INCOME OF THE ASSESSEE WHERE THERE ARE LARGE NUMBER OF UNEXPLAINED CREDIT AND DEBIT ENTRIES. IN THE ASSESSEES CASE, IT IS NOT THE CASE. ACCORDING TO THE ASSESSEES ADMISSION, THE TRANSACTIONS RECORDED IN RCB 1 & 2 A RE TRANSACTIONS PERTAINING TO ITS BUSINESS ACTIVITY AND HENCE, THE PEAK CREDIT THEORY ADVOCATED BY THE ASSESSEE HAS BEEN REJECTED. 18. COMING TO THE SECOND METHOD SUGGESTED BY THE AS SESSEE TO DETERMINE UNDISCLOSED INCOME ON THE BASIS OF ESTIMA TION OF REASONABLE PROFIT ON TOTAL RECEIPTS. IT IS AN ADMITTED FACT T HAT EVEN THE ASSESSEE IS NOT ABLE TO ASCERTAIN TRUE NATURE OF TRANSACTIONS R ECORDED IN RCB. EVEN THE AO FAILED TO IDENTIFY THE TRUE NATURE OF TRANSA CTIONS WHICH IS EVIDENT FROM THE ANALYSIS OF TRANSACTIONS RECORDED IN RCB 1 & 2 THROUGH PREPARATION OF TRIAL BALANCE. UNDER THESE CIRCUMSTA NCES, THE BEST METHOD TO DETERMINE UNDISCLOSED INCOME IS TO ESTIMA TE REASONABLE NET PROFIT ON TOTAL RECEIPTS PERTAINING TO ASSESSEES BUSINESS EXCLUDING LOAN TRANSACTIONS AND CASH WITHDRAWALS FROM BANK. THE A SSESSEE HAS ARRIVED AT A NET RECEIPT OF RS.27.59 CRORES WHICH H AS BEEN EXTRACTED AT PARA 5.3 OF AOS ORDER. THE ASSESSEE HAS PLEADED FO R 10% NET PROFIT ON TOTAL RECEIPTS. THERE IS NO UNIFORM YARDSTICK FOR ESTIMATION OF NET PROFIT. THE ESTIMATION OF NET PROFIT DEPENDS UPON FACTS OF EACH CASE AND NATURE 29 AKSHAR DEVLOPERS GROUP OF BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE. T HE ASSESSEE IS IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF FLATS. NORMALLY, THE NET PROFIT PERCENTAGE IN UNACCOUNTED TRANSACTIONS IS QU ITE MORE THAN THE NET PROFIT IN NORMALLY ACCOUNTED TRANSACTIONS. IN THE CASE OF CONSTRUCTION BUSINESS, THE STATUTE ITSELF HAS PROVIDED FOR 8% NE T PROFIT IN CASES OF CERTAIN CLASS OF ASSESSES WHERE THE TURNOVER DOES N OT EXCEED SPECIFIED LIMIT. THOUGH THE PROVISIONS OF SECTION 44AD CANNO T BE STRICTLY APPLIED TO THE FACTS OF ASSESSEES CASE, A CLUE FROM THE SAID PROVISION CAN BE DRAWN TO ESTIMATE NET PROFIT AS THE ASSESSEES NATU RE OF BUSINESS SQUARELY FIT INTO THE CLASS OF ASSESSEE WHERE THE P ROVISIONS OF SECTION 44AD APPLIES. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO DRAWING A CLUE FROM THE PROVI SIONS OF SECTION 44AD, FURTHER, CONSIDERING THE FACT THAT THESE ARE UNACCO UNTED TRANSACTIONS, A REASONABLE NET PROFIT OF 15% WOULD MEET THE ENDS OF JUSTICE. THEREFORE, WE DIRECT THE AO TO ESTIMATE NET PROFIT OF 15% ON T OTAL RECEIPTS QUANTIFIED BY THE ASSESSEE. 19. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS DENIAL OF DEDUCTION U/S 80IB(10) OF THE ACT, IN RESPECT OF HO USING PROJECT. THE FACT WITH REGARD TO THE IMPUGNED CLAIM ARE THAT THE ASSE SSEE IS IN THE BUSINESS OF DEVELOPMENT OF FLATS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DEVELOPED A HOUSING PROJECT NAMED SREEJI HEIGHTS. 30 AKSHAR DEVLOPERS GROUP THE HOUSING PROJECT CONSISTING OF 5 COMPLEX, I.E. A , B, C, D & E. THE ASSESSEE HAS NOT CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT IN ORIGINAL RETURN FILED U/S 139(1) OF THE ACT. THE DEDUCTION U/S 80IB(10) HAS BEEN CLAIMED IN THE RETURN FILED U/S 153A. THE ASSESSEE HAS EXPLAINED THE REASONS FOR NOT CLAIMING DEDUCTION U/S 80IB(10) IN THE ORIGINAL RETURN FILED U/S 139(1) AND ALSO EXPLAINED THE REASONS FOR MAKIN G SUCH CLAIM IN REVISED RETURN FILED U/S 153A. ACCORDING TO THE AS SESSEE, WHEN ORIGINAL RETURN OF INCOME WAS FILED, IT WAS UNDER A MISTAKEN UNDERSTANDING OF LAW THAT IF THE HOUSING PROJECT CONSISTS COMMERCIAL POR TION WHICH EXCEEDS CERTAIN SPECIFIED LIMIT, THEN THE ASSESSEE IS NOT E LIGIBLE FOR DEDUCTION U/S 80IB(10) AND ACCORDINGLY DID NOT MAKE ANY CLAIM IN THE RETURN OF INCOME. WHEN THE REVISED RETURN WAS FILED U/S 153A, THE LAW HAS BEEN CHANGED IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL H IGH COURT IN THE CASE OF CIT VS BRAHMA ASSOCIATES (SUPRA), WHEREIN THE HONB LE COURT HELD THAT THE CLAIM IS FULLY ALLOWABLE IN CASE THE PROJECT WA S APPROVED PRIOR TO AMENDMENT BROUGHT IN LAW WEF 01-04-2005. SINCE THE ASSESSEES PROJECT HAS BEEN APPROVED PRIOR TO THE AMENDMENT, I .E. ON 16-10-2004, THE ASSESSEE HAS MADE A CLAIM FOR DEDUCTION U/S 80I B(10). 20. THE AO DISALLOWED DEDUCTION U/S 80IB(10) OF THE ACT, ON THE GROUND THAT THE ASSESSEE HAS NOT MADE ANY CLAIM IN ORIGINA L RETURN FILED U/S 139(1) AND THE FRESH CLAIM MADE IN REVISED RETURN F ILED U/S 153A CANNOT BE ACCEPTED AS THE PROVISIONS OF SECTION 153A IS FO R THE BENEFIT OF THE 31 AKSHAR DEVLOPERS GROUP REVENUE AND HENCE, THE ASSESSEE CANNOT MAKE ANY FRE SH CLAIM WHICH WAS NOT MADE EARLIER. THE AO FURTHER OBSERVED THAT EVEN ON MERITS, THE ASSESSEES CLAIM IS NOT ADMISSIBLE AS THE ASSESSEE HAS NOT SATISFIED ALL CONDITIONS SPECIFIED IN SECTION 80IB(10) SO AS TO C LAIM DEDUCTION WHICH IS EVIDENT FROM THE FACT THAT THE ASSESSEE HAS CONSTRU CTED CERTAIN FLATS WHICH ARE HAVING SUPER BUILT UP AREA OF MORE THAN T HE SPECIFIED LIMIT. THE AREA OF THE PLOT ON WHICH THE PROJECT SREEJI H EIGHTS STANDS IS MORE THAN AN ACRE WHICH IS AGAIN IN VIOLATION OF THE CON DITIONS SPECIFIED IN SECTION 80IB(10) OF THE ACT. THE PERMISSIBLE COMME RCIAL ARE IS MAXIMUM 2,000 SQ.FT. OR 5% OF THE AGGREGATE BUILT UP AREA O F THE HOUSING PROJECT, WHICHEVER IS LESS, WHEREAS THE ASSESSEE HAS CONSTRU CTED COMMERCIAL AREA OF 2,194.84 SQ.MTRS WHICH IS MORE THAN THE SPE CIFIED LIMIT. THE ASSESSEE HAS SOLD MORE THAN TWO FLATS TO A SINGLE P ERSON IN VIOLATION OF CLAUSE (E) & (F), THEREFORE, THE AO OPINED THAT THE ASSESSEES CLAIM IS NOT IN ACCORDANCE WITH PROVISIONS OF SECTION 80IB(10) O F THE ACT. 21. IT IS THE CONTENTION OF THE ASSESSEE THAT THE A SSESSMENT FOR THE AY 2009-10 ONWARDS ARE ABATED WHICH IS EVIDENT FROM TH E FACT THAT SEARCH ACTION U/S 132(1) WAS CARRIED OUT ON 29-09-2011 AND THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) WAS EXPIRED ON 30-09-201 0 BUT NO SUCH NOTICE WAS SERVED ON THE ASSESSEE AND THE TIME LIMIT FOR C OMPLETION OF ASSESSMENT U/S 143(3) WAS DUE ON 31-03-2012. THERE FORE, THE ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10 AND SUBS EQUENT YEARS ARE 32 AKSHAR DEVLOPERS GROUP ABATED AND HENCE, THE ASSESSEE CAN MAKE A FRESH CLA IM WHICH IS VERY CLEAR AS PER THE PROVISIONS OF SECTION 153A, WHERE IT WAS SPECIFICALLY STATED THAT THE AO SHALL ASSESS OR RE-ASSESS THE TO TAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED O R REQUISITION IS MADE. THE ASSESSEE FURTHER CONTENDED THAT IT HAS MADE A C LAIM FOR DEDUCTION U/S 80IB(10) BY FILING A LETTER ON 29-03-2011 MUCH BEFORE THE DATE OF SEARCH WHICH IS HAS THE EFFECT OF AMENDING THE RETU RNS, THEREFORE, THE CLAIM MADE BY THE ASSESSEE IS NOT A FRESH CLAIM BUT IN CONTINUATION OF CLAIM MADE IN THE ORIGINAL RETURN BY FILING A RETUR N. THE LD.AR FURTHER SUBMITTED THAT EVEN OTHERWISE, AS PER THE PROVISION S OF SECTION 153A, IF THE ASSESSMENTS ARE ABATED AS ON THE DATE OF SEARCH , THEN THE ASSESSEE CAN MAKE A FRESH CLAIM WHICH IS EVIDENT FROM THE FA CT THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CITVS CONT INENTAL WAREHOUSING CORPORATION (NAVA SHEVA) LTD 2015) 374 ITR 645 (BOM ) AND IN CIT VS GURINDER SINGH BAWA (2016) 386 ITR 483 (BOM) IT WAS HELD THAT THE ASSESSMENTS / RE-ASSESSMENT PROCEEDINGS THAT ARE PE NDING ON THE DATE OF CONDUCTING SEARCH U/S 132 SHALL STAND ABATED AND NOT THE ASSESSMENTS / RE-ASSESSMENTS ALREADY FINALISED FOR THOSE ASSESSMENT YEARS COVERED U/S 153A. IN THIS CASE, THE ASSESSME NT FOR THE ASSESSMENT YEAR 2009-10 ONWARDS ARE ABATED AS THE T IME LIMIT FOR COMPLETION OF ASSESSMENT U/S 143(3) IN RESPECT OF A SSESSMENT YEAR 33 AKSHAR DEVLOPERS GROUP 2009-10 WAS DUE TO EXPIRE ON 31-03-2012 WHICH IS AF TER THE DATE OF SEARCH I.E. ON 29-09-2011 AND THE TIME LIMIT FOR IS SUE OF NOTICE U/S 143(2) FOR THE ASSESSMENT YEAR 2010-11 DUE TO EXPIRE ON 30 -09-2011, THEREFORE, THE CLAIM MADE BY THE ASSESSEE U/S 80IB(10) OF THE ACT IS IN ACCORDANCE WITH THE PROVISIONS OF LAW AND FURTHER SUPPORTED BY VARIOUS DECISIONS OF JURISDICTIONAL HIGH COURT. THE ASSESSEE FURTHER CO NTENDED THAT WHERE THE ASSESSMENTS WERE PENDING FOR ADJUDICATION AS ON THE DATE OF SEARCH AND HAS BEEN ABATED, THE ASSESSEE CAN ALWAYS MAKE A CLA IM WHICH WAS NOT MADE EARLIER IN THE RETURN FILED U/S 153A, AS THE P ROVISIONS OF SECTION 153A EQUALLY APPLY TO THE ASSESSEE AS WELL AS THE R EVENUE, AS PER WHICH THE AO CAN ASSESS OR RE-ASSESS THE TOTAL INCOME OF THE SIX YEARS IMMEDIATELY PRECEDING THE YEAR IN WHICH SEARCH TOOK PLACE ON THE BASIS OF BOOKS OF ACCOUNT AND OTHER MATERIALS FOUND AS A RESULT OF SEARCH AND THE ASSESSEE CAN MAKE A TRUE AND CORRECT RETURN WHE RE IT CAN MAKE A CLAIM WHICH WAS NOT MADE EARLIER. 22. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTI NG THE ORDER OF CIT(A) SUBMITTED THAT THE AO AS WELL AS THE CIT(A) HAS BROUGHT OUT CLEAR FACTS TO THE EFFECT THAT THE CLAIM MADE BY THE ASSE SSEE U/S 80IB(10) IS A FRESH CLAIM WHICH WAS NOT MADE IN THE ORIGINAL RETU RN FILED U/S 139(1). AS PER THE PROVISIONS OF SECTION 153A IF THE ASSESSMEN TS ARE CONCLUDED ON THE DATE OF SEARCH, THE ASSESSEE CANNOT MAKE ANY FR ESH CLAIM TO REDUCE THE INCOME ALREADY ADMITTED IN THE ORIGINAL RETURN. IN THIS CASE, THOUGH 34 AKSHAR DEVLOPERS GROUP THE ASSESSEE HAS NOT MADE CLAIM OF DEDUCTION U/S 80 IB(10) IN ORIGINAL RETURN REDUCED THE INCOME BY MAKING FRESH CLAIM WHI CH WAS NOT IN ACCORDANCE WITH LAW. THE LD.DR FURTHER SUBMITTED T HAT EVEN ON MERITS, THE AO HAS BROUGHT OUT CLEAR FACTS THAT THE ASSESSE E HAS NOT SATISFIED WITH ANY OF THE CONDITIONS SPECIFIED U/S 80IB(10) S O AS TO BE ELIGIBLE FOR DEDUCTION AND HENCE, THE AO RIGHTLY REJECTED THE CL AIM MADE BY THE ASSESSEE AND HIS FINDING SHOULD BE UPHELD. 23. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. THE FACTS WITH REGARD TO THE EXECUTION OF HOUSING PROJECT WHICH IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) IS NOT DISPUTED BY THE LOWER AUTHORITI ES. THE AO REJECTED THE CLAIM MADE BY THE ASSESSEE ON THE GROUND THAT T HE ASSESSEE HAS MADE A FRESH CLAIM IN RETURN FILED U/S 153A WHICH W AS NOT MADE IN RETURN FILED U/S 139(1), THEREFORE OPINED THAT THE ASSESSE E CANNOT MAKE A FRESH CLAIM IN THE RETURN FILED U/S 153A, AS THE SAID PRO VISIONS ARE BENEFICIAL PROVISION FOR THE REVENUE AND ALSO WHERE THE ASSESS MENTS ARE UNABATED / CONCLUDED, AS ON THE DATE OF SEARCH, NO FRESH CLAIM CAN BE MADE. ACCORDING TO THE AO, EVEN ON MERITS, THE ASS ESSEE IS NOT ELIGIBLE FOR DEDUCTION U/S 80IB AS THE ASSESSEES HOUSING PR OJECT DOES NOT SATISFY ANY OF THE CONDITIONS SPECIFIED THEREIN WHICH IS EV IDENT FROM THE FACT THAT THE ASSESSEE HAS SOLD MORE THAN ONE FLAT TO A SINGL E INDIVIDUAL WHICH IS CONTRARY TO THE CLAUSES (E) AND (F). THE ASSESSEE HAS CONSTRUCTED 35 AKSHAR DEVLOPERS GROUP COMMERCIAL PORTION IN THE BUILDING IN EXCESS OF SPE CIFIED LIMIT PROVIDED U/S 80IB(10). THE ASSESSEE HAS CONSTRUCTED CERTAIN FLATS WHICH ARE HAVING SUPER BUILT UP AREA OF MORE THAN THE SPECIFI ED LIMIT. THE PROJECT SREEJI HEIGHTS HAS BEEN DEVELOPED ON A LAND HAVIN G MORE THAN 1 ACRE AND ALSO THE PROJECT WAS WITHIN A DISTANCE OF 25 KM S FROM THE MUMBAI METROPOLITAN LIMITS. THE LD.CIT(A) HAS CONCURRED W ITH THE FINDINGS OF THE AO INSOFAR AS FRESH CLAIM MADE BY THE ASSESSEE IN R ETURN FILED U/S 153A AND OBSERVED THAT THE ASSESSEE CANNOT MAKE A FRESH CLAIM WHICH WAS NOT MADE IN THE ORIGINAL RETURN FILED U/S 139(1) WH ERE THE ASSESSMENT HAS BEEN CONCLUDED OR REACHED FINALITY AS ON THE DATE O F SEARCH. HOWEVER, DIFFERED WITH THE FINDINGS OF THE AO INSOFAR AS MER ITS IS CONCERNED AND OBSERVED THAT THE DEDUCTION CANNOT BE DENIED MERELY FOR THE REASON THAT THE ASSESSEE HAS SOLD 2 UNITS TO ONE BUYER, THROUGH ONE AGREEMENT ON THE GROUND THAT CLAUSES (E) AND (F) INSERTED BY THE FINANCE ACT WEF 01- 04-2010 IS NOT APPLICABLE TO THE FACTS OF THE ASSES SEES CASE AS THE ASSESSEES PROJECT HAS BEEN COMPLETED BEFORE THE IN SERTION OF CLAUSES (E) AND (F) WHICH IS EVIDENT FROM THE FACT THAT THE OCCUPANCY CERTIFICATE IN RESPECT OF THE SAID PROJECT WAS RECEIVED ON 22-09-2 008. THE CIT(A) FURTHER OBSERVED THAT THE RESTRICTION OF COMMERCIAL AREA ON THE HOUSING PROJECT WAS INSERTED BY FINANCE (NO.2) ACT, 2004 WE F 01-04-2005 WHEREAS THE ASSESSEES PROJECT WAS APPROVED ON 16-1 0-2004, THEREFORE, EVEN IF THE COMMERCIAL AREA IS MORE THAN THE SPECIF IED LIMIT, THERE IS NO 36 AKSHAR DEVLOPERS GROUP BAR FOR CLAIMING DEDUCTION U/S 80IB(10) AS PER THE LAW LAID DOWN BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS BRA HMA ASSOCIATES (SUPRA) THE CIT(A) FURTHER OBSERVED THAT MERELY BECAUSE ONE BUILDING, B-WING DOES NOT SATISFY THE REQUIREMENT OF SECTION 80IB(10 ) WOULD NOT RESULT IN NULLIFYING THE CLAIM OF THE ASSESSEE FOR THE ENTIRE PROJECT. THE ASSESSEE IS ENTITLED TO HAVE BENEFIT OF DEDUCTION IN RESPECT OF RESIDENTIAL UNITS SATISFYING THE REQUIREMENTS U/S 80IB(10) AS HELD IN THE FOLLOWING CASES:- 1. VISHSWAS PROMOTERS PVT LTD VS ACIT & ORS (2013) 214 TAXMAN.524 2. CIT VS VANDANA PROPERTIES (2012) 19 TAXMAN.COM 1 6 24. THE CIT(A) ALSO NEGATED THE OBSERVATIONS OF THE AO WITH REGARD TO THE APPLICABILITY OF THE DECISION OF THE HONBLE BO MBAY HIGH COURT IN THE CASE OF BRAHMA ASSOCIATES (SUPRA) BY HOLDING THAT T HE AO WAS WRONG IN NOT FOLLOWING THE DECISION ON THE GROUND THAT SLP W AS FILED AGAINST THE DECISION. IN ANY CASE, AS OF NOW, THE DECISION HAS BEEN UPHELD TO BE CORRECT BY HONBLE APEX COURT AND THE SLP OF THE IN COME-TAX DEPARTMENT IS DISMISSED. THE AO HAS MENTIONED THAT ALMOST 1/3 OF THE FLATS HAVE BUILT UP AREA IN EXCESS OF THE PRESCRIBE D LIMITS. THE ASSESSEE HAS ASKED FOR A PROPORTIONATE DEDUCTION ON THE FLAT S WHICH FULFILLED THE REQUIREMENTS OF SECTION 80IB(10) ON PROPORTIONATE B ASIS EXCLUDING THE FLATS HAVING BUILT UP AREA IN EXCESS OF 1000 SQ.FT. HOWEVER, THE CIT(A) FURTHER OBSERVED THAT THE ASSESSEE HAS NOT BEEN ABL E TO COUNTER THE AOS 37 AKSHAR DEVLOPERS GROUP FINDING THAT THE PROJECT, SREEJI HEIGHTS WAS WITH IN A DISTANCE OF 25 KMS FROM THE BOMBAY METROPOLITAN LIMITS. ACCORDINGLY, THE AO WAS DIRECTED TO ALLOW DEDUCTION U/S 80IB(10) ON THE FLATS NOT EX CEEDING LIMITS OF BUILT UP AREA AS PRESCRIBED IN THE ACT ON PRORATA BASIS. THE REVENUE HAS NOT CHALLENGED THE FINDINGS OF THE AO, INSOFAR AS MERIT S OF THE DEDUCTION CLAIMED U/S 80IB(10) AND HENCE, THE FINDINGS OF THE CIT(A) HAS BECOME FINAL. AS REGARDS OBSERVATIONS OF THE CIT(A) WITH REGARD TO THE DISTANCE OF THE PROJECT, SREEJI HEIGHTS, THE ASSESSEE HAS SUBMITTED THAT ITS PROJECT, SREEJI HEIGHTS IS WITHIN 25 KMS FROM THE METROPOLITAN LIMITS OF MUMBAI FOR WHICH HE HAS FURNISHED GOOGLE MAP AND AL SO EXTRACT FROM MCGM WEBSITE AS PER WHICH THE PROJECT IS 25 KMS AWA Y FROM METROPOLITAN LIMITS OF MUMBAI. THE LD.AR ALSO FILE D CERTAIN CASE LAWS TO SUPPORT HER ARGUMENTS THAT THE DISTANCE FROM THE MU NICIPAL LIMITS SHOULD BE MEASURED BY ROAD, BUT NOT AS CROW FLIES. ACCORD INGLY, THE HONBLE BOMBAY HIGH COURT IN THE CASE OF NITISH RAMCHANDRA CHORADIA ITA NOS 18 TO 23 OF 2015; 121 TO 129 OF 2013; 131 OF 2013; 140 OF 2013 AND 151 OF 2015 DATED 30-03-2015 HAS TAKEN A VIEW THAT THE DISTANCE BETWEEN THE MUNICIPAL LIMITS OF THE ASSESSEES PROPERTY IS TO BE MEASURED HAVING REGARD TO THE SHORTEST ROAD DISTANCE AND NOT AS THE CROW FLIES, I.E. A STRAIGHTLINE DISTANCE AS CANVASSED BY THE REVENUE. HOWEVER, THESE FACTS WERE NOT BEFORE THE AO. THEREFORE, WE ARE OF THE V IEW THAT THE AO MAY EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF T HE EVIDENCES FILED AND 38 AKSHAR DEVLOPERS GROUP ALSO THE DECISION OF JURISDICTIONAL HIGH COURT CITE D BY THE ASSESSEE. 25. AS REGARDS THE OBSERVATIONS OF THE CIT(A) WITH REGARD TO THE CLAIM OF THE ASSESSEE IN THE RETURN FILED U/S 153A, WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CONTINENTA L WAREHOUSING CORPORATION (NAVA SHEVA) LTD (SUPRA) AND CIT VS GUR INDER SINGH BAWA (SUPRA) HAVE TAKEN A VIEW THAT NO ADDITION CAN BE M ADE IN THE ASSESSMENTS WHICH HAVE BEEN CONCLUDED / UNABATED AS ON THE DATE OF SEARCH IN THE ABSENCE OF ANY SEIZED MATERIALS. THE RATIO LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT IN THOSE CASE S IS THAT IN CASE OF UNABATED ASSESSMENTS, THERE IS NO SCOPE FOR THE AO TO MAKE ANY ADDITION ON THE BASIS OF REGULAR BOOKS OF ACCOUNT A ND IF AT ALL ANY ADDITION CAN BE MADE, IT SHOULD BE ON THE BASIS OF SEIZED MA TERIALS. IN OTHER WORDS, IF ASSESSMENTS ARE ABATED, THEN THE AO IS HA VING JURISDICTION TO ASSESS OR REASSESS TOTAL INCOME ON THE BASIS OF RET URN OF INCOME FILED FILED BY THE ASSESSEE U/S 153A, INCLUDING INCRIMINA TING MATERIAL FOUND AS A RESULT OF SEARCH. GOING BY THE SAME ANALOGY, IF THE ASSESSMENTS ARE ABATED AS ON THE DATE OF SEARCH, THE ASSESSEE IS AT LIBERTY TO FILE A TRUE AND CORRECT RETURN MAKING A CLAIM WHICH WAS NOT MAD E EARLIER IN THE ORIGINAL RETURN FILED U/S 139(1) IF SUCH CLAIM IS A LLOWABLE UNDER THE ACT. IN THIS CASE, ON PERUSAL OF THE FACTS AVAILABLE ON REC ORD, WE FIND THAT THE SEARCH TOOK PLACE ON 29-09-2011, THE DISPUTE INVOLV ED WITH REGARD TO THE CLAIM OF DEDUCTION U/S 80IB(10) PERTAINS TO AY 2009 -10 TO 2012-13. THE 39 AKSHAR DEVLOPERS GROUP ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10 HAS BEEN UNABATED / CONCLUDED AS ON THE DATE OF SEARCH AS THE TIME LIMI T FOR ISSUE OF NOTICE U/S 143(2) HAS BEEN EXPIRED ON 30-09-2010 EVEN THOU GH NO ASSESSMENT HAS BEEN FRAMED U/S 143(3). INSOFAR AS ASSESSMENT YEAR 2010-11 ONWARDS, THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143 (2) WAS DUE ON 30-09- 2011, 30-09-2012 AND 30-09-2013 AND ALL THE DATES A RE AFTER THE DATE OF SEARCH. THEREFORE, WE ARE OF THE VIEW THAT THE ASS ESSMENT FOR AY 2009- 10 IS UNABATED AND AY 2010-11 ONWARDS ARE ABATED AN D IN VIEW OF THE RATIO OF THE HONBLE JURISDICTIONAL HIGH COURT IN T HE CASE OF CONTINENTAL WAREHOUSING CORPORATION (NAVA SHEVA) LTD AND GURIND ER SINGH BAWA, THE ASSESSEE CAN MAKE A FRESH CLAIM WHICH WAS NOT M ADE IN THE ORIGINAL RETURN U/S 139(1) IS ABATED ASSESSMENTS. ACCORDING LY, THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) AS PER THE CLAI M MADE IN THE RETURN FILED U/S 153A OF THE ACT AND HENCE, WE DIRECT THE AO TO ADMIT THE CLAIM OF THE ASSESSEE AND MAKE A LIMITED VERIFICATION INS OFAR AS THE OBSERVATION OF THE CIT(A) WITH REGARD TO THE DISTAN CE OF THE PROJECT BEFORE ALLOWING THE CLAIM. IN THE RESULT, THE GROUND RAIS ED BY THE ASSESSEE INSOFAR AS DEDUCTION U/S 80IB(10) FOR THE ASSESSMEN T YEAR 2009-10 HAS BEEN REJECTED AND IN RESPECT OF AYS 2010-11 TO 2012 -13 IS ALLOWED. 26 . THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERAT ION FOR AY 2011-12 IS REDUCTION IN THE VALUE OF CLOSING STOCK. THE ASSES SEE FIRM HAD DISCLOSED CLOSING STOCK OF CITY CENTER PROJECT AT RS.145,01,6 7,054 IN THE RETURN OF 40 AKSHAR DEVLOPERS GROUP INCOME FILED U/S 139(1). HOWEVER, WHILE FILING THE RETURN U/S 153A OF THE ACT, THE CLOSING STOCK WAS VALUED AT RS.143,28,67,0 54. THE SAID DIFFERENCE WAS RS.1, 73,00,000 ON ACCOUNT OF REDUCT ION OF LOSS ON SALE AMOUNTING TO RS.1,73,00,000 MADE TO M/S BOMBAY INFR ASTRUCTURE LTD WHICH WERE INCLUDED IN CLOSING WORK-IN PROGRESS. T HE LOSS WAS SUPPOSED TO BE RECOVERED FROM M/S BOMBAY INFRASTRUC TURE LTD. SINCE M/S BOMBAY INFRASTRUCTURE LTD DID NOT REIMBURSE THE SAID LOSS, THE ASSESSEE HAS WRITTEN OFF THE SAME; HENCE, THE PROFI T OTHERWISE EARLIER OVERSTATED OF RS.173 LAKHS WAS BROUGHT DOWN TO CORR ECT FIGURE. IN SUPPORT OF ITS ARGUMENTS, FILED AUDITORS REPORT AN D OTHER EVIDENCES. THE AO REJECTED THE ARGUMENTS OF THE ASSESSEE AND ADDED AN AMOUNT OF RS.173 LAKHS TO THE TOTAL INCOME TOWARDS SUPPRESSED STOCK ON THE GROUND THAT THE SAID CLAIM WAS NOT SUPPORTED BY THE LETTER FROM M/S BOMBAY INFRASTRUCTURE LTD. THE ASSESSEE SUBMITTED BEFORE THE AO THAT DUE TO STRAINED RELATIONS WITH THE BUYER, IT COULD NOT ABLE TO GET CONFIRMATION FROM THE PARTY; HOWEVER, THE AO HAS NO T DISPUTED THE CONSIDERATION RECEIVED FROM M/S BOMBAY INFRASTRUCTU RE LTD FOR THE SALE OF THOSE SHOPS. THE FACT OF THE MATTER IS THAT THE AS SESSEE IS IN RECEIPT OF SALE CONSIDERATION WHICH IS LESS THAN THE COST INCU RRED ON THE CONSTRUCTION OF SHOP AT CITY CENTRE MALL. THE FACT S STAND ADMITTED BASED ON EVIDENCES. THE ENTRIES IN BOOKS WHICH WAS WRONG LY MADE EARLIER HAS BEEN CORRECTED NOW AND HAS MERELY BEEN BROUGHT IN C ONFORMITY WITH THE 41 AKSHAR DEVLOPERS GROUP PRIMARY DOCUMENTS FOR COSTS AND SALE PROCEEDS. 27. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE L D.CIT(A) HAVING ACCEPTED THE FACT THAT THE ASSESSEE HAS EXPLAINED T HE FACTS WITH REGARD TO THE REDUCTION IN WORK-IN-PROGRESS DUE TO THE LOS S INCURRED ON SALE OF TWO SHOPS AT CITY CENTRE MALL, FAILED TO DELETE ADD ITION MADE BY THE AO BY HOLDING THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE THAT THE LOSS PERTAINING TO AY 2009-10 AND 2010-11 WAS NOT CLAIME D IN THE RESPECTIVE ASSESSMENT YEARS. THE LD.AR FURTHER SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS.173 LAKHS AS SUPPRESSION OF STOCK BEING IRRECOVERABLE LOSS WRITTEN OFF DURING THE YEA R ON THE MISINTERPRETATION OF THE FACTS AND INFORMATION. TH E ASSESSEE HAS FURNISHED NECESSARY EVIDENCE TO RECTIFY THE MISTAKE S IN PASSING ENTRIES IN THE BOOKS OF ACCOUNT IN RESPECT OF LOSS INCURRED ON SALE OF FLATS TO M/S BOMBAY INFRASTRUCTURE LTD. THE AO MERELY, ON THE B ASIS OF NON FURNISHING OF CONFIRMATION FROM THE PARTY, HAS MADE ADDITION EVEN THOUGH THE FACTS CLEARLY INDICATE THAT THE ASSESSEE HAS IN CURRED LOSS IN RESPECT OF SALE OF SHOPS WHICH HAS BEEN REDUCED IN CLOSING WOR K-IN-PROGRESS. 28. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTE D THE ORDER OF THE CIT(A). 29. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE AO MADE ADDITION OF RS.173 LAKHS TOWARDS SUPPRESSION O F CLOSING STOCK ON 42 AKSHAR DEVLOPERS GROUP THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE INCLUDING CONFIRMATION FROM M/S BOMBAY INFRASTRUCTURE LTD TOW ARDS LOSS INCURRED ON SALE OF 2 SHOPS AT CITY CENTRE MALL. THE LD.CIT (A), WHILE APPROVING THE FINDINGS OF THE AO HAS HELD THAT EVEN GOING BY THE DETAILS SUBMITTED BY THE ASSESSEE IT IS VERY CLEAR THAT THE ASSESSEE HAS FAILED TO EXPLAIN HOW IT HAS INCURRED LOSS OF RS.173 LAKHS IN RESPECT OF SALE OF CITY CENTRE MALL TO M/S BOMBAY INFRASTRUCTURE LTD. THE RELEVAN T PORTION OF THE ORDER OF THE CIT(A) IS EXTRACTED BELOW: 54. IT APPEARS FROM THE LETTER THAT THE APPELLANT H AD SOLD THE CITY MALL IN THREE YEARS. THE SALES MADE IN THE YEAR EN DING ON 31/03/2009 RELEVANT TO ASST.YEAR 2009-10 ALLEGEDLY RESULTED IN LOSS OF RS.31,84,564/- THE SALES MADE IN THE YEAR ENDING ON 31/03/2010 RELEVANT TO ASST YEAR 2010-11 RESULTED IN LOSS OF T 2,76,53,618/~. THE SALES MADE IN THE YEAR ENDING ON 31/03/2011 RELE VANT TO ASST YEAR 2011-12 RESULTED IN PROFIT OF ? 1,35,38,1827-. THE APPELLANT CLAIMS THAT THUS THERE HAS BEEN OVERALL LOSS OF ? 1 ,73,00,0007- IN THIS PROJECT AND THE SAME HAS BEEN CLAIMED IN THE R ETURN FILED IN RESPONSE TO THE NOTICE U/S 153A. THE LOSS HAS BEEN C LAIMED AS DOWNWARD REVISION IN THE CLOSING STOCK OF WIP. 55. EVEN IF THE ABOVE DETAILS FURNFSHED BY THE APPE LLANT ARE TO BE BELIEVED, THERE IS NO EVIDENCE FURNISHED BY THE APP ELLANT THAT THE LOSS PERTAINING TO ASST YEARS 2009-10 AND 2010-11 W AS NOT CLAIMED IN THE RESPECTIVE ASST YEARS. THE DETAILS A S AVAILABLE ON THE RECORD SHOW THAT THE LOSS IF ANY, HAD ALREADY B EEN CLAIMED AND THERE WAS NOTHING TO BE SET OFF DURING THIS YEA R BY WAY OF REDUCTION IN THE VALUE OF THE CLOSING STOCK. 30. FACTS ARE NOT CLEAR. THE ASSESSEE CLAIMS THAT IT HAS FURNISHED NECESSARY EVIDENCES TO JUSTIFY REDUCTION IN VALUE O F CLOSING WORK-IN- PROGRESS IN RESPECT OF LOSS INCURRED ON SALE OF CIT Y CENTRE MALL TO M/S BOMBAY INFRASTRUCTURE LTD. THE CIT(A), ON THE OTHE R HAND, OBSERVED THAT 43 AKSHAR DEVLOPERS GROUP THE ASSESSEE HAS NOT FILED ANY EVIDENCES. THE ASSE SSEE HAS FILED VARIOUS DETAILS TO EXPLAIN THE LOSS. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE NEED RE-EXAMINATION FROM THE AO IN THE LIGHT OF EVIDENCE FILED BY THE ASSESSEE; HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO AND DIRECT HIM TO CONSIDER THE EVIDENCE F ILED BY THE ASSESSEE AND TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH L AW AFTER AFFORDING OPPORTUNITY OF HEARING TO THE ASSESSEE. IN THE RES ULT, GROUND RAISED BY THE ASSESSEE IS ALLOWED, FOR STATISTICAL PURPOSE. 31. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IN ITA NO.6242/MUM/2016 FOR AY 2009-10 IS DISMISSED AND APPEALS FILED BY TH E ASSESSEE IN ITA NOS.2676/MUM/2017, 2677/MUM/2017 & 2678/MUM/2017 FO R ASSESSMENT YEARS 2010-11, 2011-12 & 2012-13, RESPEC TIVELY ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NOS 6243 & 6244/MUM/2016, 2672 & 2673/MUM/2017, 6245 & 6246/MUM/2016 & 2675/MUM/2017 32. THIS BUNCH OF 7 APPEALS FILED BY TWO DIFFERENT ASSESSEES ARE DIRECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF CIT(A)-11 , PUNE DATED 16-01- 2017 FOR THE ASSESSMENT YEARS 2009-10, 2010-11, 201 1-12 AND 2012-13. IN THESE APPEALS, THE ASSESSEE HAVE TAKEN UP MORE O R LOSS COMMON GROUNDS OF APPEAL FOR ALL THE YEARS. THEREFORE, FO R THE SAKE OF CONVENIENCE AND BREVITY, THE GROUNDS OF APPEAL APPE ARING IN APPEAL FOR AY 2009-10 IN ITA NO.2675/MUM/2017 ARE REPRODUCED B ELOW:- 44 AKSHAR DEVLOPERS GROUP THE APPELLANT INDIVIDUAL IS AGGRIEVED BY THE ORDER DATED 16.1.2017 PASSED BY THE LEARNED CIT(A) PUNE-11 U/S 250 OF THE INCOME-TA X ACT, 1961 AND IS IN APPEAL :- 1. BECAUSE, THE ID. C1T(A) HAS ERRED IN HOLDING TH AT THE ISSUANCE OF NOTICE \ U/S 143(2) OF THE ACT IS NOT MANDATORY FOR CARR YING OUT ASSESSMENT I PROCEEDINGS U/S 153A OF THE ACT AND THAT THE IMPU GNED ASSESSMENT / J ORDER IS VALID. 2(I) BECAUSE, THE ID. CIT(A) HAS ERRED IN HOLDI NG THE ADD BACK OF INTEREST INCOME OF RS. 133,84,004/- BY THE AO ON ACCOUNT OF INCOME ACCRUED BUT NOT DUE. (II) BECAUSE, THE ID. CIT(A) HAS ERRED IN HOLDING THAT THE DEED OF ADDENDUM DATED 31/3/2009 TO THE PARTNERSHIP DEED WAS AN AF TER THOUGHT ALTHOUGH THE SAME WAS VALIDLY EXECUTED AND FORMED PART OF AUDITO R'S REPORT IN ALL YEARS. (III) BECAUSE, THE ID. CIT(A) HAS ERRED IN FAILI NG TO CONSIDER THAT THE PARTNERSHIP FIRM M/S AKSHAR DEVELOPERS HAD CAPITALI ZED THE INTEREST ACCRUED TO THE PARTNERS IN THE WORK-IN-PROGRESS OF THE ON GOIN G PROJECT 'DECORIUM' IN THEIR RETURN OF INCOME FILED U/S 153A. 3(I) BECAUSE, THE ID. CIT(A) HAS ERRED IN UPHOL DING AO'S ACTION OF CONSIDERING THE IMPACT OF SEIZED MATERIAL IN THE HA NDS OF M/S AKSHAR DEVELOPERS EVEN THOUGH THE MATERIAL PERTAINED TO SE VERAL ENTITIES CO-OWNED BY THE APPELLANT AND ANOTHER. (II) BECAUSE, THE LD.CIT(A) HAS ERRED IN UPHOLDING AOS ACTION OF REJECTING THE OFFER OF BUSINESS INCOME TO THE TUNE OF RS.1,36,93, 535/- IN THE HANDS OF THE APPELLANT ON ACCOUNT OF PEAK WORKING OF THE SEIZED MATERIAL. 33. FROM THESE GROUNDS OF APPEAL, THE ASSESSEES HAV E CHALLENGED THE ASSESSMENT ORDER PASSED BY THE AO U/S 143(3) R.W.S. 153A ON THE GROUND THAT THE IMPUGNED ASSESSMENT ORDERS ARE BAD IN LAW AS THE AO HAS FAILED TO ISSUE MANDATORY NOTICE U/S 143(2) OF THE ACT. THE ASSESSEE HAS TAKEN UP A GROUND CHALLENGING THE ACTION OF THE CIT(A) IN UPHOLDING THE ADDITION MADE BY THE AO TOWARDS INTEREST ON CAP ITAL OF PARTNERS ACCRUED BUT NOT DUE AND CONSEQUENT DEDUCTION TOWARD S INTEREST PAID TO OTHERS AGAINST INCOME FROM BUSINESS. THE ASSESSEES ALSO HAVE TAKEN A GROUND FOR AY 2012-13 CHALLENGING THE ADDITION MADE BY THE AO TOWARDS SHORT TERM CAPITAL GAIN DECLARED IN ORIGINAL RETURN FILED U/S 139(1) BUT NOT 45 AKSHAR DEVLOPERS GROUP DECLARED IN REVISED RETURN FILED IN RESPONSE TO NOT ICE ISSUED U/S 142(1). 34. THE BRIEF FACTS OF THE CASE EXTRACTED FROM ITA NO.2675/MUM/2017 ARE THAT THE ASSESSEE HAD FILED HIS ORIGINAL RETURN OF INCOME ON 11-01- 2013 DECLARING TOTAL INCOME OF RS.1,52,81,625. A S EARCH AND SEIZURE ACTION U/S 132 OF THE ACT, WAS CONDUCTED ON 29-11-2 011 AND ACCORDINGLY NOTICE U/S 153A WAS ISSUED ON 11-03-2013. THE ASSE SSEE HAS FILED A RETURN U/S 153A ON 02-09-2013 DISCLOSING INCOME OF RS.1,55,85,230. IN THE RETURN FILED U/S 153A, THE ASSESSEE HAS INCLUDE D AN AMOUNT OF RS.1,36,93,535 ON ACCOUNT OF DISCLOSURE MADE DURING THE SEARCH TOWARDS UNACCOUNTED CASH RECEIPTS RECORDED IN ROUGH CASH BOOK 1 AND EXCLUDED AN AMOUNT OF RS.1,33,84,004 BEING THE INTE REST FROM PARTNERSHIP FIRMS WHICH WAS OFFERED IN THE ORIGINAL RETURN FILED U/S 139(1). THE AO COMPLETED THE ASSESSMENT U/S 153A, DETERMINI NG THE TOTAL INCOME AT RS.1,53,75,700 EXCLUDING THE OFFER OF ADD ITIONAL INCOME OF RS.1,36,93,535 BUT ADDING BACK INTEREST ACCRUED BUT NOT DUE FROM PARTNERSHIP FIRMS. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE CIT(A), ASSE SSEE HAD TAKEN UP A LEGAL PLEA INASMUCH AS THAT THE ASSESSMENT ORDER PA SSED BY THE AO IS BAD IN LAW AND LIABLE TO BE QUASHED AS THE AO DID N OT ISSUE THE MANDATORY NOTICE U/S 143(2) REQUIRED TO BE ISSUED A FTER THE RETURN WAS FILED IN RESPONSE TO NOTICE U/S 153A. THE ASSESSEE ALSO FILED ELABORATE WRITTEN SUBMISSIONS IN RESPECT OF ADDITION MADE BY THE AO TOWARDS 46 AKSHAR DEVLOPERS GROUP INTEREST ON CAPITAL FROM PARTNERSHIP FIRM AND ALSO EXCLUSION OF DISCLOSURE MADE DURING THE COURSE OF SEARCH. 35. THE CIT(A), AFTER CONSIDERING RELEVANT SUBMISSI ONS OF THE ASSESSEE, REJECTED THE GROUND TAKEN INSOFAR AS VALIDITY OF AS SESSMENT FOR NON ISSUE OF NOTICE U/S 143(2) BY HOLDING THAT THE PROVISIONS OF SECTION 153A ARE QUITE DIFFERENT AND NOTICE U/S 143(2) IS NOT A MUST FOR MAKING ASSESSMENT U/S 153A OF THE ACT. INSOFAR AS ADDITION MADE BY T HE AO TOWARDS INTEREST ON PARTNERS CAPITAL ACCOUNT RECEIVED FROM PARTNERS HIP FIRMS, THE WHOLE ARGUMENT AND THE SCHEME OF THE SO-CALLED AMENDMENT DEED APPEAR TO BE AN AFTERTHOUGHT. IT IS SEEN FROM THE RECORDS TH AT THOUGH THE AMENDMENT DEED IS CLAIMED TO BE DATED 31-03-2009, T HE ASSESSEE HAS DISCLOSED THE INTEREST INCOME IN HIS RETURN OF INCO ME FILED U/S 139(1) RIGHT UPTO AY 2012-13. THE ORIGINAL RETURN FOR THE ASSES SMENT YEAR 2011-12 WAS FILED AS LATE AS 11-01-2013 IN WHICH THE INTERE ST INCOME WAS INCLUDED. THUS, THE FACT OF THE AMENDMENT DEED AND AS A CONSEQUENCE OF NON DUE OF INTEREST INCOME CAME TO ASSESSEES MI ND ONLY FILING 153A RETURNS. THE CIT(A) FURTHER OBSERVED THAT EVEN ON GOING BY THE DETAILS FILED BY THE ASSESSEE, THE ORIGINAL RETURN OF INCOM E OF THE PARTNERSHIP FIRM OF AKSHAR DEVELOPERS FOR THE ASSESSMENT YEAR 2011-1 2 REVEALS THAT THE FIRM HAD PROFIT OF RS.4,64,17,370 BEFORE DEPRECIATI ON AND INTEREST TO PARTNERS ACCOUNT AND THE FIRM HAD CLAIMED DEDUCTION TOWARDS INTEREST PAID TO PARTNERS U/S 40(B) AND NET PROFIT OF RS.2,2 2,07,217 ONLY OFFERED TO 47 AKSHAR DEVLOPERS GROUP TAX. IN THE RETURN FILED IN RESPONSE TO 153A NOTIC E, THE POSITION REMAINS THE SAME, EXCEPT THAT THE RESULTANT INCOME HAS BEEN CLAIMED EXEMPT U/S 80IB(10) OF THE ACT. WITH THESE OBSERVATIONS, THE CIT(A) UPHELD ADDITION MADE BY THE AO TOWARDS INTEREST FROM PARTNERSHIP FI RM. SIMILARLY, THE CIT(A) HAS ENHANCED THE ASSESSMENT INSOFAR AS DEDUC TION CLAIMED BY THE ASSESSEE TOWARDS INTEREST PAID TO OTHERS AGAINS T INCOME FROM BUSINESS BY HOLDING THAT THE ASSESSEE HAS NOT EXPLA INED ANY NEXUS BETWEEN INTEREST EXPENDITURE AND INCOME DISCLOSED. THE CIT(A) FURTHER OBSERVED THAT IT CAN BE PRESUMED THAT THE ASSESSEE CLAIMS THAT WHILE INTEREST PAYABLE ON HIS BORROWINGS ACCRUES IMMEDIAT ELY AND INTEREST RECEIVABLE ON HIS LENDING OR INVESTMENT IN THE FIRM S WOULD ACCRUE IN FUTURE WHEN THE FIRMS PROFITS ARE RECORDED OR DETER MINED TO THE SATISFACTION OF THE ASSESSEES AND ITS PARTNERS. TH IS DUAL APPROACH IS NOTHING BUT AN ATTEMPT TO AVOID PAYMENT OF TAX. WI TH THESE OBSERVATIONS AND ALSO RELYING UPON CERTAIN JUDICIAL PRECEDENTS, ENHANCED THE ASSESSMENT TO THE EXTENT OF INTEREST DEDUCTION CLAI MED AGAINST INCOME FROM BUSINESS. AS REGARDS ASSESSMENT OF INCOME DET ERMINED ON THE BASIS OF SEIZED MATERIAL IN THE HANDS OF M/S AKSHAR DEVELOPERS AND NOT IN THE HANDS OF THE ASSESSEE, THE CIT(A) OBSERVED T HAT THE ISSUE HAS BEEN DISCUSSED IN DETAIL IN THE APPELLATE ORDER IN THE CASE OF AKSHAR DEVELOPERS, WHEREIN THE ADDITION MADE BY THE AO HAS BEEN CONFIRMED AND HENCE, THERE IS NO POINT IN TAXING THE SAME INC OME AGAIN IN THE 48 AKSHAR DEVLOPERS GROUP HANDS OF THE ASSESSEE. THE EXCLUSION OF SUCH INCOM E FROM ASSESSEES INCOME HAS BEEN RIGHTLY DONE BY THE AO. THIS GROUN D OF APPEAL WAS, THEREFORE, DISMISSED. AGGRIEVED BY THE CIT(A)S OR DER, THE ASSESSEE IS IN APPEAL BEFORE US. 36. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERAT ION IS ADDITION MADE TOWARDS INTEREST ON CAPITAL ACCRUED BUT NOT DUE FRO M PARTNERSHIP FIRM. THE FACTS WITH REGARD TO THE IMPUGNED ADDITION ARE THAT IN THE ORIGINAL RETURN OF INCOME FILED, THE ASSESSEE HAD INCLUDED I NTEREST ACCRUED BUT NOT DUE FROM THE PARTNERSHIP FIRM M/S AKSHAR DEVELO PERS. HOWEVER, IN THE RETURN FILED IN RESPONSE TO 153A NOTICE, THE AS SESSEE EXCLUDED THIS AMOUNT ON THE GROUND THAT INTEREST HAD NOT BEEN ACC RUED DURING THE PREVIOUS YEAR. ACCORDING TO THE ASSESSEE, THE FIRM HAS MADE PROVISION FOR INTEREST ON CAPITAL ACCOUNT ON THE BASIS OF PAR TNERSHIP DEED AND CREDITED INTEREST ON CAPITAL TO A SEPARATE ACCOUNT AND DEBITED TO WORK-IN- PROGRESS ACCOUNT WITHOUT TREATING IT AS REVENUE EXP ENDITURE. THE ASSESSEE FURTHER SUBMITTED THAT THE PARTNERS HAVE M UTUALLY DECIDED TO ALTER THE PARTNERSHIP DEED INSOFAR AS INTEREST ON C APITAL CLAUSE IS CONCERNED AND ACCORDINGLY AS PER THE ADDENDUM TO PA RTNERSHIP DEED DATED 31-03-2009, INTEREST ON CAPITAL SHALL BE PAYA BLE TO PARTNERS ONLY AFTER THE PROJECT IS COMPLETE AND PROFIT IS DETERMI NED AS THE MARKET CONDITION HAD WORSENED. THUS, IN VIEW OF THE AMEND MENT TO PARTNERSHIP DEED, INTEREST ON CAPITAL ACCOUNT IS ACCRUED BUT NO T DUE FROM THE SAID 49 AKSHAR DEVLOPERS GROUP PARTNERSHIP FIRM AND HENCE, THE SAME HAS NOT BEEN O FFERED TO TAX IN THE RETURN FILED U/S 153A OF THE ACT. THOUGH, THE ASSE SSEE HAS INCLUDED INTEREST ON CAPITAL IN THE ORIGINAL RETURN OF INCOM E FILED U/S 139(1) SUCH INCLUSION WAS MADE ERRONEOUSLY WITHOUT CONSIDERING THE LEGAL IMPLICATION TO THE ADDENDUM TO PARTNERSHIP DEED. THE ASSESSEE FURTHER SUBMITTED THAT THE FIRM HAS AMENDED THE PARTNERSHIP DEED BY W AY OF ADDENDUM DEED DATED 22-04-2015 REVERSING INTEREST CREDITED T O PARTNERS ACCOUNT AND ALSO REDUCED CLOSING WORK-IN-PROGRESS AND THIS FACT HAS BEEN CONFIRMED BY THE AUDITORS IN THEIR AUDIT REPORT IN FORM 3CB FOR THE YEAR ENDED 31-03-2016. ACCORDINGLY, THE ASSESSEE CLAIMS THAT THE FACT OF INTEREST BEING CONTINGENT EXISTS EVEN PRIOR TO SEAR CH IN RETURNS FOR AYS 2009-120 AND 2010-11 AND THE LOWER AUTHORITIES HAVE NOT CONTROVERTED THESE VITAL FACTS; HENCE, IT IS NOT AN AFTERTHOUGHT , THEREFORE, THE ASSESSEE HAS RIGHTLY CORRECTED LEGAL POSITION IN THE REVISED RETURN FILED U/S 153A OF THE ACT. 37. THE AO, AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO TAKING INTO ACCOUNT VARIOUS EVIDENCES FILED BY THE ASSESSEE OBSERVED THAT THE ASSESSEE HAS INCLUDED INTEREST ON CAPITAL ACCRUED FROM PARTNERSHIP FIRM IN THE ORIGINAL RETURN FILED U/S 1 39(1). HOWEVER, WITHOUT THERE BEING ANY MATERIAL CHANGES IN THE FACTS, EXCL UDED INTEREST IN REVISED RETURN FILED U/S 153A, ON THE BASIS OF AMEN DED PARTNERSHIP DEED WHICH IS NOTHING BUT AN AFTERTHOUGHT TO DEFER PAYME NT OF TAXES. THE AO 50 AKSHAR DEVLOPERS GROUP FURTHER OBSERVED THAT THE QUESTION OF ACCRUAL OF IN TEREST FROM PARTNERS CAPITAL ACCOUNT IS FULLY DEPENDENT UPON THE CLAUSES IN PARTNERSHIP DEED, BUT NOT BY THE CONDUCT OF THE ASSESSEE. THE ASSESS EE MAY AMEND THE PARTNERSHIP DEED TO ITS CONVENIENCE SO AS TO DEFER PAYMENT OF TAXES BUT, WHAT LAW SAYS IS IMPORTANT. ONCE, INTEREST CLAUSE WAS PROVIDED IN PARTNERSHIP DEED, AS PER WHICH THE ASSESSEE NEEDS T O PROVIDE INTEREST ON CAPITAL WHETHER OR NOT PAID. MOREOVER, THE ASSE SSEE HAS INCLUDED INTEREST IN ITS RETURN OF INCOME EVEN AFTER AMENDME NT TO PARTNERSHIP DEED DATED 31-03-2009 WHICH IS A CLEAR CASE OF AFTERTHOU GHT BY THE ASSESSEE, THEREFORE, CANNOT BE ACCEPTED. 38. THE LD.AR FOR THE ASSESSEE SUBMITTED THAT THE L D.CIT(A) WAS ERRED IN UPHOLDING ADDITION MADE BY THE AO TOWARDS INTERE ST ON CAPITAL FROM PARTNERSHIP FIRM ACCRUED BUT NOT DUE WITHOUT APPREC IATING THE FACT THAT THE PARTNERSHIP FIRM HAS REVERSED INTEREST PAYABLE TO PARTNERS BY REDUCING IT FROM WORK-IN-PROGRESS AS THE SAID INTER EST HAS NOT BEEN CLAIMED AS REVENUE EXPENDITURE, BUT ONLY CAPITALIZE D TO WORK-IN-PROGRESS. THE LD.AR FURTHER SUBMITTED THAT TAXABILITY OF ANY RECEIPT INCLUDING INTEREST DEPENDS UPON ACCRUAL OF INCOME WHICH IS, I N THIS CASE, NOT ACCRUED TO THE ASSESSEE BECAUSE THE PARTNERSHIP FIR M HAS DEFERRED PAYMENTS OF INTEREST ON PARTNERS CAPITAL ACCOUNT D UE TO ADVERSE MARKET CONDITIONS BY AMENDING THE PARTNERSHIP DEED, INTERE ST ON CAPITAL CLAUSE. THE ASSESSEE ALSO AMENDED PARTNERSHIP DEED ONCE AGA IN TO REVERSE 51 AKSHAR DEVLOPERS GROUP INTEREST CREDITED TO PARTNERS CAPITAL ACCOUNT AND ACCORDINGLY REVERSED INTEREST ON CAPITAL ACCOUNT TO PARTNERS BY REDUCING IT FROM WORK-IN- PROGRESS. TO THIS EFFECT FURNISHED COPIES OF FINAN CIAL STATEMENTS OF PARTNERSHIP FIRM FOR THE YEAR ENDING 31-03-2016 ALO NG WITH AUDITORS REPORT WHEREIN REVERSAL OF INTEREST HAS BEEN CONFIR MED BY THE AUDITORS BY WAY OF NOTES TO TAX AUDIT REPORT. THE LD.AR FURTHE R SUBMITTED THAT ONCE INTEREST HAS BEEN REVERSED IN THE PARTNERSHIP FIRM ACCOUNT AND NOT CLAIMED AS DEDUCTION AGAINST PROFITS, TAXING THE SA ME IN THE HANDS OF THE PARTNERS AMOUNTS TO DOUBLE TAXATION OF SAME AMOUNT WHICH IS NOT PERMISSIBLE IN LAW. 39. THE LD.DR, ON THE OTHER HAND, STRONGLY SUPPORTE D THE ORDER OF THE CIT(A). 40. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATE RIAL AVAILABLE ON RECORD. THE AO MADE ADDITION TOWARDS INTEREST ACCR UED BUT NOT DUE ON PARTNERS CAPITAL ACCOUNT FROM PARTNERSHIP FIRM, M/ S AKSHAR DEVELOPERS ON THE GROUND THAT THE ASSESSEE HAS INCLUDED INTERE ST ON CAPITAL IN ORIGINAL RETURN FILED U/S 139 WHEREAS EXCLUDED SUCH INTEREST IN REVISED RETURN FILED U/S 153A WITHOUT THERE BEING ANY MATER IAL CHANGES IN FACTS. THE AO FURTHER OBSERVED THAT INTERESTON CAPITAL TO PARTNERS HAS BEEN PROVIDED AND DEBITED TO THE P&L ACCOUNT OF THE FIRM AND SIMULTANEOUSLY CREDITED TO THE CAPITAL ACCOUNT OF THE PARTNERS UND ER DOUBLE ENTRY SYSTEM OF ACCOUNTING, THEREFORE, THE ASSESSEE IS BOUND TO INCLUDE THE SAME IN ITS 52 AKSHAR DEVLOPERS GROUP COMPUTATION OF INCOME AND ACCORDINGLY, THE SAME IS ADDED U/S 28 OF THE ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT INT EREST ON PARTNERS CAPITAL ACCOUNT ACCRUED BUT NOT DUE HAS BEEN INCLUDED IN OR IGINAL RETURN ON THE BASIS OF PARTNERSHIP DEED AS PER WHICH THE PARTNERS WERE ENTITLED FOR INTEREST ON CAPITAL; HOWEVER, DUE TO CHANGED BUSINE SS CONDITIONS, THE PARTNERS HAVE MUTUALLY DECIDED TO DEFER PAYMENT OF INTEREST BY AMENDING INTEREST ON CAPITAL CLAUSE IN THE PARTNERSHIP DEED BY AN ADDENDUM TO PARTNERSHIP DEED DATED 31-03-2009. THE ASSESSEE AL SO CONTENDED THAT THE PARTNERS HAVE ENTERED INTO ONE MORE AMENDMENT T O PARTNERSHIP DEED BY AMENDING INTEREST ON CAPITAL CLAUSE AND DECIDED NOT TO PAY ANY INTEREST ON PARTNERS CAPITAL ACCOUNT BECAUSE OF AD VERSE BUSINESS CONDITIONS AND ACCORDINGLY WHATEVER INTEREST HAS BE EN CREDITED TO PARTNERS CAPITAL ACCOUNT HAS BEEN REVERSED SIMULTA NEOUSLY REDUCING IT FROM WORK-IN-PROGRESS AS THE SAME HAD BEEN DEBITED TO WORK-IN-PROGRESS WITHOUT TREATING IT AS REVENUE EXPENDITURE. 41. HAVING HEARD BOTH THE SIDES, WE FIND THAT THE C ONTROVERSY HAS TO BE RESOLVED IN THE LIGHT OF LEGAL POSITION THAT WHETHE R THE ASSESSEE CAN EXCLUDE INTEREST ON CAPITAL IN THE RETURN FILED U/S 153A, WHICH WAS EARLIER INCLUDED IN RETURN FILED U/S 139(1) OF THE ACT. TH E ASSESSEE CLAIMS THAT THE ASSESSMENT FOR AY 2009-10 ONWARDS ARE ABATED IN VIEW OF THE FACT THAT THE SEARCH TOOK PLACE ON 29-09-2011 AND THE AS SESSMENT FOR THE AY 2009-10 ONWARDS WERE ABATED AS THE DUE DATE FOR ISS UE OF NOTICE U/S 53 AKSHAR DEVLOPERS GROUP 143(2) WAS DUE ON 30-09-2010 AND TIME LIMIT FOR COM PLETION OF ASSESSMENT WAS DUE ON 31-03-2012. INSOFAR AS ASSES SMENT YEAR 2010- 11 ONWARDS, THE TIME LIMIT FOR ISSUE OF NOTICE U/S 143(2) WAS DUE TO EXPIRE ON 30-09-2011, THEREFORE, THE ASSESSMENT FOR AY 201 0-11 AND SUBSEQUENT YEARS ARE CERTAINLY ABATED, THEREFORE, I N VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF CONTINE NTAL WAREHOUSING (NAVA SHEVA) LTD (SUPRA) AND CIT VS GURINDER SINGH BAWA ( SUPRA) WHEREIN THE LAW HAS BEEN EXPLAINED WITH REFERENCE TO 153A ASSES SMENT AND ACCORDINGLY, THERE IS NO SCOPE OF ANY ADDITION IN R ESPECT OF CONCLUDED / UNABATED ASSESSMENTS WITHOUT THERE BEING ANY SEIZED MATERIALS. IN OTHER WORDS, THE ASSESSMENTS WHICH ARE PENDING AS O N THE DATE OF SEARCH SHALL ABATE AND ACCORDINGLY, THE AO SHALL AS SESS OR RE-ASSESS THE TOTAL INCOME ON THE BASIS OF REGULAR BOOKS OF ACCOU NT AND OTHER SEIZED MATERIAL FOUND DURING THE COURSE OF SEARCH. THE SU M AND SUBSTANCE OF THE RATIO OF JUDGMENTS OF JURISDICTIONAL HIGH COURT IS THAT IN CASE OF ABATED ASSESSMENTS, THE SCOPE OF ASSESSMENT IS NOT LIMITED TO SEIZED MATERIALS, BUT ON THE BASIS OF REGULAR BOOKS OF ACC OUNTS AND RETURN FILED BY THE ASSESSEE. GOING BY THE SAME ANALOGY, WHEN T HE AO IS PERMITTED TO ASSESS OR RE-ASSESS TOTAL INCOME ON THE BASIS OF REGULAR BOOKS OF ACCOUNT AND SEIZED MATERIALS, THE ASSESSEE ALSO CAN MAKE A FRESH CLAIM IN RESPECT OF ITEMS WHICH HAVE NOT BEEN CLAIMED IN THE ORIGINAL RETURN OF INCOME OR MAKE ANY DEDUCTIONS WHICH WERE NOT CLAIME D IN THE ORIGINAL 54 AKSHAR DEVLOPERS GROUP RETURN OF INCOME. THEREFORE, WE ARE OF THE CONSIDE RED VIEW THAT IF AN ASSESSMENT IS ABATED, THEN THE ASSESSEE CAN MAKE A FRESH CLAIM INCLUDING DEDUCTION OR EXCLUSION OF ANY ITEM OF INC OME IF SUCH EXCLUSION OR INCLUSION IS IN ACCORDANCE WITH THE PROVISIONS O F ACT. IN THIS CASE, ON THE BASIS OF INFORMATION AVAILABLE ON RECORD, WE FI ND THAT THE SEARCH TOOK PLACE ON 29-9-2011AND AS ON THE DATE, THE TIME LIMI T FOR ISSUE OF NOTICE U/S 143(2) FOR AY 2009-10 WAS EXPIRED ON 30-09-2010 . THEREFORE, WE ARE OF THE VIEW THAT THE ASSESSMENT FOR AY 2009-10 WAS CONCLUDED / UNABATED AND HENCE, THE ASSESSEE CANNOT MAKE ANY FR ESH CLAIM OR EXCLUSION OF INCOME IN THE REVISED RETURN U/S 153A OF THE ACT. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE FOR AY 2 009-10 IS REJECTED. 42. HAVING SAID SO, LET US COME TO AY 2010-11 ONWAR DS. ADMITTEDLY, ON THE BASIS OF DATE OF SEARCH, THE ASSESSMENT FOR AY 2010-11AND ONWARDS HAVE BEEN ABATED AS THE TIME LIMIT FOR ISSUE OF NOT ICE U/S 143(2) WAS DUE TO EXPIRE ON 30-09-2011, THEREFORE, GOING BY THE RA TIO OF JUDGMENTS OF THE JURISDICTIONAL HIGH COURT IN CONTINENTAL WAREHOUSIN G (NAVA SHEVA) LTD (SUPRA) AND CIT VS GURINDER SINGH BAWA (SUPRA), WE ARE OF THE VIEW THAT THE ASSESSEE CAN MAKE A FRESH CLAIM OF ANY ITEM OF INCOME IN ACCORDANCE WITH LAW. IN THIS LEGAL BACKGROUND, IF WE EXAMINE THE ISSUE BEFORE US IN RESPECT OF TAXABILITY OF INTEREST ACCR UED BUT NOT DUE ON PARTNERS CAPITAL ACCOUNT FROM PARTNERSHIP FIRM, TH E ASSESSEE SOUGHT TO EXCLUDE INTEREST ON CAPITAL IN THE RETURNS FILED U/ S 153A ON THE GROUND 55 AKSHAR DEVLOPERS GROUP THAT SUCH INTEREST HAS NOT BEEN DUE TO THE ASSESSEE IN VIEW OF THE ADDENDUM TO PARTNERSHIP DEED WHERE THE PARTNERS HAV E MUTUALLY DECIDED TO POSTPONE PAYMENT OF INTEREST AND SUBSEQU ENTLY REVERSED INTEREST BY MAKING SIMULTANEOUS ADJUSTMENT TO WORK- IN-PROGRESS. ACCORDING TO THE ASSESSEE, INTEREST ACCRUED BUT NOT DUE ON PARTNERS CAPITAL ACCOUNT IS NOT TAXABLE, AS THE FIRM HAS NOT CLAIMED DEDUCTION TOWARDS INTEREST ON CAPITAL IN ITS BOOKS OF ACCOU NT U/S 40(B) AS IT HAS REVERSED INTEREST IN THE FINANCIAL YEAR 31-03-2016 FOR WHICH NECESSARY AMENDMENTS TO PARTNERSHIP DEED HAVE BEEN EXECUTED A ND ALSO REVERSED INTEREST ENTRY IN FIRMS BOOKS OF ACCOUNT. 43. HAVING HEARD BOTH THE SIDES, WE FIND THAT THE I SSUE OF TAXABILITY OF INTEREST ON CAPITAL HAS TO BE SEEN IN THE LIGHT OF WHETHER SUCH INTEREST HAS BEEN REALLY ACCRUED TO THE ASSESSEE IN THE LIGHT OF REAL INCOME THEORY. THE QUESTION WHETHER REAL INCOME HAS MATERIALISED H AS TO BE EXAMINED IN THE CONTEXT OF COMMERCIAL AND BUSINESS REALITIES IN THE CIRCUMSTANCES IN WHICH THE ASSESSEE IS PLACED AND NOT WITH REFERE NCE TO SYSTEM OF ACCOUNTING. THE ACCRUAL OF INCOME DOES NOT DEPEND UPON THE ACCOUNTS OF THE ASSESSEE. WHATEVER POSITION OF ACCOUNTS, IN COME WOULD HAVE TO BE REFERRED BACK TO THE CHARGEABLE ACCOUNTING PERIO D DURING WHICH SUCH PROFITS OR GAINS ARE ACTUALLY ARISEN / ACCRUED AND THE ASSESSEE WOULD BE LIABLE TO BE TAXED IN RESPECT OF THE SAME. IN THIS CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS INCLUDED INTEREST ON CAP ITAL IN ORIGINAL RETURNS, 56 AKSHAR DEVLOPERS GROUP WHEREAS THE SAME HAS BEEN EXCLUDED IN REVISED RETUR N FOR WHICH THE ASSESSEE HAS FILED NECESSARY EVIDENCE AND ALSO EXPL ANATIONS. NO DOUBT, THE TAXABILITY OF INTEREST ON PARTNERS CAPI TAL U/S 28 OF THE INCOME- TAX ACT, 1961 DEPENDS UPON THE METHOD OF ACCOUNTING FOLLOWED BY THE PARTNERSHIP FIRM, FURTHER SUPPORTED BY CLAUSES IN P ARTNERSHIP DEED FOR PAYMENT OF INTEREST SUBJECT TO CERTAIN CONDITIONS S PECIFIED U/S 40(B) OF THE ACT. IF THE PARTNERSHIP FIRM DEBITS INTEREST ON CA PITAL TO PARTNERS AND CLAIMS INTEREST ON CAPITAL AS DEDUCTION U/S 40(B) T HEN CERTAINLY INTEREST ON CAPITAL IS TAXABLE IN THE HANDS OF PARTNERS WHETHER OR NOT SUCH INTEREST HAS BEEN PAID TO THE PARTNERS. IN THIS CASE, IT IS THE CLAIM OF THE ASSESSEE THAT INTEREST ON CAPITAL IS CREDITED TO PA RTNERS CAPITAL ACCOUNT AND DEBITED TO WORK-IN-PROGRESS WITHOUT TREATING IT AS REVENUE EXPENDITURE. THE ASSESSEE FURTHER CLAIMS THAT SUCH INTEREST HAS BEEN REVERSED IN THE FINANCIAL YEAR 2016 AND SIMULTANEOU SLY REDUCING IT FROM WORK-IN-PROGRESS. IF THE CLAIM OF THE ASSESSEE IS FOUND TO BE CORRECT, THEN THERE IS NO QUESTION OF TAXING INTEREST ON CAP ITAL IN THE HANDS OF THE PARTNERS, BECAUSE SUCH INTEREST HAS NOT BEEN CLAIME D AS DEDUCTION IN THE PARTNERSHIP FIRMS PROFITS. BUT, FACTS ARE TOT ALLY DIFFERENT. THE LD.CIT(A) OBSERVED THAT FOR THE AY 2011-12, THE PAR TNERSHIP FIRM M/S AKSHAR DEVELOPERS HAS CLAIMED INTEREST ON CAPITAL U /S 40(B) AGAINST PROFITS IN THE STATEMENT OF TOTAL INCOME IN ORIGINA L RETURN FILED U/S 139(1) AND IN A RETURN FILED IN RESPONSE TO NOTICE U/S 153 A, THE POSITION REMAINS 57 AKSHAR DEVLOPERS GROUP SAME. THE FACTS ARE CONTRADICTORY TO EACH OTHER. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE NEEDS TO BE RE-E XAMINED BY THE AO IN THE LIGHT OF CONTRADICTORY FACTS AND IF THE AO FIND S THAT THE PARTNERSHIP FIRM HAS CLAIMED INTEREST ON CAPITAL AGAINST FROM PROFIT S THEN CERTAINLY, THE ASSESSEE CANNOT EXCLUDED INTEREST ON CAPITAL IN ITS RETURN OF INCOME. IF THE FIRM HAS NOT CLAIMED INTEREST ON CAPITAL AGAINS T ITS PROFITS AND REVERSED INTEREST ON CAPITAL BY REDUCING IT FROM WO RK-IN-PROGRESS, THEN CERTAINLY, EXCLUSION MADE BY THE PARTNERS IN THEIR INDIVIDUAL HANDS IN REVISED RETURN IS IN ACCORDANCE WITH LAW. THEREFOR E, WE DIRECT THE AO TO VERIFY THESE FACTS AND TAKE AN APPROPRIATE DECISION IN THE LIGHT OF OUR OBSERVATION ABOVE. HENCE, THE GROUND RAISED BY THE ASSESSEES FOR THE AYS 2010-11 TO 2-12-13 IN BOTH THE ASSESSEES CASE ARE SET ASIDE TO THE FILE OF THE AO. 44. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FOR AY 2-12-13 IS ADDITION MADE BY THE AO TOWARDS SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN ON THE BASIS OF ORIGINAL RETURN OF INC OME FILED U/S 139(1) IGNORING REVISED RETURN FILED BY THE ASSESSEE IN RE SPONSE TO NOTICE U/S 142(1) OF THE ACT. THE FACTS WITH REGARD TO THE IM PUGNED DISPUTE ARE THAT THE ASSESSEE HAS SHOWN INCOME OF RS.2,30,17,500 UND ER THE HEAD SHORT TERM CAPITAL GAIN ON SALE OF ASSET WHILE FILING RE TURN OF INCOME U/S 139(1) ON 31-03-2013. HOWEVER, WHILE FILING THE RETURN OF INCOME ON 02-03- 2013 IN COMPLIANCE TO NOTICE U/S 142(1) OF THE ACT, THE ASSESSEE HAS 58 AKSHAR DEVLOPERS GROUP CALCULATED LONG TERM CAPITAL GAIN ON THE SAID PROPE RTY AFTER CLAIMING DEDUCTION U/S 54F OF RS.1,36,90,055. ACCORDING TO THE ASSESSEE, IN THE ORIGINAL RETURN FILED U/S 139(1) GAIN ON SALE OF AS SET WAS ERRONEOUSLY CONSIDERED AS SHORT TERM CAPITAL GAIN ON THE BASIS OF HOLDING PERIOD OF ASSET TAKEN FROM DATE OF ACQUISITION AS PER REGISTR ATION OF AGREEMENT INSTEAD OF BOOKING DATE ON 21-08-2007. IN THE REVI SED RETURN, THE SAID MISTAKE HAS BEEN CORRECTED BY TAKING BOOKING DATE A ND ACCORDINGLY, ASSET HAS BEEN HELD FOR A PERIOD OF MORE THAN 36 MO NTHS, THEREFORE, GAIN HAS BEEN CONSIDERED AS LONG TERM CAPITAL GAIN. THE ASSESSEE FURTHER CLAIMED THAT EVEN IN RESPECT OF SALE CONSIDERATION AND COST OF ACQUISITION, THERE IS AN ERROR IN CONSIDERING SALE CONSIDERATION AND COST OF ACQUISITION, THEREFORE, THE MISTAKES HAVE BEEN RECTIFIED BY ADOP TING CORRECT FIGURE OF SALE CONSIDERATION AND COST OF ACQUISITION IN THE R EVISED RETURN FILED U/S 142(1) OF THE ACT. THE AO REJECTED THE CLAIM OF TH E ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FILE ANY EVI DENCE IN RESPECT OF RE- COMPUTATION OF CAPITAL GAIN BY FILING NECESSARY EVI DENCE TO JUSTIFY THE DATE OF ACQUISITION OF THE PROPERTY AND ALSO COST O F IMPROVEMENT AND RE- INVESTMENT IN PURCHASE OF ANOTHER HOUSE PROPERTY U/ S 54 OF THE ACT. THE AO FURTHER OBSERVED THAT THE DATE OF PURCHASE OF ON E PROPERTY HAS BEEN SHOWN FROM FY 2008-09 WHICH IS HELD FOR LESS THAN 3 6 MONTHS. ACCORDING TO THE ASSESSEE, IT HAD INADVERTENTLY EXC LUDED STAMP DUTY AND REGISTRATION CHARGES IN RESPECT OF 7 SHOPS. THE SA LE CONSIDERATION HAS 59 AKSHAR DEVLOPERS GROUP BEEN INCORRECTLY RECORDED WHICH RESULTED INTO DOUBL E DEDUCTION OF COST OF ACQUISITION IN RESPECT OF 7 SHOPS. FURTHER, IN RES PECT OF SHOP NO.11, DATE OF ACQUISITION WAS WRONGLY MENTIONED AS 01-04-2010 INSTEAD OF 14-03- 2008. THUS, THERE WAS A WRONG CALCULATION OF CAPIT AL GAIN UNDER THE HEAD SHORT TERM INSTEAD OF LONG TERM. 45. HAVING HEARD BOTH THE SIDES AND CONSIDERED MATE RIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS REVISED COMPUTATION OF C APITAL GAIN IN RESPECT OF SALE OF PROPERTY AND SHIFTED SHORT TERM CAPITAL GAIN DECLARED IN ORIGINAL RETURN TO LONG TERM CAPITAL GAIN IN THE REVISED RET URN FILED U/S 142(1) BY CHANGING THE DATE OF ACQUISITION OF PROPERTY, ACCOR DING TO WHICH, THE PERIOD OF HOLDING OF ASSET IS MORE THAN 36 MONTHS. AS PER THE WORKINGS FURNISHED BY THE ASSESSEE SHOWING COMPUTATION OF CA PITAL GAIN AS PER ORIGINAL RETURN OF INCOME FILED U/S 139(1) AND AS P ER RETURN FILED U/S 142(1), THERE IS A MISMATCH OF DATE OF ACQUISITION OF PROPERTY, COST OF ACQUISITION AND SALE CONSIDERATION. THE ASSESSEE C LAIMS THAT WHILE ADOPTING COST OF ACQUISITION, IT HAS INADVERTENTLY OMITTED TO INCLUDED REGISTRATION CHARGES AND STAMP DUTY. SIMILARLY, TH E ASSESSEE CLAIMS THAT COST OF ACQUISITION WAS DEDUCTED TWICE FROM THE SAL E CONSIDERATION WHICH RESULTED IN DOUBLE DEDUCTION AND UNDER STATEMENT OF CAPITAL GAIN IN RESPECT OF TWO SHOPS. THE ASSESSEE HAS FILED VARIO US DETAILS TO JUSTIFY ITS ARGUMENTS THAT THE PROPERTY HAS BEEN PURCHASED ON 2 1-08-2007 BY WAY OF BOOKING ADVANCE, HOWEVER, IN THE RETURN THE DATE OF ACQUISITION HAS 60 AKSHAR DEVLOPERS GROUP BEEN TAKEN AS PER REGISTRATION OF AGREEMENT. THE F ACTS ARE NOT CLEAR. ONE SIDE THE AO CLAIMS THAT THE ASSESSEE HAS NOT FU RNISHED ANY EVIDENCE TO JUSTIFY THE DATE OF ACQUISITION OF PROP ERTY, COST OF IMPROVEMENT AND EXEMPTION CLAIMED IN RESPECT OF 54F TOWARDS RE- INVESTMENT IN PURCHASE OF PROPERTY. ON THE OTHER H AND, THE ASSESSEE HAS FILED VARIOUS DETAILS INCLUDING COPIES OF AGREE MENT, SALE DEEDS AND LETTER OF ALLOTMENT FOR BOOKING THE FLAT. THE ASSE SSEE ALSO FILED A CHART EXPLAINING VARIOUS EXPENDITURE INCURRED IN THE ASSE SSMENT YEAR 2009-10 FOR IMPROVEMENT OF PROPERTY. WE DO NOT KNOW WHETHE R THESE DOCUMENTS HAVE BEEN FURNISHED BEFORE THE AO AT THE TIME OF AS SESSMENT PROCEEDINGS OR NOT. THEREFORE, WE ARE OF THE CONSI DERED VIEW THAT THE ISSUE NEEDS TO BE RE-EXAMINED BY THE AO IN THE LIGH T OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. THEREFORE, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO AND DIRECT HIM TO EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF ADDITIONAL EVIDENCE AND IF THE ASSESSEE IS ABLE TO JUSTIFY THE DATE OF ACQUISITION OF THE PROPERTY ON 21-08-2007 BY FIL ING NECESSARY EVIDENCE, THEN THE AO IS DIRECTED TO TREAT GAIN FRO M SALE OF PROPERTY UNDER THE HEAD LONG TERM CAPITAL GAIN INSTEAD OF SHORT TERM CAPITAL GAIN. IF THE ASSESSEE HAS CONSIDERED THE DATE OF ACQUISIT ION ON THE BASIS OF ALLOTMENT LETTER WITHOUT THERE BEING ANY AGREEMENT, THEN THE HOLDING PERIOD OF THE ASSET SHOULD BE CONSIDERED FROM THE D ATE OF AGREEMENT BUT NOT FROM THE DATE OF ALLOTMENT LETTER. SIMILARLY, THE ASSESSEE HAS CLAIMED 61 AKSHAR DEVLOPERS GROUP VARIOUS EXPENDITURE TO JUSTIFY IMPROVEMENT TO THE A SSET. IF THE ASSESSEE IS ABLE TO ESTABLISH EXPENDITURE INCURRED WITH NECE SSARY EVIDENCES AND ALSO SOURCE, THEN THE AO IS REQUIRED TO EXAMINE THE EVIDENCES BEFORE TAKING ANY DECISION TO ALLOW COST OF IMPROVEMENT. IF THE ASSESSEE IS ABLE TO JUSTIFY THE COST OF IMPROVEMENT WITH NECESSARY E VIDENCE, THEN THE AO IS DIRECTED TO ALLOW COST OF IMPROVEMENT AS CLAIMED BY THE ASSESSEE. 46. IN THE RESULT, GROUND RAISED BY THE ASSESSEE F OR AY 2012-13 IS ALLOWED FOR STATISTICAL PURPOSES. 47. THE REMAINING EFFECTIVE GROUND PENDING FOR OUR ADJUDICATION FOR ALL THE ASSESSMENT YEARS IN BOTH THE CASES ARE LEGAL GR OUNDS CHALLENGING THE VALIDITY OF ASSESSMENTS IN THE LIGHT OF NON ISS UE OF NOTICE U/S 143(2) FOR THE AYS 2009-10 AND 2011-12 AND IN RESPECT OF 2 012-13 CHALLENGING THE ACTION OF LD.CIT(A) HOLDING THAT CONSEQUENT TO THE ANNULMENT OF ASSESSMENT, THE ORIGINAL RETURN OF INCOME FILED ON 31-03-2013 IN COMPLIANCE TO NOTICE U/S 142(1) R.W. INTIMATION U/S 143(1) HAS ATTAINED FINALITY AND THUS, THE SUBSEQUENT RETURN FILED ON 2 3-09-2013 HAS BECOME NON EST. SINCE THE ISSUES INVOLVED IN ALL THE YEAR S HAS BEEN SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION IN ALL THE ASSE SSMENT YEARS IN RESPECT OF BOTH THE ASSESSEES, THE LEGAL GROUND RAISED BY THE ASSESSEES IN ALL THE YEARS BECOME INFRUCTUOUS AND HENCE, THE SAME ARE DI SMISSED. 48. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE S IN ITA NO 6244 /MUM/2016 FOR AY 2009-10 IS DISMISSED; FOR AYS 2010 -11 TO 2012-13 IN 62 AKSHAR DEVLOPERS GROUP ITA NO. 6245/MUM/2016; 2672 & 2673/MUM/2017, 6245 & 6246/MUM/2016 & 2675/MUM/2017ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. 49. AS A RESULT, APPEAL FILED BY THE ASSESSEE IN IT A NO.6242/MUM/2016 FOR AY 2009-10 IS DISMISSED AND APPEALS FILED BY TH E ASSESSEE IN ITA NOS.2676/MUM/2017, 2677/MUM/2017 & 2678/MUM/2017 FO R ASSESSMENT YEARS 2010-11, 2011-12 & 2012-13, RESPEC TIVELY ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE AND THE APPEALS FIL ED BY THE ASSESSES IN ITA NO. ITA NO 6244 /MUM/2016 FOR AY 2009-10 IS DISMISSED; FOR AYS 2010-11 TO 2012-13 IN ITA NO. 6245/MUM/2016; 2672 & 2673/MUM/2017, 6245 & 6246/MUM/2016 & 2675/MUM/2017 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 28 TH FEBRUARY, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI