Gera Developments Pvt.Ltd, Pune V. Assistant Commissioner of Income-tax, Central Circle -1 (3), Pune

ITSSA 123/PUN/2019

AI Insights

The case involves Gera Developments Pvt. Ltd., which appealed against the orders of the Commissioner of Income Tax (Appeals)-11, Pune, concerning the assessment years 2010-11, 2011-12, 2012-13, 2014-15, and 2015-16. The primary issues revolved around the additions made under section 153A of the Income Tax Act, 1961, following a search and seizure operation that uncovered incriminating materials suggesting involvement in Hawala transactions. The tribunal dismissed the appeals for A.Y. 2010-11 to 2012-13, upholding the additions made by the Assessing Officer based on the seized materials and the inability of the appellant to prove the genuineness of the transactions. However, for A.Y. 2014-15, the tribunal allowed the appeal concerning the deduction under section 80IB(10), agreeing with the appellant that the conditions applied were not retrospective and thus did not affect the transactions prior to the specified date.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 137235 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 15-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-09-2022
• Assessment Year: misc
• Appeal Filed On: 25-06-2022
• Other Referred Cases: PCIT vs. Mohommad Haji Adam & Co., PCIT vs. Rishabhdev Technocable Ltd., PCIT vs. Jakharia Fabric (P.) Ltd., Shoreline Hotel (P.) Ltd. vs. CIT, CIT vs. Mandavi Builders
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; Search and seizure; Retrospective amendment
• Section: 132; 143(3); 153A; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 A. Yrs. : 2010-11, 2011-12, 2012-13, 2014-15 & 2015-16 Gera Developments Pvt. Ltd., 200, Gera Plaza, Boat Club Road, Pune- 411001. PAN : AAACG6703F Vs. ACIT, Central Circle- 1(3), Pune. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM : These are the appeals filed by the assessee against the common order of ld. Commissioner of Income Tax (Appeals)-11, Pune [‘the CIT(A)’] dated 31.07.2019 for the assessment years 2010-11,2011-12 2012-13, 2014-15 & 2015-16 respectively. 2. Since the identical facts and common issues are involved in all the above captioned five appeals, we proceed to dispose of the same by this common order. Assessee by : Shri S. K. Tyagi & Shri Ramesh S. Soniminde Revenue by : Shri Sunil Kumar Date of hearing : 06.09.2022 Date of pronouncement : 16.11.2022 IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 2 3. For the sake of convenience and clarity, the facts relevant to the appeal in IT(SS)A No.120/PUN/2019 for the assessment year 2010-11 are stated herein. IT(SS)A No.120/PUN/2019, A.Y. 2010-11 : 4. Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of developing of properties. The original return of income for the assessment year 2010-11 was filed u/s 139(1) of the Income Tax Act, 1961 (‘the Act’). Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Central Circle-1(3), Pune (‘the Assessing Officer’) vide order dated 28.03.2013 at total income of Rs.1,42,39,620/-. Subsequently, the search and seizure operations were conducted u/s 132 in the business premises of the appellant on 11.09.2014. During the course of search and seizure operations, the Department found certain incriminating materials suggesting that the appellant company was engaged in Hawala purchases, the incriminating material was found in loose pages no.1 to 264, bundle-3. Based on the seized material, the appellant was asked to explain the notings found in the seized material indicating that Hawala purchases were made by the assessee. Even the IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 3 statement of officer of the assessee company, one Mr. Narendra Shriram Bhamre, Assistant General Manager (AGM) was recorded considering this seized material. Despite several opportunities given, he could not substantiate the purchases made were genuine and the relevant entries were found and recorded in the books accounts maintained. In the circumstances, the Assessing Officer concluded that the assessee had nothing to explain, therefore, brought to tax of Rs.14,10,364/- vide order dated 31.12.2016 passed u/s 143(3) r.w.s. 153A of the Act. The Assessing Officer also made certain other disallowances with which we are not concerned. 5. Being aggrieved by the order of assessment, an appeal was filed before the ld. CIT(A). The ld. CIT(A) while granting the relief in relation to the addition on Hawala purchases, rejected the contention of the appellant that there was no incriminating material indicating the Hawala purchases. 6. Being aggrieved, the appellant is in appeal before us in the present appeal. 7. It is contended that no incriminating material was found during the course of search and seizure operations suggesting that the appellant was engaged in Hawala transactions. Without prejudice to the above, it is further contended that the alleged Hawala transactions was already considered in the assessment made IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 4 u/s 143(3) r.w.s. 147 and the transaction of alleged Hawala purchases already entered in the books of accounts, therefore, cannot be subject-matter of addition u/s 153A placing reliance on the certain judicial precedents. 8. On the other hand, ld. CIT-DR placing reliance on the order of the ld. CIT(A) submits that no interference is called for. 9. We heard the rival submissions and perused the material on record. The issue that arises for our consideration is with regard to the validity of the jurisdiction u/s 153A of the Act. On perusal of the para 5 of the assessment order, it would be clear that the Assessing Officer had referred to seized material found as result of search and seizure operations indicating that the appellant had been indulging in the Hawala purchases, despite several opportunities given to the appellant, could not substantiate that the transactions of Hawala purchases were duly recorded in the books of accounts nor could substantiate by adducing the necessary evidence the transaction of Hawala purchases made from two parties i.e. M/s. Mahadev Trading Co. and M/s. Siddhivinayak Corporation are genuine. In these circumstances, the Assessing Officer concluded that the transactions of Hawala purchases made from two parties were not genuine and accordingly, brought to tax as unexplained. IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 5 Even on appeal before the ld. CIT(A), the only argument advanced on behalf of the assessee is that no addition u/s 153A can be made in the absence of any incriminating material found. This contention was rightly rejected by the ld. CIT(A) after making a reference to the findings of the Assessing Officer, wherein the Assessing Officer had categorically referred to the seized material as well as statement recorded from the AGM of the appellant company, namely, Mr. Narendra Shriram Bhamre. In our considered opinion, the contention of the appellant that there was no incriminating material was found suggesting that the appellant was engaged in the Hawala purchases is contrary to the material on record, which is evidence from para 5 and 6 of the assessment order, the ld. CIT(A) had rightly rejected the contention of the appellant. On the merits of addition, the material on record clearly suggests that the appellant had not disputed that the parties from whom purchases were made are whose names appears on the website of Sales Tax Department as accommodation entries providers nor the assessee could discharge the onus of proving that the purchases made from said parties were genuine. As regards to the contention of the ld. Authorized Representative that even assuming for a moment that the purchases were genuine, the entire amount of purchases should not have been IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 6 added to the total income but, only profit margin embedded in such purchases should be brought to tax. This issue requires to be decided based on the findings of the lower authorities whether the purchases are bogus or parties from whom such purchases were made are bogus. The Assessing Officer had recorded a categorically finding vide para 4.6 of the assessment order that the appellant had failed to furnish accounts’ confirmations of the parties and also supporting proof in the form of transportation bills, Octroi receipts, weighing bills, day to day inventory register and subsequent sales made etc. This finding remains uncontroverted. This finding clearly suggests that alleged purchases never entered in the inventory register nor corresponding sales were made, which means that the entire alleged purchases were bogus purchases. Therefore, the entire amount covered by such purchases should be brought to tax not the gross profits embedded in such purchases. The ratio of the Hon’ble Jurisdictional High Court in the case of PCIT vs. Mohommad Haji Adam & Co., 103 taxmann.com 459 (Bombay), PCIT vs. Rishabhdev Technocable Ltd., 424 ITR 338 (Bombay) and PCIT vs. Jakharia Fabric (P.) Ltd., 118 taxmann.com 406 (Bombay) have no application but the ratio of the decision of the Hon’ble Bombay High Court in the case of Shoreline Hotel (P.) Ltd. vs. CIT, 98 taxmann.com 234 (Bombay) is squarely applicable, IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 7 wherein, it was held that where the assessee was not able to produce any proof of purchases made by it, the entire expenditure incurred on such bogus purchases should be brought to tax. Accordingly, the issues raised by the assessee in the present ground of appeal stand dismissed. 10. In the result, the appeal of the assessee in IT(SS)A No.120/PUN/2019 for A.Y. 2010-11 stands dismissed. IT(SS)A Nos.121 & 122/PUN/2019, A.Ys. 2011-12 & 2012-13 : 11. Since the facts and issues involved in the above two appeals are identical, therefore, our decision in IT(SS)A No.120/PUN/2019 for A.Y. 2010-11 shall apply mutatis mutandis to the appeals of the assessee in IT(SS)A Nos.121 & 122/PUN/2019 for A.Ys. 2011-12 and 2012-13 respectively. Accordingly, the appeals of the assessee in IT(SS)A Nos.121 & 122/PUN/2019 for A.Ys. 2011-12 and 2012-13 stand dismissed. IT(SS)A No.123/PUN/2019, A.Y. 2014-15 : 12. Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of developing of properties. The assessment was completed by the Assessing Officer vide order dated 31.12.2016 passed u/s 143(3) r.w.s. 153A of the Act at total IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 8 income of Rs.8,28,28,790/-. While doing so, the Assessing Officer had denied the exemption u/s 80IB(10) on the ground that the appellant violated the conditions of under clauses (e) and (f) of section 80IB(10) by allotting of one residential unit in the housing project to a family. 13. Being aggrieved by the order of Assessing Officer, an appeal was preferred before the ld. CIT(A), who vide impugned order held that the benefit of proportionate allowance on the flats completed by the assessee should be granted, however, confirmed the disallowance of benefit u/s 80IB(10) on the ground of violation of conditions stipulated under clauses (e) and (f) of the said section 80IB(10) of the Act. Rejecting the contention of the appellant that clauses (e) and (f) of section 80IB(10) have been inserted by Finance (No.2) Act, 2009 w.e.f. 01.04.2010 and cannot have retrospective effect in respect of allotment of flats made prior to 01.04.2010. 14. Being aggrieved by the decision of the ld. CIT(A), the assessee company is in appeal before us in the present appeal. 15. The ld. AR submits that in respect of allotment of flats made prior to 01.04.2010 i.e. date from which clauses (e) and (f) to section 80IB(10) have been inserted and come into effect, the said conditions cannot have retrospective effect and, therefore, the ld. IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 9 CIT(A) had fell in error in denying the claim. In this regard, he also placed reliance on the decision of the Hon’ble Karnataka High Court in the case of CIT v. Mandavi Builders [2020] 121 taxmann.com 36 (Kar.). 16. On the other hand, ld. CIT-DR contends that since the flats were made subsequent to 01.04.2010, the provisions of clauses (e) and (f) to section 80IB(10) shall have applicable. 17. We heard the rival submissions and perused the material on record. The issue that arises for our consideration is whether the provisions of clauses (e) and (f) of section 80IB(10) is retrospective in nature or have prospective application. These clauses (e) and (f) to section 80IB(10) were inserted by the Finance (No.2) Act, 2009 w.e.f. 01.04.2010 which provides that not more than one residential unit in the housing project is allotted to any person not being an individual, no other residential unit in such housing complex shall be allotted to the individual, the spouse or the minor children of such individual, the Hindu Undivided Family (HUF) in such individual is Karta or any person representing such individual, spouse or minor children of such individual of HUF in which such individual is Karta, then the exemption u/s 80IB(10) cannot be availed. The Parliament used expressed word “allotted” in other words in case where the residential unit was allotted prior to IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 10 01.04.2010 even though the residential unit is transferred after 01.04.2010, even than assessee is entitled to benefit of section 80IB(10) as the said provisions of clauses (e) and (f) to section 80IB(10) are prospective in nature and applied in respect of transaction entered into after April, 2010 as clarified by the Circular No.5/2010 dated 03.06.2010 as held by the Hon’ble Supreme Court in the case of CIT vs. Mandavi Builders, 443 ITR 235 (SC) by dismissal of SLP filed against the decision of the Hon’ble Karnataka High Court (supra). In light of this settled position of law, we direct the Assessing Officer to allow the deduction u/s 80IB(10) even in respect of flats as it is undisputed fact that the flats were allotted prior to 01.04.2010. 18. In the result, the appeal filed by the assessee in IT(SS)A No.123/PUN/2019 for A.Y. 2014-15 stands allowed. IT(SS)A No.124/PUN/2019, A.Y. 2015-16 : 19. Since the facts and issues involved in the above appeal in IT(SS)A No.124/PUN/2019 for A.Y. 2015-16 are identical, therefore, our decision in IT(SS)A No.123/PUN/2019 for A.Y. 2014-15 shall apply mutatis mutandis to the appeal of the assessee in IT(SS)A No.124/PUN/2019 for A.Y. 2015-16 respectively. IT(SS)A Nos.120, 121, 122, 123 & 124/PUN/2019 11 Accordingly, the appeal of the assessee in IT(SS)A No.124/PUN/2019 for A.Y. 2015-16 stands allowed. 20. To sum up, the appeals in IT(SS)A Nos.120 to 122/PUN/2019 for A.Y. 2010-11 to 2012-13 are dismissed and the appeals in IT(SS)A Nos.123 & 124/PUN/2019 for A.Y. 2014-15 & 2015-16 are allowed. Order pronounced on this 16 th day of November, 2022. Sd/- Sd/- (S. S. GODARA) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 16 th November, 2022. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-11, Pune. 4. The Pr. CIT (Central), Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.