Madhav Corporation, Ahmedabad V. The ACIT, Central Circle-1(4), Ahmedabad

ITSSA 382/AHD/2014

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0793 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 01-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Keywords: Unexplained expenditure; Business income; Document seized; Principle of natural justice; Rule of consistency; Source of fund; Retrospective amendment; Competent authority; Block assessment; Benefit of exemption; Documents seized
• Section: 143(3); 54B; 153A; 80IB; 27; 6; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD BEFORE S/SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMB ER AND ANIL CHATURVEDI, ACCOUNTANT MEMBER. IT(SS)A NOS. 380 TO 382/ AHD/2014 ASST. YEARS 2006-07 TO 2008-09 MADHAV CORPORATION, 120/3, RADHE CHAMBERS, OPP. MADHAV PARK VIBHAG-4, VASTRAL ROAD, VASTRAL, AHMEDABAD. VS ASSTT. C.I.T. CENTRAL CIRCLE 1(4), AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO.AAMFM 1428J APPELLANT BY SHRI ANIL KSHATRIYA, AR RESPONDENT BY SHRI O.P. VAISHNAV, CIT, DR DATE OF HEARING: 03/06/2015 DATE OF PRONOUNCEMENT: 28/07/2015 O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER. ALL THESE APPEALS PERTAIN TO THE SAME ASSESSEE AND THE ISSUES INVOLVED ARE COMMON SO THESE WERE HEARD TOGETHER AN D ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 2 2.1 IT(SS)A NO.380/AHD/2014 ASST. YEAR 2006-07 GROUND NO.1. IN LAW, ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN NOT CONSID ERING THE APPELLANTS SUBMISSIONS MADE BEFORE HIM AS SUCH THE ORDER IS AGAINST PRINCIPLE OF NATURAL JUSTICE, BAD IN LAW AN D DESERVES TO BE CANCELLED. GROUND NO.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING THE LEGIT IMATE DEDUCTION U/S 80IB(10) OF THE ACT OF RS.8,59,151/-. THE SAME MAY PLEASE BE DIRECTED TO BE ALLOWED SUCH CLAIMED. GROUND NO.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING THE CHARG ING INTEREST U/S 234A, 234B, 234C & 234D OF THE ACT. HE MAY BE D IRECTED TO WITHDRAW THE SAME. GROUND NO.4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING THE INITI ATION OF PENALTY PROCEEDINGS U/S 271(1)(C) & 271AAA RI.W.S. 274 OF THE ACT. HE MAY BE DIRECTED TO WITHDRAW THE SAME. IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 3 2.2 IT(SS) A NO.381/AHD/2014 ASST. YEAR 2007-08 GROUND NO.1. IN LAW, ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN NOT CONSID ERING THE APPELLANTS SUBMISSIONS MADE BEFORE HIM AS SUCH THE ORDER IS AGAINST PRINCIPLE OF NATURAL JUSTICE, BAD IN LAW AN D DESERVES TO BE CANCELLED. GROUND NO.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING THE LEGIT IMATE DEDUCTION U/S 80IB(10) OF THE ACT OF RS.53,57,814/- . THE SAME MAY KINDLY BE DIRECTED TO BE ALLOWED SUCH CLAIMED. GROUND NO.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING THE CHARG ING INTEREST U/S 234A, 234B, 234C & 234D OF THE ACT. HE MAY BE D IRECTED TO WITHDRAW THE SAME. GROUND NO.4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING THE INITI ATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. HE MA Y BE DIRECTED TO WITHDRAW THE SAME. IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 4 2.3 IT(SS)A NO.382/HD/2014 ASST. YEAR 2008-09 GROUND NO.1. IN LAW, ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN NOT CONSID ERING THE APPELLANTS SUBMISSIONS MADE BEFORE HIM AS SUCH THE ORDER IS AGAINST PRINCIPLE OF NATURAL JUSTICE, BAD IN LAW AN D DESERVES TO BE CANCELLED. GROUND NO.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING THE LEGIT IMATE DEDUCTION U/S 80IB(10) OF THE ACT OF RS.1,42,65,490 /-. THE SAME MAY KINDLY BE DIRECTED TO BE ALLOWED SUCH LEGITIMAT E CLAIMED. GROUND NO.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS.85,66,228/-, BEING ADDITIONAL CLAIM OF DEDUCTION U/S 80IB(10) ON THE BASIS OF SEIZED RECORDS. THE SAME MAY KINDLY BE DIRECTED TO BE ALLOWED ON SUCH LEGITIMATE CLAIM. GROUND NO.4 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD, HAS GROSSLY ERRED IN CONFIRMING THE ADDI TION OF RS.2,75,00,000/- REFLECTED IN SEIZED DOCUMENTS BY C ONSIDERING IT AS NOT RELATED TO PROFIT OF THE HOUSING PROJECT. THOUG H THE SAME IS FORMING PART OF TOTAL PROFIT OF THE HOUSING PROJECT AND THEREFORE, THE SAME MAY KINDLY BE CONSIDERED AS PART OF PROFIT OF THE HOUSING PROJECT. THE SAME MAY KINDLY BE DIRECTED TO CONSIDE R AS PART OF IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 5 PROFIT OF THE HOUSING PROJECT AND BE ALLOWED AS DED UCTION U/S 80IB(10) OF THE ACT. GROUND NO.5 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING THE CHARG ING INTEREST U/S 234A, 234B, 234C & 234D OF THE ACT. HE MAY BE D IRECTED TO WITHDRAW THE SAME. GROUND NO.6 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A)-1, AHMEDABAD HAS GROSSLY ERRED IN CONFIRMING THE INITI ATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. HE MA Y BE DIRECTED TO WITHDRAW THE SAME. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM CARRIES ON THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF RESIDEN TIAL HOUSES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS UNDERTAKEN THE CONSTRUCTION WORK OF A HOUSING PROJECT KNOWN AS MADHAV PARK. ON 21/07/2011 A SEARCH OPERATION WAS CONDUC TED AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM AND PARTNERS RESIDENCE PREMISES. DURING THE COURSE OF SEARCH PROCEEDINGS C ERTAIN INCRIMINATING MATERIALS WERE FOUND AND SEIZED BY TH E DEPARTMENT. THE ASSESSEE FIRM WAS ISSUED NOTICE UNDER SECTION 1 53A(1)(A) OF THE INCOME-TAX ACT, 1961 TO FILE BLOCK RETURN OF IN COME. IN RESPONSE THERETO, THE ASSESSEE FIRM HAS FILED RETUR N FOR THE BLOCK PERIOD SHOWING TOTAL INCOME AT RS.NIL AFTER CLAIMIN G DEDUCTION IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 6 U/S 80IB(10) OF RS.5,65,48,683/- FOR A.Y. 2008-09 I NCORPORATING THE INCOME GENERATED OUT OF THE REGULAR BOOKS OF AC COUNT AS WELL AS INCOME APPEARING IN THE INCRIMINATING MATERIALS. TH E ASSESSEE FIRMS CLAIM OF DEDUCTION U/S 80IB(10) OF THE ACT W AS REJECTED BY THE ASSESSING OFFICER IN HIS ORDER UNDER SECTION 14 3(3) R.W.S. 153A OF THE ACT CONSIDERING THE ASSESSEE FIRM AS A CON TRACTOR AND NOT AS A DEVELOPER AS THE LAND WAS NOT OWNED BY THE ASSESSEE FIRM. SOME OTHER ISSUES ARE ALSO THERE WHICH WILL BE DEAL T AT APPROPRIATE PLACE. THE ASSESSING OFFICER ALSO RELIED ON THE RE GULAR ASSESSMENT U/S 143(3) OF THE ACT IN THE ASSESSEES CASE IN THI S YEAR AND ALSO IN AY 2007-08 IN WHICH THE CLAIM OF DEDUCTION UNDER SE CTION 80IB(10) WAS REJECTED AND THE SAME HAS BEEN CONFIRM ED BY CIT(A)-XV/ITO/9(2)/266/09-10 DATED 7 TH JANUARY, 2011. THIS ISSUE IS COMMON IN ALL THREE YEARS. ASSESSEE IS BE FORE US OPPOSING REJECTION OF ITS CLAIM WHILE DEPARTMENTAL REPRESENT ATIVE MADE DETAILED SUBMISSION TO SUPPORT THE ORDERS OF AUTHOR ITIES BELOW. RIVAL CLAIM OF BOTH PARTIES ARE BEING DEALT IN COMI NG PARAGRAPHS. 4. REGARDING DISALLOWANCE OF DEDUCTION CLAIMED U/S 80IB(10) WE FIND THAT THE DISALLOWANCE WAS MADE AS PER REASO NS SUMMARIZED IN PARA 3.23 OF THE ASSESSMENT ORDER. THE CRUX IS T HAT THE APPELLANT DID NOT OWN THE LAND SO IN VIEW OF THE ASSESSING OF FICER ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION BECAUSE IT WORKED AS A IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 7 CONTRACTOR/AGENT OF THE LAND OWNERS. ACCORDING TO T HE ASSESSING OFFICER THE ASSESSEE IS A WORKS CONTRACTOR NOT ELIG IBLE FOR DEDUCTION. IT DID NOT SELL ANY UNIT TO THE PURCHASE R BUT THE SOCIETY EXECUTED THE SALE DEEDS AS A SELLER, ACCORDING TO T HE ASSESSING OFFICER THIS ALSO PROVED THAT THE ASSESSEE WAS MERE LY A CONTRACTOR. 4.1 IN FIRST APPEAL WRITTEN SUBMISSIONS DATED 26.4. 2010, 26.10.2010, 13.12.2010, 28.12.2010 AND 4.1.2011 WE RE FILED BY THE APPELLANT HAVE BEEN PLACED ON RECORD BY WAY OF DULY CERTIFIED PAPER BOOK. ACCORDING TO ASSESSEE FOR AVAILING ITSE LF OF THE DEDUCTION U/S 80IB(10) ANY ASSESSEE HAS TO FULFILL THE CONDITIONS STIPULATED FROM CLAUSE (A) TO CLAUSE (D) OF SECTION 80IB(10). LET THE SAME BE ANALYSED IN ITS FACTUAL AND LEGAL BACK GROU ND. 4.2. AS PER CLAUSE (A) OF SECTION 80IB(10) THE HOUS ING PROJECT SHOULD BE COMPLETED WITHIN FOUR YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE HOUSING PROJECT IS APPR OVED BY THE LOCAL AUTHORITY ON OR AFTER 1.4.2004. TIME LIMITS OF APPR OVAL AND COMPLETION HAVE NOT BEEN DISPUTED BY THE ASSESSING OFFICER. ASSESSING OFFICERS OBJECTION IS THAT LAND BEING IN TEGRAL PART OF THE PROJECT SHOULD HAVE BEEN OWNED BY THE APPELLANT. AC CORDING TO THE ASSESSING OFFICER THE LAND WAS OWNED BY THE SOCIETY , THE APPROVALS OF LOCAL AUTHORITY ARE NOT IN THE NAME OF THE APPEL LANT AND THAT THE IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 8 APPELLANT WORKED MERELY AS A CONTRACTOR OF THE LAND OWNERS. ACCORDINGLY THE CLAIM WAS REJECTED AND AS STATED AB OVE SAME WAS CONFIRMED BY CIT(A). 4.3 WE FIND THAT THE ORIGINAL DEVELOPMENT PERMISSIO N WAS OBTAINED ON 01/05/2004 AS DETAILED ON PAGE NO.143 O F P.B. THE REVISED DEVELOPMENT PERMISSION DATED 10/07/2006 WAS OBTAINED AS MENTIONED AT PAGE NO.145/192 OF P.B. SUBSEQUENTLY B U PERMISSION DATED 22/09/2008 WAS FOR 74 RESIDENTIAL TENEMENTS + 1 ELECTRIC SUB-STATION + 1 ROOM AND OVER HEAD TANK AS DETAILED AT PAGE NO.191 OF PAPER BOOK. FURTHER REVISED DEVELOPMENT P ERMISSION DATED 16.07.2012 WAS OBTAINED FOR 18 SHOPS + 54 RES IDENTIAL FLATS AS DETAILED ON PAPER BOOK PAGE NO.147. BU PERMISSIO N DATED 16.06.2012 IS FOR 54 RESIDENTIAL FLATS + 18 SHOPS A S DETAILED AT PAGE NO.366 OF P.B. ORIGINALLY TOTAL AREA OWNED BY THE S OCIETY WAS OF 16,815 SQ.MTRS. OUT OF WHICH 14,843.27 SQ. MTS. OF LAND WAS ENTRUSTED TO THE ASSESSEE FIRM TO DEVELOP 74 RESIDE NTIAL TENEMENTS + 1 ELECTRIC SUB-STATION + 1 ROOM AND OVER HEAD TANK BY AN AGREEMENT IN WRITING ENGLISH TRANSLATION OF SAME ANNEXED AT P .B.PAGE NOS.75 TO 79 OF THE STAY PETITION NOS.117 TO 119 OF 2014 W HICH HAS ALSO BEEN FILED BEFORE US AS WELL. BALANCE LAND OF 1971 .73 SQ. MTRS. WAS ENTRUSTED FOR DEVELOPMENT TO PANCHAMRUT DEVELOPERS DIRECTLY BY THE SOCIETY BY EXECUTING A SEPARATE AGREEMENT DATED 07/07/2008 TO IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 9 CONSTRUCT 54 RESIDENTIAL FLATS AND 18 SHOPS OUT OF THE PLAN SANCTIONED OF ALL TYPE AS DETAILED AT PAPER BOOK PA GE NOS.149 TO 158. THE REVISED DEVELOPMENT PERMISSION FOR THESE U NITS WAS GRANTED BY DEVELOPMENT PERMISSION DATED 16/07/2008 FOR ONLY THESE 18 SHOPS & 54 RESIDENTIAL UNITS + ELECTRIC SU BSTATION AS DETAILED IN P.B. PAGE NO.147. AFTER THAT COMPLETIO N OF THE SAID 18 SHOPS AND 54 FLATS THE BU PERMISSION WAS GRANTED ON 16.06.2012 BY THE COMPETENT AUTHORITY AS DETAILED IN PAGE NO. 366 OF P.B. IN THIS FACTUAL BACKGROUND, THE CIT(A) WAS NOT JUSTIFI ED TO OBSERVE THAT ASSESSEE HAS COMPLETED CONSTRUCTION OF ALL TYP ES I.E. A TO E TYPES OF RESIDENTIAL UNITS AND 18 SHOPS AND THEREBY ERRED IN HOLDING THAT ASSESSEE VIOLATES CONDITION (A) OF PROVISIONS OF SECTION 80IB(10). IN FACT ASSESSEE HAS DEVELOPED 74 RESIDEN TIAL TENEMENTS ON SEPARATE AREA OF LAND OF 14,843.27 SQ.MTS. ONLY. THE BU PERMISSION WAS GRANTED ON 22/09/2008. WHEREAS THE R EVISED DEVELOPMENT PERMISSION FOR 18 SHOPS & 54 FLATS WAS GRANTED BU ON 16/07/2008 AND SINCE THE CONSTRUCTION OF THE SAM E WAS COMPLETED IN FEBRUARY 2012 THE BU PERMISSION FOR TH E SAME WAS GRANTED ON 16/06/2012, WHICH WERE CONSTRUCTED BY AL TOGETHER A SEPARATE AND DIFFERENT FIRM NAMELY PANCHAMRUT DEVEL OPERS FROM ASSESSEE I.E. MADHAV CORPORATION. IT IS NOT IN DISP UTE THAT AN AREA OF 14,843.27 SQ.MTS. WAS UNDERTAKEN TO DEVELOP RESI DENTIAL HOUSING SCHEME WHICH IS MORE THAN 1 ACRE BY ITSELF. SO COND ITION AS LAID IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 10 DOWN UNDER CLAUSE (A) OF SECTION 80IB(10) IS FULFIL LED. THERE IS NO DISPUTE OVER THE AREA OF CONSTRUCTION AS STIPULATED IN CLAUSE (C). FURTHER THERE IS NO VIOLATION OF CLAUSE (D) AS FAR AS CONSTRUCTION OF 74 TENEMENTS IS CONCERN THESE ARE ON A SEPARATE ARE A 14.843.27 SQ.MTS. BU PERMISSION WAS GRANTED ON 22.09.2008 WHI CH HAS BEEN PROPERLY APPRECIATED BY LOWER AUTHORITIES. THERE IS NO VIOLATION OF THIS CLAUSE SINCE AS NO COMMERCIAL CONSTRUCTION WAS CARRIED OUT BY THE ASSESSEE FIRM AND ALSO NO DEDUCTION U/S 80IB(10 ) HAS BEEN CLAIMED BY THE OTHER PARTY I.E. PANCHAMRUT DEVELOPE RS. SO THE CONSTRUCTION CARRIED OUT BY THE ASSESSEE WITH REGAR D TO 74 TENEMENTS ON THE AREA OF 14.843.27 SQ.MTS. HAS TO BE LOOKED ON STAND ALONE BASIS FOR WHICH IT HAS SEPARATE DEVELOP MENT PERMISSION AS WELL AS BU PERMISSION WERE ACCORDED AS DISCUSSED ABOVE. PROVISIONS OF SECTION 80IB(10) HAS TO BE LOOKED VIS --VIS THIS PIECE OF LAND MEASURING 14.843.27 SQ.MTS. ON WHICH THE AC TIVITY OF CONSTRUCTION FULFILLED THE CONDITIONS OF SECTION 80 IB(10) AS DISCUSSED ABOVE. THE CLAIM OF THE ASSESSEE CANNOT B E NEGATED ON THE GROUND THAT SOME PORTION WAS CONSTRUCTED BY OTH ER FIRM ASSIGNED BY THE SOCIETY WHICH DOES NOT FULFILL THE CONDITION OF SECTION 80IB(10). THE CLAIM OF SECTION 80IB(10) OF NON-ALLOWABLE AREA IS SEPARATE ALTOGETHER WHICH SHOULD NOT BE MIX ED AND CONFUSED WITH ASSESSEES CLAIM. IN FACT SAME HAS TO BE LOOKE D IN ITS FACTS AND CIRCUMSTANCES ALTOGETHER. THUS, COMING TO THE ISSU E OF OWNERSHIP, IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 11 THIS IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISI ON IN THE CASE OF RADHE DEVELOPERS WHEREIN IT HAS BEEN HELD THAT DOMA IN OF ASSESSEE HAS TO BE LOOK IN THE LIGHT OF DOMINANT ROLE IN THE BUILDING PROJECT CARRIED OUT BE ASSESSEEE AS ENTREPRENEUR. UNDER FA CTS AND CIRCUMSTANCES, ASSESSEE HAS WORKED AS DEVELOPER SO, IT IS ENTITLED FOR DEDUCTION AS CLAIMED UNDER THE PROVISION OF 80I B(10) OF ACT. THIS TAKE CARES CLAIM OF ASSESSEE U/S 80IB(10) OF T HE ACT FOR ALL THREE YEARS AS DISCUSSED ABOVE. THE ASSESSEE FULFI LLS ALL THE CONDITIONS LAID DOWN IN SECTION 80IB(10). ASSESSIN G OFFICER IS DIRECTED ACCORDINGLY. THIS TAKE CARE OF GROUND NO. 2 IN A.YS. 2006- 07 TO A.Y.2008-09. 5. NEXT ISSUE IN A.Y 2008-09 IS REGARDING ADDITIONA L CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT. 'MODIFICATION OF THE CORRECT FIGURE IN ORIGINAL GRO UND NO.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-I, AHMEDAB AD, HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS. 85,66,228/- BEING ADDITIONAL CLAIM OF DEDUCTION U/S . 80IB(10) ON THE BASIS OF SEIZED RECORDS. THE SAME M AY KINDLY BE DIRECTED TO BE ALLOWED ON SUCH LEGITIMATE CLAIM,' 5.1 IN THIS REGARD STAND OF ASSESSEE HAS BEEN THAT DURING THE COURSE OF THE APPELLATE PROCEEDINGS, THE APPELL ANT HAS VEHEMENTLY CONTENDED BEFORE THE CIT(A) AS TO HOW IT S CLAIM IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 12 OF ELIGIBLE DEDUCTION U/S.80IB(10) ON ADDITIONAL IN COME (ON MONEY RECEIPTS) IS ADMISSIBLE. THE CIT (A) HAS NOT ED ON PAGE 25 AT ITEM (II) OF APPELLATE ORDER DATED 26/09 /2014 THAT. 'THE ADDITIONAL INCOME SHOWN BY THE APPELLANT IN TH E BLOCK RETURN AND IS CLAIMED TO BE EXEMPT U/S. 80IB OF THE ACT. THIS INCOME IS CALCULATED BY THE APPELLANT BAS ED ON THE SEIZED MATERIAL (PAGE 116 OF ANNEXURE A/19-PART Y NO.40). THIS AMOUNT OF ADDITIONAL INCOME (OF RS.1,47,83,193), AN AMOUNT OF RS.8,59,151/- AND RS. 53 , 57,814/- IS TO BE REDUCED AS DISCUSSED IN PARA 5.1 OF THIS ORDER.' HOWEVER, THE CIT(A) HAS MISDIRECTED HERSELF IN OBSE RVING THAT THE ADDITIONAL INCOME IS NOT SHOWN IN THE REGU LAR BOOKS OF ACCOUNTS CANT BE CONSIDERED FOR THE PURPOSE OF DEDUCTION U/S.80IB(10). IN FACT, THE APPELLANT HAS DISCLOSED SUCH INCOME IN THE RETURN U/S.153A. FURTHER, AS MAY BE VERIFIED FROM AUDIT REPORT (FROM 10 CCB) THE APPELLANT HAS N O OTHER SOURCE OF INCOME EXCEPT DEVELOPMENT/CONSTRUCTION BUSINESS. (P.B.P.119). 5.2 WE FIND THAT HON'BLE ITAT AHMEDABAD B BENCH, AHMEDABAD HAS AN OCCASION TO CONSIDER ALLOW-ABILITY OF ASSESSEE'S CLAIM OF DEDUCTION U/S. 54B OF THE ACT A GAINST CAPITAL GAIN TAXATION ON THE 'ON MONEY COMPONENTS' IN THE CASE OF SHRI BHAGWANBHAI R. PRAJAPATI IN IT(SS)APPE AL NO. 377/AHD/2014, WHEREIN IT HAS HELD THAT BENEFICIAL IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 13 PROVISIONS PLAY IN THEIR OWN SPHERE AND THEY ARE ME ANT FOR BENEFIT OF THE TAX PAYERS. RELEVANT PORTION OF THE ORDER DATED 24/06/2015, IS AS UNDER:- '6.2 REGARDING ALLOWABILITY OF CLAIM OF 'ON-MONEY' THE LD. AR DREW OUR ATTENTION TO THE DECISION OF HON'BL E GUJARAT HIGH COURT IN THE CASE OF CIT VS. SUMAN PAP ER & BOARDS LTD. (2009) 221 CTR 0781 WHEREIN IT WAS HELD THAT IN VIEW OF AMENDMENT ON THE PROVISIONS OF SECT ION 158BB BY THE FINANCE ACT, 2002 WITH RETROSPECTIVE E FFECT FROM 1 ST JULY, 1995 THE ASSESSEE WAS ENTITLED TO CLAIM DEDUCTION UNDER SEC. 80-I OR SECTION 80-IA IN BLOCK ASSESSMENT OF THE BLOCK PERIOD. THE REVENUE HAS ACKNOWLEDGED THE BENEFIT OF DEDUCTION WITH REGARD T O UNDISCLOSED INCOME OF THE BLOCK PERIOD. 6.3 IN THE CASE BEFORE US THE ISSUE IS WITH REGARDS TO THE BENEFIT OF EXEMPTION UNDER SECTION 54B WITH REGARD TO THE ON MONEY. BOTH ARE BENEFICIAL PROVISIONS IN THEIR O WN SPHERES SO DRAWING THE SAME ANALOGY, WE ARE OF THE VIEW THAT ASSESSEE IS ENTITLED FOR GETTING BENEFIT OF EX EMPTION U/S. 54B WITH REGARD TO THE 'ON MONEY'. THIS VIEW IS FORTIFIED BY DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. SHETH DEVELOPERS (P) LTD. IN ITA NO. 3724 OF 2010, WHEREIN IT WAS HELD THAT ASSESSEE WAS ENTI TLED TO THE BENEFIT OF SEC. 80IB AND ACCORDINGLY DIRECTED T HE A.O. TO RECOMPUTE THE TAX PAYABLE FOR THE BLOCK PERIOD 1.4.1995 TO 21.2.2002 U/S. 185BB AFTER GIVING BENEF IT OF SEC. 80IB.' IN THIS BACKGROUND, IT WAS HELD THAT FOR BLOCK PERI OD ASSESSEE IS ENTITLED TO CLAIM DEDUCTION IN ITS INCO ME U/S. 80IB. IN VIEW OF THE ABOVE DECISION, BENCH HELD THA T THE ASSESSEE IS ENTITLED IN CLAIMING EXEMPTION ON TOTAL INCOME IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 14 INCLUDING ON MONEY. THE ASSESSING OFFICER IS DIREC TED ACCORDINGLY. 5.3 IN CASE BEFORE US, ASSESSEE HAS EARNED ADDITION AL INCOME WHICH AMOUNT IS DISCLOSED CONSEQUENCE UPON T HE SEARCH, HENCE IT PARTAKES THE CHARACTER OF BUSINESS INCOME AND THE ASSESSEE HAS ADMITTED THAT THE SAID AMOUNT WAS A PART OF INCOME EARNED FROM THE PROJECT UNDERTAKEN N AMELY BY IT. THEREFORE, THE AMOUNT HAS DIRECT AND PROXIM ATE CONNECTION WITH THE NORMAL BUSINESS/DEVELOPMENT ACTIVITIES, HENCE AS ELIGIBLE FOR DEDUCTION U/S. 80 IB (10) OF THE ACT. ONCE ON THE BASIS OF DECLARATION OF THE AS SESSEE, THE INCOME OF THE ASSESSEE WAS ACCEPTED AND HAS BEEN AS SESSED IN THE HANDS OF THE ASSESSEE, THE DEPARTMENT HAS ON LY DISPUTED THE FACTUM THAT THE PROJECT UNDERTAKEN BY THE ASSESSEE FIRM IS NOT ELIGIBLE FOR HOUSING PROJECT U /S. 80IB OF THE ACT. THUS, VIEWING CORRECT INTERPRETATION OF T HE PROVISION OF THE ACT IN THE TUNE OF THE AFORESAID JUDGMENTS, THE UNDISCLOSED INCOME I.E. 'ON MONEY' BEING PART OF BU SINESS INCOME ONLY. THE SAME FORMS PART OF BOOK PROFIT AND IT HAS NO OTHER SOURCES OF INCOME AND WHATEVER INCOME ARIS ING TO THE ASSESSEE FIRM IS BUSINESS INCOME. THE HEAD OF I NCOME HAS TO BE DETERMINED FROM THE NATURE OF BUSINESS WH ICH ASSESSEE WAS BEING CARRYIED AT THE TIME OF SEARCH. THEREFORE, ADDITIONAL INCOME DISCLOSED BY THE ASSES SEE BEING PART AND PARCEL OF BUSINESS INCOME ONLY I.E. ALREAD Y IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 15 DISCLOSED BY THE ASSESSEE FIRM DURING THE COURSE OF SEARCH HAS BEEN BUSINESS INCOME AND THE ASSESSEE IS ELIGIB LE FOR DEDUCTION U/S. 80IB(10) OF THE ACT. IN VIEW OF THE ABOVE AND CONSEQUENT TO SEARCH U/S. 132 OF THE ACT, DOCUMENT MARKED AS PAGE NO. 116 AT ANNEX. A/19 WAS SEIZED BY THE DEPARTMENT WHICH CONTAIN NOTING OF CALCULATION OF P ROFIT FOR THE HOUSING PROJECT EXECUTED BY THE ASSESSEE AND SU CH PROFIT WAS INCLUSIVE OF 'ON MONEY' COMPONENT. IN RE SPONSE TO NOTICE U/S. 153A OF THE ACT, THE RETURNS OF INCO ME U/S. 153A ARE FILED WHICH ARE THE RETURNS OF INCOME U/S. 139 OF THE ACT. THE ASSESSING OFFICER HAS MADE ASSESSMENT ON THE SAID RETURNS INCOME. THE SAID ASSESSMENT ORDERS WER E CHALLENGED BEFORE THE CONCERN CIT(A), WHO PASSED A PPELLATE ORDERS ON IT NEGATING CLAIM OF ASSESSEE. WE FIND T HAT ASSESSEE HAS DEMONSTRATED WITH SUPPORTIVE DOCUMENTA RY EVIDENCE THAT IT IS ELIGIBLE FOR THE CLAIM OF DEDUC TION U/S. 80IB(10) OF THE ACT AND THE SAME IS ALLOWABLE NOT O NLY ON THE PROFIT DISCLOSED IN THE PRE-SEARCH RETURNS OF INCOM E FILED U/S. 139(1) BUT ALSO ON THE ENTIRE PROFIT INCLUDING THE ONE DISCLOSED ADDITIONALLY SUBSEQUENT TO THE SEARCH PRO CEEDING U/S. 132 OF THE ACT AND DISCLOSED IN THE RETURN OF INCOME FILED U/S. 153A OF THE ACT. EVEN OTHERWISE BASED ON THE RULE OF CONSISTENCY IF THE ELIGIBLE PROJECT UNDERTAKEN R EMAINS THE SAME AND THE CONDITIONS ARE SATISFIED AND IF DEDUCT ION IS ALLOWABLE IN THE FIRST ASSESSMENT YEAR (WHICH IS A. Y. 2006-07 IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 16 IN THE ASSESSEE'S CASE) THEN THE SAME HAS TO BE ALL OWED IN THE SUBSEQUENT ASSESSMENT YEARS. WE FIND THAT COORD INATE 'D' BENCH OF TRIBUNAL IN ITA NO. 496/AHD/2011 A.Y. 2007- 08 IN THE CASE OF GOLDEN DEVELOPERS VS. ITO (OSD), RANGE-9, AHMEDABAD DATED 13/11/2014, IT WAS HELD THAT IN CAS E THE APPELLANT IS ENTITLED FOR CLAIM OF DEDUCTION U/S. 8 0IB(10) IN A.Y.2006-07 THEN THE APPELLANT IS ALSO ELIGIBLE FOR THE SAID DEDUCTION IN A.YS.2007-08 & 2008-09. FOLLOWING SAM E REASONING, WE HOLD THAT THE ASSESSEE ON THIS ADDITI ONAL INCOME OF RS.85,66,228/- FOR A.Y. 2008-09 IS ENTITL ED FOR CLAIMING DEDUCTION U/S. 80IB(10) OF THE ACT AS DISC USSED ABOVE. ASSESSING OFFICER IS DIRECTED ACCORDINGLY 6. NEXT ISSUE AS RAISED IN A DDITIONAL CLAIM OF DEDUCTION U/S. 80IB(10) OF THE ACT OF RS. 2,75,00,000/-BEING CLAIM ED ON THE BASIS OF SEIZED DOCUMENT AND STATEMENT U/S. 132(4). WHILE DISPOSING OF APPEALS, THE CIT(A) HAS DEALT WITH THE ISSUE OF DEDUCTIONS U/S. 80IB (10) OF THE ACT AT PARA 5.3(II ) OF THE APPELLATE ORDER APPEALED AGAINST. ACCORDING TO CIT( A), THE ADDITIONAL INCOME WHICH IS NOT SHOWN IN REGULAR BOO KS OF ACCOUNTS CANNOT BE CONSIDERED FOR THE PURPOSE OF DEDUCTIONS U/S. 80IB(10) OF THE ACT. IN THIS REGAR D, STAND OF ASSESSEE HAS BEEN THAT IT IS INBUILT PROVISION OF T HE ACT THAT IF AN INCOME IS EXEMPT EITHER U/S. 2 (14), (10) OR OTHERWISE, DUE EFFECT OF THE SAME HAS TO BE GIVEN WHILE FRAMING THE IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 17 ASSESSMENT. LIKEWISE, DEDUCTIONS U/S. VIA SHALL HA VE TO BE ALLOWED WHILE COMPUTING TOTAL INCOME SUCH AS 80C, 8 0IB(10) ETC. EVEN IN RESPECT OF ASSESSMENT UNDER CHAPTER-XI VB I.E. 158BC/BD AND ALSO UNDER CHAPTER XIV I.E. U/S. 153A/ 153C AS IT IS SPECIFICALLY PROVIDED UNDER EXPLANATION TO SECTION 153A OF IT ACT 1961, THAT ALL OTHER PROVISIONS OF T HIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER THIS SECTI ON, THEREFORE, ALLOWABLE IN BOTH THE ABOVE CHAPTERS. 6.1 LET US ANALYSE THIS LEGAL PREPOSITION IN FACTUA L MATRIX OF THE CASE. THE ASSESSING OFFICER HAS ACCEPTED THE A DDITIONAL INCOME AS DEPICTED IN THE SEIZED PAPER, BUT IGNORED THE DISCLOSED INCOME ATTRIBUTED TO 'ON MONEY', ON POINT OF CLAIM OF DEDUCTION U/S.80IB(10) OF ACT. THE CIT (APPEALS ), HAS HELD THAT THE ON MONEY IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE FINDING OF CIT (A) IS WITHOUT PROPERL Y ADDRESSING THE OBJECTIONS OF THE ASSESSEE. IT IS N OT IN DISPUTE THAT THE 'ON MONEY' IS RELATABLE TO BUSINES S INCOME ONLY, AND THERE IS NO FINDING OF THE REVENUE AUTHOR ITIES THAT IT IS OTHERWISE, ONCE IT HAS BEEN DISCLOSED PURSUAN T TO SEARCH IN THE HANDS OF THE ASSESSEE. THE DEPARTMEN T IS UNABLE TO DISLODGED THE SAME BY ANY COGENT REASONIN G. IN SUCH SITUATION, REVENUE AUTHORITIES WERE NOT JUSTIF IED TO IGNORE THE SAME AS FAR AS ASSESSEES CLAIM OF DEDUC TION U/S.80IB(10) IN THIS REGARD IS CONCERN. IT IS SET TLED LEGAL IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 18 POSITION THAT DOCUMENT HAS TO READ AS WHOLE HAS TO APPRECIATE WHICH WHOLE MAKING ASSESSMENT ON THE BAS IS OF SEIZED DOCUMENT REVENUE AUTHORITIES ARE NOT ALLOWED TO MAKE PICK AND CHOOSE APPROACH WHILE INTERPRETING TH E NOTINGS OF SEIZED DOCUMENT. IN VIEW OF ABOVE, THE C IT (APPEALS) HAS GROSSLY ERRED IN VIEWING THE 'ON MONE Y' COMPONENT, AS UNRECORDED IN THE REGULAR BOOKS OF AC COUNTS WHICH WAS IN FACT OFFERED AS INCOME DURING THE COUR SE OF RECORDING OF STATEMENT U/S. 132(4) OF THE ACT DURIN G THE COURSE OF SEARCH PROCEEDINGS CARRIED OUT U/S. 132 O F THE ACT WILL NOT BE ENTITLED TO CLAIM OF DEDUCTION U/S.80IB (10) BECAUSE SAME WAS ALSO DISCLOSED IN RETURN OF INCOME AS PER LAW. AS STATED IN THE ASSESSMENT ORDER, THE ASSESS EE IN VIEW OF THE PROVISIONS OF SECTION 139(1) OF THE ACT, HAS FILED HIS ORIGINAL RETURN FOR PRE-SEARCH PERIOD. SUBSEQUENTL Y, PURSUANT TO A NOTICE U/S.153A OF THE ACT, THE ASSES SEE HAS FILED A RETURN U/S.153A OF THE ACT. THE ASSESSING OFFICER HAS PROCEEDED TO MAKE ASSESSMENT ON SUCH RETURN OF INCOME ONLY. IN THIS RETURN OF INCOME, THE ASSESSEE HAS SHOWN INCOME AS PER BOOKS OF ACCOUNTS INCLUDING 'ON MONEY' RECEIPT RECORDED IN THE BOOKS OF ACCOUNTS GI VING EFFECT TO THE ABOVE DOCUMENT SEIZED AS A RESULT OF SEARCH. THE RETURN OF INCOME FILED IN PURSUANCE OF NOTICE U /S. 153A IS THE RETURN OF INCOME U/S. 139 OF THE ACT ONLY. THE SAID BOOKS OF ACCOUNTS ARE DULY AUDITED AND SUPPORTED BY THE IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 19 REQUISITE AUDIT REPORT U/S. 80IB IN FORM NO. 10CCB DATED 25/01/2012. IT IS AN UNDISPUTED FACT THAT THE BUSI NESS ACTIVITY OF THE FIRM IS THAT OF DEVELOPING THE HOUS ING PROJECTS UNDER THE NAME AND STYLE 'MADHAV PARK (NIKOL)' AND THERE WAS NO OTHER BUSINESS ACTIVITY OF ASSESSEE AS CERTI FIED BY THE AUDITOR IN THE ABOVE SAID REPORT IN FORM NO. 10CCB AS PER SR. NO. 24 OF THE REPORT. WE FIND THAT HONBLE GUJARAT HIGH COURT IN CASE OF KIRIT DAHYABHAI PATEL VS. ACIT, I N TAX APPEAL NO.1181,82 & 85 ORDER DATED 03/12/2014 (GUJ) HELD THAT: IT IS NOT RELEVANT WHETHER ANY RETURN OF INCOME WA S FILED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH AND WHE THER ANY INCOME WAS UNDISCLOSED IN THAT RETURN OF INCOME . IN VIEW OF SPECIFIC PROVISIONS OF SECTION 153A OF THE ACT, THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.15 3A OF THE ACT IS TO CONSIDERED AS RETURN FILED UNDER SECT ION 139 OF THE ACT AND THE A.O. HAS MADE ASSESSMENT ON THE SAID RETURN. ITAT, AHMEDABAD BENCH IN CASE OF JAYNABEN RAMESHBH AI TAILOR VS. DCIT, IN ITA. NO. 760 / AHD / 2010 I N ORDER DATED 30/01/2015 APPLYING THE RATIO OF KIRTI DAHYAB HAI PATEL (SUPRA) HELD AS UNDER: 'THE CIT(A) RIGHTLY HELD THAT IT IS NOT RELEVANT WH ETHER ANY RETURN OF INCOME WAS FILED BY THE ASSESSEE PRIO R TO THE DATE OF SEARCH AND WHETHER ANY INCOME WAS UNDISCLOSED IN THAT RETURN OF INCOME. IN VIEW OF S PECIFIC PROVISION OF SECTION 153A OF THE I.T. ACT, THE RETU RN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 15 3A OF IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 20 THE I.T. ACT IS TO BE CONSIDERED AS RETURN FILED UN DER SECTION 139 OF THE ACT, AS THE ASSESSING OFFICER HA S MADE ASSESSMENT ON THE SAID RETURN AND THEREFORE, THE RE TURN IS TO BE CONSIDERED FOR THE PURPOSE OF PENALTY UNDE R SECTION 271(L)(C) OF THE I.T. ACT AND THE PENALTY I S TO BE LEVIED ON THE INCOME ASSESSED OVER AND ABOVE THE IN COME RETURNED UNDER SECTION 153A, IF ANY. IN VIEW OF THE PRINCIPLE LAID DOWN IN THE AFORESAID DECISIONS, IN THE CASE OF THE ASSESSEE HAVING CONSI STENTLY SHOWN INCOME THE ASSESSMENT ORDER IS ALSO FRAMED ON THE BASIS OF THIS RETURN OF INCOME FILED IN RESPONS E TO NOTICE U/S.153A OF THE ACT. THEREFORE, IT IS NOT O PEN TO THE REVENUE DEPARTMENT TO NOT ALLOW STATUTORY ALLOW ABLE DEDUCTION AFTER ACCEPTING THE SAME AS ADDITIONAL IN COME OF THE ASSESSEE. FOR THE PURPOSE OF GRANT OF RELIE F U/S. 80IB(10) OF THE ACT, THE CLAIM OF THE ASSESSEE IS Q UITE IN TUNE WITH THE RATIO LAID DOWN IN THE ABOVE CASES. IN VIEW OF ABOVE, IT IS SETTLED LEGAL POSITION THAT EVEN WHEN UN-RECORDED SALES AND INCOME THEREFROM ARE CONSIDER ED WHILE MAKING ASSESSMENT FOR THE RELEVANT PERIOD, TH E CORRESPONDING UNACCOUNTED EXPENDITURE HAS TO BE ALL OWED AS HELD BY HONBLE GUJARAT HIGH COURT IN CASE OF CI T V. HINDUSTAN MARBLES LTD. [2010] 327 ITR 312 (GUJ)]. IN THE SAME ANALOGY, UNRECORDED (ON-MONEY) INCOME BEING PA RT OF SALE CONSIDERATION, IT IS ELIGIBLE FOR COMPUTATION OF TAXABLE CAPITAL GAINS U/S 54B OF THE ACT. 6.2 IN THE LIGHT OF ABOVE FACTUAL AND LEGAL DISCUSS ION, WE ARE OF THE VIEW THAT ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION IN RESPECT OF ADDITIONAL INCOME DETECTED CONSEQUENT TO SEARCH IS ENTITLED TO CLAIM OF DEDUCT ION U/S. IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 21 80IB(10) OF ACT WHICH IS PART OF SALE PROCEEDS OF F LATS OF THE PROJECT IN QUESTION INCLUDING COST OF LAND TOTALING TO RS.2.75 CRORE DETECTED AS RESULT OF SEARCH. THIS VIEW IS F ORTIFIED BY DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF C IT VS. SUMAN PAPER BOARDS LTD. [2009] 221 CTR 781 (GUJ), WHEREIN THE ASSESSEE CLAIMED DEDUCTION U/S. 80I OR 80IA OF THE ACT IN RELATION TO THE TOTAL UNDISCLOSED INCOME OF BLOCK PERIOD, WHEREIN THE SAID CLAIM WAS REJECTED BY THE ASSESSING OFFICER AND THE MATTER CARRIED BEFORE TRIBUNAL. TH E TRIBUNAL ALLOWED THE RELIEF FOR THE REASONS THAT THE UNDISCL OSED INCOME DECLARED IN FORM NO.2B IS UNDER THE HEAD BUS INESS INCOME FROM INDUSTRIAL UNDERTAKING, WHICH HAS BEEN ALL ALONG ASSESSED AS BUSINESS INCOME. THE UNDISCLOSED INCOME IS IN ACCORDANCE WITH ASSESSEE'S STATEMENT U/S. 132(4) OF THE ACT. THUS, A CORRECT INTERPRETATION OF THE PROVISIO NS OF SEC.L58BB(L), 158BB(4) AND 158BH AS APPLICABLE TO T HE FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE IS ELIG IBLE FOR DEDUCTION U/S.80I/80IA IN RESPECT OF UNDISCLOSED IN COME ASSESSED BY ASSESSING OFFICER UNDER THE BLOCK PERIO D. ON APPEAL BY REVENUE, THE HONBLE HIGH COURT OBSERVED THAT WE ARE OF THE OPINION THAT THE ASSESSEE WILL BE ELIGIB LE FOR DEDUCTION U/S. 801/80IA OF THE ACT IN RESPECT OF UN DISCLOSED INCOME UNDER THE BLOCK PERIOD, BY HOLDING THAT THE ASSESSEE CAN'T BE DENIED THE DEDUCTION U/S.80IA. SIMILAR VI EW HAS BEEN TAKEN BY HONBLE BOMBAY HIGH COURT IN CASE OF C.I.T IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 22 VS. SHETH DEVELOPERS (P) LTD. [2012] 25 TAXMANN.COM 123 (BOM), WHEREIN THE ASSESSEE COMPANY CARRIED ON BUSI NESS AS A BUILDER. CONSEQUENT TO A SEARCH CARRIED OUT U /S. 132 OF THE ACT, THE ASSESSEE DECLARED THE UNDISCLOSED INCO ME AT RS.7 CRORES FOR THE BLOCK PERIOD, RECEIVED BY IT DU RING THE COURSE OF CARRYING OUT ITS BUSINESS ACTIVITIES. ASS ESSEE CLAIMED DEDUCTION U/S.80IB(10) WHILE COMPUTING UNDISCLOSED INCOME. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE. THE CIT (APPEALS) ALLOWED THE CLA IM IN ITS FAVOUR. ON SECOND APPEAL, THE TRIBUNAL UPHELD THE ORDER OF THE CIT(APPEALS). ON REVENUE'S APPEAL TO HIGH COUR T HELD THAT: CONSEQUENT TO THE AMENDMENT BY THE FINANCE ACT, 2002, WITH RETROSPECTIVE EFFECT FROM 01/07/1995, TH E TOTAL INCOME OR LOSS HAS TO BE COMPUTED IN ACCORDAN CE WITH PROVISIONS OF THIS ACT, I.E. THE SAID ACT. CONSEQUENTLY, W.E.F 01/07/1995 THE TOTAL INCOME /LO SS FOR THE BLOCK PERIOD HAS TO BE COMPUTED IN ACCORDAN CE WITH PROVISIONS OF THE SAID ACT AND THE SAME WOULD INCLUDE CHAPTER VI A OF THE SAID ACT. SECTION 80IB THE ACT IS A PART OF CHAPTER VI A. IN VIEW OF THE ABOVE, W HILE COMPUTING THE UNDISCLOSED INCOME FOR THE BLOCK PERI OD, THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION FROM IT S INCOME UNDER SECTION 80IB. WE ALSO FIND THAT M/S NILKANTH DEVELOPERS V S. ITO IN ITA NO. 2610/AHD/2014 ORDER DATED 19/12/2014 BY ITAT C BENCH, AHMEDABAD, WHEREIN ITAT WHILE DIS POSING IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 23 OF THE APPEAL, THE HONBLE TRIBUNAL VIDE PARA 12 OB SERVED AS UNDER:- '12. WE FIND THAT THIS BENCH OF THE TRIBUNAL IN THE CASE OF CIT V. M/S. SHREE PADMAVATI DEVELOPERS (SUPRA) HAS HELD AS UNDER:- '7. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERU SED THE IMPUGNED STATEMENT OF MR. MAHENDRA KATARIA RECORDED ON 27/28.12.2006. IN REPLY TO A QUESTION, IT WAS CATEGORICALLY STATED, QUOTE '(I) RS.50,000/- SALES PROCEEDS OF FLAT NOT RECORDED IN BOOKS.' UNQUOTE. CONSEQUE NT THEREUPON, THE SAID AMOUNT OF RS.50 LACS WAS DULY DISCLOSED IN THE PROFIT & LOSS ACCOUNT DRAWN ON 31.3.2007. IN THE CASE OF THE CIT VS. SUMAN PAPER AND BOARD LTD. [2009] 314 ITR 119(GUJ.) AN OBSERVATION HAS BEEN MADE THAT MANUFACTURING AND SALE OF BOARD PAPE R AND CRAFT PAPER HAPPENED TO BE THE ONLY SOURCE OF I NCOME OF THE ASSESSEE, THEREFORE THE AMOUNT DISCLOSED CONSEQUENCE UPON THE SEARCH PARTAKES THE CHARACTER OF BUSINESS INCOME AND ELIGIBLE FOR THE DEDUCTION U/S. 80IB/80IA OF THE I.T. ACT. IN THE PRESENT CASE, THE ASSESSEE HAS ADMITTED THAT THE IMPUGNED AMOUNT WAS PART OF THE SALE CONSIDERATION RECEIVED IN CASH AT THE TIME OF BOOKING OF FLATS AND, THEREFORE, THE AMOUNT HAD DIRECT AND PROXIMATE CONNECTION WITH THE NORMAL BUSINESS O F CONSTRUCTION ACTIVITY, HENCE ELIGIBLE FOR THE DEDUC TION U/S 80IB(10) OF THE I. T. ACT. BECAUSE OF THE FACTUAL AS ALSO LEGAL ASPECT OF THE CASE, WE HEREBY CONFIRM THE FIN DING OF LD. CIT(APPEALS) AND DISMISS THIS GROUND OF THE REVENUE. IN THE INSTANT CASE, HON'BLE TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE HOLDING THAT AS PER PROVISIO NS OF SEC. 80IB DEDUCTION IS ALLOWABLE IN RESPECT OF INCO ME DERIVING FROM THE ELIGIBLE HOUSING PROJECT. IN THE INSTANT IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 24 CASE, IT IS NOT IN DISPUTE THAT BUSINESS OF THE ASS ESSEE IS THAT OF DEVELOPING AND BUILDING RESIDENTIAL PROJECT IN THE NAME AND STYLE OF NILKANTH HEIGHTS PROJECTS WAS ELI GIBLE HOUSING PROJECT U/S. 80IB OF THE ACT. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE STATUTORILY ALLOWABLE DEDUCTION TO THE ASSESSEE CANNOT BE DENIE D WITH REGARD TO THE GROUNDS OF THE ASSESSEE.' IN THIS BACKGROUND, WE FIND THAT THE ASSESSEE FIRM HAS ALREADY SUBMITTED SPECIAL AUDITED REPORT U/S. 80IB OF THE ACT (FORM NO. 10 CCB) [P.B. 183] WHEREIN AT COLUMN 24 OF THE REFERRED AUDITED REPORT, IT IS CLEARLY STATED T HAT THE ASSESSEE FIRM HAS NO OTHER BUSINESS ACTIVITIES (I.E . OTHER THEN DEVELOPING A BUILDING HOUSING PROJECTS AS DEFI NED 80IB(10) OF THE ACT). IN THE SAID REPORT, THE ASSE SSEE HAS CLAIMED SPECIAL DEDUCTIONS U/S. 80IB(10) OF THE ACT . ACCORDINGLY, ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTIO N U/S.80IB(10) OF THE ACT AS DISCUSSED ABOVE. 7. NEXT ISSUE OF CHARGING INTEREST IN ALL THREE YEA RS U/S.234A, 234B, 234C AND 234D IS CONSEQUENTIAL. ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 8. NEXT ISSUE OF PENALTY IN ALL THREE YEARS U/S. 27 1(1)(C) IS PRE-MATURE. SO, SAME IS DISMISSED BEING PRE-MATURE . IT(SS)A NOS. 380 TO 382/AHD/2014 ASST. YEARS 2006-07 TO 2008-09 25 9. AS A RESULT, APPEALS FILED BY ASSESSEE IN ALL TH REE YEARS ARE PARTLY ALLOWED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF JULY, 2015. SD/- SD/- ( ANIL CHATURVEDI ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD: DATED 28/07/2015 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: ________OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: