Tribunal upholds CIT(A)'s decisions, dismissing revenue's appeal on deduction and bogus creditors issues.

The Tribunal dismissed the revenue's appeal in its entirety, upholding the CIT(A)'s decisions on both issues. The addition made on account of disallowance of deduction claimed under section 80IB(10) was deleted as the assessee was deemed a developer and had complied with necessary requirements. Additionally, the deletion of the addition on account of bogus creditors was upheld, supported by evidence provided by the assessee. The Tribunal found no grounds to interfere with the CIT(A)'s findings based on the evidence presented.

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Issues Involved:
1. Deletion of addition made on account of disallowance of deduction claimed under section 80IB(10) of the Income Tax Act.
2. Deletion of addition on account of bogus creditors amounting to Rs. 16,74,394.

Issue-wise Detailed Analysis:

1. Deletion of Addition Made on Account of Disallowance of Deduction Claimed Under Section 80IB(10):

The revenue contested the Commissioner of Income Tax (Appeals) [CIT(A)]'s decision to delete the addition of Rs. 2,53,19,825 on account of disallowance of deduction claimed under section 80IB(10). The Assessing Officer (A.O.) had disallowed the claim on grounds that the assessee did not furnish the certificate from the Chartered Accountant (C.A.) in Form No.10CCB and that the assessee acted merely as a contractor, not a developer. Additionally, the A.O. noted discrepancies in the figures mentioned in Form No.10CCB and the audited profit and loss account, and the absence of a completion certificate for the housing project.

The CIT(A) allowed the claim, noting that the discrepancy in Form No.10CCB was a typographical error and that the assessee had obtained a completion certificate within the required timeframe. The CIT(A) also determined that the assessee acted as a developer, holding a coloniser’s license, obtaining necessary permissions, and adhering to the rules for housing projects. The CIT(A) further observed that the assessee was the owner of the project land and had comprehensive agreements with buyers, indicating the role of a developer rather than a contractor. The CIT(A) relied on various case laws to support this conclusion.

The Tribunal upheld the CIT(A)’s decision, noting that the revenue did not provide any adverse material to rebut the CIT(A)’s findings. The Tribunal also referenced CBDT Instruction No.4 of 2009, which allows the assessee to claim deduction on a year-to-year basis. Thus, the ground of the revenue’s appeal was rejected.

2. Deletion of Addition on Account of Bogus Creditors:

The revenue also contested the deletion of Rs. 16,74,394 on account of bogus creditors. The A.O. had made the addition because notices sent to the creditors were returned unserved. The CIT(A) deleted the addition, noting that the creditors were old suppliers who were filing their income tax returns, and the assessee had been making frequent purchases from them. The CIT(A) also observed that the assessee provided ledger accounts, copies of bills, and bank statements proving payments through account payee cheques.

The Tribunal agreed with the CIT(A), stating that the findings were based on the evidence furnished by the assessee, including affidavits of the creditors, their bank accounts, and supporting bills. Therefore, this ground of the revenue’s appeal was also dismissed.

Conclusion:

The appeal filed by the revenue was dismissed in its entirety. The Tribunal upheld the CIT(A)’s decisions on both issues, finding no reason to interfere with the findings based on the evidence presented. The order was pronounced in the open court on 26.09.2018.

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