TaxTMI 
TaxTMI 
2009 (11) TMI 907
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....d consequential in nature. 2.2. There was another grouse of the assessee that the calculation of interest u/s 234A and 234B of the Act was not in accordance with the Act as the AO had failed to consider the amount paid u/s 140A of the Act. While giving effect to this common order, the AO shall look into the misgiving of the assessee and take remedial action, if found necessary. 2.3. In the remaining grounds, the cruxes of the issues, for the sake of convenience and clarity, are reformulated in concise manners as under: (i) the assessment was bad in law as the mandatory conditions to invoke the jurisdiction u/s 153A of the Act did not exist or having not been complied with - as the reasons for issuance of Notice u/s 153A were not given and the assessee had reason to believe that the same was not recorded, the mandatory conditions to assume jurisdiction was to record reasons and in the absence of the same, the assessment was bad in law; (ii) without prejudice, the assessee denies itself liable to be assessed at Rs. 8.08 crores as against Rs. 70.34 lakhs returned; - the lower authorities were not justified in disallowing the claim of Rs. 7.25 crores u/s 80-IB(1) of t....
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....of the case, in brief, are that the assessee was carrying on the business of developing and construction of residential flats. During the years under dispute, the assessee was executing two projects - Anriya Dwellington Phase I & II consisting of 152 and 11 flats respectively. 5.1. The premises of the assessee and the residences of its directors were subjected to action u/s 132 of the Act on 30/9/05. In compliance to a notice u/s 153A of the Act for the AY 2005-06, the assessee had furnished a ROI, admitting an income of Rs. 70.34 lakhs after claiming deduction u/s 80-IB. The AO, had, however, concluded the assessment u/s 143(3) rws 153A of the Act, determining the income at Rs. 8.08 crores. In doing so, the AO has observed thus - (i) While purchasing a flat No.2 in Anriya Residency, the assessee had paid the consideration of Rs. 15 lakhs through cheques and cash of Rs. 3.5 lakhs. However, the cash paid was not finding a place in the books of account. When the AR of the assessee was confronted, he had agreed for addition. Hence, addition of Rs. 3.5 lakhs was made u/s 69 of the Act; (ii) The assessee had purchased lands at Allalasandra for a consideration of Rs.....
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....pose or not. But the explanation has come into effect from 1.4.2005 and AY 2005-06. Facts of the case records reveal that by that time, the project was already complete and the seized document vide No.A1/APM/SPL/7 reveals that the appellant had sent letters to take occupation of the flat to the respective owners before 1.4.2005. Therefore, I concur with the view of the authorized representative when he expresses: The Finance (No:2) Bills 2004 which was enacted on 10th of September 2004 introduced definition of "built up area" into section 10-IB for the first time. By the time the definition was inserted the building complete in all respects. No adjustments/corrections were possible to structure at this moment.' However, the explanation inserted by the FA 2004 does not take away any rights of the assessee over the property or other allied rights. It only clarifies what is to be included while calculating the area of 1500 sq.ft. Therefore, the clarificatory explanation is, I find applicable to all pending cases and, therefore, I find the action of AO justified and, therefore, dismiss the grounds of appeal." 6.1. After distinguishing the case laws on which the ass....
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....maximum built-up area of 1500 sft. - the unit had a maximum built-up area of 1500 sft as per structural design and the plan approved by BBMP whose bye-laws excluded the open balcony in its definition; (v) The AO in his impugned orders, had observed that the built-up area in 12 out of the total flats constructed exceed the ceiling limit of 1500 sft. as envisaged in s.80-IB(10) of the Act; - When the plan got sanctioned for the AY 04-05, the word 'built-up area' was not defined in the Act when the project in Phase I got under-way. As such, the assessee had to follow the meaning of the term 'built-up area' as followed by the Building Industry Practice and 'floor area' defined in the bye-laws of BBMP; - As per the Building Industry Practice, the term 'built-up area' in each flat was defined as habitable area of the flat unit including the wall thickness. The built-up area excludes common area of the building and open balconies which were not habitable and have only utility value; - As per the bye-laws of BBMP; the floor area which was also called as "built up area" exempts open balconies for the purpose of arriving at the "built up area". The sanctio....
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....equently which amounts to double addition; (x) Rs. 8,67,450 being 1/5th of cash payments of Rs. 4337250/- was made as detailed below: Sl. No. Details of cash payments made Amount 01 Bylappa for purchase of land 497850 02 Mrs. subbalakshmi for purchase of land 88400 03 Mrs. Subbalakshmi for purchase of land 846000 04 Mrs. Subbalaksmi for purchase of land 1000000 05 Cash deposited in to current account of M/s. Construction solutions (P) Ltd. 655000 06 Narayanaswamy for purchase of land -This amount has already been considered for addition/disallowance u/s 40A(3) supra 500000 07 Cash deposited in to current account of M/s. Construction solutions (P) Ltd. 400000 08 Mrs. Shalini R Kumar 350000 Total 4337250 (xi) the AO made an addition of Rs. 3.5 lakhs as cash payments to V.Vijayaraghavan and Smt.V.Latha, as not accounted for in the books of account. The said amount was paid from available cash balances with the assessee and that if it were to be added then the same shall also become part of the cost of flat and that the AR had not consented to any additions....
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.... reopened automatically by virtue of s.153A of the Act. Thus, the AO was within his powers provided by the Act and that the conduct of search u/s 132 or the requisition of books/assets under s.132A of the Act would suffice for the issuance of notice u/s 153A of the Act and assume jurisdiction over the assessee. 8.1.2. With due respects, we have perused the case laws reported in 260 ITR 80 (SC) and 289 ITR 341 (SC) on which the assessee had placed strong reliance. With regards, we would like to point out that the said rulings of the Highest Court of the land were in respect of mere information from CBI received and on the basis of which the search conducted and consequent block assessment was not valid. However, the present case on hand is on the different footing and the case laws on which the assessee placed reliance are distinguishable. Moreover, various High Court's and Special Bench decisions, Tribunal have held that Tribunal has no power to examine validity of authorization for search and same is not justiciable before the Tribunal. The following are case law reported on above issue: 1) M.B Lal Vs. CIT, 199 CTR 571 (Del) 2) CIT Vs. Paras Rice Mills, 313 IT....
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....s, the Hon'ble Tribunal was of the firm view that - "12. Considering the rival submissions, we are of the view that the appeal by the assessee is to be allowed to the extent of the flats the built-up area of the flat is not more than 1500 sft. We agree with the submission of the learned representative for the assessee that while considering the built-up-area of 1500 sft. for the purpose of exemption u/s 80-IB(10), the mezzanine floor and common areas are to be excluded. The assessing officer is directed accordingly. We hold that in respect of the pent houses the built-up-area of which is more than 1500 sft. they may be excluded for exemption. However, in the light of the decision of the Special Bench in the case of Brahma Associates [supra - ITA No:1417/PN/06 dt: 6.4.2009 - ITAT, Pune (SB)], merely because some flats are larger than 1500 sft, the assessee will not lost (sic) lose the benefit in its entirety. Only with reference to the flats which has more than the prescribed, the assessee will lose the benefit." II. Yet an another finding in the case of G.R. Developers v. DCIT in ITA Nos:668 & 669/Bang/2006 dated: 5.2.2009 on a similar issue, the Hon'ble Tribunal was of....
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....s. 18.5 lakhs, out of which, Rs. 15 lakhs was paid through cheques and the balance amount of Rs. 3.5 lakhs was paid in cash. On verification of cash book, the AO found that there was entry for Rs. 15 lakhs only whereas the alleged cash payment of Rs. 3.5 lakhs had not passed through the books of account. According to the AO, when the A.R of the assessee was countered with, perhaps, he had consented for the addition as unexplained investment u/s 69 of the Act. The assessee has now come up with a theory that the said payment of Rs. 3.5 lakhs was paid from the available cash balances with the assessee and that if at all it was to be added then the same shall also become part of the cost of flat. The assessee had flatly denied the AO's assertion that it was an agreed addition. Considering the facts of the issue, we are of the considered view that the assessee had not come up with any documentary evidence to contradict the AO's assertion and, thus, we uphold the action of the AO on this count. (ii) Rs. 1.0 lakh being 1/5th of the total payment of Rs. 5 lakhs made towards the purchase of land to C.Narayanaswamy - disallowance effected twice: The assessee had purchased lands at A....