TaxTMI 
TaxTMI 
2018 (4) TMI 698
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....2. Whereas, the rest of the appeals, four by the Revenue and two by the assessee, arise out of proceedings initiated under section 154 of the Income Tax Act, 1961 (for short "the Act") by the Assessing Officer. 2. Since, all the appeals and cross objections pertain to the same assessee and involve common issues, they were heard together and, as a matter of convenience, are being dispose off by way of this consolidated order. ITA no.5643 to 5649/Mum./2015 Revenue's Appeal for A.Y. 2005-06 to 2011-12 C.O. no.105 to 110/Mum./2017 Assessee's Cross Objection for A.Y. 2005-06 to 2010-11 3. The only common issue arising out of Revenue's appeal pertains to allowance of assessee's claim of deduction under section 80IB(10) of the Act. Whereas, in the common grounds raised in the cross objections, the assessee has raised certain issues challenging the validity of the proceedings initiated under section 153C of the Act. Since, the grounds raised in the cross objections are on purely legal and jurisdictional issues we propose to deal with the cross objections of the assessee at the very outset. 4. The grounds raised by the assessee in cross objection....
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....er the second plan each floor of the building has four flats each flat having built-up area of 1,000 sq.ft. While the second plan is as per the BMC approved plan for SRA project, the first plan having two flats in each floor, according to the Department, was meant for potential customers. One Sashikant Chhatrawala, from whose computer these two sets of plans were found and print outs were taken and seized was examined on oath during the search proceedings. A statement on oath was also recorded from Sameer Bhojwani, the director of the assessee company during the search and seizure operation. In course of proceedings under section 153C of the Act, when the assessee was confronted with the unapproved plan seized from the computer of Sashikant Chhatrawala, and called upon to justify its claim of deduction under section 80IB(10) of the Act, the assessee submitted that the unapproved plan was never acted upon and the building was constructed as per the plan approved by the BMC. However, the Assessing Officer did not accept the contention of the assessee. Referring to the statement recorded from Sashikant Chatrawala and Sameer Bhojwani during the search and post-search proceedings the As....
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....elonging to the assessee, however, according to him, the said plan can certainly said to be a plan pertaining to the assessee. The learned Commissioner (Appeals) observed, the word "belonging to" in section 153C of the Act has to be understood as covering a document which is "pertaining to" the assessee. In this context, he referred to the amendment made to section 153C of the Act by Finance Act, 2015 w.e.f. 1st June 2015 and observed that the said amendment being clarificatory in nature would apply retrospectively. Thus, he rejected assessee's ground challenging the validity of the proceedings initiated under section 153C of the Act. 7. The learned Authorised Representative reiterating the stand taken before the first appellate authority submitted that the seized documents (print out of the unapproved plan) on the basis of which proceedings under section 153C of the Act was initiated cannot be said to be belonging to the assessee which is the condition precedent for initiation of proceedings under section 153C of the Act. Drawing our attention to the satisfaction note of the Assessing Officer before issuing notice under section 153C of the Act, the learned Authorised Representa....
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....architect belongs to the assessee's housing project. Therefore, the Assessing Officer before issuing notice under section 153C of the Act has recorded a satisfaction to that effect. That being the case, assessee's argument against the validity of the proceedings under section 153C of the Act should not be entertained. 10. We have patiently and carefully considered rival submissions and perused materials on record. We have also applied our mind to the decisions relied upon. Undisputedly, for the assessment year 2005-06 to 2010-11, the Assessing Officer has initiated proceedings under section 153C of the Act and has also completed the assessments under the said provision. It is also a fact on record, which is very much evident from the satisfaction note of the Assessing Officer before issuing notice under section 153C of the Act, the basis for initiation of the assessment proceedings under section 153C of the Act is the print out of the drawing/ floor plan found and seized from the computer of Sashikant Chhatrawala, stated to be an Architect / designer which have been marked as A-24 and A-25. It is also an accepted factual position that the seized unapproved floor plan does not ta....
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....missioner (Appeals) in this regard is, the amendment made to section 153C of the Act by Finance Act, 2105 w.e.f. 1st June 2015, being clarificatory in nature will apply retrospectively. It needs to be examined whether the amendment brought to the provisions of section 153C by Finance Act, 2015 substituting the words "belongs to" with "pertains to" in respect of books of account, seized documents, etc. would apply retrospectively. The Hon'ble Delhi High Court in case of ARM Infrastructure India Ltd. (supra) while referring to the amended section 153C of the Act has held that the said amended provision would apply prospectively w.e.f. 1st June 2015. The Tribunal, Mumbai Bench, in case of DCIT v/s National Standard India Ltd., [2017] 85 taxmann.com 87 (Mum.), while examining the issue of retrospective applicability of the amended provisions of section 153C of the Act has held in the following manner:- "9. We have heard the Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. We are of the considered view that before adverting to and adjudicating the validity of the assumption of jurisdiction by ....
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.... other person. The relevant extract of the memorandum explaining the aforesaid amendment to Sec. 153C, as had been made available on the statute vide the Finance Act, 2015, is reproduced as under:- "Disputes have arisen as to the interpretation of the words "belongs to" in respect of a document as for instance when a given document seized from a person is a copy of the original document. Accordingly it is proposed to amend the aforesaid section to provide that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing belongs to, or any books of account or documents seized or requisitioned pertain to, or any information contained therein, relates to any person, other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income ....
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....3C of the Act by Gujarat High Court is not correct/appropriate. We find that in any case our Court has also taken a similar view in CIT V/s. Sinhgad Technical Education Society [2015] 378 ITR 84/235 Taxman 163/63 taxmann.com 14 (Bom.) and refused to entertain Revenue's appeal". 10. We have further perused the 'Satisfaction note' of the A.O, as well as the seized documents, viz. Page No. 107-108 (supra) which had been referred to by the A.O to justify the assumption of jurisdiction under Sec. 153C in the case of the assessee company. We find that a bare perusal of the aforesaid seized documents viz. Page No. 107-108 (supra) does neither make any reference of the assessee company, nor of any transaction entered into by the latter, which could go to justify the assumption of jurisdiction by the A.O under Sec.153C. We are of the considered view that in the absence of any 'document' belonging to the assessee having been seized during the course of search proceedings in the case of Lodha Group (Supra), the assumption of jurisdiction by the A.O under Sec.153C by referring to the aforesaid seized doucuments, viz. Page No. 107-108(supra), is highly misplaced. We further find ou....
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....t years 2005-06 to 2010-11. Consequently, the cross objections are allowed. 12. Having held so, now, we have to advert back to the issue of allowance of assessee's claim of deduction under section 80IB(10) of the Act as raised in the Revenue's appeals. 13. In view of our decision in assessee's cross objections, though, the issue raised by the Revenue in assessment years 2005-06 to 2010-11 have become academic, however, it is not so in case of assessment year 2011-12, wherein, the assessment was completed under section 143(3) and not under section 153C of the Act. Therefore, the issue raised by the Department in its appeals also needs to be addressed on merits. As discussed earlier, on the basis of the print out of floor plans recovered / sized from the computer of Sashikant Chhatrawala, the Assessing Officer found certain deviation between the approved plan and the seized unapproved floor plan. He, therefore, called upon the assessee to explain why deduction claimed under section 80IB(10) in respect of housing project should not be disallowed. Though, the assessee objected to the proposed disallowance by justifying the claim of deduction under section 80IB(10) of the Act and ....
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....e tallies with the number of residential units as per the approved plan. From the details of shares allotted and copies of the last maintenance bills raised by the society on the flat owners it was found that each floor of the housing project consists of four flats and not two as alleged by the Assessing Officer. The first appellate authority while examining the seized documents found that out of 12 floor plans (drawings) seized, 11 were those of approved plans. Therefore, he directed the assessee to produce copies of plans bearing stamp of approval of municipal authorities and also produce the original plans for verification. On examining the original plan of the housing project bearing stamp of approval of municipal authority and cross verifying them with the approved plans seized from the computer he found them to be the same. The learned Commissioner (Appeals) observed, the only material on the basis of which the Assessing Officer denied assessee's claim under section 80IB(10) of the Act is the unapproved plan dated 31st December 2012 seized from the computer of Sashikant Chhatrawala, which does not have any other details except the date. From the material on record, the learne....
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.... the approved plan with each residential unit having built-up area of less than 1,000 sq.ft, assessee's claim of deduction under section 80IB(10) cannot be disallowed. Accordingly, he directed the Assessing Officer to allow assessee's claim of deduction under section 80IB(10) of the Act. Being aggrieved of the aforesaid decision, the Revenue is in appeal. 16. Ground no.(i) to (v) bring out various facets of Department's challenge to allowance of assessee's claim of deduction under section 80IB(10) of the Act. The first issue raised by the Revenue is on the alleged violation of rule 46A of the I.T. Rules, 1962, by the learned Commissioner (Appeals). 17. The learned Departmental Representative submitted that in the course of appeal proceedings, the learned Commissioner (Appeals) conducted independent enquiry with the housing society by calling for certain information. He submitted, the learned Commissioner (Appeals) also called for certain evidences from the assessee. On the basis of such information / evidences obtained during the appellate proceedings, the learned Commissioner (Appeals) decided the issue of deduction under section 80IB(10) of the Act in favour of the assessee....
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....view of the evidence available on record, the learned Commissioner (Appeals) was not justified in allowing assessee's claim of deduction under section 80IB(10) of the Act. In support of his contention, the learned Departmental Representative relied upon the following decisions:- i) Roshan D. Hatti v/s CIT, [1977] 107 ITR 938 (SC); ii) Mohan Singh v/s ACIT, [2017] 85 taxmann.com 219; and iii) Dinesh Parikh v/s CIT, [2011] 12 taxmann.com 490; 18. The learned Authorised Representative strongly supporting the finding of the learned Commissioner (Appeals) submitted that in the course of appellate proceedings learned Commissioner (Appeals) did request the Assessing Officer to make certain enquiries and furnish certain details, however, the Assessing Officer failed to comply to the directions of the first appellate authority. He submitted, since the Assessing Officer did not carry out his direction, learned Commissioner (Appeals) called for assessment record for necessary verification and conducted enquiry independently to ascertain the correctness of assessee's claim with regard to fulfillment of conditions of section 80IB(10) of the Act. The learned Authori....
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....s with regard to the violation of the approved plan. The learned Authorised Representative submitted, before the Assessing Officer the assessee has made detailed submissions both factually and legally justifying its claim of deduction under section 80IB(10) of the Act. Without controverting the facts brought on record, the Assessing Officer has disallowed assessee's claim of deduction under section 80IB(10) simply relying upon the unapproved plan. The learned Authorised Representative submitted, assessee has started claiming deduction under section 80IB(10) from assessment year 2004-05. Assessee's claim of deduction was examined in detail by the Assessing Officer in assessment year 2004-05 and the Assessing Officer after conducting enquiry with the flat purchasers has allowed assessee's claim of deduction. The learned Authorised Representative submitted, even in the original assessment completed under section 143(3) of the Act for assessment year 2009-10, a copy of which is placed at Page-55 of the paper book, the Assessing Officer while referring to the assessment order passed under section 143(3) of the Act for the assessment years 2004-05, 2005-06, 2006-07, 2007-08 and 2008-09 h....
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....hout giving any opportunity to the Assessing Officer to examine and have his say on the evidences brought on record. For deciding this issue, it is necessary to look into the observations of the learned Commissioner (Appeals) in Para-14.5 of his order. It has been noted by the learned Commissioner (Appeals) that the Assessing Officer was specifically asked to make certain enquiries and furnish certain details in respect of assessee's claim of deduction under section 80IB(10) of the Act. As noted by the learned Commissioner (Appeals), since the Assessing Officer did not respond to or comply with the directions of the learned Commissioner (Appeals), he had to call for the assessment record for verifying the factual details. Further, since, the dispute between the Department and the assessee pertained to the issue whether the housing project has been constructed as per the approved plan and complying to the conditions of section 80IB(10) of the Act, it required factual verification. Therefore, to ascertain the fact whether the housing project was built as per the approved plan, learned Commissioner (Appeals) decided to conduct an independent enquiry with the housing society and as per....
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.... to (3) of rule 46A would not affect the power of the first appellate authority in such cases. The Hon'ble Jurisdictional High Court while dealing with identical issue in Smt. Prabhavati S. Shah v/s CIT, [1998] 231 ITR 001 (Bom.) has held in the following manner:- "On a plain reading of Rule 46A, it is clear that this rule is intended to put fetters on the right of the appellant to produce before the Appellate Assistant Commissioner any evidence, whether oral or documentary, other than the evidence produced by him during the course of the proceedings before the Income-tax Officer, except in the circumstances set out therein. It does not deal with the powers of the Appellate Assistant Commissioner to make further enquiry or to direct the Income-tax officer to make further enquiry and to report the result of the same to him. This position has been made clear by Sub-rule (4) which specifically provides that the restrictions placed on the production of additional evidence by the appellant would not affect the powers of the Appellate Assistant Commissioner to call for the production of any document or the examination of any witness to enable him to dispose of the appeal. Un....
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....io laid down in the decisions referred to above, we hold that there is no violation of rule 46A of the rules in the instant case. Therefore, the argument of the department in this regard cannot be accepted. So far as the other aspects of the Department's challenge to allowance of assessee's claim of deduction under section 80IB(10) of the Act are concerned, a bare perusal of the assessment order would reveal that relying heavily upon the seized unapproved plan dated 31st December 2001, the Assessing Officer has concluded that four flats in each floor of the housing project have been merged into two as a result of which the floor area of each flat has exceeded 1,000 sq.ft., thereby, violating the condition of section 80IB(10)(c) of the Act. Of course, the Assessing Officer selectively relied upon the statement recorded from Shahikant Chatrawal, whom the Assessing Officer presumed to be the architect of the housing project. However, the enquiry conducted by the learned Commissioner (Appeals) with the housing society clearly revealed that the housing project has four flats in each floor having built-up area of less than 1,000 sq.ft. The supporting evidences submitted by the housing so....
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....persuade us to reverse the decision of the Commissioner (Appeals). On the contrary, the evidences brought on record clearly support the factual findings of learned Commissioner (Appeals) and which, in our view, the department has failed to controvert. Another relevant fact which needs to be mentioned is, assessee claimed deduction under section 80IB(10) for the first time in assessment year 2004-05. The Assessing Officer after making necessary enquiry having found that assessee has fulfilled the conditions of section 80IB(10) allowed the deduction. The Assessing Officer in similar manner allowed assessee's claim of deduction in scrutiny assessments made for assessment years 2005-06 to 2009-10. Therefore, considering the totality of facts and circumstances of the case, we have no hesitation in upholding the decision of the learned Commissioner (Appeals) on the issue. As regards the case laws cited by learned Departmental Representative, though, the principle laid down therein are well accepted, however, they do not come to the rescue of the department as the decision of the learned commissioner (Appeals) is purely on factual basis and on appreciation of facts and evidences brought o....
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....entical issue in ITA no.575/ Mum./2008, dated 23rd September 2016, has held as under:- "4. After hearing both the parties and on perusal of the cited decision of the Tribunal in the case of M/s. AHCL-PEL (supra), wherein one of us (AM) is a party to the said order, we find, the facts as well as the conclusions drawn by the Tribunal will help the assessee. Considering the importance of the said paras for the sake of completeness of this order, the same are extracted as under:- "3. At the outset, Shri Mayur Kisnadwala, Ld Counsel for the assessee mentioned that the assessee is a builder and engaged in the business of development of housing project which is allowable for deduction u/s 80IB of the Act. There is no dispute about the project and the allowability of deduction of profits relatable to the sale proceeds of the flats of the said housing project. The only dispute relates to the allowability of deduction u/s 80IB of the Act in respect of the rental income earned by the assessee in respect of certain unsold flats held as stock-in-trade. It is the case of the assessee that some of the flats which are left unsold were let out under 'leave and license system' and ....
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....hat the unsold flats, being stock-in-trade of the housing project, being the immediate source of the impugned rental income, we find direct nexus of the said income to the housing project on hand. Therefore, the said income is derived from the housing project, making the income eligible for deduction u/s 80IB(10) of the Act. Therefore, the conclusions drawn by the CIT (A) are not sustainable in law. Accordingly, we reverse the order of the CIT (A) on this issue and allow the ground no.1 in all the three appeals." 5. Considering the above, we are of the opinion, the grounds raised by the assessee should be allowed in favour of the assessee and against the Revenue. We order accordingly." 24. Respectfully following the aforesaid decision of the Co-ordinate Bench in assessee's own case, we uphold the decision of the learned Commissioner (Appeals) on this issue. Ground raised is dismissed. 25. In the result, Revenue's appeals are dismissed. ITA no.6891 to 6894/Mum./2014 Revenue's Appeal for A.Y. 2005-06 to 2008-09 ITA no.6940 and 6941/Mum./2014 Assessee's Appeal for A.Y. 2009-10 and 2010-11 26. Respective appeals of the Revenue and a....