TaxTMI 
TaxTMI 
2019 (3) TMI 682
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....its AR, who was entrusted to file the appeals before the ITAT, was having a severe medical problem which resulted in a major surgery to him, due to which, the appeals filed belatedly. It was therefore submitted that the delay may be condoned and admit the appeals for hearing and adjudication as the reason is genuine and not wilful. 3. After considering the submissions of the assessee, we are of the view that the assessee was prevented by a reasonable cause for not filing the appeals in time. Therefore, we condone the delay and admit the appeals for hearing and adjudication. ITA Nos. 1139 & 1140/Hyd/2017 and ITA Nos. 215 & 216/Hyd/2017 by the assessee and revenue, for AY 2007-08 & 2008-09 respectively. 4. These are cross appeals, directed against a common order of CIT(A) - 11, Hyderabad, dated 30/08/2016. ITA No. 1139/Hyd/2017. 5. In this appeal, the assessee has raised the following grounds of appeal: " 1. The order of the Appellate Commissioner is erroneous, contrary to the law, facts and circumstances of the case, insofar as it relates to the confirming of addition of Rs. 1,05,00,000/-. 2. The Appellate Commissioner erred in sustaining the additio....
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.... Rs. 45,00,000/- by 15.11.2007 Rs. 45,00,000/- by 15.03.2008 Rs. 45,00,000/- by 15.07.2008 6.3 The AO asked the assessee company to furnish the sources of their payments mentioned in the above said agreements vide letter dated 12.11.2009 and 08.07.2010. It was noticed from the copy of the agreement that except Rs. 15,00,000/- the balance sum was agreed to be paid in the form of cash. The show cause notices were duly served on the assessee, but, the assessee did not file any explanation and in turn they made written-submission on 04.08.2010 requesting for an opportunity to explain the transaction during the course of hearing. The AO noted that the assessee has chosen not to file any reply till last date of assessment. 6.4 The AO observed that as the agreement clearly speaks about the nature of the transaction and part of the payment was also paid through cash and cheque for which the landlords have given their acknowledgment of receipt, it is clear that the assessee company should have paid the balance sum also as per the payment schedule. Accordingly, a sum of Rs. 1,05,00,000/- (Rs.15,00,000 on 03.10.2006, Rs. 45,00,000 within 20 days from the date of....
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....as acted upon and sale was completed by proper registration. Since allegedly the deal is not completed and there is no proof for making further payments, the evidence available on the agreement to sell alone can be considered as actual payment made relating to this deal. In the absence of any evidence, we have no choice, but, to accept the contention of the assessee, particularly, when allegedly the deal is not through. Therefore, the addition cannot be made merely based on presumption. Accordingly, ground raised by the assessee is allowed. 7. As regards the additional ground pertaining to section 40(a)(ia), the AO noted that the Special Auditor has observed that the assessee had not deducted tax at source on a sum of Rs. 4,48,65,718/- and short deduction of tax of Rs. 55,93,439/-, totalling to Rs. 5,04,59,157/-. The list of such payments is enclosed as Annex-III to the Special Audit report. In this connection, the assessee was asked to file its objections, if any, for disallowance of Rs. 5,04,59,157/-, vide order sheet dated 28.06.2010 and the final show cause dated 08.07.2010. 7.1 The written submission of the assessee, nature of various expenditures debited into the Profit....
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....Assessing Officer is directed accordingly." 7.4. Before us, the ld. AR of the Assessee submits that an amendment has been made to section 40(a)(ia) by the Finance Act, 2012. By virtue of this amendment if the people to whom the Assessee has paid monies without deducting TDS, and if the people to whom the monies have been paid have offered the same in their incomes, then there is no scope for disallowance u/s 40(a)(ia). He further submits that this amendment has been deemed to be retrospective from the day the section was introduced. The Assessee relies on the judgement of the Allahabad High Court reported at 402 ITR 238 for the retrospective application of the said amendment. 7.5 Ld. DR, on the other hand, relied on the orders of revenue authorities. 7.6 Considered the rival submissions and perused the material on record. We notice that assessee has not deducted tax at sources for the payment made as per special audit report. There is no dispute but the legislature has softened the stand on the default by the assessees subsequent to various judicial precedents and amended the sections like 40(a)(ia), 201(1), etc. The Courts have held that these amendments are retrospective....
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....s.69B by the AO, amounting to Rs. 72,50,000/- being amounts purportedly paid as on money to one Mr.Mirza Baig. 9. The Appellate Commissioner erred in sustaining the addition of Rs. 1,35,00,000/- which was added by the AO vide paragraph 7.1 of the assessment order as unexplained investment. 10. The Appellate Commissioner erred in sustaining an amount of Rs. 94 .50.000/* being addition made by the assessing officer as unexplained investment Vide paragraph 7.2 of the assessment order. 11. The Appellate Commissioner erred in giving a direction to the AO to assess an amount of Rs,45,00,000/- in the A.Y 2009-10 . 11. Any other grounds which the assessee may urge either before or at the time of hearing. 8. As regards ground No. 1, 2 & 3, relating to the disallowance of claim u/s 80IB of JP Arcadia of Rs. 1,93,43,017/- as well as JP Metropolis of Rs. 1,58,96,825/-, the AO observed that in the return of Income filed, the assessee disclosed income arising out of business and profession at Rs. 7,65,47,347/- but claimed a sum of Rs. 6,86,47,282/- as deduction under section 80IB of the Income Tax Act, 1961 from such income. The assessee was asked to furnis....
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....hich the project is situated. It is also interesting to note that this letter dated 30.03.2012 is seen to be received in the inward section of GHMC Town Planning Section on 13.03.2012. It is also significant that if such a letter was indeed furnished on 13.03.2012, or even 30.03.2012, there is no reason why the same could not have been furnished before the Assessing Officer in the 'course of the remand proceedings in Nov/Dec. 2013. 4.5.6 As already noted above, details of the size of the project, etc., is not on record. However, what is seen from the letter dated 30.03.2012 is that it refers to completion of Block No.C, and not the project as a whole. The requirement of Completion Certificate provided in the Explanation below 80IB(10)(a) cannot be read independent of the clause to which it is appended. Clause (a) refers to commencement of construction as approved by the Local Authority, and its completion within a prescribed time frame that has to be reckoned with reference to the date of such approval. Therefore, the completion referred to in the Completion Certificate envisaged by the Explanation cannot be any completion, but one that is in line with the per....
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....ed or orders issued there under have been transgressed in the course of the work. The building is fit for use for which it has been erected, re-erected or altered, constructed and enlarged. The necessary occupancy certificate may be issued. 4.5.9 It would be apparent from the above that even this project cannot be ascertained to have been completed in the manner, and to the extent, construction was approved by the relevant local authority, Details of the project in respect of which approval was claimed to have been received, is not available for consideration. Besides, the above letter refers to completion of Block No.5 of the project, and not the project itself. In addition to the unusual coincidence that both projects are claimed to have been complete on the same day - 23.02.2012, for reasons identical to those in the case of the project J.P. Arcadia discussed above, it has to be held that compliance with requirements of Section 80IB(10) is not evident. The Assessing Officer's action in restricting the deduction claimed u/s. 80IB(10) in respect of the project J.P.Metropolis would also, therefore, not call for any interference." 8.2 Before us, the ld. AR o....
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....in the instant case is an individual and engaged in the activity of Promoters and Builders in the name and fashion of "Harshad Constructions". During the impugned assessment year the assessee has constructed a housing project at Ashok Nagar, Handewadi Road, Hadapsar, Pune. The commencement certificate for this project was received by the assessee on 14-02-2007 which was subsequently revised on various dates. As per the original plan passed by the Municipal authorities, there are three buildings, viz., A, B and C. The assessee has submitted the completion certificate only for Buildings B and C but did not furnish the completion certification for Building A on the ground that the same was not constructed. Since the plan was sanctioned for Buildings A, B and C and the assessee has completed only Buildings B and C and Building A was never constructed, the AO rejected the ITA No.2004/PN/2014 claim of deduction of Rs. 3,05,70,196/- made by the assessee u/s.80IB(10). In appeal the Ld.CIT(A) following various decisions allowed the claim of pro-rata deduction in respect of Buildings B and C which were completed. 10. We do not find any infirmity in the order of the CIT(A) granting p....
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....e are flats which satisfied the conditions particularly of the nature stated under Section 80IB(10)(c) of the Act, we have already upheld the case of the assessee in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012 for grant of relief under Section 80IB(10) of the Act on a proportionate basis, by following the decision of the Bombay High Court reported in ITA No.2004/PN/2014 [2011] 333 ITR 289 (CIT Vs. Brahma Associates). Thus applying the decision of this Court in T.C.Nos.1348 and 1349 of 2007 dated 10.10.2012, we hold that the assessee is entitled to succeed both on the principle of proportionality as well as by reason of the construction on the meaning of the expression "housing project" as referring to construction of any building and the wordings in Section 80IB(10) of the Act. In the circumstances, we hold that the mere fact that one of the blocks have units exceeding builtup area of 1500 sq.ft, per se, would not result in nullifying the claim of the assessee for the entire projects. Consequently, in respect of each of the blocks, the assessee is entitled to have the benefit of deduction in respect of residential units satisfying the requirement under Section 80IB(10)(....
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....ars 2003- 04 to 2005-06, order dated 21.11.2012. Following the same parity of reasoning, we hold that the assessee is entitled to pro-rata deduction in respect of residential units in the housing project No.7, which have complied with the conditions and were eligible for the deduction under section 80- IB(10) of the Act. However, the said deduction is allowable to the assessee only in respect of units construction of which has been completed upto 31st March, 2008. Accordingly, we direct the ITA No.2004/PN/2014 Assessing Officer to verify the claim of the assessee in this regard in assessment years 2006-07 and 2007-08 and if the assessee has fulfilled the aforesaid conditions under section 80-IB(10) of the Act, pro-rata deduction under the said section could be allowed to the assessee in relation to the buildings / flats completed in Sector No.7. Consequently, the ground of appeal raised by the assessee is partly allowed." 15. In view of the above discussion, we hold that the assessee is entitled to pro-rata deduction in respect of the buildings/units of the housing project 'Kumar Padmalaya' which have complied with the conditions laid down in section 80IB(....
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....sessing Officer noted at para 4.16 on page 11 that the assessee admitted unaccounted payments of Rs. 27,94,106/- only. For the remaining payments of Rs. 9,20,76,294/- the Managing Director is seen to have stated that the lands are yet to be registered since payments are still being made, and that the following sources were available for making the payments in cash, Source Amount (Rs.) Withdrawals from bank 6,79,60,894 Agricultural income 1,15,00,000 Site advances - crusher 43,85,000 Dairy milk income 12,05,000 Miscellaneous expenses 42,87,400 Site advances-Lorries 27,38,000 Total 9,20,76,294 9.1 The Assessing Officer examined the explanation of the assessee and found various short comings. It was stated by the Managing Director that cash was drawn from the ING. Vysya Bank account of the group concerns. The withdrawals from such bank accounts examined with reference to cash book of the assessee company prepared subsequent to the search and admittedly up to date, revealed that there were negative cash balances from 03.04.2007 to 17.03.2008. A monthly summary of the cash ledger for 01.04.2007 to 31.03.2008 reproduced by the Assessing ....
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....e unexplained amount of Rs. 6,11,57,900/- identified by him, and held that the aggregate amount of Rs. 6,46,57,900/-- is the unexplained investment to be added back u/s.69B. 9.4 Before the CIT(A), the assessee filed written submissions and after considering the same, the CIT(A) elaborately discussed the issue and directed the AO to delete the addition of Rs. 1,27,05,000/- (Rs. 1,15,00,000 + 12,05,000/- to the extent it has been brought to tax from other sources or assessed as returned, in the hands of the directors. He, therefore, restricted the addition to the extent of Rs. 5,19,52,900/- (Rs. 35,00,000 + 3,70,42,500 + 1,14,10,400) as against the addition of Rs. 6,46,57,900/- made by the AO on account of unexplained investment in cash payments made to land owners for purchase of land. 9.5 Before us, the ld. AR of the Assessee submits that the explanation for the sources as given is genuine and correct. Further, he submits that a major portion of the sources pertains to cash balances. The peak credit as arrived by the AO, is as per the books of account found on the date of search. On the day of search the books were not completed and many an accounts have not been entered into....
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....eement for sale dated 07.02.2007 in respect of the same property between the same vendor and vendee as per which the consideration agreed upon was Rs. 2.10 Cr. in cash in addition to Rs. 2,62,50,000/- payable in the form of constructed area. The Assessing Officer noticed that out of Rs. 2.10 crores, Rs. 65,62,500/- was paid before 31.03.2007 and the balance Rs. 1,44,37,500/- was to be paid before 31.03.2008. When called upon to explain, the assessee stated that the purchase was not registered and instalments were not completely paid and, therefore, there can be no finding of unaccounted payments. The AO held that the transfer of property was registered and stamp duty of Rs. 1,33,725/- was also paid to the SRO, Rangareddy (East). He concluded that the difference between the consideration of Rs. 2.10 Cr. agreed upon, and the consideration of Rs. 1,31,62,500/- as registered, amounting to Rs. 78,37,500/- which is not routed through the regular books of account, is the unrecorded cash component assessable as an unexplained investment u/s.69B. 10.1 AO observed that identical documents were found showing similar transactions between the assessee and Sri Mohd. Khadir, and Sri Mirza Rafi....
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....o, it is being urged that the signed document of a transaction that, admittedly took place, is correct only in part. It goes against the settled principles of interpretation that a seized document cannot be partly correct and partly incorrect: In view of the necessary inference generated by the seized material juxtaposed with the registered document, it is not enough for the assessee to merely deny that certain transactions in the document did not take place. It would indeed be a very unnatural event, if after agreeing to receive Rs. 2.10 crores for transfer of his property, in an agreement reduced to writing on stamped paper signed by the Managing Director of the assessee company, the vendor is easily persuaded to register the transfer of property for a much reduced sum of Rs. 1,31,62,500/-. Significantly, the vendee (assessee) for all the resistance he would have naturally faced in persuading the vendor to accept less than the agreed consideration, has been unable to lead any evidence of any form of renegonation. It has to be held, therefore, that the assessee has been unable to controvert the preponderant probability of the payment having indeed been made as agreed upon....
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....re prayed that the addition made be deleted. 11.3 As regards the additions of Rs. 72,75,000/- and Rs. 72,50,000/-, the additions made on similar lines as that of Mr. Lingala Senapathi, but, the vendors in this case are Mr. M. Qadeer and Mr. Mirza Rafiullah Baig. He, therefore submitted that the additions in these cases also may be deleted. 11.4 Ld. DR, on the other hand, relied on the orders of revenue authorities. 11.5 Considered the rival submissions and perused the material on record. We notice that at the time of search, the department found two documents, one for the registered sale deed and another for agreement to sell. The consideration mentioned in both the documents are different. It is natural to presume that when the transaction is complete by registering the document, two parties must have exchanged the value as per the agreement to sell. This is the original arrangement between the parties. In the given case, all the transactions i.e. three transactions are complete. Accordingly, ld. CIT(A) has come to conclusion that assessee must have adhered to the clauses in the agreement to sell. Ld. AR brought to our notice in the case of Shri Lingala Senapati that the ....
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....rial on record. At the time of hearing, no arguments were put-forth by the ld. AR of the assessee before us on this ground, hence, this ground is dismissed. 14. As regards ground No. 11 regarding the directions of CIT(A) in giving direction to AO to assess an amount of Rs. 45,00,000/- in AY 2009-10, the assessee has not pressed this ground before us, hence, this ground is dismissed as not pressed. 15. ITA No. 215 & 216/Hyd/2017 for AY 2007-08 & 2008-09 by the revenue 16. In this appeal, the revenue has raised the following grounds of appeal, which are common in both the appeals under consideration: " 1. The CIT(A) is not justified in holding that the assessee is eligible to claim deduction u/ s 80IB without appreciating the fact that the assessee has not furnished completion certificates and letters issued by Municipal Authorities as held by the Hon'ble ITAT in the case of M/s Sainath Estates Pvt. Ltd (ITA No.299,300,379 & 380/Hyd/2012 dt. 08.02.2013). 2. The CIT(A) is not justified in holding that the assessee company is eligible for deduction u/ s 80IB (10) without appreciating the fact that apart from nonfurnishing of completion certificate, the as....
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....th respect to the addition made u/s 69 of the Act despite the fact that the seized documents are belonging to the assessee company. 2) The Commissioner of Income-tax (A) ought to have appreciated the fact that the payment claimed to have been made by Janapriya Engineers Syndicate Ltd for the land purchased by the assessee company is not reflected in the accounts of Janapriya Engineers Syndicate Ltd., or in the accounts of assessee company. 3) Any other ground that may be urged at the time of hearing." 22. Brief facts relating to the ground Nos. 1 & 2 are that in the course of assessment proceedings, the AO based on the seized documents and sworn statement of the director of the assessee, made an addition of Rs. 6,30,25,000/- as unexplained expenditure u/s 69C of the Act. 22.1 When the assessee preferred appeal before the CIT(A), it submitted before the CIT(A) that the addition made by the AO was in fact already offered as income in the hands of M/s. Janapriya Engineers Syndicate Pvt Ltd. It was further stated that assessment in the case of Janapriya Engineers Syndicate Ltd. for the AY 2007-08 was already completed wherein at page-10 of the order, the AO had ....