TaxTMI 
TaxTMI 
2020 (7) TMI 170
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....1, Pune dated 05.01.2016 u/s 143(3) of the Act for the assessment year 2011-12. Sri Vijaykumar Rajaram Shah is the Managing Director of the company- LCESPL. Since the facts and issues involved in all the above 7 captioned appeals of the Revenue as well as of the assessee are interlaced, therefore, all the above 7 captioned appeals were heard together and are being disposed of by this composite order. 2. Brief Facts common to the cross appeals for three assessment years : Briefly stated the relevant facts include that the assessee is engaged in the business of executing the Civil, Electrical and Mechanical contracts. The details of dates of filing of return of income, returned income and assessed income for the respective assessment years under consideration are tabulated as under :- A.Y. Dates of filing of Return of Income Returned Income Assessed Income 2009-10 31.10.2009 7,67,71,340/- 14,42,51,631/- 2010-11 18.07.2011 15,30,190/- 39,80,58,455/- 2011-12 30.09.2011 2,53,998/- 19,76,44,154/- 3. There was a search and seizure action u/s 132 of the Act at the residential as well as business premises of the assessee and the Sri Vija....
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....79076000 42500000 291576000 4. The above extracted table indicates the offer of unaccounted income of Rs. 7 crores for the assessment year 2009-10, Rs. 17.90 crores (rounded up) for the assessment year 2010-11 and Rs. 4.25 crores for the assessment year 2011-12 respectively, totalling to Rs. 29.15 crores (rounded up). 5. In compliance of the above statement, the assessee filed the returns of income including the above stated disclosure of undisclosed income for all the assessment years under consideration. Specific to the assessment year 2009- 10, which is relied for facts, the assessee offered the said Rs. 7 crores as undisclosed income in the return income for that year. Otherwise, the regular income of the assessee works out to Rs. 7,22,78,057/-. The total income offered by the assessee for the year under consideration is Rs. 14,22,78,057/- (i.e. 7,22,78,057 + 7,00,00,000). 6. In the return of income, the assessee claimed deduction u/s 80-IA(4) of the Act in respect of the entire total income of Rs. 14,22,78,057/-. Similar claims are made by the assessee in the rest of the two assessment years i.e. A.Y. 2010-11 and 2011-12. 7. Before the A.O. : During the asses....
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....tion which was claimed originally in the original assessment". Referring to the source of said undisclosed income of Rs. 29.15 crores, ld. Counsel for the assessee submitted that the source of the said undisclosed income is assessee's business itself. The undisclosed income is the business income of the company only. The search and seizure action resulted in discovery of the mode of inflation of various expenses to save the tax and thus, the the source of the said Rs. 29.15 crores is the assessee's business itself only. So long as the business discovered during the search and seizure action is from the actual business of the assessee, subject to the fulfilment of the conditions relating to filing of certain audit reports in Form No.10CCB, the assessee should be entitled to claim of deduction u/s 80IA(4) of the Act. In this regard, the assessee relied on the series of the decisions such as : (i) Control Touch Electronic Pvt. Ltd., 77 ITD 522; (ii) CIT vs. Suman Papers & Boards Ltd., 314 ITR 119; (iii) JK Export SB of Settlement Commission, SA No.21 dt. 29.01.1996; and, (iv) CIT vs. V. Subramaniyan (Late), 305 ITR 289. 9. The summary of the assessee's explanation in this regard is....
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....The Assessing Officer discussed the same in para 14 of his order and distinguished the series of judgements relied on by the assessee. In fact, the Assessing Officer distinguished the Jurisdictional High Court's judgement in the case of CIT vs. Sheth Developers Pvt. Ltd., 254 CTR 127. The Assessing Officer opined that this is case where the assessment was made u/s 153BC of the Act and not section 153A of the Act as in the assessee's own case. In this case, the assessee made a claim of deduction u/s 80IB(10) of the Act in respect of the undisclosed income of the block period. Eventually, the Assessing Officer added the undisclosed income of Rs. 7 crores as income from other sources as per discussion given in para 18.3 of his assessment order. Similar additions were made in the other two assessment years too. The Assessing Officer also made adjustments to the claim of deduction qua the income by way of Miscellaneous Receipts. 12. Miscellaneous Receipts : On the denial of deduction u/s 80IA(4) of the Act in respect of the miscellaneous receipts, the Assessing Officer noticed that the assessee earned miscellaneous receipts and credited to the Profit and Loss Account. These receip....
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....the assessee holding that the assessee is eligible for claim of deduction u/s 80IA(4) of the Act. 16. While deciding the issues in favour of the assessee, the Tribunal relied heavily on the Jurisdictional High Court's judgement in the case of ABG Heavy Industries Ltd. (supra). The fact that ABG Heavy Industries Ltd. is a contractor for the JNP Trust and the same is found eligible for claim of deduction u/s 80IB(4) of the Act which was considered by the Tribunal and the said decision was applicable to the facts of the present case. In the written submission, the assessee relied heavily on the order of the Tribunal in assessee's own case vide ITA No.254/PUN/2008, ITA No.431/PUN/2007, ITA No.435/PUN/2007 and ITA No.766/PUN/2009 pertaining to assessment years 2006-07, 2005-06, 2003-04 and 2004-05 dated 08.06.2011. Highlighted the requirement of following the precedent in assessee's own case (supra) and also relied on the decision of Pune Bench of the Tribunal in the case of ITO vs. M/s. Gajraj Constructions vide ITA No.2057/PUN/2013 for the assessment year 2010-11 dated 11.02.2015, ld. Counsel for the assessee submitted that a contractor constitutes a developer for the purpose of....
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....al i.e. allowability of the claim of deduction u/s 80IB(10) of the Act in respect of the income computed as undisclosed income u/s 69A of the Act. Mentioning that in both the cases i.e. assessee and the Sheth Developers Pvt. Ltd. (supra), the CIT(A) mentioned that in both the cases there was undisclosed income and only difference with reference to the claim of deduction in different sections i.e. the assessee of the present appeal made a claim u/s 80IA(4) of the Act and in Sheth Developers Pvt. Ltd. made a claim of deduction u/s 80IB(10) of the Act. The Hon'ble Bombay High Court considered the Hon'ble Madras High Court's judgement in the case of ANBU Textiles vs. ACIT, 262 ITR 684 where the deduction u/s 80IB of the Act was allowed while computing the undisclosed income for the block period in that case. Thus, the assessee is found eligible for claim of deduction on the income offered by the assessee during the search and seizure action u/s 132 of the Act. Thus, the CIT(A) found the assessee, being a contractor, constitutes a developer for the purpose of section 80IA(4) of the Act and the deduction is found eligible in respect of both the regular/business income of the assessee as ....
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....stances of the case and in law and on careful perusal of the order passed by the A.O., it reveals that the prerequisites of such disallowance in S. 14A have been ignored which mandate that the A.O. to record satisfaction that the interest-bearing funds have been used to earn tax- free income. The satisfaction to be recorded must be based upon credible and relevant evidence and onus to prove that interest bearing funds have been used, lie squarely on the shoulders of Revenue. The A.O. failed to discharge the onus that lay upon her. The disallowance made by the A.O. and sustained by Ld. CIT(A) be quashed and set aside. 3) The appellant craves to leave, add/amend or alter any of the above grounds of appeal." 22. The only issue raised in the assessee's appeal relates to the disallowance made by the Assessing Officer and confirmed by the CIT(A) on account of provisions of section 14A r.w. Rule 8D(2) of the Rules. For the assessment year 2008-09 too, the Assessing Officer disallowed a sum of Rs. 2,87,333/-. The CIT(A) confirmed the same as per the discussion given in para 60 of the order of the CIT(A). In the process, both the Assessing Officer and the CIT(A) ignored the asse....
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.... for the case laws in the Paperbook for the Case Laws) 5. The above disallowance was challenged before the CIT (A) who has discussed this issue on page No. 65 of his order. The CIT (A) has held that the fact that the investment has been made in subsidiary company or assessee has not received any exempt income during the year would not lead to conclusion that the disallowance cannot be made. Following the decision of Special Bench in the case of Cheminvest Ltd. v. ITO [124 TTJ 577 (Del)] he confirmed the disallowance made by the Assessing Officer. 6. It is respectfully submitted before Your Honours that the assessee has not received any exempt income during the year. This is evident from the Profit & Loss A/c and the computation of income filed in the paper book before Your Honours. In fact, the submissions to that effect was made before both the lower authorities and remains undisputed. However, the lower authorities have relied upon the decision of Special Bench in the case of Cheminvest Ltd. v. ITO [124 TTJ 577 (Del)]. It is submitted that the above decision of the Special Bench has been reversed by the Hon'ble Delhi High Court in the case of Cheminvest Ltd. v. ....
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....g both the sides and considering the above written submission of the assessee on this issue, we are of the opinion that the grounds are required to be allowed in favour of the assessee. Accordingly, the grounds raised by the assessee are allowed. 26. In the result, the appeal of the assessee in ITA No.1177/PUN/2015 for the assessment year 2009-10 is allowed. ITA No.1245/PUN/2015 - A.Y. 2009-10 - By Revenue 27. The grounds raised by the Revenue are as under :- "1) On the facts and the circumstances of the case and in law, the Ld. CIT(A) has erred while allowing the assessees appeal or eligibility of Miscellaneous Receipts of Rs. 3,85,74,806/- without controverting the facts enumerated by the AO in his order and further erring in treating the said receipts as Profits and gains derived from eligible business as required by Section 80IA(4) of the Act. 2) On the facts and the circumstances of the case and in taw, the Ld. CIT(A) has erred in holding that the assesses is eligible for additional deduction u/s 80IA(4) of the Act of Rs. 7,00,00,000/- addition made on account of undisclosed income declared during the course of Search Action. 3) The order of....
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....gly, he has disallowed claim of assessee u/s. 80IA(4) of the Act in respect of such miscellaneous receipts. 9. At this juncture, we would like to mention that the Assessing Officer has initially held that various projects of the assessee are not eligible for deduction u/s. 80IA(4) of the Act on various grounds. However, this finding of the Assessing Officer has been reversed by the CIT (A) following several decisions of Tribunal and High Court including the decisions of Tribunal in the assessee's own case for earlier years. The question, as far as ground No. 1 of the Department's appeal is concerned, is regarding eligibility of miscellaneous receipts u/s. 80IA(4) of the Act. 10 The above issue has been discussed by the Assessing Officer on page No. 62 of his order. The receipts under consideration which is subject-matter of Ground No. 1 of Department's appeal are as under. Particulars of Miscellaneous Receipts Amount Bank Interest & Other Interest 73,28,660.44 Other Income 8,43,409.77 VAT Reimbursement 1,70,77,488.00 Work Insurance 1,08,85,831.00 New Item FBT (Excess Provision) 1,246.00....
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....ligible activity for the purpose of deduction u/s. 80IA(4) of the Act. When the work was carried out the expenditure has been debited to the Profit and Loss. Since the road project is eligible for deduction u/s. 80IA(4) of the Act receipt of insurance amount is also to be credited to Profit and Loss and not liable to tax. In this regard, the reliance is placed upon the decision of Delhi High Court in the case of CIT v. Sportking India Ltd. (324 ITR 283). (Refer Para 2 on Page no. 359 and Para 12 on Page 365 and No. 358 to 365 for the case law in Paperbook of Case Laws). 14. The Assessing Officer has not accepted the above receipts to be part of business income from eligible undertaking. According to the Assessing Officer, these receipts have got nothing to do with the business and they are not entitled for any deduction. 15. Elaborate submissions have been made before the CIT (A) which is recorded by him on page No. 8 to 11 of his order. The ld. CIT (A) has given a detailed finding on page No. 14 to 16 of his order. 16. The assessee relies upon the detailed submissions made before the CIT (A) and his findings as well as submissions made hereinabo....
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....upply, irrigation, roads etc. The income of the assessee is eligible for deduction u/s. 80IA(4) of the Act. The assessee has filed its return of income for the year under consideration, i.e., A.Y. 2009-10 on 31.10.2009. Thereafter, on 15.06.2010 the search and seizure action u/s. 132 of the Act was carried out at the premises of the assessee. It may kindly be noted that since the time limit for issuing notice u/s. 143(2) of the Act was not expired on the date of search, the pending assessment proceedings were abated. Subsequently, a notice u/s. 153A of the Act was issued on 30.05.2011 in response to which the assessee filed return of income in which deduction u/s. 80IA(4) of the Act has been claimed at Rs. 14,22,78,057/- (It has been wrongly mentioned in the assessment order that the assessee has stated that return filed earlier may be treated as return in response to S. 153A of the Act.) 19. In the return of income the assessee has claimed deduction u/s. 80IA(4) of the Act of Rs. 14,22,78,057/-. This amount also included Rs. 7 crores on account of additional income declared during the course of search. The core dispute in this ground of appeal is regarding eligibility of ....
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.... of Seth Developers the assessee is entitled to deduction u/s. 80IA(4) of the Act. 24. The assessee submits that the CIT (A) has correctly appreciated the facts of the case, the objections raised by the AO are not sustainable as discussed hereinbelow. 25. As regards the objection of the AO to the effect that the claim cannot be made in the return of income filed u/s. 153A of the Act. It is submitted that the present assessment proceedings are abated proceedings and, hence, there is no such embargo on the AO so far as the issues to be considered by him. As pointed out hereinabove, on the date of search i.e. 15.06.2010, the time limit for issuing the notice u/s. 143(2) of the Act had not expired. This is in light of the fact that the return of income for the year under consideration, i.e. A.Y. 2009-10 was filed on 31.10.2009 and the time limit u/s. 143(2) of the Act as up to 30.09.2010. Once, an assessment has been abated, the AO is not only entitled to consider all issues but duty bound to do so. Various decisions relied upon by the AO are in respect of non-abated years. 26. The next objection of the AO is that the undisclosed income is not a business inco....
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.... 224 - 230 of Paperbook for Case Laws) 30. The relevant facts, as culled out from the aforesaid judgment, are in the way following. The assessee had deposited the employer's and employees' contribution towards PF and ESIC beyond the due date, as a result of which the Assessing Officer made an addition of Rs. 71.59 lakhs. However, while granting deduction u/s. 10A of the Act the additions made were ignored on the ground that they were not generated out of the manufacturing activity of the assessee. In the further proceedings before the Hon'ble Court at the instance of the revenue, it was found that since the addition made on account of employer's contribution was not assailed by the assessee, the only issue for consideration pertained to allowability of deduction u/s. 10A of the Act qua the additional income due to the disallowance pertaining to employees' contribution. In answering the subject-issue in favour of the assessee, the Hon'ble Court held as under: "12. By reason of the judgment of the Supreme Court in CIT v. Alom Extrusions Limited [2009] 319 ITR 306 the employer's contribution was liable to be allowed, since it was deposited by the due date for filing ....
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....otherwise of deduction u/s. 80-IB of the Act with respect to the undisclosed income in the form of cash was the subject matter of consideration. The relevant substantial question of law on which decision was sought by the revenue read as under: "(1) Whether on the facts and circumstances of the case and in law the Tribunal was justified in holding that deduction under s. 80-IB(10) has to be allowed from the income computed as undisclosed income under s. 69A of the I.T. Act, 1961?" (Refer Para 2 (1) on Page No. 178 of Paperbook for Case Laws) 32. In agreeing with the decision arrived at by the Hon'ble Tribunal holding that such a claim was allowable, the Hon'ble High Court held as under: "10. Chapter XIV-B of the said Act provides for special procedure for assessment of search cases and is contained in s. 158B to s. 158BI of the said Act. Further, this chapter applies only in cases of search initiated before 31st May, 2003. In this case, the search took place in 2002 and therefore, the present case is governed by Chapter XIV-B of the said Act. Sec. 158BB of Chapter XIV-B of the Act deals with computation of undisclosed income of the block period. ....
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....r. The same was returned by the respondent as income arising from profits and gains of business or profession and the same was accepted by the Department unlike in the matter of Fakir Mohmad Haji Hassan (supra). 12. In view of the above the order dt. 12th Oct., 2009 of the Tribunal cannot be faulted. Therefore, question (1) above is answered in the affirmative in favour of the respondent-assessee and against the appellant-Revenue " (Refer Para 10,11,12 on Page No. 180 - 181 of Paperbook for Case Laws) 33. Further we rely on the case of Asst. Commissioner of Income Tax Circle 1, Kolhapur vs. Mahalaxmi Infraprojects Limited ITA No. 142 - 145 / PUN / 2016 and ITA No. 146 - 147 / PUN /2016, ITAT Pune. (Refer Page No. 133 - 148 of Paperbook for Case Laws) The following grounds of appeal were raised reproduced below: 1. Whether on the facts and in the circumstances of the case and in law, the learned CIT(Appeals) erred in allowing deduction u/s.80IA(4) of the Act of Rs. 35,98,460/- on the additional income offered on account of purchases. 2. Whether on the facts and in the circumstances of the case and in law, the learned CIT....
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....ist of parties and amount mentioned, admitted that supporting bills were not there nor any supporting evidence of purchase of goods were available. However, since the old records were kept at different sites, he should be given time to collect the evidence. It was also mentioned by him that search action under section 132 of the Act was conducted in 2009 by the Income Tax Department, Kolhapur and both the above companies have disclosed sum of Rs. 24.71 crores and Rs. 6.29 crores, respectively in the block period on account of inflation of expenses. He asked for set off of said disclosure while estimating the amount of non-genuine purchases. The Assessing Officer noted that the assessee had booked bogus expenses amounting to Rs. 89,79,588/- under the head 'Purchase of stilt and cement' for the year under consideration, which was added in his hands. The assessee had sought set off with the disclosure already made and also it was contended that the said income offered in respect of purchases was part of business income and infrastructural activities and was eligible for deduction under section 80IA(4) of the Act. Decision for AY 2011 - 12 : .... issue which is arisin....
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....ent recorded u/s. 32(4) of the Act of Shri Rahesh Malpani, a partner of the assessee firm and also copies of some of the seized papers, which indicated receipt of on-money, and the same have placed in the Paper Book at pages 35 to 52. A perusal of the seized material shows that a complete detail of that on-money received is enumerated, viz. name of the customers, amount and the respective flat sold in the project. Even in the deposition made u/s. 132(4) of the Act, the partner of the assesse firm made a year-wise detail of additional income declared on account of on-money received on sale of flats in the project. Accordingly, the impugned sum bas been declared as unaccounted income from the housing project in question. .............................................................................. 17. In-fact, the Hon'ble Bombay High Court in the case of Sheth Developers (P) Ltd. (supra) was considering the claim of deduction u/s. 80-IB(10) of the Act in relation to the undisclosed income declared consequent to the search. In the case before the Hon'ble High Court, it was factually emerging that undisclosed income was earned by the assessee in the course of carryin....
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....Tribunal in the case of Liberty Plywood (P) Ltd. (supra) relied upon by the learned CIT-DR, for the proposition that income surrendered during the course of a survey action was to be assessed separately as 'deemed income'. On the basis of the said proposition, the Chandigarh Bench of the Tribunal denied the claim of the assessee to set off business losses against such surrendered income, in the context of sections 70 and 71 of the Act. By drawing an analogy from the said precedent, it is canvassed by the Revenue that the impugned additional income is not eligible for the benefits of section 80IB(10) of the Act. 39. We have carefully perused the fact-situation in the case before the Chandigarh Bench of the Tribunal and find that the ratio of the said decision has to be understood with reference to peculiar facts of the case. In the case before the Chandigarh Bench of the Tribunal, the undisclosed income surrendered by the assessee in the course of search was in the shape of unaccounted cash, investments etc. and the material seized did not show the sources of acquisition of the undisclosed income reflected by such unaccounted cash, etc. So however, in the present case, it i....
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....Paperbook for Case Laws). Decision: The Ld Standing Council appearing for the revenue fairly stated that the first question stands covered in favour of the assesse by judgement of this court in case of Anbu Textiles & Eastern Produce Companies vs. ITO (2006) and following the above judgements, no substantial question of law arise and accordingly the case is dismissed. (Refer Page 223 of Paperbook for Case Laws). (d) Reliance is next placed upon the order of this Hon'ble Tribunal in the case of Construction Portal Pvt. Ltd. v. ITO for A.Ys. 2005-06 and 2006-07 in ITA Nos. 1607 and 1608/PUN/2014, dated 06.06.2018. In both the appeals, the only grievance was against the treatment given to the income declared during the course of survey as deemed income u/s. 69A of the Act as against 'business income'. Decision relied upon by Assessing Officer is distinguishable 35. In support of his decision to make the impugned disallowance, the Assessing Officer has relied upon the order of Ahmedabad Bench of the Hon'ble Tribunal in the case of DCIT v. Rameshbhai C. Prajapati for A.Y. 2006-07 in I.T.A. No. 226/Ahd/2010 dated 21.09.2012. It is sub....
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..... Keval Construction, Tax Appeal No. 443 of 2012, December 10, 2012, Gujarat High Court: *Commissioner of Income-tax-IV, Nagpur vs. Sunil Vishwambharnath Tiwari, IT Appeal No. 2 of 2011, September 11, 2015, Bombay High court. (ii) If deduction under section 40A(3) of the Act is not allowed, the same would have to be added to the profits of the undertaking on which the assessee would be entitled for deduction under section 80- IB of the Act. This view was taken by the court in the following case: *Principal CIT, Kanpur vs. Surya Merchants Ltd., I.T. Appeal No. 248 of 2015, May 03, 2016, Allahabad High Court. The above views have attained finality as these judgments of the High Court of Bombay, Gujarat and Allahabad have been accepted by the Department. 3. In view of the above, the Board has accepted the settled position that the disallowances made under sections 32, 40(a)(ia), 40A(3), 43B, etc. of the Act and other specific disallowances, related to the business activity against which the Chapter VI-A deduction has been claimed, result in enhancement of the profits of the eligible business, and that deduction under Chapter VI-A is admissi....
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....re prepared by you are grouped as 'wages'. Please explain what type of vouchers are you preparing? Ans. The vouchers for wage - payments are prepared by me on the oral instructions of Shri Vijaykumar Shah or Shri Rajendra Doshi. The names of the sites and amounts are told by them. Accordingly, I prepared vouchers with small amounts and mentioning any name as the labourer. Such undated vouchers are prepared and kept. Later on the dates on such vouchers are written as per the instructions of Shri Vijaykumar Shah or Shri Rajendra Doshi. Q. 5 Is any payment made against such vouchers? Ans. No. I prepare the vouchers but do not make any payment against them. Q. 6 Does these transactions are entered in your cash book? Ans. No. These transactions are not entered in the cash books which are maintained manually. They are directly entered into the books maintained in Tally on the computer on the instructions of Shri Vijaykumar Shah or Shri Rajendra Doshi." 40. The above statement of Anuradha Gulavani was shown to her senior Swati Kulkarni who has also agreed and accepted the entire modus operandi and explained the booking of expenditure w....
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....d expenditures made for facilitating the execution of various projects undertaken by our concerns. These expenses are not accounted for in the regular books of account of our company. Q. 8 Please explain the source of these unaccounted expenses. Ans. the above expenses are met out by inflating the construction expenses including wages expenses. Q. 10 I am showing you bundle No. 4, 5 and 6 of Annexure A of panchnama dated 16.06.2010 seized from office of Laxmi Civil Engineering Services Pvt. Ltd., 1148, E, Sykes Extension, Kolhapur. Please explain as to why signatures of recipients have been taken many blank vouchers. Also explain whether the expenses mentioned on these vouchers are genuinely incurred. Ans. These vouchers contain various expenditures debited to various expense heads. All of the above vouchers are not genuine or fully substantiated. As explained in my earlier answer the unexplained expenditure for facilitating various projects is met out through debiting certain unsubstantiated expenses. We shall provide further details in due course of time." 43. The statement of Shri Vijaykumar Rajaram Shah was again recorded on the same....
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....5. At the cost of repetition, it is submitted that the assessee is a private limited company and it carries on its activity of infrastructure development as per its object clause of Memorandum of Association. It has no other business activity and, hence, there is no question of generation of cash from any other source. 46. Finally, the objection of the AO regarding non-filing of report of Form No. 10CCB from a Chartered Accountant is not relevant because as noted by the AO himself on page no. 57 of his order at para 17.6 the assessee has submitted the report in Form No. 10CCB during the course of the assessment proceedings. It has also been recorded by the AO that it was not possible to attach the report along with the e-return. In light of this, the above objection of the AO is not valid." (..... end of the extraction from the written note) 33. While the ld. AR for the assessee relies on the written submission, the ld. DR for the Revenue submitted that the order of the Assessing Officer should be approved. However, it is not the case of the Revenue supported by any direct evidences that the additional income offered by the assessee is not a business income-company. ....
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....following. A search action u/s. 132 of the Act was carried out against the assessee on 15.06.2010. During the course of search, cash of Rs. 2,55,00,000/- was seized by the officers of the Department. The assessee vide letter dated 13.09.2010 (filed on 16.09.2010) and vide letter dated 21.01.2013 (filed on 23.01.2013) requested the Department to adjust the seized cash against the self-assessment tax liability for A.Y. 2010-11 However, no adjustment has taken place despite the specific request by the assessee. The Assessing Officer completed the assessment u/s. 143(3) of the Act vide his order dated 22.03.2013. The credit for the seized cash was given with effect from 31.03.2013 and not from the date on which the request for adjustment was made. The Assessing Officer calculated the interest u/s. 234B of the Act accordingly. This was challenged before the CIT (A) who has confirmed it by stating that the liability of interest is consequential and depends on the amount of tax. 49. It is respectfully submitted that once a request has been made for appropriation of seized cash, in all fairness, the Department is bound to act upon it. The officers of the Department cannot keep the....
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....e Court that Explanation 2 to section 132B of the Act is prospective in nature and accordingly, it is directed that appeals on this issue for cases prior to 01.06.2013 and those already filed may be withdrawn/not pressed upon. 54. Your Honours' kind attention is also invited to the order of the Tribunal, Pune Bench, in the case of Happy Home Developers v ACIT [87 taxmann.com 10], In this case, the Department had seized cash of Rs. 32,24,000/- in the search action taken on 06.01.2010 u/s. 132 of the Act at the premises of the assessee. The Assessing Officer completed the assessment u/s.153A of the Act and charged interest u/s.234B and 234C of the Act by ignoring the letter dated 14.10.2010 filed by the assessee requesting to adjust cash seized towards its advance tax liabilities. The assessee sought rectification thereof but the same was denied by the Assessing Officer and on further appeal, by the CIT(A) after taking into account provisions of Explanation 2 to section 132B of the Act and holding that this explanation was clarificatory in nature and hence, it covered pending cases also. The assessee filed further appeal before the Tribunal by taking, inter alia, the followi....
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....is case, the Department had seized cash of Rs. 20,00,000/- found in the bank locker pursuant to the search action taken on 27.07.2006 u/s.132 of the Act. The assessee filed return of income u/s.153A of the Act and requested for adjustment of cash seized towards the self-assessment tax payable by the assessee. The Assessing Officer completed the assessment u/s.153A of the Act on 01.07.2008. The Assessing Officer gave credit of Rs. 20,00,000/- for cash seized against the self- assessment tax but later rectified the order u/s.154 of the Act on 02.03.2010 as, according to the Learned AO, there was no existing liability, and consequentially charged interest u/s 234B and234C of the Act. This action was not confirmed by the CIT(A) and hence, the Revenue filed further appeal before the Tribunal with following grounds: "1. That in the facts and circumstances of the case and in law, the Learned CIT(A) has erred in allowing the adjustment of seized cash against self- assessment tax liability though Income Tax Act does not provide for adjustment of seized cash before determination of tax liability. 2. That the Department craves leave to add, modify or alter any of the ground(....
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....trospective in operation, still it will not disturb the impugned case as in the facts of the instant case, the assessee never requested for adjustment of seized cash towards advance tax liability. He only requested for adjustment of seized cash towards self-assessment tax. It is beyond doubt that the terms 'advance tax' and 'self-assessment tax' are distinct and separate. ..... ..... 11. We find that the various case laws cited by the Learned AR in the paper book filed by him need not be considered as those case laws pertain to the adjustment of seized cash towards advance tax liability. But the impugned issue before us is adjustment of seized cash towards self-assessment or regular tax payable and not advance tax. In conclusion, we hold that the action of the Learned AO in adjusting the seized cash towards the tax liability determined on completion of search assessment is in order. With regard to charging of interest u/s 234B and 234 C of the Act for non-payment and short payment of advance tax is concerned, we have already held that the amendment in section 132B of the Act is held to be prospective in operation from 1.6.2013 and accordingly not....
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....he AO on account of unexplained cash by holding that the addition made by the AO on protective basis in the assessee's hand whereas the AO in the assessment order in the case of Laxmi Civil Engineering Services Pvt. Ltd. clearly mentioned that addition is being made in the assessee's company on protective basis and substantive basis in the case of the assessee. 2) On the facts and the circumstances of the case, the Ld. CIT(A) has erred in holding that the cash was found from the assessee's possession does not belong to him clearly ignoring the provision of Sec. 292C(1) whereby it is incumbent upon the assessee to prove that the same did not belong to him. 3) On the fact and the circumstances of the case, the Ld. CIT(A) the Ld. CIT(A) has erred in ignoring the ratio laid down of the Hon'ble Apex Court in the case of CIT Vs. M. Ganapathi Mulidhar (1964) 53 ITR 623 (SC) which is squarely applicable to the present case. 4) The order of the Ld. CIT(A) may be vacated and that of the Assessing Officer be restored. 5) The appellant craves leave to add, alter, amend and modify any of the above grounds of appeal." 42. Briefly stated the relevant fac....
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....T(A), the Revenue is in appeal before us with the above extracted five grounds. 45. On going through them, we find they are argumentative in nature and the core issue arising out of them, relates if the said cash was added in the hands of Shri Shah is protective or substantive. 46. On the said core issue, ld. Counsel for the assessee submitted that the Revenue is aggrieved with the decision of deletion of Rs. 2,51,00,000/- by the CIT(A). It is further submitted that it is necessary to refer to the observations made /reasons given by the Assessing Officer in the assessment order, which is reproduced as under :- "However, this cash is being considered here as protective addition because this has been offered as undisclosed income in the hand of the company. In future, if at stage during the course of appellate proceedings if it is decided that this cash amount is eligible for deduction under section 80IA(4) of the I. T. Act 1961, in such circumstances, this cash of Rs. 2,51,44,400/- will become substantive income of the assessee. In view of the foregoing facts, the cash of Rs. 2,51,44,400/- is treated as unexplained money. Accordingly, the said amount of Rs. 2....
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.... said income in the hands of the assessee. 13. It is further submitted that irrespective of the outcome of addition made in the hands of Laxmi Civil Engineering Services Ltd., the CIT(A) has evaluated the merits of the addition and held that the assessee had kept impugned cash on behalf of the said company and that it was not the case of the Assessing Officer that the cash so given to the assessee as remuneration or compensation etc. so that it can be treated as assessee's income. The CIT(A) has also taken due cognizance of the fact that in the statement recorded during the search and post search enquiries that the impugned cash was included in additional income of the said company and its source was inflation of expenditure in the case of the said company. 14. In this respect, further reliance is placed on the statements of the employees of the said companies. It is submitted that if the evidence unearthed at the time of search and other circumstances of the case are taken note of, irresistible conclusion which would emerge is that the sole source of cash is inflated expenditure in the hands of Laxmi Civil Engineering Pvt. Ltd. In this regard, Your Honours' kind ....
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.... 15. The above statement of Anuradha Gulavani was shown to her senior Swati Kulkarni who has also agreed and accepted the entire modus operandi and explained the booking of expenditure without making actual cash payment. The relevant portion of the statement of Mrs. Swati Kulkarni is reproduced hereinbelow: "Q. 3 Please explain the nature of your work Ans. I am looking after accounting of Laxmi Civil Engineering Services Pvt. Ltd. I maintain the book of account in Tally in computer. The bills / vouchers received from the sites are verified and accounted for. The Bank details are maintained and accounted for. The payments through cheque are made by me according to the instructions of Shri Vijaykumar Shah and Shri Rajendra Doshi. The same are entered in the books immediately. The details of cash payments are received from the cashier which are also entered in books." "Q. 6 Please confirm the above facts Ans. Yes, I do confirm that the facts stated by Sou. Anuradha Gulavani are true. The expenditure under the head of 'wages' debited to the P&L A/c of Laxmi Civil Engineering Services Pvt. Ltd. are accounted for in the books by me on the basi....
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.... assessee has no other source of income and hence, it cannot be said that such a huge amount of cash is out of some other undisclosed source of income. Thus, taking into account the facts and circumstances of the case, it is submitted that the assessee has sufficiently discharged the initial onus to show that the cash found in his possession was kept in the custodial capacity and the ownership of the cash so found vested with the said company. Hence, the presumption sought to be invoked by the Assessing Officer is misplaced. 19. In the third ground, the Assessing Officer has relied on the judgment of the Apex Court in the case of CIT v. M. Ganapathi Mulidhar [53 ITR 623]. In the said case, the issue was regarding taxability of remittances received by the assessee from abroad. The Hon'ble Supreme Court, in the facts of that case, after evaluating the material on record, upheld the addition made by the Revenue. While holding so, the Hon'ble Supreme Court took into account inconsistencies in the explanation offered by the assessee at different point of time Thus, the judgment given by the Supreme Court is totally based on the facts of that case and no ratio as such has been l....