TaxTMI 
TaxTMI 
2017 (4) TMI 1513
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....e profits of the Radha Govind project (ground 2 and7). 2. Background facts include that the assessee is engaged in the building construction. There was survey action u/s 133A of the Act on 25.11.2009 (ie relevant to the current AY 2010- 11). During the action, assessee offered a sum of Rs. 1 crore as additional income for the AY 2011-12 in respect of the entire project involving the construction of three buildings namely Radha Govind, Radha Krishan and Radha Madhav. Statements of Sri Radha Krishna Desai (working partner), Pankaj Vora, Sales Manager and others were recorded during the survey action. The basis of the said additional income is the entries in the diary (Annexure A1 to A4) maintained by the assessee. The contents in the said Annexures (A1 to A4) suggest that the assessee had unaccounted receipts worth Rs. 6,65,19,715/- and unaccounted expenditure of Rs. 5,01,65,977/-. These expenditure include illegal payments of Rs. 88,19,000/-. The AY wise break up of receipts. Expenditure - both legal and illegal, building wise breakup are given in the table below: Dairy No. A2 A3 A4 A1 A5 Total Financial year 2005-06 2006-07 2007-08 2008-09 ....
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....rther also, the AO made another addition of Rs. 29,26,940/- being the unexplained expenditure u/s 69C of the Act by way of "bogus purchases‟. Facts include that the assessee recorded the purchases from the suppliers namely Vinayak Trading Co, Chetan Enterprises. Undisputedly, these parties are pronounced in the website of the Sales Tax Department of Maharashtra. AO made addition of entire such purchases. Thus, the assessment was completed assessing the total income at Rs. 10.50 Cr (rounded off). 6. During the first appellate proceedings, CIT(A) deleted the aforesaid addition of Rs. 6.23 cr and restricted the said addition to Rs. 5,10,410/-. Further, FAA restored fully the claim of deduction u/s 80IB(10) of the Act in respect of the profits relatable to the Radha Govind building. Finally, CIT(A) deleted the addition of Rs. 29,26,940/-. Aggrieved with the above deletion of additions, the Revenue is in appeal with the aforesaid issues mentioned in the first paragraph of this order. We shall now take up the arguments and the counter arguments of the parties and the decision of the Tribunal in the following paragraphs of this order. 7. Regarding the issue of deletion of addi....
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....Judgment in the case of Veena Developers (277 ITR 392). At the end of the hearing proceedings, Ld Counsel submitted that there is no area violation and the report of the DVO supports to the assessee. Regarding ownership related violation, there are decisions to support the legal proposition that the provisions of said clause (f) are prospective qua the date of approval of the Housing project. After hearing the parties, on perusal of the orders of the Revenue Authorities and the paper books filed along with the written submissions, we are of the view that AO should be directed to examine the date of approval of the project in question and apply the said decisions on the said clause (Ex. Emgeen Holdings (P) Ltd (47 SOT 98) (Mumbai) (para 8 is relevant). Accordingly we order. AO shall grant reasonable opportunity of being heard to the assessee as per the set principles of natural justice. Accordingly, relevant grounds are partly allowed for statistical purposes. 9. The final issue for adjudication relates to the addition of Rs. 6,22,67,448/- being the "unaccounted receipts‟ calculated from the impounded material in the form of Annexures A1 to A9. The basis of the said additio....
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.... 2009 of Rs. 1,03,25,300/- minus expenses of Rs. 95,76,050-/- being the expenses above Rs. 20,000/- less expenses below Rs. 20,000 of Rs. 2,39,119/- thereby restricting the income for this year to Rs. 5,10,410/-." 10. From the above, it is evident that the CIT(A) relied on the order of his predecessor for the preceding AY 2009-10 and the principle of consistency. The contents of the para 7.1 from that order for AY 2009-10 were extracted in page 29/30 of impugned order. On verification of the files of the concerned CIT (A), we find that the said order of the CIT(A) for AY 2009-10 was final and there was no second appeal. In this year of assessment, AO made an identical addition of Rs. 5,21,81,258/- giving identical reasons and the same was deleted by the CIT(A) and the said order of the CIT(A) has reached the finality. 11. Before us, Ld CIT-DR for the Revenue relied heavily on the order of the AO and requested for reversing the order of the CIT(A). Further, Ld DR filed written submissions. However, on the issue of making multiple additions in the AYs 2009-10; 2010-11 and AY 2011- 12, Ld DR has nothing to contribute. 12. Per contra, Ld AR for the assessee mentioned that the ....
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....ly the sum offered during the survey action and discrepancies, if any, need to be taxed in that year only. Ld AR also argued that the AY 2010-11 is year of survey and not the year of completion of the "housing project‟. Therefore, Ld AR justified the order of the CIT(A) by stating that recognizing the income of the building "Radha Govind‟ which enjoys the benefits of section 80IB(10) of the Act does not make substantial difference as there is no tax implication and the entire profits of the building - Radha Govind are exempt from tax as per the said provisions. As such, according to Dr Shivram, Ld AR, any addition made on account of related business profits of the housing projects, is eligible for the benefits of the said deduction. In this regard, Ld AR relies on various binding judgments. Therefore, Ld AR argued stating that the CIT(A) has taken one possible view and the same is required to be confirmed in toto. 13. We heard both the parties, perused the orders of the revenue and the documents/written submissions filed by both the parties. Revenue is aggrieved against the deletion of the addition of Rs. 6.23 crores, which was taxed by the AO being the "on money" ea....
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....he same and implement the said judicial orders. Therefore, in principle, the building - Radha Govind is an eligible one for deduction u/s 80IB(10). On the peculiar facts of this case and the commitments of the assessee during the survey action, assessee volunteered to disclose the profits of Radha Govind. Therefore, in principle, we approve the finding of the CIT(A) relating to deletion of receipts of Rs. 6.26 crores and also the amended project completion method followed by the assessee. Assessee did not wait to offer the income of Radha Govind building in the year of completion. Rather, Assessee offered the same in the current year. He however, did not offer any income on account of relatable "on money‟. Therefore, regarding confirming of the addition of Rs. 5,10,410/-, we find CIT(A) is not consistent with the recognized profits of the said Radha Madhav building. In quantifying the said sum of Rs. 5,10,410/-, the CIT(A) considered the AY specific "on money receipts‟ and expenditure instead of building-wise unaccounted receipts/ expenditure. In our view, there is need for slight amendment to the order of the CIT (A) on this issue. We proceed to examine this part in th....
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....letion of the project? In our view, such calculation is not proper for the reason the principle of offer of the building-specific-income is vitiated. The reason includes that the on-money receipts relatable to the other two buildings (Radha Krishna and Radha Madhav) whose income is not recognized in this year should be considered in the relevant year of completion of the said two buildings. In amended project completion method adopted by the assessee, it is not proper to tax any on money of the said two building in this year and the same should be in the year where relevant accounted money is offered to tax ie in the next year, the year of project completion. We order accordingly. D. Quantification of On money of Radha Govind building for taxing in the current year of income recognition: To elaborate further, the assessee recognized the profits of Radha Govind building in this year and therefore, we direct the AO to work out, with the help of the Assessee, the net on money relatable to the Radha Govind ie after deducting the legal expenditure relatable to Radha Govind and tax the same in this year of recognizing the income of this sole building. If perfect and reliable working i....