TaxTMI 
TaxTMI 
2020 (12) TMI 163
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to confirm that the penalty on income of Rs. 15,61,500/- cannot be levied on sales shown in F.Y. 2010- 11 but treated by A.O. in F.Y. 2009-10 on different stand as there is no furnishing of inaccurate particulars or concealment of income. 4. The Learned CIT(A) has erred in law and facts to confirm levy of penalty of Rs. 11,22,133/- u/s.271(1)(c). 5. Your Appellant leaves the right to amend, add, or alter the grounds at the time of regular hearing." 2. Brief facts of the case are that the assessee is a partnership firm engaged in the business of construction of development of properties. The assessee filed its Return of Income for A.Y. 2010- 11 on 27.09.2010 declaring income of Rs. 1.08 crores. In the computation of income the assessee claimed deduction under section 80IB(10) of Rs. 24,66,080/-. 3. A survey under section 133A was carried out at the business premises of assessee on 10.11.2009. During survey certain incriminating material in the form of loose papers containing details of "on money" of Rs. 24,21,000/- received by assessee on account of sale of plots, were recovered. During the assessment, the Assessing Officer (AO) noted that out of the so-called 'on money' of R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tative (AR) of the assessee sent an application through e-mail stating therein that quantum appeal being ITA No.1577/Ahd/2014 is still pending for disposal before the Tribunal. It was further stated that the quantum appeal has been transferred from Ahmedabad Bench to Surat Bench of ITAT, but no notice of hearing has been received so far and that the quantum appeal may be clubbed with the present appeal. On the application of assessee, we directed the registry (bench clerk) to find out the status of quantum appeal in ITA No.1577/Ahd/2014 and club the quantum appeal with this appeal and adjourned the for hearing for 02.11.2020. 8. On the direction of Bench, Bench Clerk made a requisition to Ahmedabad Bench of Tribunal vide his letter dated 11.09.2020 to find out the status of ITA No. 1577/Ahd/2014. In response to requisition of Bench Clerk, the registry of Ahmedabad Tribunal sent the original file of ITA No.1577/Ahd/2014 to Surat Bench of Tribunal. On perusal of record of ITA No.1577/Ahd/2014, we find that quantum appeal of assessee was heard on 13.02.2017 and order was pronounced on 29.06.2017. In the order dated 29.06.2017, the assessee was granted full relief, thereby allowing de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y of Rs. 15,61,500/- 5. The appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal." 12. The Coordinate bench of Tribunal after considering the contention of both the parties passed the following order. "7. We have heard the rival contention and perused the records placed before us. From going through the grounds of appeals, we observe that following three issues needs adjudication. 1. Whether "On money" is taxable as business income or income from other sources. 2. Whether "On money" of Rs. 15,61,500/- pertaining to flat sold during financial year 2010-2011 are to be taxed in the year of receipt i.e financial year 2009-2010. 3. Whether deduction u/s.80IB(10) of the Act is allowable on the "on money" 8. We observe that assessee is in the business of construction of flats since financial year 2001-02 and project named "Adinath" was completed long back. During the course of survey u/s,133A of the Act certain loose papers showing details of "On money" receipts towards five flats were found and following amount of "On money" was received thereon. Sr.No. Flat No. On money amount Year of sale deed and transfer of possession 1. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessment order computed the total undisclosed income for the block period at Rs. 2,61,78,438/-. However, the AO opted to adopt the undisclosed income on the basis of the statement on oath of one Shri Sunil H.Desai being higher of the two figures. The contention of the assessee is that the entire receipts have been disclosed and declared in the income-tax return in the subsequent years. It is the contention of the assessee that against the total sale consideration adopted by the AO at Rs. 7,88,02,178/-, the assessee had disclosed the sale consideration at Rs. 8,68,55,671/- and the taxes on such income has been paid. Therefore, the assessee cannot be subjected to double taxation. 6. The undisputed facts emerged from the above discussion is that the assessee is engaged in the business of construction. The assessee has been showing the flats in question as stock-in-trade, therefore in view of the decision of the Coordinate Bench rendered in the case of ITO vs. Shri Siddharth S.Patel in ITA Nos.1852 &1853/Ahd/2003(supra). The provisions of section 2(47) would not be applicable. The assessee has disclosed the 'on money' in the return of income in the year in which the sale-....
X X X X Extracts X X X X
X X X X Extracts X X X X
....15,61,500/- in subsequent assessment year 2011-12. This issue is decided in favour of assessee. 12. As far as the issue as to whether the amount of "On money" is to be taxed as business income or income from other sources. We observe that the loose paper found during the course of survey were sufficient piece of evidence that "On money" was received towards sale of flats. Ld. AOs contented that "On money" amount has not been included in the total value of sales construction shown in the registered sale deed. We find that assessee has disclosed the amount as business receipt and details of purchasers of the flats were provided in the sale deed. Revenue had no estopple to call the information from the purchasers about the "On money" paid by them, which however has not been taken by the Revenue authorities in the case before us. In these circumstances we are of the considered opinion that "On money" received on account of sale of flats is a part of business income only and cannot be taxed as income from other sources. Accordingly this issue is also decided in favour of the assesse. 13. Now we take up last issue about the eligibility of claim of deduction u/s. 80IB(10) of the Act o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... respect of the said additional income of Rs. 1,25,00,000/- also. The Assessing Officer did not allow deduction u/s 80IB(10) in respect of this additional income of Rs. 1,25,00,000/- on the ground that the assessee could not give details of the receipts of Rs. 1,25,00,000/- and could not give evidence to show that the same was in respect of business of the assessee. 10. On appeal, the CIT(A) confirmed the addition made by the Assessing Officer. He observed that the assessee, during the survey, admitted unrecorded receipts in the regular books of accounts. Had the Department not conducted survey u/s 133A at the business premises of the assessee firm and detected the undisclosed income, the assessee would not have disclosed these receipts to the Department. The assessee has included these undisclosed receipts in the total turnover and consequently in its net profit and claimed deduction u/s 80IB(10) of the Act. Thus, no tax has been paid by the assessee on the income which he was forced to disclose due to the action/detection by the Department during the survey proceedings. According to the CTT(A), the intention of the legislature is to give incentive to honest assessees to comply ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....turing and sale of Board paper and craft paper happened to be the only source of income of the assessee, therefore the amount disclosed consequence upon the search partakes the character of business income and eligible for the deduction u/s.80IB/80IA.of the I T. Act. In the present case, the assessee has admitted that the impugned amount was part of the sale consideration received in cash at the time of booking of flats and, therefore, the amount had direct and proximate connection with the normal business of construction activity, hence eligible for the deduction u/s.80IB(10) of the I T . Act. Because of the factual as also legal aspect of the case, we hereby confirm the finding of Learned CIT(Appeals) and dismiss this ground of the Revenue. " 13. In the instant case, we find that it is not in dispute that the only business of the assessee was of developing and building of housing project styled "Nilkanth Heights Project". No material has been brought before us to show that the assessee was engaged in any other activity. Further, during the course of survey, the assessee has categorically staled that the amounts mentioned in loose documents marked as "BF-44" represents additiona....