TaxTMI 
TaxTMI 
2022 (5) TMI 621
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.... ld CIT(A). 2. First we shall take up the Assessee's appeal in ITA No. 2094/Kol/2017 for AY 2010-11. The Grounds of appeal raised by the assessee are as under: 1. For that in view of the facts and circumstances of the case the Ltd. CIT(A) was wholly wrong & unjustified in confirming the disallowance made by the A.O of the assessee's claim of deduction of Rs. 6,81,07,687/- u/s 801 A(4)(iii) of the Act based on the Audit Report u/s 801 A(4)(7) in respect of the Industrial Park " Salarpuria Touchstone " on the sole ground that the assessee company failed to furnish the CBDT Notification in support of such claim. The arbitrarily actions of both the A.O and the Ld. CIT(A) may kindly be reversed and the deduction u/s 80IA(4)(iii) may kindly be directed to be allowed in full. 2. For that in view of the facts and circumstances of the case the Ltd. CIT(A) was wholly wrong & unjustified in confirming the disallowance of the deduction of Rs. 6,81,07,687/- u/s 80IA(4)(iii) without considering the facts that since filing of the Application on 15.12.2006 under the I.P scheme. 2002 before the concerned Authority all the requisite papers & documents were periodically ....
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....the said Industrial Park. 3.1. The facts in brief are that the assessee has filed return of income on 9.10.2010 which was revised on 27.12.2010. The return was processed u/s 143(1) of the Act accepting the returned income. Thereafter the case of the assessee was selected under scrutiny and statutory notices were duly issued and served upon the assessee. During the assessment proceedings, the AO noticed that the assessee has claimed deduction u/s 80IA at Rs. 31,82,31,912/- as well as deduction u/s 80IB at Rs. 57,47,32,064/-. Accordingly, the AO called upon the assessee to produce the books of accounts, bills and vouchers with details as to the said claim of deduction u/s 80IA and 80IB of the Act besides audit reports in Form No. 10CCB. The AO called upon the assessee to furnish the copies of notification issued by CBDT in respect of its claims u/s 80IA & 80IB of the Act however the same could not be produced in respect of industrial park known as "Salarpuria Touchstone" whereas the notification was duly produced in respect of Salarpuria G.R. Tech Park, Phase-II. For the sake of ready reference the details of deductions u/s 80IA and 80IB of the Act during the year as given below: ....
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....ble Karnataka High Court seeking the direction to CBDT/competent authority to bring out a notification in respect of Salarpuria Touchstone and the Hon'ble Karnataka High Court was also pleased to give certain directions to competent authority in respect of above Industrial Park however again due to the failure of competent authority to follow the directions of Hon'ble Karnataka High Court, another writ petition was filed by the assessee before the Hon'ble Karnataka High Court seeking necessary directions to the competent authority which is pending for adjudication. Undisputedly till date the project has not been notified by the competent authority which was a pre-condition for grant of deduction u/s 80IA (4) of the Act. Under these circumstances, we are of the view that the deduction u/s 80IA(4) of the Act of Rs. 6,81,07,687/- in respect of Salarpuria Touchstone park cannot be allowed. However, in case the Hon'ble High Court decides the issue favorably and the project is notified in future by the competent authority , then the assessee may approach the AO for grant of relief/deduction 80IA(4) of the Act and the AO will be bound to amend the order accordingly. Subject to above obser....
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....2019 are as under: 1. For that in view of the facts and in the circumstances, the Ld. CIT(A) erred in not adjudicating the validity of order u/s 153A/ 143(3) and in view of the facts and in the circumstances such action of the Ld. CIT(A) is bad in law and in view of the facts and in the circumstances it may be held accordingly. 2. Without prejudice to Ground No. 1 above, the Ld. CIT(A) erred in not appreciating the fact that in absence of any incriminating material the order so passed u/s 153A/143(3) was bad in law and in view of the facts and in the circumstances it may be held accordingly. 3. Without prejudice to Grounds No, 1 & 2 above, the Ld; CIT(A) erred in directing the AO to follow the adjudication of appeal in the original order u/s 143(3) when the issues in such order u/s 143(3) had merged with the order so passed u/s 153A/ 143(3) and in view of the facts and in the circumstances it may be held accordingly. 4. Without prejudice to Grounds No. 1, 2 & 3 above, the Ld. CIT(A) erred in not appreciating the fact and the law that since the order so passed u/s 143(3) was unabated, no addition could have been made in the order u/s 153A/ 143(3) ....
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....s and additions. 4.3. The assessee assailed the order of AO before the First Appellate Authority by challenging the jurisdiction of the AO to make additions. On jurisdictional issue, the assessee has assailed the assessment order on the ground of lack of jurisdiction of the AO to make additions in an unabated assessment on the date of search as there were no incriminating materials found and seized during the course of search. The Ld. CIT(A) dismissed the appeal of the assessee on this issue by rejecting the contentions of the assessee as regards the jurisdiction of the AO to make addition in an unabated assessment year by observing the holding as under: "It is seen that most of the additions made in this order are repeat of additions made in the order passed u/s 143(3). The AO has been directed to follow the adjudication in the appeal order passed as a result of original order u/s 143(3), therefore the AO has not made any fresh addition. Further on the issues on which AO has made fresh addition the assessee has been granted relief in this order. Therefore, in my view there is no need to adjudicate these grounds are hereby dismissed." 4.4. The Ld. A.R vehemently subm....
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.... AO but qua which no incriminating documents were found in search proceedings. The ld DR ,therefore, submitted that the legal issue raised by the assessee may kindly be dismissed. 4.6. After hearing the rival contentions and perusing the materials on record as placed before us , we note that search was conducted on 15.3.2016 on Salarpuria group of companies including the assessee and its directors. It is undisputed that the assessment was framed in the instant assessment year vide order dated 26.03.2013 and thus it had attained finality on date of search and would be an unabated assessment on the date of search in terms of provisions of section 153A of the Act. It is settled legal position that in order to make addition in an unabated assessment on the date of search, there has to be incriminating material found during search as laid down in various decisions as cited by the assessee's counsel supra. After carefully analyzing the facts of the acts and after the perusal of assessment order, we find that there is no reference at all by the AO to any such incriminating material found during search. The various additions were undisputedly made on the basis of observation of the AO d....
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.... and in the circumstances it may be held accordingly. 2. Without prejudice to Ground No. 1 above, the Ld. CIT(A) erred in not appreciating the fact that in absence of any incriminating material the order so passed by the AO u/s 153A/143(3) is bad in law and the AO could not made such addition in the impugned order and according the order so passed by the AO and affirmation of such order by Ld. CIT(A) is bad in law it may be held accordingly. 3. For that in view of the facts and in the circumstances, the Ld. CIT(A) erred in confirming the action of the AO in not granting deduction u/s 80IA(4)(iii) in respect of the project namely "Salarpuria Touchstone" and in view of the facts and in the circumstances it may be held accordingly. 4. Without prejudice to Ground No. 3 above, the disallowance so made by the AO in respect of deduction u/s 80IA(4)(iii) for the project "Salarpuria Touchstone" is bad in law especially in absence of incriminating material and in view of the facts and in the circumstances it may be held accordingly. 5. For that your petitioner craves the right to put additional grounds and / or to alter / amend / modify the present grounds....
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.... in C.O. No. 43/Kol/2019 for AY 2014-15. 8.1. The issue raised in ground no. 1 by the revenue in its appeal is against the deletion of addition of Rs. 10,05,218/- by the Ld. CIT(A) as made by the AO u/s 14A of the Act read with Rule 8D(2)(ii) of the Income Tax Rules, 1962. 8.2. The facts in brief are that the assessee has advanced Rs. 8.14 Cr as advance to related parties which were duly reported in the audit Report for the year ended 31.03.2014. The assessee has also borrowed Rs. 147.09 Cr and the advances/share application money was paid out of loan funds. Besides no allotment of shares was made to the assessee no any refund was granted. According to the AO that part of the interest on the loan taken by the assessee which related to the investments in the related/group entities is not allowable as per the provisions of section 36(1)(iii) of the Act as interest was not incurred for the purpose of business wholly and exclusively but to earn dividend and long term capital gain on shares. Accordingly the AO calculated the proportionate interest at Rs. 10,05,218 to be disallowed u/s 14A r.w.r. 80D2(ii) and added the same to the income of the assessee. 8.3. The Ld. CIT(A) allo....
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.... In the appellate proceedings, the ld CIT(A) deleted the disallowance of Rs. 1,87,34,612/- on the same reasoning as discussed in para 7.3 supra that there is no exempt income. 8.8. We have already decided the similar issue in ground no. 1 in para 7.4. wherein we have decided that no disallowance is to be made in case of no exempt income from equity shares and securities. Therefore our decision would ,mutatis mutandis, apply to ground no. 2 also. Resultantly ground no. 2 in revenue appeal is dismissed. 8.9. The issue raised in ground no. 3 is against the deletion of addition of Rs. 2,36,454/- which was made by the AO on account of bad debts during the year. 8.10. The facts in brief are that the AO upon perusal of profit and loss account observed that the assessee has charged Rs. 2,31,881/- on account of sundry balances written off and Rs. 4,573/- on account of stock written off during the year which were not allowable as the assessee has failed to prove the claim with documentary evidences. 8.11. The Ld. CIT(A) allowed the appeal of the assessee on the basis of details/evidences filed by the assessee. The Ld. CIT(A) noted that the amount written off by the assessee were ....
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.... to the seized document No. SDPL/43 seized during the course of search from the office of Sattva Developers Pvt. Ltd.. The said documents appeared at serial no 17 in the Panchnama in the name of Sattva Builders Pvt Ltd and Sattva Realtors Pvt Ltd. File No. A/SDPL/43 a copy of which is filed at page no. 157. The AO noted that the sale price of flats in respect of two projects namely Gold Summit and Laurel Heights belonging to Sattva Developers Pvt Ltd. were shown at lower price in comparison to the sale price with flats at the same floor and same date. The AO , finally after comparing various sale agreements, came to the conclusion that the assessee has sold the flats at a differential prices in its Melody project and accordingly a show cause notice was given to the assessee on the basis of information's gathered by the AO from aforesaid documents and sample customer application related to Sattva Gold as to why the on -money should not be calculated and added to the income of the assessee. The show cause was replied by the assessee by filing written submissions objecting to be addition on account of on-money as there were no incriminating material found during search relating to the....
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....nth. The A.R has countered this point by stating that rates could vary depending on location of flats, floor, terms of payment, internal fittings etc. Therefore I agree that while this is a strong lead indicating possibility of on-money receipt, however, on the basis of this evidence alone it cannot be concluded that the assessee must have received on -money on sale of properties in this company. There is no admission of any customers u/s 133(6) or u/s 131 to corroborate the hypothesis. In view of the above, the addition made for on-money receipt cannot be sustained and therefore ground no. 11 and 12 is allowed." 8.16. The Ld. D.R vehemently submitted before the Bench that the Ld. CIT(A) has wrongly deleted the addition as made by the AO on the basis of evidences gathered during the course of search and also on the basis of statements recorded of various employees during the search which proved that the assessee has been receiving on-money on sale of flats. The Ld. D.R. argued that the AO has analyzed the information in the form of seized documents, statements recorded during the search and sample application form of Shri William Joseph Subash as well as incentive payme....
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....pect of Melody project as well as no specific statement was given by the employees in respect of the said project to the effect that the assessee has received on-money on sale of flats. The Ld. A.R. also argued that the AO has just presumed that the assessee has been receiving on-money even without bothering to summon the buyers and examining whether they gave on money on the purchase of flats. Thus the requisite enquiries which the AO was supposed to conduct have not been made. The Ld. A.R specifically referred to the materials as referred to by the AO in the assessment order which formed the basis of addition on account of on-money. The Ld. A.R. referred to page nos. 8 to 24 which comprised of statements of various employees whereas page no. 25 was a sample application form duly filled in respect of Sattva Gold Project which did not belong to the assessee and its income belonged to Salarpuria Developers Pvt. Ltd. which is the group company. The ld AR stated that on further on a perusal of said form it can be seen that there were minor alterations which same could not be presumed as incriminating materials in any manner more so in the hands of the assessee and therefore cannot be ....
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....perused the material on record. The undisputed fact of the case, the search was conducted on 15.03.2016 on the assessee and group companies and during the course of search certain documents were seized and statement of various employees including managing director was recorded. It is undisputed that no specific material was found during the course of search in respect of Melody project which belong to the assessee in respect of which the AO has made addition of Rs. 72,93,646/- on account of on-money received by the assessee on sale of flats. We note that various statements recorded of employees and also of the managing director. The fact of the case, on-money having been received was admitted and accepted however this was a general statement and no specific corroborative material has found during the course of search. We also note that the managing director of the assessee company made a surrender of Rs. 55 crores in various group companies which was duly offered to tax by filing a settlement petition which has been accepted by the settlement commission. Needless to say that the said surrender was made having regards and having considered the material found during the course of sea....
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....n the assessee company. Under these circumstance, on-money has calculated by the AO it just based on estimation and extrapolation and has rightly been deleted by the Ld. CIT(A). 8.18. We have perused the decision relied upon by the Ld. Counsel for the assessee and found them to be squarely applicable to the assessee's case in the case of CIT vs. Dolphin Builders Pvt. Ltd. (supra). The Hon'ble Madhya Pradesh High Court has held that no addition can be made on the basis of doubt unless there is material to prove the receipt of on-money by the assessee. Similarly the addition made on the basis of statement without any corroborative material cannot be sustained as has been held in the case of Best Infrastructure India Pvt. Ltd.(supra), Shri Saurabh Mittal(supra)and SRM Securities Ltd.(supra). Considering the facts of the cases, in the light of the decisions as mentioned and discussed earlier, we are inclined to uphold the order of Ld. CIT(A) and dismiss the appeal of the revenue. 8.19. The assessee has filed cross objection supporting the order of Ld. CIT(A) on various issues on which the Ld. CIT(A) has allowed the appeal. Since we have dismissed the appeal of the revenue therefo....