TMI Blog2019 (8) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... in both the appeals of the assessee. Appeals of the Assessee are dismissed. - ITA. No. 2619/Ahd/2014 And ITA. No.2620/Ahd/2014 - - - Dated:- 26-7-2019 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER For The Assessees : Shri Gaurang Solanki, C.A. For The Revenue : Shri S. R. Meena, Sr. D.R. ORDER PER BHAVNESH SAINI, J.M. Both the appeals by different Assessees are directed against the common Order of the Ld. CIT(A)-1, Surat, Dated 05.06.2014, for the A.Y. 2010-2011, challenging the additions of ₹ 1,03,50,000/- and ₹ 58,50,000/- respectively. 2. Briefly the facts of the case are that both the assessee firms namely M/s. Vraj Corporation and M/s. Vraj Developers belong to the same group of developers and issues are identical in both the appeals. Only the figures have been changed. The Ld. CIT(A), therefore, decided both the appeals together. 3. The Ld. CIT(A) noted that brief facts of the case are that a survey under section 133A of the I.T. Act was conducted by the department on 06.09.2007 at the business prem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that since receipts disclosed during survey are business receipts from developing and building residential housing project, same would qualify for deduction under section 80IB(10) of the I.T. Act. In respect of the details of receipts of disclosures, it was submitted that same have been generated out of booking of flats generated in the project surveyed by the department and minute details of receipts of the same with regard to exact amount received from a particular person to whom flats have been sold and the date of its receipts is not retained by the assessee firms in any of the cases. The explanation given by the assessees were not accepted by the A.O. and he disallowed the deduction under section 80IB(10) of the I.T. Act treating the undisclosed amounts as income from other sources by holding that when assessees claims that such receipts are business receipts of eligible projects, primary burden lies on it to prove that same are business receipts from its eligible projects with supporting evidences, details and in absence of such details the amounts offered during survey as undisclosed income cannot be considered as business receipts of the assessees eligible project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. It was also admitted by appellant during survey that the said receipts are not recorded in the regular books of account of the appellant firms therefore not meant for the purpose of disclosing it to the department. These facts make it abundantly clear that had the department not conducted survey u/s. 133A at the business premises of appellant firms and detected the undisclosed income, the appellants would not have disclosed these booking receipts to the department. Now the appellant has included these undisclosed booking receipts in its total turnover and consequently to its net profit and claimed deduction u/s. 80IB(10) of the Act on these receipts. Thus, no tax has been paid by appellant on the incomes which he was forced to disclose due to action/detection by department during survey proceedings. The details of such receipts such as names and addresses of the persons from whom amounts were received, their PANs, amounts, dates etc. were also not provided by appellant to AO so that he could co-relate these receipts with the actual persons to hold that these receipts belong to the business of appellants. In absence of these details, AO has assessed receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per appellant's own admission, undisclosed receipts of ₹ 1,03,50,000/- and ₹ 58,50,000/- were not recorded in the regular books of account with the intention of not disclosing it to the department. Thus, at one hand the appellant hides its receipts and conducts in conscious disregard to its obligation and deprives the exchequer with its due, on the other hand when caught, discloses the income and claims benefit u/s. 80IB(10) and gets scot free. In my opinion, the intention of Act is not to give benefit of such provisions to those assessees who disregard their obligation and act deliberately in defiance of legal provisions, but, for those assessees who comply the provisions of Act honestly and regard their obligations and disclose their true and correct income to the department. 5.1. In continuation to above, further question arises whether giving benefit of incentive provisions of Income Tax Act to tax evaders, defaulters or those assessees who do not comply the provisions of Act voluntarily and hide their income/receipts deliberately, would not encourage them to further act or conduct dishonestly. In my opinion, giving the benefit of these' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipts of ₹ 1,03,50,000/- and ₹ 58,50,000/- disclosed in the hands of M/s. Vraj Corporation and M/s. Vraj Developers, as per their own admission, were not recorded in their regular books of account with the intention not to be disclosed to the department. They have wrongly claimed the benefit of deduction u/s. 80IB(10) of the Act which is meant for only those assessees who disclose their income in the returns on the basis of true and correct books of account. Any income disclosed beyond those books of account or disallowance made by AO during assessment proceedings on account of wrong facts or wrong application of legal provisions, is not entitled for deduction u/s. 80IB(10) of the Act. Otherwise, there would be no meaning of such legal provisions or their compliance. Whatever expenses disallowed or unaccounted income added to the net profit disclosed by assessee will have no meaning as the net income computed would get exempted by the incentive provisions of section 80IB(10). In that case, assessing authority has to accept whatever assessee shows/claims in its return of income or books of account or beyond these, Any evasion/default detected by AO would not make any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible projects. The assessee group is having many undertakings (6 firms as per statements) developing several projects and which part of unaccounted money is received from which undertaking and where utilized is not known unless it is specifically explained and linked by appellant. There are possibilities that the unaccounted money received from other projects have been disclosed by appellant against the entitled projects with the intention to get the benefit of section 80IB(10) of the Act. In absence of all these details, AO has correctly treated the amounts of ₹ 1,03,50,000/- and ₹ 58,50,000/- in the hands of M/s. Vraj Corporation and M/s. Vraj Developers as 'income from other sources'. Since the deduction u/s. 80IB(10) of the Act is allowable only on business profit, income assessed under the head 'income from other sources' is not entitled for said deduction. It is, therefore, held that the AO has rightly disallowed the amounts of ₹ 1,03,50,000/- and ₹ 58,50,000/- in the hands of M/s. Vraj Corporation and M/s. Vraj Developers, respectively. The disallowances made by AO are confirmed and grounds taken by appellant are dismissed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; ( ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 [but not later than the 31st day of March, 2005], within four years from the end of the financial year in which the housing project is approved by the local authority; ( iii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority.] Explanation For the purposes of this clause,- ( i) In a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority. ( ii) The date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities below that conditions of Section 80IB(10) of the Act are satisfied in this case. The salient feature of Section 80IB(10) of the I.T. Act shows that assessee has undertaken or commenced developing and building residential housing project. It is approved by the Local Authority and Completion Certificate is obtained within time provided under the above Act. There is a time limit provided for commencement and completion of the project within the stipulated period. The assessee could construct this specified area as provided in the Act. The built-up area should have limited commercial establishment and that the residential apartments have been allotted to original persons. The authorities below have held that assessee have failed to comply with the above conditions of Section 80IB(10) of the Act. It is an admitted fact that the impugned amount was not recorded in the regular books of account of both the assessee firms. The impugned amount have been admittedly disclosed as undisclosed income which was over and above the regular income earned during the year. The assessee made disclosure of undisclosed income in the case of both the firms. Shri Maganbhai Radadyi in his stateme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the deduction under section 80HHC of the Act, the entire amount of ₹ 51,16,053 was shown as profits of the business. The Assessing Officer did not accept the stand of the assessee and held that the excess stocks available at the premises were not recorded in the books of account on which deduction under section 80HHC of the Act was being claimed. Mere surrender by the assessee at the time of survey, on excess stock being found did not entitle the assessee to deduction under section 80HHC of the Act, which was available only in respect of income derived from the export. This view was upheld by the Commissioner (Appeals) as well as the Tribunal. On appeal to the High Court: Held, dismissing the appeal, that there could be no presumption that the amount surrendered represented income from exports. The assessee was not able to prove that it was. Hence it was not entitled to special deduction under section 80HHC in respect of such income. 7.2. Learned Counsel for the Assessee, however, referred to accounts of the assessee in which assessee stated that the firm had made disclosure in survey of unaccounted impugned receipts earned from the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble High Court has held as under : The sole surviving question relates to the assessees disclosure of unaccounted receipts during the survey operation. The A.O. taxed such receipts with the aid of Section 68 of the Act. Before the higher authorities, assessee argued that this also been the assessee s income from development of housing project, the same should have been allowed as a deduction under section 80IB910) of the Act. The CIT(A) and the Tribunal accepted such proposition, upon which the Revenue has filed this appeal. There is nothing on the record to suggest that the assessee had other businesses or that the undisclosed receipts were assessee s profit out of any other activity other than development of housing project. The Tribunal came to the specific conclusion that the unrecorded consideration was also part of the assessee s sale transaction of completed residential units and was therefore eligible under section 80IB(10) of the Act. We do not find any error in such view. In the result, Tax Appeal is dismissed. 7.3. The aforesaid decision would also not support the case of the assessee. In the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrendered amount would represent business income of the assessees. Unless and until assessees satisfies the authorities below that assessees have complied with the conditions of Section 80IB910) of the I.T. Act while earning the impugned undisclosed income, assessee would not be entitled for such benefit as per Law. Considering the above discussion, we are of the view that authorities below have rightly concluded that impugned undisclosed income is income from other sources. Since assessees failed to prove through any evidence or material on record that undisclosed income has any nexus with any housing project of the assessees, therefore, assessees would not be entitled for deduction under section 80IB(10) of the I.T. Act. In view of the above, we do not find any error in the Orders of the authorities below in denying the deduction under section 80IB(10) of the I.T. Act on the undisclosed receipts so surrendered for taxation during the course of survey. There is no merit in both the appeals of the assessees. Appeals of the Assessees are dismissed. 8. In the result, both the appeals of the Assessees are dismissed. Order pronounced in the open Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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