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TMI Blog2019 (1) TMI 1637X X X X Extracts X X X X X X X X Extracts X X X X ..... /H/2012 which is the appeal filed by the assessee-company M/s. Sainath Estates against the order of the CIT(A)-1, Hyderabad dated 28.06.2012 confirming the addition of Rs. 3 Crs and other disallowances in the hands of the assessee-company u/s 69 of the Act. ITA No. 1567/H/2012 (A.Y. 2009-10) (By Revenue) 2. Brief facts of the case are that the assessee, an individual, was travelling by air from Hyderabad to New Delhi, when he was searched u/s 132 of the Act at Indira Gandhi International Air Port, New Delhi and was found to be carrying Rs. 3 Crs in cash with him. On questioning, he stated that it belonged to the company and subsequently, the entire cash was owned up by the company M/s. Sainath Estates Pvt Ltd also as its unexplained money. Further, during the search proceedings at the business premises of M/s. Sainath Estates Pvt Ltd, physical cash of Rs. 1,00,62,250/- was also found and this was also owned up by the company. Even in the statement recorded during the course of search, the assessee explained that the sources of the cash found, was the amount of Rs. 2,37,00,000/- being the cash withdrawn from the bank account of M/s. Sainath Estates Pvt Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cash found with him at New Delhi Airport belonged to M/s. Sainath Estates Pvt Ltd in his deposition dated 12.05.2009 and that this is the undisclosed income of the company for the Financial Year 2008-09. 4. After considering all these contentions and considering the fact that the company, though admitted in the search proceedings that the cash belonged to it, did not admit the unexplained cash in its return of income filed for the assessment year 2009-10, the A.O. added the sum of Rs. 3 Crs protectively in the hands of the assessee, Sri KRV Uday Charan Rao and substantively in the hands of the company and brought it to tax. 5. Aggrieved, the individual assessee preferred an appeal before the CIT(A), who deleted the same by observing that the since the substantive addition made in the hands of the company M/s. Sainath Estates Pvt Ltd was confirmed by him, the addition of Rs. 3 Crs made in the hands of the assessee on protective basis deserves to be deleted in the absence of any other evidence to show that the cash found belonged to the assessee. Against the relief granted to the assessee, the Revenue is in appeal before us by raising the following groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) perused the summary of cash for the month of March 2009 as well as the bank entries as per the details filed by the assessee for the month of March 2009. He observed that cash of Rs. 3 Crs was seized from Sri KRV Uday Charan Rao and Harish Kumar Kundra on 17.03.2009 at Indira Gandhi International Airport, New Delhi and physical cash of Rs. 1,00,62,250/- was found at the business premises of M/s. Sainath Estates. He further observed that at the time of search, the books of account were not updated and cash balances could not be drawn properly. He also observed that despite having huge cash balances as per the cash book, the assessee had drawn cash from the bank regularly and that too most of these withdrawals were selfwithdrawals and the assessee could not furnish the details of payments made from these withdrawals. Observing that there is no live-link between the so called cash withdrawals from the bank and the cash found on the day of search, CIT(A) confirmed the addition of Rs. 4,00,62,250/- in the hands of the company as 'unexplained money' u/s 69A of the Act and the assessee is in appeal before us against the same. 10. Learned Counsel for the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall of 48 sq. yards cannot be a reason for disallowance of claim u/s 80-IB(10) in respect of project Sai Sagar Heights. The appellant submits that the Ld. CIT(A) should have observed that there is substantial compliance of the provisions of this section and therefore should not have disallowed the claim u/s 80-IB(10)." 14. As regards this ground, brief facts are that in response to the notice u/s 153A of the Act, the assessee filed its return of income disclosing income arising out of business and profession of Rs. 12,55,61,984/- and claimed deduction of equivalent amount u/s 80-IB of the Act. During the course of search proceedings and post search investigation, the DDIT (Inv) noticed that the assessee-company violated the provisions of section 80-IB by constructing the flats where the built up area of almost every flat exceeded the prescribed limit of 1500 sft. The A.O. observed that the assessee-company has constructed four residential complexes viz., Manasarovar Heights-I, II and III at Hasmatpet Village and IVth one at Sai Sagar Heights at Begumpet, Secunderabad. 15. As far as the deduction with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repeated issuance of cheques proves that the assessee resorted to issue of cheques initially without sufficient balance in its bank account and thereafter made cash payments. He therefore confirmed the disallowance, against which, the assessee is in appeal before us. 18. Learned Counsel for the Assessee submitted that the disallowance u/s 40A(3) of the Act cannot be made if the assessee satisfactorily explained the payments made in cash exceeding Rs. 20,000/-. He also submitted that the assessee has made payments initially by way of crossed-cheques but since sufficient balance was not there in the bank accounts, he resorted to make payments in cash and it is a sufficient explanation for making the cash payments and the addition ought not to have been made. 19. Learned Departmental Representative is also heard. Having regard to the rival contentions and the material on record, we find that the contention of the assessee that it had initially issued crossed cheques, but because of insufficient funds in its bank account, the cheques were dishonoured against which payments were made in cash is not disputed by the Department. It is also a fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; 24. Brief facts of the case are that the Assessing Officer had disallowed 10% of the direct and indirect expenditure claimed by the assessee on the ground that the assessee has not furnished the evidence in support of the total expenditure claimed by it. The CIT(A) has deleted the same by holding that the assessee has maintained proper books of account and that it is supported by bills / vouchers and that the Assessing Officer, in a hurry to complete the assessment, caused this blanket disallowance. For holding so, the CIT(A) has considered that in the immediately preceding previous year, the assessment was completed u/s 143(3) of the Act and the books of account have been verified and no disallowances were caused and that the projects are the same in the relevant previous year and that the Assessing Officer should have considered this aspect while causing an ad-hoc disallowance of 10% of the total expenditure. 25. Learned Departmental Representative supported the assessment order while the Learned Counsel for the Assessee supported the order of the CIT(A). We find that except relying upon the order of the A.O., Ld DR has not been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts-II and Sai Sagar Heights be allowed. b. The addition on account of disallowance u/s 40A(3) sustained by the Ld. CIT(A) be deleted." 28. As regards Ground No.3 is concerned, brief facts are that during the assessment proceedings u/s 143(3) r.w.s 153A of the Act, A.O. observed that the assessee has constructed four residential complexes viz., Manasarovar Heights-I, II and III at Hasmatpet Village and fourth one ie., Sai Sagar Heights at Begumpet, Secunderabad. During the course of enquiries, information was called for from the Sub-Registrar's office to furnish the details of flats at Sai Sagar Heights and the same was furnished by the Sub-Registrar. On going through the same, the A.O. observed that the area of most of the flats sold, exceeded 1500 sft. A.O. therefore carried out further investigations from the flat owners and some of them deposed that the builder himself sold flats exceeding 1500 sft to them but got registered them by splitting them into smaller flats. The A.O, therefore was of the opinion that the assessee is not eligible for deduction u/s 80IB(10) of the Act in respect of Sai Sagar Heights. 29. Further, he also observed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In respect of this contention, he relied upon various case law. 32. Learned Departmental Representative, however, submitted that the deduction is eligible to the project and not to individual flats and therefore, since there is major deviation by the assessee in construction of flat of more than 1500 sft, the entire deduction is to be disallowed. 33. Having regard to the rival contentions and the material on record, we find that 90 flats of Manasarovar Heights - III exceeded 1500 sft of built up area, and the assessee's contention is that it is the purchasers who have merged two flats into one, thereby area has exceeded 1500 sft. However, this contention is not convincing. Therefore, the assessee is not eligible for deduction in respect of such flats. We therefore, direct the Assessing Officer to grant proportionate deduction only in view of the decision of Hon'ble Madras High Court in the case of Viswas Promoters (P) Ltd reported in (2013) 29 Taxman.com 19 (Mad.). Thus, Ground no.2 is partly allowed. 34. As regards, Ground no.4 is concerned, we find that the Assessing Officer has made disallowance u/s 40A(3) of the payments made i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observed that the property consists of 14940 sq yds of land and that the net annual value as per section 23 of the IT Act, 1961 was determined by the Assessing Officer in his speaking order for the Assessment Year 2006-07. After considering the 'market rent method' and 'gross maintainable rent method', he determined the market rent of the property at Rs. 3,04,06,020/- as net annual value of the property and arrived at the income from house property at Rs. 2,10,39,214/- and brought it to tax. 40. Aggrieved, assessee filed appeal before the CIT(A), who directed the AO to apply rate of 7% on the investment of the assessee subject to cost inflation index and also further investments / improvements made by the assessee on this property during the year under consideration. To reach this conclusion, CIT (A) followed the coordinate Bench decision of the ITAT for the AYs 2002-03, 2003-04 and 2005-06. Against the relief granted by the CIT(A), revenue is in appeal before us. 41. We find that this issue is covered by the order of the ITAT in the earlier assessment years and since no contrary decision is brought to our notice by the Revenue on this issue, we confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct and indirect expenditure in the absence of any evidence filed by the assessee for incurring such expenditure. 3. The CIT(A) has erred in deleting the addition stating that there was no finding of the Assessing Officer that his decision was based on any material found in the course of action u/s 132(1) since the insertion of section 158BI of the IT Act, the Assessing Officer can take into consideration the material other than what was available during the course of search and seizure operation. 4. The CIT(A) is not justified in ignoring the evidence found in seized material at page Nos. 87 to 91 of Annexure-A/S.E.P.L/04 which clearly showed that some of flats constructed by assesseecompany in project MSH-III exceeding 1500 sft. 5. The CIT(A) is not justified in ignoring evidence in respect of flat no.629 in MSH-III venture purchased by M. Seetharama Murthy, as per Sale Agreement dated 27.10.2008, the area of the flat exceeded 2500 sft, and hence not eligible for deduction u/s 80IB of the Act. 6. The CIT(A) ought to have noted that the assessee-company adopted a colourable device of registering flats by way of multiple sale deeds so that the area of the flat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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