2012 (11) TMI 704 - AT - Income Tax

Addition of on money based on the seized papers of estimated sales - Addition was made by the A.O. for the assessment year 1998-99 to assessment year 2004-05 which was deleted by CIT(A). But there is no mention of the present assessment year in the seized material. In assessment year 2005-06, the tribunal has deleted similar addition in assessee s own case by following the Tribunal order for assessment year 2004-05 in which, it was held that in the absence of any cogent evidence, there is no scope for extrapolation. Since, in the present year also, there is no evidence regarding receipt of any on money, addition cannot be made on the basis of seized material relating to earlier year. By respectfully following the Tribunal decision in assessee s own case, issue is decided in favour of the assessee - revenue s appeal is rejected. Deduction u/s. 80IB Held that - Assessee is not the legal owner of the land and was carrying on the activity of developing and building housing project on a land which is not owned by him There is a complete identity between the assessee referred to in Section 80IB(S) and the undertaken referred to in section 80IB(10) and this identity becomes further clear from rule 18BBB prescribing the Form No. 10CCB of audit report to be furnished by the assessee by virtue of Section 80IB(13) r.w.s. 80IA(7) - matter may be restored back to the file of CIT(A) for a fresh decision - In the result, appeal of the revenue stands partly allowed for statistical purpose.

Summary

Issues:
1. Addition of 'On Money' received on sale of flat
2. Disallowance of deduction claimed under section 80-IB of the Income Tax Act, 1961

Issue 1: Addition of 'On Money' received on sale of flat:
The appeal was against the order of the ld. CIT (A) for the assessment year 2006-07 concerning the addition of 'On Money' received on the sale of a flat. The assessing officer (A.O.) made the addition based on seized materials from a search operation in the earlier years. The A.O. concluded that the assessee received 'on money' on the sale of flats in a particular project, impacting the correctness of the current year's accounts. The CIT (A) deleted the addition, relying on the previous year's appellate order. The tribunal upheld the CIT (A)'s decision, emphasizing the lack of evidence in the current year's seized material to support the addition. The tribunal referred to a similar decision in the assessment year 2005-06 in the assessee's favor, stating that without concrete evidence, no extrapolation could be made. Therefore, the tribunal decided in favor of the assessee, rejecting the revenue's appeal.

Issue 2: Disallowance of deduction claimed under section 80-IB:
The dispute revolved around the disallowance of the deduction claimed under section 80-IB of the Income Tax Act, 1961. The A.O. disallowed the deduction as the assessee was not the legal owner of the land, a primary condition for claiming the deduction. The A.O. reasoned that the assessee, engaged in developing housing projects, did not own the land but had a development agreement with the landowner. The CIT (A) overturned this disallowance, following the precedent set in the assessment year 2005-06. The revenue appealed this decision. The tribunal noted that in the assessment year 2005-06, the matter was sent back to the CIT (A) for a fresh decision based on specific directions. The tribunal directed the CIT (A) to consider relevant legal principles and readjudicate the deduction claim. The tribunal allowed the revenue's appeal for statistical purposes, instructing the CIT (A) to reconsider the issue in light of a recent decision by the Hon'ble Gujarat High Court, once the judgment was made available.

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