2015 (8) TMI 1505 - AT - Income Tax

Assessment u/s 153C - HELD THAT - The assessee s claim that no incriminating documents were found during the course of search and the proceedings u/s 153C of the Act are not factually correct. There are certain documents seized during the search which reflect certain receipts which are not reflecting in the books of accounts. Since there were incriminating documents which were seized during the search operation, the CIT(A) was justified in sustaining the issue of notice issued u/s 153C of the Act as legal and valid. Addition on account of receipts of bank OCR (owners contribution receipt) - HELD THAT - Issue needs verification at the level of the Assessing Officer wherein the cross-verification from the bank with regard to margin money is required to be established. The requirement of certification with respect to disbursement of loan needs verification. The investigation from the purchasers is necessary to know the correct facts. Considering all these aspects, we remand this issue to the file of the Assessing Officer for verification and then decide the issue. Deduction u/s 80IB(10) - Approval of housing project - HELD THAT - The assessee got the project sanctioned. The assessee got approved housing project on 17.6.2004 in its own name as colonizer. The project was completed in F.Y. 2007-08, as per the sanctioned plan from Municipal Corporation, Bhopal. None of the residential units was sanctioned for more than 1500 sq.ft. The assessee completed the project in the stipulated period of four years as per the approved plans. The assessee has developed and completed the infra-structure, approach road, water line sewerage line and electrification work as per the norms laid down by 28.1.2008. The possession letter was also issued to the customers on the completion of the residential units in all respect. These possession letters were signed by all the customers. The purchasers got permanent electricity connection from M.P. Electricity Board as customer. The permanent electricity connections are given only on the completion of the houses/flats. The persons who have purchased these units have paid property taxes to the Municipal Corporation, Bhopal. All these evidences show that the assessee has constructed and developed the project and completed well within time provided u/s 80IB(10 Visakhapatnam Bench of the ITAT in the case of M/s Vishnu Builders vs. ACIT 2011 (11) TMI 638 - ITAT VISAKHAPATNAM observed that completion certificate was not filed before the Assessing Officer and the proof of municipal tax assessment of various flat owners establishing that the housing project was completed before September, 2008 was filed. Since there was no practice of issuing the project completion certificate, therefore, it was held that it was not a condition precedent of filing the completion certificate for allowing deduction u/s 80IB(10).

Summary

Issues Involved:
1. Delay in filing appeals.
2. Issuance of notices under Section 153C.
3. Addition on account of receipts of bank OCR.
4. Deduction under Section 80IB(10).
5. Charging of interest under Sections 234A, 234B, and 234C.
6. Initiation of penalty proceedings under Section 271(1)(c).

Detailed Analysis:

1. Delay in Filing Appeals:
The appeals were filed with a delay of 5 days. The assessee's counsel explained that the delay was due to the courier service, which was beyond the control of the assessee. After hearing both sides, the tribunal condoned the delay and proceeded to hear the appeals on merits.

2. Issuance of Notices Under Section 153C:
The common ground in ITA Nos. 238, 239, and 240/Ind/2012 was the challenge against the issuance of notices under Section 153C. The assessee argued that the notices were issued without proper basis and satisfactory reasons, and the satisfaction note was not provided. The tribunal found that incriminating documents were seized during the search, which justified the issuance of notices under Section 153C. Therefore, the CIT(A)'s decision to sustain the notice was upheld as legal and valid.

3. Addition on Account of Receipts of Bank OCR:
In ITA Nos. 238 and 240/Ind/2012, the issue was the addition of unaccounted receipts. During the search, receipt books showing cash payments from purchasers were found, which were not accounted for in the books. The assessee claimed these were fabricated receipts for facilitating bank loans for purchasers and no actual money was received. The tribunal decided that this issue required further verification from the bank and the purchasers. Thus, the matter was remanded to the Assessing Officer for further investigation.

4. Deduction Under Section 80IB(10):
In ITA Nos. 239, 240, and 241/Ind/2012, the issue was the disallowance of deduction under Section 80IB(10). The CIT(A) had disallowed the deduction on grounds that the project was not built and developed by the assessee, the project completion certificate was not obtained, and the commercial establishments exceeded the allowed area. The tribunal, after considering the facts and various case laws, concluded that the assessee had complied with all necessary conditions and completed the project within the stipulated time. Therefore, the tribunal allowed the deduction under Section 80IB(10).

5. Charging of Interest Under Sections 234A, 234B, and 234C:
The assessee challenged the charging of interest under Sections 234A, 234B, and 234C. The tribunal held that the charging of interest is mandatory and consequential in nature, and therefore, these grounds were dismissed.

6. Initiation of Penalty Proceedings Under Section 271(1)(c):
The grounds regarding the initiation of penalty proceedings under Section 271(1)(c) were considered premature by the tribunal and were therefore dismissed.

Conclusion:
The appeals were partly allowed. The tribunal condoned the delay in filing, upheld the issuance of notices under Section 153C, remanded the issue of unaccounted receipts for further verification, allowed the deduction under Section 80IB(10), upheld the charging of interest, and dismissed the grounds related to penalty proceedings as premature.