2019 (9) TMI 854 - AT - Income Tax

Excess cash found during the course of survey action - benefit of telescoping towards income offered from Solitaire Project - HELD THAT - AO as well as the Ld. CIT(A) had recorded categorical finding in the light of statement of Shri Kamlesh Shah, Director of the company that the assessee was having excess cash during the course of survey for which no explanation has been offered. We further noted that although the assessee claims to have taken the benefit of telescoping towards income offered from Solitaire Project, but while recording statement during the course of survey it was the case of the assessee that excess cash found during the course of survey represents unaccounted income. We, therefore are of the considered view that there is no error in the findings of fact recorded by the lower authorities and hence, we agree with the finding of the CIT(A) and reject ground taken by the assessee Entitlement for deduction 80IA(4)(iii) - withdrawal of approval granted - HELD THAT - We find that although Ministry of Commerce and Industry, Government of India vide letter dated 24/07/2006 granted approval to the said park stating that the project is covered under the Industrial Park Scheme, 2002 and accordingly, entitled for deduction 80IA(4)(iii) but subsequently approval granted by the Empowered Committee has been withdrawn vide their letter dated 06/01/2009, on the ground that the assessee is not eligible under Industrial Park Scheme, 2002. Although the assessee has got relief from Hon ble Bombay High Court against the order of the Empowered Committee, in respect of withdrawal of approval granted under Industrial Park Scheme, 2002 but such relief has been granted on technical grounds for not allowing reasonable opportunity being heard to the assessee. Except this, the findings of the empowered committee of Ministry of Commerce and Industry was not negated by the Hon ble Bombay High Court in respect of eligibility for deduction u/s 80IA(4)(iii) - AO as well as the Ld. CIT(A) had categorically recorded the fact that the assessee has not fulfilled conditions prescribed u/s 80IA(4) in order to be eligible for deduction in respect of profit derived from its industrial project - Decided against assessee

Summary

Issues:
1. Addition of excess cash found during a survey.
2. Disallowance of deduction claimed under section 80IA(4)(iii) of the Income Tax Act, 1961.

Issue 1: Addition of Excess Cash Found During a Survey:
The appellant, engaged in the business of Builder and Developer, filed its return of income for AY 2007-08, declaring total income. During a survey under section 133A of the IT Act, 1961, excess cash was found, leading to a difference of ?1,94,232. The Director admitted to the excess cash and agreed to offer it as additional income. The AO made an addition to the returned income based on this excess cash. The appellant argued that the excess cash was part of receipts from a project and should not be separately added. The CIT(A) upheld the AO's decision, stating that the appellant failed to provide evidence to support the claim, leading to the rejection of the appellant's appeal. The ITAT agreed with the lower authorities, dismissing the appeal.

Issue 2: Disallowance of Deduction Claimed under Section 80IA(4)(iii):
The appellant claimed a deduction under section 80IA(4)(iii) for a project named Silver Metropolis. The AO disallowed the deduction, stating that the project did not meet the conditions under the provision. The Empowered Committee also concluded that the appellant was not eligible for the deduction. The appellant cited relief from the Bombay High Court against the Empowered Committee's decision but failed to provide sufficient evidence during assessment proceedings. The CIT(A) upheld the AO's decision, emphasizing the failure to fulfill conditions under section 80IA(4). The ITAT concurred with the lower authorities, dismissing the appeal due to the appellant's inability to substantiate the claim.

In conclusion, the ITAT Mumbai upheld the decisions of the lower authorities regarding the addition of excess cash found during a survey and the disallowance of the deduction claimed under section 80IA(4)(iii). The appellant's appeal was dismissed, emphasizing the importance of providing proper documentation and meeting the prescribed conditions for tax deductions.