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2023 (5) TMI 119 - AT - Income TaxDeduction u/s. 80IB(10) - assessee s declaration of additional income - assessee has failed to prove the source of the cash payment along with another cash payment - A.O. disallowed the claim of deduction u/s. 80IB(10) on the said additional income for the reason that the assessee has filed its original return of income after claiming the deduction u/s. 80IB(10) and since the unaccounted cash receipts has not been offered for tax and the assessee has also not claimed any deduction on the impugned cash receipts - HELD THAT - As evident that the assessee has made a new claim on the additional income declared by the assessee, pursuant to the search and seizure action. If not for the search action, the additional income would not have been declared by the assessee and perhaps there will be no claim of deduction u/s. 80IB for the same. Assessee has failed to substantiate the fact that the impugned amount pertain to income of the project which was eligible for deduction u/s. 80IB - The assessee has failed to discharge its onus in proving the source of the impugned income. No doubt there has been suppression of the actual income for the purpose of evading tax. Nevertheless, various decisions of the higher forums have held that the assessee is entitled to claim deduction u/s. 80IB(10) on additional income declared by the assessee subsequent to the search proceedings. Assessee s case would not fall under those decisions for the reason that the assessee has failed to substantiate the source of income and whether it pertains to business income of the assessee was not corroborated by evidence. The decision relied upon by the assessee in the case of Sheth Developers (P) Ltd. 2012 (8) TMI 159 - BOMBAY HIGH COURT does not hold good for the present case wherein the A.O. did not have a dispute that the undisclosed income was out of business activity of the assessee. Decided against assessee.
Issues:
The judgment involves the challenge to the order of the Commissioner of Income Tax (Appeals) regarding the denial of deduction u/s. 80IB(10) of the Income Tax Act, 1961 for the Assessment Years 2009-10 and 2010-11. Issue 1 - Addition of Deduction u/s. 80IB(10): The assessee, a partnership firm engaged in construction activities, contested the addition of Rs.77,50,000/- and Rs.69,12,500/- for A.Y. 2009-10 and 2010-11 respectively, disallowed by the Assessing Officer for not granting deduction u/s. 80IB(10) of the Act. The Assessing Officer disallowed the deduction claimed by the assessee based on seized documents revealing cash transactions. The AO held the impugned amount to be unexplained cash payment and disallowed the deduction u/s. 80IB(10) due to failure to prove the source of cash payment. The CIT(A) upheld the addition, stating that the seized documents did not relate to on-money receipts eligible for the deduction. The assessee contended that the income was from a housing project eligible for deduction u/s. 80IB(10) and relied on previous decisions supporting the claim. The Tribunal observed that the seized documents indicated unexplained cash expenditure, not on-money receipts eligible for deduction u/s. 80IB(10). The assessee failed to prove the source of income and made a fresh claim of deduction post-search action, lacking evidence to support the claim. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the appeal. Issue 2 - New Claim Post-Search Action: The Tribunal noted that the additional income declared by the assessee post-search action led to a new claim of deduction u/s. 80IB(10) not made in the original return. The assessee failed to substantiate that the impugned amount was business income eligible for deduction, leading to a dismissal of the appeal. The Tribunal emphasized the necessity for the assessee to come with clean hands to claim the deduction u/s. 80IB(10), highlighting the lack of evidence supporting the source of income. The Tribunal differentiated the present case from previous decisions where undisclosed income was linked to business activity, concluding that the assessee failed to substantiate the source of income for the claimed deduction. The Tribunal upheld the CIT(A)'s decision, dismissing the appeal filed by the assessee in ITA No. 78/Mum/2023 and ITA No. 79/Mum/2023, as the facts were identical in both cases. Order pronounced in the open court on 28.04.2023.
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