9911796707
TMI Blog2019 (8) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80IB(10) on the undisclosed receipts so surrendered for taxation during the course of survey. There is no merit in both the appeals of the assessee. Appeals of the Assessee are dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... s is not retained by the assessee firms in any of the cases. The explanation given by the assessees were not accepted by the A.O. and he disallowed the deduction under section 80IB(10) of the I.T. Act treating the undisclosed amounts as income from other sources by holding that when assessees claims that such receipts are business receipts of eligible projects, primary burden lies on it to prove that same are business receipts from its eligible projects with supporting evidences, details and in absence of such details the amounts offered during survey as undisclosed income cannot be considered as business receipts of the assessees eligible projects. Consequently, A.O. disallowed the deductions at ₹ 1,03,50,000/- and ₹ 58,50,000/- in the cases of both the assessees respectively and completed the assessments. 4. The assessee challenged both the additions before the Ld. CIT(A) and reiterated the same facts as submitted during the assessment proceedings. It was further submitted that assessee firms have adopted Project Completion Method ["PCM"] of accounting and profits have been disclosed as per this method for claiming deduction under section 80IB(10) of the Act. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to" its net profit and claimed deduction u/s. 80IB(10) of the Act on these receipts. Thus, no tax has been paid by appellant on the incomes which he was forced to disclose due to action/detection by department during survey proceedings. The details of such receipts such as names and addresses of the persons from whom amounts were received, their PANs, amounts, dates etc. were also not provided by appellant to AO so that he could co-relate these receipts with the actual persons to hold that these receipts belong to the business of appellants. In absence of these details, AO has assessed receipts as "income from other sources'. Now the question arises, in such situation, whether one should be allowed to get benefit of deduction u/s. 80IB(10), by not paying any tax, on the income which is not voluntarily disclosed to the department which it was obliged to do. In my opinion, the beneficial provisions of the Act are for those assessees who comply the provisions of Act voluntarily and disclose their income and other material facts to the department in true and correct manner. These provisions are not for those assessees who hide their income deliberately and consciously ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bligation and act deliberately in defiance of legal provisions, but, for those assessees who comply the provisions of Act honestly and regard their obligations and disclose their true and correct income to the department. 5.1. In continuation to above, further question arises whether giving benefit of incentive provisions of Income Tax Act to tax evaders, defaulters or those assessees who do not comply the provisions of Act voluntarily and hide their income/receipts deliberately, would not encourage them to further act or conduct dishonestly. In my opinion, giving the benefit of these' incentive provisions, such as deduction u/s. 80IB(10), to such tax evaders and defaulters will encourage them to further evade the taxes and deprive the exchequer with its due. In such situation, it would not be obligatory on the part of such evaders/defaulters to comply the provisions of Act as they would know that even if they are caught by the departmental authorities hiding their income, there is no harm as the income disclosed would get exempted by such incentive provisions. Such method can give ample opportunity to such evaders/defaulters to manipulate the accounts and receipts/expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong application of legal provisions, is not entitled for deduction u/s. 80IB(10) of the Act. Otherwise, there would be no meaning of such legal provisions or their compliance. Whatever expenses disallowed or unaccounted income added to the net profit disclosed by assessee will have no meaning as the net income computed would get exempted by the incentive provisions of section 80IB(10). In that case, assessing authority has to accept whatever assessee shows/claims in its return of income or books of account or beyond these, Any evasion/default detected by AO would not make any difference to the assessee as whatever income assessed by him would get exempted. In this way, the assessee gets license to do whatever it intends by manipulating the books of account or financial affairs, which cannot be permitted. Therefore, the receipts/income disclosed by appellant during survey proceeding, which are not recorded in the regular books of account, are to be taxed as regular income, whether it is considered business income or income from other sources. These receipts/incomes are beyond the income computed by appellants in their regular books of account, therefore, not entitled for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Vraj Corporation and M/s. Vraj Developers as 'income from other sources'. Since the deduction u/s. 80IB(10) of the Act is allowable only on business profit, income assessed under the head 'income from other sources' is not entitled for said deduction. It is, therefore, held that the AO has rightly disallowed the amounts of ₹ 1,03,50,000/- and ₹ 58,50,000/- in the hands of M/s. Vraj Corporation and M/s. Vraj Developers, respectively. The disallowances made by AO are confirmed and grounds taken by appellant are dismissed." 5. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that assessee followed PCM which is accepted by the department in earlier year. He has referred to statement of Shri Maganbhai Radadyi in which he has stated that from three projects they have earned ₹ 1.81 crores as received or receivable income in the current year which is not reflected in the financial books of account. It would be declared as income in current year on which he will pay the taxes. He has, therefore, submitted that undisclosed income would be business income of the assessee. He has referred to earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date on which the building plan of such housing project is first approved by the local authority. (ii) The date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority; (b) the project is on the size of a plot of land which has a minimu8m area of one acre; Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or development of existing building in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf; (c) the residential unit has a maximum built-up area of one thousand square feet where such residential unit is situated within the city of Delhi or Mumbai or within twenty five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place, (d) the built-up area of the shops and other commercial establishments included in the housing project does not exceed [th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of both the firms. Shri Maganbhai Radadyi in his statement has admitted to have earned undisclosed income which is not reflected in the financial books of account. He has agreed to surrender the impugned amount in current year for taxation and agreed to pay the taxes on the same as per Law, details of which, he has promised to be informed to the Revenue Department within two days. However, he has not complied with his commitment given to the Revenue Department. The assessee admittedly did not provide any details of undisclosed income surrendered to the Revenue Department. No names, addresses, data etc., have been provided from whom the above amount have been received. For complying the conditions of Section 80IB(10) of the I.T. Act, assessee shall have to prove that it is engaged in construction and development of residential project and shall have to satisfy all the conditions cumulatively for claiming the deduction under section 80IB(10) of the I.T. Act. However, no such evidence have been furnished before the authorities below. Thus, the primary burden upon the assessee to prove conditions of Section 80IB(10)of the I.T. Act have not been satisfied in the present case. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect. The Learned Counsel for the Assessee also referred to assessment order for A.Y. 2008-2009 in which similar issue was considered by the A.O. and addition of the same amount was made. He has also referred to Order of the Ld. CIT(A) for A.Y. 2008-2009 in which the assessee pleaded that since assessee preferred Project Completion Method ["PCM'], therefore, entire income would be considered in the year when project is completed which is assessment year under appeal. The explanation of assessee have been accepted by the Ld. CIT(A) on the basis of PCM. However, the Ld. CIT(A) did not decide the issue of eligibility for deduction under section 80IB(10) of the I.T. Act which arise only in the year in which receipts are taxed. Therefore, this decision of the Ld. CIT(A) would not help the assessee in any manner. Learned Counsel for the Assessee also referred to the Order of ITAT, Dated 30.03.2017 for the A.Y. 2008-2009 in which Revenue preferred appeal against the aforesaid Order of the Ld. CIT(A) in which the ITAT has set aside and quashed the Ld. CIT(A) order and restored the Order of the A.O. In this view, the Tribunal observed that assessee shall be entitled to deduction under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had been from development of housing project. The assessee failed to produce any details as to how the undisclosed impugned receipts are connected with the development and building housing project. The assessee failed to produce any evidence before the authorities below as well as before the Tribunal as to how the impugned receipts are part of the assessees's sale transaction. Admittedly, the undisclosed receipts have not been recorded in the books of account of the assessees. The assessees could not co-relate the undisclosed receipts with any housing project under development or completed by the assessees. Since burden is upon assessee to prove that assessee is eligible for deduction under section 80IB (10) of the I.T. Act and such burden has not been discharged by the assessee by producing any material or evidence on record, therefore, contention of the assessee cannot be accepted that assessee would be entitled for deduction under section 80IB(10) on undisclosed receipts. The contention of the Learned Counsel for the Assessee that assessees has no other housing project, therefore, it should be accepted that assessees has business income only is based merely on presumpti ..... 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