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TMI Blog2024 (5) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... of search and later verification proceedings u/s 131 Loose Paper file was found and seized from partner of assessee firm related to cash amount received from various persons in the financial year 2008-09 for purchase of land - HELD THAT:- We find merit in the submission of ld Counsel to the effect that the disputed land was brought into the books of the assessee - firm during the assessment year 2009-10 and not in the impugned assessment year, 2008-09. We note that the term 'Person' has been defined in clause 31 of section 2, to include seven categories of persons, all of which are independent and distinct from each other. A literal interpretation of the above provisions leads to the conclusion that only a right person as per the Act, is liable to pay tax on his income and no option is available to tax income in the hands of the person other than the one in whose hands it is taxable. The Hon'ble Supreme Court in case of ITO vs. Ch. Atchaiah [ 1995 (12) TMI 1 - SUPREME COURT] has held that the assessing officer must tax the right person and right income, alone. Thus, the transaction in respect of disputed land, if any, may be taxable in the assessment year 2009-10 and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f hearing of the appeal. 3. The appeal filed by the Revenue, for Assessment Year 2008-09, is barred by limitation by 3 days. The Revenue has moved a petition requesting the Bench to condone the delay. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the appeal for hearing. 4. Ground No.1 raised by the Revenue relates to deletion of addition of Rs. 80,74,429/- by ld CIT(A), which was made by the assessing officer, on account of disallowance under section 80IB of the Act. 5. The relevant material facts, as culled out from the material on record, are as follows. A search action under section 132 of the Income Tax Act, 1961 was carried in Vaishnodevi Group of Surat on 28.11.2013 and the case of the assessee-firm and their partners were also covered in the said action. The assessee filed return of income u/s 139(1) of the Act, on 14.09.2008 declaring total income of Rs. Nil. During the assessment year under consideration, the assessee was doing business of Builders and developers and developing project by name Rushikesh , Vaishnodvei Township and Ideal Homes . During the search on 28.11.2013 vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst this undisclosed income. a) Details of transaction which lead to generation of this un-disclosed income declared. b) Evidence of transaction which lead to generation of this un-disclosed income declared. c) Name address of person from whom this undisclosed amount is received. You are requested to provide following details (Project-wise) in respect this undisclosed income of Rs. 2,07,03,663/- (total profit shown from the project Rushikesh) S. N Name and latest postal address of the person PAN Date of amount received Amount in Rs. Reason for payment Reason for not recorded in regular books 7. The assessee-firm has submitted its reply before the assessing officer, which is reproduced as under: In respect of your query relating details of transaction which lead to generation of this undisclosed income declared, evidence of transaction which lead to generation of this undisclosed income declared and name address of person we submit following point : i. M/s. S. R. Corp. is in the business of development and construction of residential projects. The assessee firm had started project Rushikesh from Jinancial year 2006-07 and completed the project in W10-11, and thereafter started proje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncern but it is not possible to segregate year wise expenditure as books and profit and loss account were maintained project wise and not year wise. Sec 292C of the Act categorically states that 292C. Presumption as to assets, books of account, etc (1) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under this Act, be presumed (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of any particular person, are in that person's handwriting, and in the case of a document stamped\ executed or attested\ that it was duly stamped and-executed or attested by the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the followings: (i) The assessee has credited certain amounts of Rs. 80,74,429/-, in its computation of income under the head Disclosure Income (Rushikesh), which is not a part of audited books of account and disclosed them in the return under the head business income from this project. (ii) The assessee has solely based his claim on the impounded document only i.e. Profit and loss account seized from the resident premises of Shri Rajesh Vaghani, partner of the assessee firm. No link was found that this amount was earned from the project Rushikesh, which was eligible for deduction u/s 80IB. The assessee firm also has not claimed such profit in its original return of income (ROI) while an opportunity has also been received by the assessee as order u/s 143(3) was also passed by the department prior to this order. No other evidence or explanations about the nature or source of these amounts have ever been produced by the assessee till the date of this order. (iii) Assessee upon being confronted with the same and being required to explain and account for the true source of these amounts had grossly failed to discharge onus cast upon him. Resultantly, the three ingredients of section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee was informed by the assessing officer about the factual inconsistencies with regards to the contents of the documents impounded and the evidences on record and assessing officer also stated that assessee-firm is not eligible to claim deduction under section 80IB of the Act. Admittedly, if the amounts are profit out of on money receipts, then the details of the total on money received, person from whom such amount was received and the flat of the project in lieu of which it has been received should be stated by the assessee-firm. That is, the assessee was unable to submit the details of the persons from whom the firm has received this amount as on money and why should not be recorded in the books of accounts, while it was clear for the assessee that any profit shown from this project comes under the provisions of section 80IB (10) of the I.T. Act and there was no tax liability on the firm. There is no evidence whatsoever, at least to indicate that the amounts, admittedly received by the assessee, are received from only and only from the flat owners, in lieu of the purchase of flats. In view of the same, it was held by the assessing officer that the assessee has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all ledgers or details. Only the profit and loss account which was the basis of such distribution was maintained and a copy of the same was given to all partners for their records. One such copy was found and seized by the department during the search at the residential premises of Rajesh Vaghani on 28/11/2013. The undisclosed income is the differential income between profit as shown by the assessee-firm in regular return, as filed before the department from time to time and profit and loss account as seized by the department during the search action. The same relates to the core business of the assessee- firm, as is evident from the profit and loss account, as seized. Hence disclosed amount of Rs. 80,74,429 is part of business income in form of on money received on project and not disclosed in regular profit and loss account. Therefore, ld CIT(A) has rightly allowed the deduction under section 80IB of the Act, and therefore the findings of ld CIT(A) may be upheld. 13. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question of doubting the veracity of seized material does not arise. Income Tax is on actual income and the paper, as seized depicts the actual profit earned by the assessee. The correctness of the document seized cannot be doubted and more so by the department as per section 292C of the Act, which armors the presumption that the seized material is correct and hence cannot be doubted. When the statute itself proves a deeming provision regarding the veracity of the seized material, the question of doubting or providing corroborative evidence does not arise, more so when the same seized paper is the basis of disclosure of unaccounted profit in the hands of the assessee-firm. We also note that same deduction u/s 80IB of the Act was allowed by the CIT(A) in case of the assessee for assessment year 2009- 10 and in assessment year 2010-11. Thus, it is a fact, which is not disputed by the AO that the assessee firm had started the residential project' Rushikesh from financial year (FY) 2006-07 and completed the same in 2010-11. The Project Rushikesh fulfilled all the conditions for claiming benefit of deduction u/s 80IB of the Act. It is also a fact that the seized material found d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 80,74,429/ u/s 80IB of the Act. We have gone through the above findings of ld CIT(A) and noted that conclusion reached by ld CIT(A) does not contain any infirmity. The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss ground No.1 raised by the Revenue. 15. In the result, ground No.1 raised by the Revenue is dismissed. 16. Ground No.2 raised by the Revenue, relates to addition of Rs. 5,65,50,000/-, on account of alleged unexplained cash credit under section 68 of the Act. 17. Succinct facts qua the issue are that during the course of search proceedings, at the residential premises of Shri Rajesh N. Vaghani, A-401, Akhshar Plaza, Adajan, Surat, partner in Vaishnodevi Group, the Loose Paper file was found and seized as per Annexure - A-9. During the course of search and later verification proceedings u/s 131 of I.T. Act , Rajesh N. Vaghani has stated that , the noting in these papers ( vide page 8, 9 10) are related to cash amount received from various persons in the financial year 2008-09 for purchase of land for S. R. Corporation. These persons were also benami partners for pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vendors and spent further amount of Rs. 1.62 Crore on its title and development before the same was brought into the books of the firm, as the capital of Mr. Popatbhai Kakadia. Therefore, the facts of the purchase of land and notings found of receipt of cash in the residential premises of Mr. Rajesh Vaghaiii are not matching for making an addition in the hands of the assessee-firm in the impugned assessment year. As stated earlier, the land in question has been bought in the month of March 2008 by Mr. Popatbhai Kakadia. The said land was brought into the books of the assessee-firm on 30.09.2008, which is during the assessment year 2009-10. Thus, during assessment year 2008-09 (impugned assessment year) the land was not belonging to the assessee- firm. Based on these facts, ld CIT(A) deleted the addition. 19. Aggrieved by the order of ld. CIT(A), the Revenue is in appeal before us. 20. Learned DR for the Revenue, argued that during the course of search proceedings, at the residential premises of Shri Rajesh N. Vaghani, A-401, Akhshar Plaza, Adajan, Surat, partner in Vaishnodevi Group, Loose Paper file was found and seized as per Annexure A-9 . During the course of search and later v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt dated 23.08.2019 during the course of CIT(A) proceedings (vide Pb. 1 11), (2) Copy of Receipt of Registration Fees and Index copy along with Supplementary Partnership Deed of M/s. S. R. Corporation dated 30.09.2018 (vide Pb. 12 21), (3) Partnership Deed of M/s S. R. Corporation dated 19.05.2005 (vide Pb. 22 28), (4) Party-wise and Year-wise bifurcation of part seized material along with copy of part of seized materials (vide Pb.29 36), (5) Firms and Partners- wise disclosure chart (vide Pb.37), (6) Copy of three Purchase Deeds of agriculture lands, Block No.49-A, Vanakla purchased by Popatbhai Harjibhai Kakadia (vide Pb.38 66). We have gone through the above factual documents and evidences. We note that during the course of search at residential premises of Mr. Rajesh Vaghani at Akshar Plaza, Adajan, Surat, loose papers file was found and seized as Annexure A-9. Mr. Rajesh Vaghani in his statement recorded u/s 131 of the Act stated that the notings on papers at page 8, 9 and 10 were related to cash received from various persons in the financial year 2008-09 for purchase of land for the assessee firm. He further stated that the said eight persons are the benami partners for purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01. Gordhan Dada 3,27,50,000 1,00,00,000 A.Y. 2008-09 1,80,00,000 AY.2009-10 47,50,000 AY.2010-11 02. Shambhubhai 1,22,00,000 9,00,000 A.Y. 2008-09 94,00,000 A.Y. 2009-10 19,00,000 A.Y. 2010-11 03. Maheshbhai Mavani 8,50,000 3,00,000 A.Y 2008-09 5,50,000 A.Y. 2009-10 04. Bhikhubhai Khaini 71,50,000 51,50,000 A.Y. 2009-10 20,00,000' A.Y. 2010-11 05. Vijaybhai Mavani 26,00,000 19,60,000 A.Y. 2009-10 6,40,000 A.Y. 2010-11 06. Rajubhai Mehta 10,00,000 10,00,000 A.Y. 2009-10 5,65,50,000 5,65,50,000 Therefore, the ld CIT(A) observed that the facts of the purchase of land and notings found of receipt of cash in the residential premises of Mr. Rajesh Vaghani are not matching for making an addition in the hands of the assessee-firm in the impugned assessment year. The ld CIT(A) noted that the land in question has been bought in the Month of March 2008 by Mr. Popatbhai Kakadia. The said land was brought into the books of the assessee-firm on 30.9.2008, which is during the assessment year 2009-10. Thus, during assessment year 2008-09 (impugned assessment year) the land was not belonging to the assessee-firm. The ld CIT(A) further noted that Mr. Popatbhai Kakadia who has bought the land f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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