M/S. VRAJ DEVELOPERS,,SURAT vs. INCOME TAX OFFICER, WARD-5(2),, SURAT

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH : SURAT BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER ITA.No.2619/Ahd/2014 Assessment Year 2010-2011 M/s. Vraj Corporation, The Income Tax Officer, C/o. Shri Jigneshbhai Radadiya (Partner), 53-54, Ward-5(2), Aayakar Shree Ram Nagar Society, vs. Bhawan, Surat. Near Hira Baug Circle, Varachha Road, Surat PIN – 395 002. PIN – 395 006. PAN AAFFV4962R (Appellant) (Respondent)

ITA.No.2620/Ahd/2014 Assessment Year 2010-2011 M/s. Vraj Developers, The Income Tax Officer, C/o. Mohanbhai D Zalawadiya, 8, Ward-5(2), Aayakar Swaminarayan Society, vs. Bhawan, Surat. Opp. Kala Kunj, Varachha Road, Surat – 395 006. PIN – 395 002. PAN AAFFV5875M (Appellant) (Respondent)

For Assessees : Shri Gaurang Solanki, C.A. For Revenue : Shri S.R. Meena, Sr. D.R.

Date of Hearing : 25.07.2019 Date of Pronouncement : 26.07.2019

2 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. ORDER PER BHAVNESH SAINI, J.M.

Both the appeals by different Assessees are directed against the common Order of the Ld. CIT(A)-1, Surat, Dated 05.06.2014, for the A.Y. 2010-2011, challenging the additions of Rs.1,03,50,000/- and Rs.58,50,000/- respectively.

3 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. Name of the Firm Name of the Project Amount (Rs.) M/s. Vraj Vraj Bhoomi 1,03,50,000/- Corporation Township (Sector No.1) M/s. Vraj Vraj Bhoomi 58,50,000/- Developers Township (Sector No.2) M/s. Vrundavan Vraj Ratna Residency 19,00,000/- Developers Total 1,81,00,000/-

3.1. By disclosing the income, assessee admitted that the said income was not recorded in the regular books of the firms. Therefore, the same was disclosed as undisclosed income which was over and above the regular income earned during the year. However, during the assessment proceedings, it was noticed by the A.O. that assessees have included the disclosures of Rs.1,03,50,000/- and Rs.58,50,000/- in the total turnover of respective firms which represent the receipts on sale of flats/shops and consequently, claimed deduction under section 80IB(10) of the I.T. Act on net profits of Rs.11.79 crores and Rs.7.48 crores and finally total income was shown at Rs. NIL in both the firms. Thus, both the assessees have not paid any tax on the undisclosed income declared during the survey

4 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. proceedings by claiming exemption under section 80IB(10) of the Act. However, during the assessment proceedings A.O. asked the assessees to give details about the undisclosed booking deposits of Rs.1,03,50,000/- and Rs.58,50,000/- such as names and complete addresses of the persons from whom amounts were received, their PAN No., amounts, dates etc. Assessees submitted that both the firms are engaged only in undertaking business of development of residential housing projects, therefore, undisclosed receipts disclosed in survey have resulted in generation of business receipts of the aforesaid amount to the respective firms. It was further submitted that since receipts disclosed during survey are business receipts from developing and building residential housing project, same would qualify for deduction under section 80IB(10) of the I.T. Act. In respect of the details of receipts of disclosures, it was submitted that same have been generated out of booking of flats generated in the project surveyed by the department and minute details of receipts of the same with regard to exact amount received from a particular person to whom flats have been sold and the date

5 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. of its receipts 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 Rs.1,03,50,000/- and Rs.58,50,000/- in the cases of both the assessees respectively and completed the assessments.

6 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. this method for claiming deduction under section 80IB(10) of the Act. It was also submitted that all the required conditions for claiming the said deductions have been fulfilled by the assessee firms. In respect of claiming deduction of undisclosed booking receipts, it was submitted that the said receipts have been transferred to its P & L A/c, therefore, it has to be considered as business income and not income from other sources. The Ld. CIT(A) reproduced the written submissions of the assessee in the appellate order in which the assessee reiterated the same facts that assessee firms have adopted PCM of accounting and claimed deduction under section 80IB(10) accordingly as the project was completed during the year ending March 31, 2010. The assessee referred to statements of the key person recorded during the course of survey in which while disclosing the amount as undisclosed income explained that said undisclosed income was from the above three projects which is over and above the regular income earned during the year. It was, therefore, claimed that the said amounts are business income of assessees and as such entitled for deduction under

7 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. section 80IB(10) of the Act. Ld. CIT(A) considering the submissions of the assessees and material on record, confirmed the Order of the A.O. and dismissed the appeals of the assessees. The findings of the Ld. CIT(A) in paras 5 to 5.3 of the order are reproduced as under :

“5. I have considered the facts of the case, basis of disallowance made by AO and submissions of appellant. It is admitted fact that the disclosures of Rs.1,03,50,000/- & Rs.58,50,000/- were made by appellant on account of undisclosed receipts from the projects namely M/s. Vraj Corporation and M/s. Vraj Developers, respectively and the evidence of these undisclosed receipts were found by department during the survey proceedings u/s. 133A of the Act. It was also admitted by appellant during survey that the said receipts are not recorded in the regular books of account of the appellant firms therefore not meant for the purpose of disclosing it to the department. These facts make it abundantly clear that had the department not conducted survey u/s. 133A at the business premises of appellant

8 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. firms and detected the undisclosed income, the appellants would not have disclosed these booking receipts to the department. Now the appellant has included these undisclosed booking receipts in its total turnover and consequently 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

9 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. 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. In the case of appellant, it was obliged to disclose the receipts of Rs.1,03,50,000/- & Rs.58,50,000/- in its books of account truly and correctly which, as admitted by appellant itself, was not disclosed in its regular books of account with the intention of hiding it to the department. This shows the appellant has acted deliberately in defiance of provisions of law and conducted dishonestly and acted in conscious disregard to its obligation. And, after conducting in this manner, it has claimed the benefit of deduction u/s. 80IB(10) also and did not pay any tax. Thus, the appellant has got the benefit of deduction even after concealing the income and not disclosing it voluntarily. It has disclosed the said income only when the department detected the

10 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. concealment during survey proceeding and confronted it to the appellant. On the similar facts, Hon'ble Delhi High Court in the case CIT Vs. Usha International Ltd. says that when the assessee is cornered by the evidence or material collected by the Revenue Authorities, even by filing by revised return assessee can gain nothing from it and he is liable for penal provisions u/s. 271(1)(c) of the Act. Similarly, different Hon'ble Courts, including Apex Court, have opined that if it is gathered by revenue that :ne omission was attributable to a intention or desire on the part of the assessee to hide or conceal the income so as to avoid the imposition of tax thereon, penalty for concealment is leviable on assessee. Here In the case of appellant, leave aside the imposition of penalty, it Is claiming not even liable to paid regular taxes on the undisclosed income detected by department which it was forced to disclose when cornered by departmental authorities with the evidence and material collected during survey proceeding. As per appellant's own admission, undisclosed receipts of Rs.1,03,50,000/- and

11 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. Rs.58,50,000/- were not recorded in the regular books of account with the intention of not disclosing it to the department. Thus, at one hand the appellant hides its receipts and conducts in conscious disregard to its obligation and deprives the exchequer with its due, on the other hand when caught, discloses the income and claims benefit u/s. 80IB(10) and gets scot free. In my opinion, the intention of Act is not to give benefit of such provisions to those assessees who disregard their obligation 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

12 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. 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 and get away by showing the fictitious higher income out of such business and claiming deduction u/s. 80IB(10) and thus increasing their capital without paying any tax as whatever the income is earned as net profit from the business, whether disclosed or undisclosed, would get exempted. In a hypothetical situation, if an assessee computes net profit of Rs.10 crores on the basis of regular books of account from a housing project entitled for

13 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. deduction u/s. 80IB(10), and during survey proceedings discloses unaccounted receipts of Rs.50 crores without giving any spec fic details, he would be benefited with the provisions of deduction u/s. 80IB(10) and can convert his black money into white without paying any tax by taking shelter of these incentive provisions. Same thing has happened in the case of appellant also. He has converted his unaccounted money into accounted income by taking shelter of the provisions of section 80IB(10) of the Act, I think the incentive provisions are not meant for such assessees. These provisions are meant for those assessees only who comply the provisions of law honestly and regard their obligation and disclose their income truly and correctly supported with all the material facts. The intention of legislature has never been to give incentive to such defaulters/evaders and encourage them further to do so, rather, intention has been to encourage such honest assessees who comply the provisions of Act and disclose their true and correct

14 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. income voluntarily. To such assessees, these incentive provisions have been meant for.

5.2. In the light of aforesaid discussion, the case of appellants clearly falls under the category which is not entitled for deduction under the incentive provisions of section 80IB(10) of the Act. The receipts of Rs.1,03,50,000/- and Rs.58,50,000/- disclosed in the hands of M/s. Vraj Corporation and M/s. Vraj Developers, as per their own admission, were not recorded in their regular books of account with the intention not to be disclosed to the department. They have wrongly claimed the benefit of deduction u/s. 80IB(10) of the Act which is meant for only those assessees who disclose their income in the returns on the basis of true and correct books of account. Any income disclosed beyond those books of account or disallowance made by AO during assessment proceedings on account of wrong facts or 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

15 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. 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 u/s. 80IB(10) of the Act. The cases

16 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. laws relied upon by appellant in its submission are clearly distinguishable as in none on the cases this aspect of issue has been the subject matter.

5.3. Without prejudice to the above, now I deal with the Issue related to head of income to assess the aforesaid unaccounted receipts. During the assessment proceedings, AO asked the assessee to furnish the specific details such as names and addresses of the persons from whom amounts were received, their PANs, amounts, dates etc. to verify the claim of appellant that these receipts are actually business receipts from, its eligible projects. However, the appellant failed to furnish those details on the plea that it does not retain such details. It is very strange to note that in respect of accounted receipts, complete details have been maintained by appellant but for unaccounted receipts, not a single detail has been furnished. In absence of such details, it is difficult to imagine how the amounts of Rs.1,03,50,000/- and Rs.58,50,000/- have been arrived as unaccounted receipts from the projects. No method or

17 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. formula has been revealed by appellant to compute such receipts and arrive to these figures. In my opinion, unless the complete details are available to establish that: these unaccounted receipts pertain to the eligible projects as received from purchasers of these two projects, these amounts cannot be treated as business receipts from the eligible projects. The general submission given oy appellant that it is engaged in the business of development of residential housing projects, therefore, unaccounted receipts are also business receipts, does not have any force in absence of specific details/documents to co-relate these receipts with eligible projects. The assessee group is having many undertakings (6 firms as per statements) developing several projects and which part of unaccounted money is received from which undertaking and where utilized is not known unless it is specifically explained and linked by appellant. There are possibilities that the unaccounted money received from other projects have been disclosed by appellant against the entitled projects with the intention to get the benefit

18 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. of section 80IB(10) of the Act. In absence of all these details, AO has correctly treated the amounts of Rs.1,03,50,000/- and Rs.58,50,000/- in the hands of M/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 Rs.1,03,50,000/- and Rs.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.”

19 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. 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 earlier years assessment order, referred to the case law which are filed in the paper book.

20 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. 7. We have considered the rival submissions and perused the material available on record. The assessee claimed deduction under section 80IB(10) of the Act. The same is reproduced as under :

“Section 80IB(10 :

(10) The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31st day of March, [2008] by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if. – (a) such undertaking has commended or commences development and construction of the housing project on or after the 1st day of October, 1998 and completes such construction,- (i) in a case where a housing project has been approved by the local authority before the 1st day of April, 2004, on or before the 31st day of March, 2008; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004 [but not later than the 31st day of March, 2005], within four years from the end of the financial year

21 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. in which the housing project is approved by the local authority;

(iii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2005, within five years from the end of the financial year in which the housing project is approved by the local authority.]

Explanation – For the purposes of this clause,-

(i) In a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the 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;

22 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. (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 [three] per cent of the

23 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. aggregate built-up area of the housing project or [five thousand square feet, whichever is higher];] (e) not more than one residential unit in the housing project is allotted to any person not being an individual; and (f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely;- (i) the individual or the spouse or the minor children of such individual; (ii) the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta.] [Explanation – For the removal of doubts, it is hereby declared that nothing contained in this sub- section shall apply to any undertaking which

24 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. executes the housing project as a works contract awarded by any person (including the Central or State Government)”

7.1. Since assessees claimed deduction out of income earned, therefore, burden is upon assessees to prove that assessees are entitled for deduction under section 80IB(10) of the Act. Assessees shall have to satisfy the authorities below that conditions of Section 80IB(10) of the Act are satisfied in this case. The salient feature of Section 80IB(10) of the I.T. Act shows that assessee has undertaken or commenced developing and building residential housing project. It is approved by the Local Authority and Completion Certificate is obtained within time provided under the above Act. There is a time limit provided for commencement and completion of the project within the stipulated period. The assessee could construct this specified area as provided in the Act. The built-up area should have limited commercial establishment and that the residential apartments have been allotted to original persons. The authorities below have held that assessee have failed to comply with the above conditions

25 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. of Section 80IB(10) of the Act. It is an admitted fact that the impugned amount was not recorded in the regular books of account of both the assessee firms. The impugned amount have been admittedly disclosed as undisclosed income which was over and above the regular income earned during the year. The assessee made disclosure of undisclosed income in the 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

26 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. 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 Hon’ble Punjab & Haryana High Court in the case of National Legguard works vs. CIT(A) & ANOTHER [2007] 288 ITR 18 held as under :.

“Special deduction under section 80HHC of the Income- tax Act, 1961 can be claimed only on showing facts which make the assessee eligible for the deduction. The burden to prove these facts is on the assessee and not on the Revenue. There could be no presumption that surrender made on account of unexplained stocks represents export income.

The assessee was a manufacturer and exporter of sports goods. It filed its return for the assessment year 1999- 2000 declaring an income of Rs.6,67,850. A survey was

27 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. conducted under section 133A on the assessee. The survey party found that the stocks physically available at the premises of the assessee were in excess by Rs.11,97,809 of the stocks reflected in the books of account. In order to cover the discrepancy, the assessee offered to disclose an additional income of Rs.12 lakhs over and above the normal business income to be taxed for the assessment year under consideration. This income was duly reflected in the profit and loss account and thereby a net profit of Rs.51,16,053 was declared. However, while working out the deduction under section 80HHC of the Act, the entire amount of Rs.51,16,053 was shown as profits of the business. The Assessing Officer did not accept the stand of the assessee and held that the excess stocks available at the premises were not recorded in the books of account on which deduction under section 80HHC of the Act was being claimed. Mere surrender by the assessee at the time of survey, on excess stock being found did not entitle the assessee to deduction under section 80HHC of the Act, which was

28 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. available only in respect of income derived from the export. This view was upheld by the Commissioner (Appeals) as well as the Tribunal. On appeal to the High Court:

Held, dismissing the appeal, that there could be no presumption that the amount surrendered represented income from exports. The assessee was not able to prove that it was. Hence it was not entitled to special deduction under section 80HHC in respect of such income.”

7.2. Learned Counsel for the Assessee, however, referred to accounts of the assessee in which assessee stated that the firm had made disclosure in survey of unaccounted impugned receipts earned from the said project. 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

29 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. 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 section 80IB(10) of the Act in assessment year. In the present appeal on showing to the satisfaction of the A.O. that condition stipulated would not have been complied with in accordance with law. Learned Counsel for the Assessee submitted that A.O. thereafter dropped the proceedings. However, it is very specific that even the Tribunal has directed that assessee

30 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. would be entitled for deduction under section 80IB(10) of the Act if assessee satisfied the conditions of the aforesaid Section to the satisfaction of the A.O. as per Law. There is nothing in the set aside Order of the A.O. if he was satisfied about the conditions of Section 80IB(10) of the Act have been complied with by the assessee. Therefore, such reference of the earlier years Order would be of no help to the assessee. Merely because assessee in the accounts have stated that impugned amount is earned from the project would of self- serving without substantiated by any evidence or material on record. Learned Counsel for the Assessee relied upon Judgment of the Hon'ble Gujarat High Court in Tax Appeal No.1199 of 2018 in the case of Pr. CIT vs. Green Associates Dated 08th October, 2018 in which the Hon'ble High Court has held as under :

The sole surviving question relates to the assessees disclosure of unaccounted receipts during the survey operation. The A.O. taxed such receipts with the aid of Section 68 of the Act. Before the higher authorities, assessee argued that this also been the assessee’s

31 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. income from development of housing project, the same should have been allowed as a deduction under section 80IB910) of the Act. The CIT(A) and the Tribunal accepted such proposition, upon which the Revenue has filed this appeal.

There is nothing on the record to suggest that the assessee had other businesses or that the undisclosed receipts were assessee’s profit out of any other activity other than development of housing project. The Tribunal came to the specific conclusion that the unrecorded consideration was also part of the assessee’s sale transaction of completed residential units and was therefore eligible under section 80IB(10) of the Act. We do not find any error in such view.

In the result, Tax Appeal is dismissed.”

7.3. The aforesaid decision would also not support the case of the assessee. In the present cases, the authorities below have not accepted the undisclosed income of the assessee had been from development of housing project. The

32 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. 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 presumption. Further, it is settled Law that

33 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. presumption and suspicion cannot take place of the proof. Therefore, this decision would not support the case of the assessee. Learned Counsel for the Assessee also referred to certain decisions of ITAT, Ahmedabad Bench, copies of which are filed in the paper book in which it has been accepted that undisclosed receipts were part of business income of the assessee. Therefore, such decisions would not support the case of the assessees. Learned Counsel for the Assessee also relied upon Judgment of the Hon'ble Bombay High Court in the case of CIT vs. Sheth Developers Pvt. Ltd., 254 CTR 127 in which it has been concluded “consequent to the retrospective amendment in Explanation to sub-section (1) of Section 158BB of the I.T. Act w.e.f. 01.07.1995, while computing undisclosed income for the block period, assessee is entitled to claim deduction from its income under section 80IB of the I.T. Act.”

7.4. This decision is clearly distinguishable on facts. Therefore, this Judgment would not support the cases of the assessees. There could be no presumption that surrendered amount would represent business income of the assessees.

34 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. Unless and until assessees satisfies the authorities below that assessees have complied with the conditions of Section 80IB910) of the I.T. Act while earning the impugned undisclosed income, assessee would not be entitled for such benefit as per Law. Considering the above discussion, we are of the view that authorities below have rightly concluded that impugned undisclosed income is income from other sources. Since assessees failed to prove through any evidence or material on record that undisclosed income has any nexus with any housing project of the assessees, therefore, assessees would not be entitled for deduction under section 80IB(10) of the I.T. Act. In view of the above, we do not find any error in the Orders of the authorities below in denying the deduction under section 80IB(10) of the I.T. Act on the undisclosed receipts so surrendered for taxation during the course of survey. There is no merit in both the appeals of the assessees. Appeals of the Assessees are dismissed.

35 ITA.Nos.2619 & 2620/Ahd/2014 M/s. Vraj Corporation, Amd M/s. Vraj Developers, Surat. Order pronounced in the open Court.

Sd/- Sd/- (O.P.MEENA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated 26th July, 2019 VBP/- Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT, Surat Bench, Surat 6. Guard File. //By Order//

Asst. Registrar, ITAT, Surat Bench Bench.