SILVER LAND DEVELOPERS P. LTD,MUMBAI vs. ACIT CIR 10(2), MUMBAI

Date of Hearing 11/07/2019 Date of Pronouncement 31/07/2019 आदेश / O R D E R आदेश आदेश आदेश PER G.MANJUNATHA (A.M):

This is an appeal filed by the assessee is directed against order of the Commissioner of Income Tax Appeals–22, Mumbai dated 19/07/2010 and it pertains to the Assessment Year 2007-08. The assessee has raised the following grounds of appeal:- IA. The Id CIT (Appeals) erred in confirming the addition of Rs,1,94,232/- made to the returned income of the appellant on account of alleged excess cash found during the course of survey action ignoring the fact that the cash found was pan of the cash receipts from the Solitaire project duly offered to tax by the appellant company. IB. The Id CIT (Appeals) erred in sustaining the action of the Id AO resulting in double addition of Rs. 1,94,232/- once as income and again on account of application thereof in the form of an asset. 1C. The Id CIT (Appeals) erred in confirming the addition of Rs.1,94,232/- , made by the Ld. AO on the sole basis of the bonafide error on the part of the director of the appellant company in clarifying a particular issue

M/s. Silver Land Developers Pvt.Ltd. during the course of survey action, which otherwise is not justified by facts and in law. 2A. The Id CIT (Appeals) erred in disallowing the deduction of Rs. 2,34,07 ,151/-claimed by the appellant u/s 80 1A (4) (iii) of the I T. Act 1961 by holding that the appellant did not comply with the requisite conditions laid down under the said section and was accordingly not eligible for the said claim for deduction, 2B. The Id CIT (Appeals) erred in not appreciating the facts of the appellants claim for deduction u/s 80 1A (4) (iii), particularly the order of the Hon. High Court Bombay as well as the provisions of section 80 IA (4) applicable to the facts of the appellants case 3. The appellant craves leave to add, alter, amend, delete and/or vary any of the above grounds of appeal

/relief claimed at any time before the decision of the appeal.

2. The brief facts of the case are that the assessee company is engaged in the business of Builder and Developer filed its return of income for AY 2007-08 on 30/10/2007 declaring total income at Rs. 73,99,676/-. A survey u/s 133A of the I.T.Act, 1961 was carried out at the business premise of the assessee on 04/10/2006. During the course of survey, inventory of physical cash was taken as per which physical cash amounting to Rs. 12,46,700/- was found. Further, cash balance as per cash book maintained by the assessee as on the date of survey was at Rs. 10,52,468/-. Therefore, difference amount of Rs. 1,94,232/- has been treated as unexplained money and accordingly, a statement was recorded on 04/10/2006, from Shri Kamlesh Shah Director of the company where he had admitted excess cash of Rs. 1,94,232/- and also agreed to offer an additional income.

to why an addition should be made in respect of excess cash found during the course of survey for Rs. 1,94,232/-. In response, the assessee has filed a letter dated 02/11/2009 and submitted that it has declared additional income of Rs. 24,50,000/- from Solitaire Project. In respect of income, in the form of excess cash found, the same is telescoped out of additional income offered for Solitaire Project. Therefore, separate addition is not called for. The AO after considering relevant facts and also taken note of admission of the Director in his sworn statement about excess cash found during the course of survey, made addition of Rs. 1,94,232/- to the returned of income. Similarly, the AO has denied the benefit of deduction claimed u/s80IA in respect of project developed by the assessee, i.e., Silver Metropolis situated at Georgian, Mumbai on the ground that the assessee has failed to fulfil conditions prescribed under the provision of section 80IA(ii) of the Act, and also the Empowered Committee has concluded that assessee is not eligible for deduction u/s 80IA(4) of the Act, 1961. The relevant findings of the AO are as under:

6.1 From the accounts of the assessee it is seen that the assessee has shown profit from Jaycoach Project to the tune of Rs. 2,34,07,151/-. However, in the computation the assessee has claimed 100% deduction from the profits of such project u/s 80IA of the Act. Further, in the notes to accounts mentioned as under: ‘Company has undertaken development of IT. Project named Silver Metropolis situated at Georgian, Mumbai which is under construction. Said project have been approved as IT. Park by Government of India, Ministry of Commerce and Industries vide their approval No.15/09/2006-ID&ID dated July 24, 2006, Pending issue of notification by Central Board of Direct Taxes, in this respect, company has re-submitted the application for amendment in original application which is still pending for approval. As this being a project approval as IT. Park entitled to Income-tax benefit as provided under subsection 4(iii} of section 80IA of the IT. Act,

M/s. Silver Land Developers Pvt.Ltd.

1961. No income have been recognized from this project in the current year' 6.2 From the above note it is clear that the project in which the assessee has claimed deduction u/s.80IA is not fully approved and certain issues have been pending with the Board. In light of the above facts, during the course of assessment proceedings the assessee was asked to furnish the relevant details in respect of claim of deduction u/s.80IA with necessary supporting evidences. It was also show caused to the assesses, in absence of any proper approval from the government agencies, why the claim of deduction u/s,80IA should not be disallowed. 6.2 In response, the assessee vide its letters dated 02-10-2009 and 10- 10-2009 submitted that the Empowered Committee' wrongly concluded that the assessee's project is not covered under the Industrial Park Scheme 2002, however, it got the relief from the Hon’ble Bombay High Court against the order of the said committee, which is still pending with the Empowered Committee, 6.3 Under the above circumstances the assessee has been given final opportunity vide order sheet noting dated 26-10-2009 to submit the relevant details to substantiate its claim of deduction. Further, considering the time barring matter involved in this case, the assessee was specially show caused as to why the deduction should not be disallowed in absence of any proper approvals from the relevant agencies by fixing the hearing on 16-11-2009 at 2.30 pm. On the said date neither the assessee / assessee's representative appeared nor filed any written submission in this behalf to substantiate its claim- In absence of any properly explanation / evidences the claim of the assessee is not allowable. Further, more, on verification of the details, the Empowered Committed clearly mentioned that the project has not been covered under Industrial Park Scheme 2002, hence deduction u/s.80IA of the Act is not allowable to the assessee. 6.4 In view of the above discussion, it is clear that the assessee has no evidence to prove that its project is covered under the relevant scheme and hence it failed to submit the details as asked for on the date of hearing. Further, more after giving ample time the assessee failed to submit any details to substantiate its claim of deduction. In absence of any proper explanation, the deduction claimed u/s 80IA of Rs. 2,34,07,151/- is disallowed to the assessee. Accordingly, penalty proceedings u/s 271(1)(c) of the Act are being separately initiated for furnishing inaccurate particulars and concealing the taxable income.

M/s. Silver Land Developers Pvt.Ltd. the course of survey amounting to Rs. 1,94,232/-. Similarly, the Ld.CIT(A) has confirmed additions made by the AO towards disallowance of deduction claimed u/s 80IA(4) of the Act, 1961, on the ground that the Empowered Committee has categorically held that the assessee is not eligible for the benefit of Industrial Park Scheme, 2002 and accordingly, withdrawn approval granted to the assessee vide their letter dated 06/01/2009. Although, the Hon’ble Bombay High Court, has set aside the order of the empowered committee vide their order dated 16/06/2009, but on perusal of the order of the Hon’ble High Court, it is very clear that the High Court has set aside the order on the ground that the assessee was not given reasonable opportunity of being heard, otherwise the Court has not decided the issue of eligibility for deduction u/s 80IA(4) of the Act, 1961. Therefore, he opined that the assessee has not fulfilled conditions prescribed u/s 80IA(4) and accordingly, no reasons to deviate from the findings recorded by the AO while rejecting deduction claimed u/s 80IA(4) of the Act, 1961.

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 Ld. CIT(A) and reject ground taken by the assessee. In so far as rejection of deduction claimed u/s 80IA(4)(iii) in respect of its project Silver Metropolis situated at Georgian, Mumbai, 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) of the Act, 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. We, further, noted that 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 M/s. Silver Land Developers Pvt.Ltd.

Hon’ble Bombay High Court in respect of eligibility for deduction u/s 80IA(4)(iii) of the I.T Act, 1961. We, further noted that the 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. We do not find any error in the findings of the Ld. CIT(A). Hence, we are inclined uphold findings of the Ld. CIT(A) and reject ground taken by the assessee

Order pronounced in the open court on this 31 /07/2019