ACIT, NEW DELHI vs. M/S. TANEJA DEVELOPERS & INFRA LTD., NEW DELHI

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “D ”: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA No. 1943, 1944/Del/2012 (Assessment Year: 2006-07 & 2007-08) Taneja Developers and Vs. DCIT, Infrastructure Limited Central Circle-18, 9, Kasturba Gandhi Marg, New Delhi New Delhi PAN: AABCT3582A (Appellant) (Respondent)

ITA No. 1907/Del/2012 (Assessment Year: 2006-07) ACIT, Vs. Taneja Developers & Central Circle-18, Room No. Infrastructure Ltd, 327, 3rd Floor, ARA Centre, 9, Kasturba Gandhi Marg, Jhandewalan Extn, New Delhi New Delhi PAN: AABCT3582A (Appellant) (Respondent)

ITA No. 60/Del/2014 (Assessment Year: 2007-08) DCIT, Vs. Taneja Developers & Central Circle-18, Room No. Infrastructure Ltd, 327, 3rd Floor, ARA Centre, 9, Kasturba Gandhi Marg, Jhandewalan Extn, New Delhi New Delhi PAN: AABCT3582A (Appellant) (Respondent)

ITA No. 2178 & 2177 /Del/2013 (Assessment Year: 2006-07 and 2008-09) Taneja Developers and Vs. DCIT, Infrastructure (Panipat) Ltd, Central Circle-18, 9, KG Marg, New Delhi New Delhi PAN: AACCT4122B (Appellant) (Respondent)

Assessee by : Shri Salil Aggarwal, Adv Shri Shailesh Gupta, CA Revenue by: Shri Vijay Varma, CIT DR Page | 1

Date of Hearing 10/04/2018 Date of pronouncement 25/06/2018

O R D E R PER PRASHANT MAHARISHI, A. M. 1. These are the six appeals of two assesses Namely Taneja Developers and Infrastructure Limited and Taneja Developers and Infrastructure (Panipat) Limited of one group arising out of same search proceedings involving three assessment years. As they involve similar grounds those were heard together and disposed of by this common order. 2. First, we take up the appeal of Taneja Developers and Infrastructure Limited for Ay 2006-07 and 2007-08. A Y 2006-07 ITA No. 1907/Del/2012 (By Revenue against order of CIT (A) dated 16-02-2012) 3. This appeal is preferred by the Ld. Assistant Commissioner Of Income Tax, Central Circle-18, New Delhi (the Ld. AO) against the order of the Ld. Commissioner Of Income Tax (Appeals) – III, New Delhi dated 16-02- 2012 for Assessment Year 2006 – 07 delivered in appeal preferred by the assessee against the order passed by the Ld. AO u/s 153A read with section 143 (3) of The Income Tax Act 1961 on 31/10/2010. 4. The Ld AO has raised the following grounds of appeal in ITA No. 1907/Del/2012 for the Assessment Year 2006-07:- “1. On the facts and in the circumstances of the case the ld CIT(A) has erred on facts and in law in deleting the addition of Rs. 40,00,000/- made by the Assessing Officer u/s 68 of the Income Tax Act, 1961. 2. On the facts and circumstances of the case, the ld CIT(A) was not justified in holding that the assessee has discharged its onus of Page | 2

substantiating the source of deposit, without appreciating the statements given by the entry operator of providing bogus accommodation entries in lieu of cash and corresponding acceptance of this fact by chairman of the assessee group. 3. The order of the CIT(A) is erroneous and is not tenable on facts and in law.” 5. Brief facts of the case is that assessee is a company engaged in the business of real estate owners, builders, colonizers and developers, promoters etc. The assessee filed its return of income on 30.11.2006 declaring total income of Rs. 10,69,506/-. Search and seizure operation under section 132 of The Income Tax Act, 1961 was carried out on 05.01.2009 in the Taneja – Puri group of cases. Therefore, notice under section 153A was issued to the assessee on 9/11/2009. Assessee filed return on 20/8/2010 declaring a business loss of Rs. 7,64,88,660/- and current depreciation of Rs. 7,21,421/- , book profit under section 115JB was declared at Rs. 10,46,115/-. 6. In the return filed in response to notice under section 153A the assessee made additional claim for deduction of expenses of Rs. 7.82 crores. Assessee put note that inadvertently the company could not claim interest expenditure proportionately on accrual basis in the regular return. It is being claimed in the return filed in response to notice under section 153A of the act. Ld. AO dismissed the claim of the assessee holding that that the provisions of section 153A are not for the benefit of the assessee but only for revenue, hence, no additional claim is allowable. The Ld. AO further stated that the assessments under section 153A are in relation to undisclosed income and therefore new claim of deduction, allowance cannot be entertained in the completed

assessment. He therefore, held that additional claim of the assessee of Rs. 7 827 9586/- is disallowed. Further the Ld. AO found that assessee company has received an amount of Rs. 40,00,000/- from M/s cubic commercial resources Ltd which has been shown as an outstanding liability in the form of advance received. As on 31/3/2006 the outstanding have been shown at Rs. 4 0, 00, 000/–. Ld. assessing officer noted that survey under section 133A was conducted by investigation wing, New Delhi on 20/11/2007 at the business premises of Sh. S K Gupta , a chartered accountant. During the course of survey, it was noted that Shri S K Gupta was controlling various companies from a small office without having sufficient infrastructure and power for running the business affairs of such company. During the course of survey, statement of Mr. Gupta ( CA) was recorded who accepted that the various companies controlled by him do not have actual business activities but are used only to issue accommodation entries. The above company cubic commercial resource Ltd was also found to be one of the companies operated by Mr. S. K. Gupta. It was also noted during the survey that Mr. Gupta was used to maintain „Conduit wise ledger‟ accounts. In the account, details of cash received, cheques issued, commission/ premium paid in respect of the party was also noted. In case of Taneja- Puri group of cases, Mr. A. S. Taneja, Advocate was the conduit. In the accounts with respect to entries given to this group was debited in the name of „ Aneja” or Taneja. As a result of search in the group Mr. Gupta (CA) admitted various companies controlled by him do not have any substantial business activity and were only used to provide Page | 4

accommodation entries, simultaneously with search on Taneja group on 5/1/2009 and survey under section 133A was also conducted on Mr. S K Gupta. During the course of search, statement of Mr. S K Gupta (CA) was recorded on 7/1/2009, the director of this company was also examined with respect to the accommodation entries from Sri S K Gupta . The Director in his statement surrendered sum of Rs. 6.23 crores in question No. 5 of the statement with respect to accommodation entries of Mr. S.K. Gupta obtained by the group. 7. In this background, the Ld. assessing officer asked the assessee to furnish full details regarding the receipt of Rs. 40 lakhs from M/s cubic commercial resources private limited. Further AO asked the assessee to produce the directors of this company. The assessee submitted that this company has booked one plot of land admeasuring 5000 square meters at the rate of Rs. 4000/- per square meter at Moradabad. The total consideration for the above plot was agreed at Rs. 2 crores and advance of Rs. 40 lakhs was received from this company through cheques. Subsequently it was stated that the deal was cancelled and Rs. 38 Lacs were refunded to this company through cheque on 17/3/2009. 8. The Ld. assessing officer did not believe the explanation of the assessee. It was stated by him that total income declared by the cubic commercial resources private limited is just Rs. 14,499/-. Further Paid up share capital is only Rs. 27.50 lakhs and therefore the financial worth of this company is not satisfactorily explained. The Ld. AO further noted that this company is controlled by the accommodation entry provider wherein the name of this company is mentioned. Further, the director of the group Page | 5

also agreed to offer the entries with Mr. S K Gupta as income of the assessee, in spite of that this amount has not been offered as additional income in the return of income of the assessee company . Therefore, the Ld. assessing officer made an addition of Rs. 40 Lacs as income of the assessee as unexplained credit under section 68 of the income tax act. Consequently the total taxable income of the assessee was determined at Rs. 62,19, 965/–. 9. The assessee aggrieved with the order of the Ld. assessing officer preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) A dismissed the claim of the assessee of allowability of the additional expenditure on account of interest holding that assessee is not entitled to the additional benefit in search cases. Even otherwise, on merits the claim of the assessee is not allowable. With respect to the addition of Rs. 40 lakhs on account of unexplained credit under section 68 of the income tax Act, he noted that assessee has discharged the initial onus cast upon him of substantiating the source of deposit by filing the documents in the nature of receipt No. 70915 issued by the appellant to M/s cubic commercial resource Ltd on 9-4-05 as advance against booking of residential plot at Moradabad. Assessee has also submitted advance registration form filed as on 9/4/2005. He further held that the above deposit has been accepted by the assessee through cheque and subsequently it is refunded. He noted that that though the name of company cubic commercial resource private limited figure in the statement of Sh. S. K Gupta recorded on 20/11/2007 wherein he has accepted that M/s cubic commercial resource Ltd has provided accommodation entries to the Page | 6

group companies but the transactions of Rs. 40 Lacs does not form part of the total disclosure of of Rs. 6.23 crores made by the director of the group in his statement recorded on 07/01/2009. He therefore held that merely because M/s cubic commercial resource Ltd figures in the list of accommodation entry providing companies, it would not lead to the conclusion that all the transactions of that company with the appellant group would by necessary implication be as such treated as unexplained cash credit. He further stated that during the course of assessment proceedings neither the cross examination was provided to the appellant or its directors of Sri S. K. Gupta . He further held that during the course of search, no incriminating documents have been found with respect to the above deposit of Rs. 40 Lacs in the name of the above company and therefore there is no incriminating material found during the course of search and hence even on that basis the addition in the hands of the assessee cannot be made. Hence, ld AO has filed this appeal before us. 10. Ld. departmental representative submitted that in the present case whole sequence of events need to be looked into for understanding nature of the addition. He submitted that on 20.11.2011 survey under section 133A was carried out on Shri S K Gupta, CA. He further referred to para 19 of the assessment order wherein such Facts are mentioned. He Submitted that based on the statement of the assessee, which culminated into search on 5/1/2009. During that search, statement of Shri Gupta was also recorded. When the statement of Mr. Gupta was confronted to the director of the group, he surrendered a sum of Rs. 6.23 crores as undisclosed income provided by Mr. Gupta as accommodation entries. He Page | 7

referred to para No. 16 of assessment order. He further referred to para No. 17 of the order where the details of the transactions of Rs. 40 lakhs are mentioned. He further stated that the company from whom accommodation entries were taken by the assessee is the same party from whom advance against sale of plot is shown. He further stated that the same company is a conduit company. He referred assessment order wherein it has been shown that there is negligible net worth of this company. He further stated that assessee has failed to show that any transaction was carried out with this company. He submitted that all the documents shown by the assessee are make-believe statement. He stated that where the plot is situated is not proved by the assessee. Even before the coordinate bench, the assessee is unable to show which plot of land was transacted by the assessee with that company. He referred to the various documents relied upon by the assessee to show that there is no address given on these documents of the plot of land and selected by the assessee. In the end, he referred to the decision of the coordinate bench in case of Parag Dalmia in ITA No. 5499/del/2017 dated 26 – 2 – 2018 and the decision of Hon Supreme court in case of Mr. Mukund Rai K Shah 290 ITR 433. 11. With respect to the incriminating document found during the course of search he submitted that there is a statement of Mr. Gupta who provided the accommodation entry, there is a statement of the director of the group who accepted that he has entered into the transaction of buying accommodation entries from Mr. SK Gupta and based on that he surrenders the amount. Further, the company with whom assessee has Page | 8

transacted is also part of the disclosure made by the director. From the same company assessee has accepted the advance against plot deposit. Therefore, he stated that there is a complete nexus between the addition made and the search material gathered by the revenue. 12. The Ld. authorized representative vehemently supported the order of the Ld. CIT(A). He submitted that the assessment year in question is assessment year 2006-07 wherein the original assessment was completed on 31/3/2008. Therefore, according to him, it is „concluded assessment‟. He further stated that before the completion of the assessment under section 143 (3) the statement of Sh. Gupta was available with the revenue. He further stated that in the concluded assessment the addition could only be made based on incriminating material found during the course of search. In the present case, the only material that is found is of Mr. SK Gupta‟s statement. Therefore, he submitted that a statement could not be an incriminating material. For this proposition, he relied on the decision of the Hon‟ble Delhi High Court in Meeta Gutgutia 395 ITR 596 as well as, 241 taxman 199. He further referred to the statement of the director of the group and stated that he has not committed or not made any disclosure on account of the amount of plot deposit given by that company. There may be other transactions with that company and they are not in dispute here. He therefore submitted that the transaction of acceptance of advance against sale of plot by the assessee from that company was not at all part of disclosure. 13. During the course of his argument, the bench made a specific query about the location, address, size of the plot, ownership and accounting in Page | 9

whose books of land at Moradabad, he referred to the decision of the ld CIT(A) and submitted that the order of the ld CIT(A) even on the merit is correct. He submitted that tribunal should not dislodge the finding of the ld CIT(A). To support his contention, he referred the decision of Hon‟ble Kolkata High Court in Prahlad Bhattacharya V CIT 386 ITR 708 para No. 20 wherein it has been held that Tribunal fell into an error in interfering with the order of the Commissioner of Income tax (Appeals) without first dislodging the reasons given by him. Assuming that another view was possible, that itself would be no ground to interfere with the order of the Commissioner of Income-tax (Appeals) unless it is shown that the appreciation of evidence by the Commissioner of Income-tax (Appeals) was either perverse or untenable and that in holding in favour of the assessee the Commissioner of Income-tax (Appeals) either ignored material evidence or that the view taken by him was patently untenable. Therefore his submission was that that unless the order of the Ld. CIT – A is found to be perverse or patently untenable, then only the coordinate bench has right to dislodge the finding of the Ld. CIT appeal. He submitted that in present case none existed. He submitted that at page No. 345 of the paper book the details of the amount of advance received against sale of plot is mentioned. He submitted that the party who gave the advance is assessed to income tax and the complete details with respect to the assessee were provided to the assessing officer. The Ld. AO merely based on this information commented that the assessee does not have any worth. He has not carried out any independent enquiry with respect to the above company. He further referred to the decision of the Page | 10

Hon‟ble Supreme Court in case of Orissa Corporation 159 ITR 78 and stated that the Ld. AO should have issued summons to the directors of that company to examine the veracity of the claim made by the assessee. He further referred to the decision of Hon‟ble Supreme Court in case of PADMASUNDARA RAO (DECD.) AND OTHERS VS.STATE OF TAMIL NADU AND OTHERS 255 ITR 1478 page No. 153 to state that the decision cited by the Ld. departmental representative do not apply to the facts of the case. He read the particular para of the decision of the Hon‟ble Supreme Court wherein it is held that “Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morrin in Herrington v. British Railways Board [1972] 2 WLR 537 (HL). Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases.” Therefore, he submitted that the decisions relied upon by the Ld. departmental representative of Mr. Parag Dalmia and on the MukundRai K Shah does not apply to the facts of the case. 14. The Ld. departmental representative vehemently contested in rejoinder the argument of the Ld. AR. He submitted that that apparently in this case there are judicial precedents available that when section 153A is invoked the provisions of section 148 cannot be exercised by the AO. He therefore stated that as in this case the provisions of section 153C are Page | 11

applicable on the issue of addition involved in the present appeal section 148 not have been invoked. He further referred to page number 345 to 347 of the paper book submitted by the assessee wherein the details of the amounts received by the assessee is mentioned. He further stated that the stamp paper is dated 17/3/2009, whereas the search took place on 5/1/2009, therefore, it is apparent that the document is created by the assessee immediately after the date of search just to avoid this consequence. He further stated that entry was squared up by the assessee immediately. He stated that these are the self-serving documents prepared by the assessee without any basis. He further challenged the assessee to show that which plot was transacted and who owned that. He further stated that assessee must show where this land is appearing in the balance sheet of the assessee of the identical sites and what was the price on the date of the transaction. He further stated that there is no whisper by the assessee why this transaction was cancelled by the assessee immediately after the search. He submitted that the documents are self-serving and does not prove that the transaction entered into by the assessee is genuine. 15. We have carefully considered the rival contentions and the orders of the lower authorities. Admittedly assessee has taken a credit of Rs. 40 Lacs from M/s Cubic Resources Private Limited which is a company operated by Mr. S K Gupta who is alleged to be an entry operator. It is also a fact that during the course of search the director of the group has disclosed a sum of Rs. 6.23 crores because of accommodation entry taken by the group from Mr. Gupta. However we find that while making the addition by Page | 12

the Ld. AO of the above sum there is no mention of any material found during the course of search with respect to the above transaction of Rs. 40 Lacs. It is also not shown that in the disclosure of Rs. 6.23 crores made by the director of the group whether these Rs. 40 Lacs are included or not. If these details do not exist then naturally in the concluded assessment the addition is required to be made only based on incriminating material. With respect to this transaction, we do not find that the Ld. AO has made any reference to the incriminating document. Merely the statement of Mr. SK Gupta cannot be any incriminating document without finding any corroborative material with respect this transaction. The amount of advance received by the assessee was earlier disclosed to the revenue and was not discovered during the course of search. The entries of the advance received by the assessee were part of the regular books of accounts maintained by the assessee and are disclosed in the balance sheet. Further during the course of assessment proceedings in pursuance to notice under section 153A of the Act, assessee submitted details with respect to the above transactions which have been not further enquired by the AO. In fact the only claim of the revenue is that there is a disclosure made in the statement by the assessee as well as the accommodation entry provider. However, the revenue could not show with respect to this transaction, where in the statement this disclosure has been made. Further it was also not shown to us that this transaction was not disclosed by the assessee before the Ld. assessing officer in assessment under section 143 (3) of the act when the Ld. assessing officer himself has noted that this amount is shown as Page | 13

received from the above company as advance against sale of plot. Naturally, therefore, there is no „incriminating evidence‟ found during the course of search. Even otherwise, each document found during the course of search cannot become an incriminating material based on which the addition can be made in the hands of the assessee. With respect to the statement of Mr. SK Gupta and the director of the assessee group Hon‟ble Delhi High Court[2017] 395 ITR 526 (Del) in The Principal Commissioner of Income Tax v. Meeta Gutgutia Prop. M/s. Ferns “n” Petals is categorically held that merely a statement cannot be an incriminating material. Even otherwise, the circular issued by the CBDT also states that merely a statement is not enough to sustain any addition in the hands of the assessee in absence of any corroborative material. As we have not been shown any corroborative material with respect to impugned transaction of Rs. 40 Lacs we are not inclined to interfere with the order of the Ld. CIT(A). 16. Further with respect to the argument of the Ld. Departmental Representative that when proceedings under section 153A were pending before the assessing officer the action cannot be taken under section 148 of the income tax act. This argument itself suggests that the material available with the revenue was fit for action under section 148 of the income tax act not under section 153A of the income tax act. According to us the provisions of section 153A/ 153C appeals (in different field when the material was found during the course of search which is incriminating in nature then the provisions of section 153A would be applicable and when the material is found belonging to or pertaining to a different Page | 14

person other then the person searched, provisions u/s 153C can be invoked. It clearly shows that these provisions would be invoked only when there is a search and there is an incriminating material found during the course of that search. Looking at the provisions of section 148 of the income tax act it is also operating in different field and can be invoked in different circumstances. These provisions can be invoked independently if they satisfy the condition of having tangible material coming into the possession of the Ld. assessing officer subsequent to the assessment completed, which shows escapement of income in the hands of the assessee. Therefore it is for the revenue to look into the both the provisions and decide on the facts of each case which provision of the law required to be invoked in that particular circumstances. The our role is only to look whether the provision invoked under either of the section is justified on its own legs. 17. With respect to the argument of the Ld. authorized representative citing the decision of the Hon‟ble Kolkata High Court (386 ITR 708), we would also like to refer the decision of the Hon‟ble Delhi High Court in case of sonal constructions 359 ITR 532 wherein it is held that It is equally true that while examining the evidence, the Tribunal is not expected to put on blinkers ; wherever necessary, it should scratch the surface, probe deeper and draw the appropriate inferences which accord with the normal course of human conduct and probabilities. Let us not forget that tribunal is the final fact finding authority and is duty bound to investigate, probe deeper and examine the evidences with open eyes looking at the circumstantial facts surrounding the case and modus Page | 15

operandi adopted by the assessee. If the issue involves clear-cut tax evasion , tribunal is duty bound to speak louder as it is the larger duty of any statutory authority. The issues before the Hon'ble Kolkata High Court was of addition u/s 68 of Rs. 2,40,000/- of gift from blood relations. In that circumstances the findings were given. The issue before us is of disclosure of Rs. 6.23 crores of bogus accommodation entries accepted by the assessee‟s director in the statement u/s 132(4) of the Act when confronted with the statement of entry operator Mr. S.K. Gupta. Therefore, the facts of the case incline us to follow the decision of Hon'ble Delhi High Court. Despite query from the bench, assessee did not given the details of plot transacted. This is with reference to the nature of the documents produced by the assessee to justify the identity of the company, creditworthiness of the company and the genuineness of the transactions. We do not have any hesitation in holding that the documents produced by the assessee do not inspire any confidence in all the 3 ingredients of section 68 in the present case. We are in disagreement on the issue of findings of the ld CIT(A) that transaction of the Cubic Resource are genuine. Further, we are also in disagreement that cross examination of Shri S.K. Gupta should have been given to the assessee. According to us the assessee has failed to establish the creditworthiness and genuineness of the transaction. 18. But for the only reason that the Ld. AO has invoked the provisions of section 153A of the income tax act to make this addition without any incriminating evidence, respectfully following the decision of the Hon‟ble Delhi High Court in Meeta Gutguttia ( Supra) following the decision of the Page | 16

Hon‟ble Delhi High Court in CIT versus Kabul Chawla, we agree with the order of the Ld. CIT – A that there is no incriminating material found during the course of search with respect to this addition. In view of this, we dismiss ground No. 1 and 2 of the appeal of the revenue. 19. In the result ITA number 1907 /del/2012 for assessment year 2006 – 07 filed by the revenue is dismissed.

ITA No. 1943/Del/2012

(By Assessee against order of CIT (A) dated 16-02-2012)

year and as such, whether sales were made or not are irrelevant for the purpose of claiming the said expenditure. 2.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that income has to be computed as per the provisions of the Act and not only on the basis of books of accounts prepared by the appellant company. 2.4 That the learned Commissioner of Income Tax (Appeals) further grossly erred in relying on the judgments totally inapplicable to the facts of the case. 3. That the learned Commissioner of Income Tax (Appeals) has in any case failed to appreciate the fact that, amount claimed was of Rs. 6.93.97,767/- and not, Rs. 7,82,79,586/-.Thus, the learned Assessing Officer inadvertently disallowed excess amount of Rs. 88.81,819/- which should never have been disallowed, as it was never claimed by the appellant company and, as such, disallowance of Rs. 88,81,819/- may kindly be deleted. 4. That without prejudice to the above, if the said expenditure is not found to be allowable in the instant assessment year, then expenditure incurred of Rs. 6,93,97,767/- it may be directed to be allowed in Assessment Year 2008-09. 5. That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in sustaining an addition of Rs. 11,50,460/- without appreciating the fact that the same addition was made by Assessing officer in original proceedings under section 143(3) and as such, addition made in the impugned order was double addition, which should have been deleted as such. 6. That further the learned Commissioner of Income Tax (Appeals) has failed to appreciate that appellant company furnished sufficient details/evidences during the course of assessment proceedings to prove the genuineness of brokerage and interest, which the assessing officer without providing any valid opportunity and, had made the addition on the basis of suspicion and surmises. 7. That the learned Commissioner of Income Tax (Appeals) has further erred in sustaining the levy of interest u/s 234B of the Act, which is not leviable on the facts of the appellant company.” 21. As during the course of hearing of the above appeal the Ld. authorised representative fairly agreed that as the claim of the assessee is a fresh claim made during the course of search proceedings, which is not emanating out of any undisclosed income or material found during the

course of search, therefore, same is not allowable to the assessee in view of the decision of the Hon‟ble Delhi High Court in CIT versus Kabul Chawla 380 ITR 573, the appeal of the assessee is dismissed.

ITA No. 1943/Del/2012 Assessment Year 2007-08 ( By Assessee against order of CIT (A) dated 17-02-2012

under section 153A are denovo proceedings and once notice under section 153A is issued, than even the original return of income under section 139 (1) does not exist for the purposes of law. Thus, statutory condition of filing a fresh return of income under section 153 A in itself pre supposes the fact that fresh claim may be made by assessee, and in any case, claim made by the appellant was a legal claim and, not a fresh claim perse w hich should have been allowed as such. 2.2 That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts in failing to appreciate that, the said expenditure were duly incurred during the impugned assessment year and as such, whether sales were made or not are irrelevant for the purposes of claiming the said expenditure. 2.3 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that the income has to be computed as per the provisions of the Act and not only on the basis of books of accounts prepared by the appellant company. 2.4 That the learned Commissioner of Income Tax (Appeals) further grossly erred in relying on the judgments totally inapplicable to the facts of the case. 3. That without prejudice to the above, if the said expenditure is not found to be allowable in the instant assessment year, then the expenditure incurred of Rs. 13,17,52,079/- it may be directed to be allowed in the Assessment Year 2008-09. 4. That further the learned Commissioner of Income Tax (Appeals) ignored the fact that the appellant company furnished sufficient details/ evidences during the course of assessment proceedings to prove the genuineness of brokerage and interest, even than the assessing officer without providing any opportunity what so ever mechanically brushed aside the documents furnished by the appellant company and made an addition on the basis of suspicion and surmises. 5. That the learned Commissioner of Income Tax (Appeals) has further erred in sustaining the levy of interest u/s 234B of the Act, which is not leviable on the facts of the appellant company.” 24. The brief facts of the case is that assessee, pursuant to search under section 132 of the Act on 5/1/2009, in response to notice under section 153A issued on 9/11/2009, furnished return of income declaring total loss of Rs. 1 2, 12, 11, 764/– on 20/8/2010. The original return was filed on 15/11/2007 declaring total income of Rs. 9 3, 72, 590/–. Therefore, it is Page | 20

apparent that the income of the assessee, instead of going up in return in response to notice under section 153A, has gone down substantially. On Inquiry it was found that in the return filed in response to notice under section 153A, the assessee has made additional claim for expenses of Rs. 13,17,52,079/–. It was the claim of the assessee that assessee has paid expenses, interest and brokerage amounting in all of Rs. 134270655/– out of which only Rs. 25,18,576/– was claimed in the original return and therefore the balance of Rs. 13,17,52,079/– was the additional claim of expenditure allowability was made by the assessee. In the return of income the assessee pointed by putting up note that inadvertently the company could not claim interest, brokerage etc on accrual basis in the original return and therefore same is claimed in the return under section 153A is legally available under the law and accepted accounting principles. 25. The Ld. assessing officer disallowed the claim of the assessee stating that the provisions of section 153A are for the benefit of revenue only and no additional claim is allowable under section 153A relying on the decision of the Hon‟ble Supreme Court in case of CIT versus sun engineering works private limited 107 CTR 209. He also placed the reliance on the decision of Jodhpur bench of tribunal in case of Sun City Alloys private limited versus ACIT (2009) 124 TTJ 674. 26. Consequently he passed order under section 153A read with section 143 (3) of the act on 31/12/2010 determining total income of Rs. 9 372591/– at original return filed by the assessee on 15/11/2007.

assessee. The claim of the assessee was that that assessee has incurred the expenditure of expenses, interest and brokerage amounting to Rs. 1 3, 42, 70, 655/– and out of that in the original return filed by the assessee it has claimed the deduction of only Rs. 25,18,576/– and therefore the sum of Rs. 13,17,52,079 was not claimed in the original return of income and therefore it is claimed in the return filed in response to the notice under section 153A of the income tax act. The Ld. assessing officer disallowed the above claim stating that provisions of section 153A are for the benefit of the revenue. On appeal before us also in our order in ITA No. 1944/Del/2012, we have confirmed the order of the Ld. AO relying upon the decision of the Hon‟ble Delhi High Court in CIT versus Kabul Chawla (supra). 36. On the above addition, the Ld. assessing officer initiated the penalty proceedings. He held that apart from the legal issues , even on merit the claim of the assessee was not found acceptable as it was noticed that after claiming those expenses in the computation of income, the assessee has not revised its opening balance of the project work in progress of the subsequent assessment year. Thus, the assessee has tried to claim the same expenditure twice, once in the present assessment year by claiming in the computation of income and in the subsequent year based on its books of accounts. Therefore it was stated that by making additional claim of expenses in the return of income filed by the assessee under section 153A, which have already been claimed by the assessee in the original return of income filed for the subsequent assessment year the assessee has tried to claimed by deduction, thereby Page | 24

furnished inaccurate particulars of income. Therefore the Ld. AO levied the penalty of Rs. 4,43,47,750/– under section 271 (1)(c) of the act vide order dated 28.03.2013. 37. On appeal before the Ld. CIT(A) he deleted the penalty. He held that since in the present case the appellant in the return of income filed under section 153A relying on the accounting principle changed its method of accounting, which was not accepted by the Ld. assessing officer, therefore he held that the claim is found to be in the „realm of law‟ i.e. a legal claim, no penalty would be leviable even if the claim were untenable in law. He also held that mere disallowance of claim did not ipso facto warrant penalty. 38. The Ld. departmental representative vehemently supported the order of the Ld. AO. 39. The Ld. authorized representative stated that it is a case of mere disallowance of expenditure on which penalty for furnishing inaccurate particulars cannot be levied. He relied vehemently on the order of the Ld. CIT – A wherein he has held that claim of the assessee is legal, which was rejected by the Ld. AO. 40. We have carefully considered the rival contentions and the orders of the lower authority of assessment as well as of penalty. The present case the assessee has made a fresh claim under section 153A of the income tax act of the proportionate expenditure, which was originally claimed, partly in the original return and the balance was claimed in the return under section 153A of the income tax act. Admittedly the balance expenditure which is claimed by the assessee in return filed under section 153A of the Page | 25

income tax act was already shown in the project expenditure for that year at the close of the year which carried forward in the next year as opening project work in progress. Therefore, in the subsequent year the same are also claimed as expenditure. We do not find any infirmity in the order of the Ld. assessing officer to this finding. However, with respect to the penalty the claim of the assessee was rejected at the threshold itself based on the decision of the Hon‟ble Supreme Court in case of Sun engineering works private limited (supra). The claim of the assessee was also examined on merits of the case by the assessing officer as well as by the 1st appellate authority. The Ld. CIT(A) held that the claim of assessee was based on accounting principles changing method of accounting. It was not acceptable to the Ld. assessing officer and therefore it was rejected. Mere rejection of the claim, which is found untenable, does not lead to penalty for furnishing of inaccurate particulars. Even otherwise the complete details of the expenditure, the accounting policy followed by the assessee, the claim of the assessee in the original assessment proceedings under section 143 (3) of the act were already before the Ld. assessing officer. It was merely a claim that whether the expenditure should be carried on in the project work in progress or allowable as expenditure in the year in which it is incurred in case of the developer. The Ld. departmental representative could not controvert finding of the Ld. CIT – A that the claim of the assessee is legal and based on the method of accounting. On reading the various paragraphs of the order of the Ld. CIT – A wherein he has given reasons for deletion of the penalty, we do not find any infirmity in his order in deleting the penalty. In view of Page | 26

this the order of the Ld. CIT – A is confirmed and appeal of the revenue is dismissed. 41. In the result ITA No. 60/ DEL/2014 filed by the revenue is dismissed.

Taneja Developers and Infrastructure ( Panipat) Limited

ITA No. 2178/Del/2013 ( By Assessee for Ay 2006-07) 43. The assessee has raised the following grounds of appeal in ITA No. 2178/Del/2013 for the Assessment Year 2006-07:- “1. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining a disallowance of Rs. 3, 57, 79, 780/- representing expenditure incurred on brokerage of Rs. 3, 56, 77, 663/- and other expenses of Rs. 1, 02, 118/- claimed in the return of income filed in response to the notice under section 153 A of the Act.

1.1 That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in failing to appreciate that, proceedings under section 153A are denovo proceedings and once notice under section 153A is issued, than even the original return of income under section 139 (1) does not exist for the purposes of law. Thus, statutory condition of filing a fresh return of income under section 153A itself pre supposes the fact that fresh claim may be made by assessee, and in any case, claim made by appellant was a legal claim and, not a fresh claim perse which should have been allowed as such. 1.3 That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts in failing to appreciate that, the said expenditures were duly incurred during the impugned assessment year and as such, whether sales were made or not are irrelevant for the purpose of claiming the said expenditure. 1.4 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that income has to be computed as per the provisions of the is Act and not on the basis of books of accounts prepared by the appellant company. 1.5 That the learned Commissioner of Income Tax (Appeals) further grossly erred in relying on the judgments totally inapplicable to the facts of the case of the appellant company. 2. That without prejudice to the above, if the said expenditure is not found to be allowable in the instant assessment year, then expenditure incurred of Rs. 3,57,79,780/- may be directed to be allowed as part of the cost of project in proportion to sales booked by the appellant company under the percentage of completion method in various assessment years. 3. That the learned Commissioner of Income Tax (Appeals) has further erred in sustaining the levy of interest u/s 234A and 234B of the Act, which are not leviable on the facts of the appellant company. It is therefore prayed that, disallowances/additions so made and, sustained along with interest levied may kindly be deleted and, appeal of the appellant company be allowed.” 44. The assesee has raised the following grounds of appeal in ITA No. 2177/Del/2013 for the Assessment Year 2008-09:- “1. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in sustaining a disallowance of Rs. 24, 54, 43, 885/- representing expenditure incurred on brokerage, interest of Rs. 22, 98, 89, 297/- and interest income Rs. 1, 55, 54, 588/- claimed in the return of income filed in response to the notice under section 153A of the Act. Page | 28

1.1 That the learned Commissioner of Income Tax (Appeals) has erred in law and on facts in failing to appreciate that, proceedings under section 153A are denovo proceedings and once notice under section 153A is issued, than even the original return of income under section 139 (1) does not exist for the purposes of law. Thus, statutory condition of filing a fresh return of income under section 153A itself pre supposes the fact that fresh claim may be made by assessee, and in any case, claim made by appellant was a legal claim and, not a fresh claim perse which should have been allowed as such. 1.3 That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts in failing to appreciate that, the said expenditures were duly incurred during the impugned assessment year and as such, whether sales were made or not are irrelevant for the purpose of claiming the said expenditure. 1.4 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that income has to be computed as per the provisions of the Act and not based on books of accounts prepared by the appellant company. 1.5 That the learned Commissioner of Income Tax (Appeals) further grossly erred in relying on the judgments totally inapplicable to the facts of the case of the appellant company. 2. That without prejudice to the above, if the said expenditure is not found to be allowable in the instant assessment year, then expenditure incurred of Rs. 22, 98, 89, 297/- may be directed to be allowed as part of the cost of project in proportion to sales booked by the appellant company under the percentage of completion method in various assessment years. 3. That, as regards, addition of Rs. 1,55,54,588/- on account of interest income received, learned CIT (A) has erred in not disposing off the same by a speaking order, whereas, he dismissed the said ground of the appellant company without going into the merits of the issue. 4. That the learned Commissioner of Income Tax (Appeals) has further erred in sustaining the levy of interest u/s 234A and 234B of the Act, which are not leviable on the facts of the appellant company.” 45. Both the parties confirmed the facts of the case as similar to the case of Taneja developers and Infrastructure Limited for AY 2006-07 and 2007- 08 where in fresh claims were made. We have also on perusal of the orders confirmed similarity of facts except the amounts. We have already

decided the issues in Taneja Developers and Infrastructure Limited dismissing the appeal of the assessee relying on the decision of Hon. Supreme court in Sun Engineering Works P Ltd ( Supra), Honourable Delhi High court in CIT V Kabul Chawla (Supra) and Coordinate benches in case of Suncity Alloys P Limited ( Supra). Therefore, for the similar reasons we dismiss both the appeals of this assessee. 46. In the result all the six appeals in the case of two assesses preferred by the assessee and Ld AO are dismissed. Order pronounced in the open court on 25/06/2018.

-Sd/- -Sd/- (AMIT SHUKLA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated:25/06/2018 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi