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Income Tax Appellate Tribunal, “H”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH, JM
आदेश / O R D E R PER R.C.SHARMA (A.M):
These are the cross appeals filed by assessee and revenue against the order of CIT(A) for the assessment year 2008-09, in the matter of order passed u/s.143(3) of the IT Act. 2. Rival contentions have been heard and record perused.
2 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., 3. Facts in brief are that the assessee is a developer of projects which have been undertaken by it during the year in respect of which the claim has been made u/s.80IA(4) of the Act. 4. In respect of following projects assessee has claimed deduction u/s.80IA(4). CIDCO – Construction of Rabale Railway Station Airport Authority of India – Expansion of CSI Airport, Mumbai – Terminal 1B NFR-Construction of Railway Tunnel (Agartala Tunnel) Government of Andhra Pradesh, Irrigation and C.A.D. Department Indira Sagar Pkg-60 (Development of Irrigation Canals) 5. By the impugned order CIT(A) allowed assessee’s claim after observing as under:- The A.O relied on the decision of ITAT, Mumbai in the case of M/s.B.T.Patil & Sons Belgaum Construction Private Ltd vide ITA No. 140B & 1409/PN/2003 dated 26.10.2009. However, the said decision was overruled by the same tribunal vide its later decision in the same case vide ITA No. 1408 & 1409/PN/2003 dated 28.2.2013. The sequence of events that lead to the later decision is mentioned in paragraph No. 6.1 above. The Tribunal allowed the deduction u/s.80IA(4) of the Act on the ground that the assessee executed the work by shouldering investment and technical risk by employing team of technically and administratively qualified persons and it is also liable for liquidated damages. The relevant paragraphs No. 8 and 9 of the order is reproduced as under: "8. In the case of ABG Heavy Industries, the assessee therein had not developed the entire port but was only the supplier of cranes at the loading and unloading terminal at the said JNPT port. Thus assessee was not required to execute the entire project as observed by the Third Member. Another significant word used here is "owned", which indicates that the infrastructure facility should be owned by a company so as to be
3 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., entitled to deduction under this section. The work done by the assessee is not owned by it, it does not satisfy sub clause (a) of section 80IA(4)(i). The infrastructure facility should be owned by the assessee is not correct interpretation. It is evident from section itself as clarified by the jurisdictional High Court in ABG Heavy Industries inter alia held that the assessee has shouldered out investment & technical risk in respect of the work executed and it is liable for liquidated damages if failed to fulfill the obligation laid down in the agreement. The liability which has been assumed by the assessee under terms of the contract are obligations involving the development of an infrastructure facility. The assessee has also in its employment technically and administratively qualified team of persons and therefore it is not correct to say that assessee is merely a contractor & not a developer. The assessee is eligible for benefit u/s. 80IA even if part of the Infrastructural Project work is executed. 9. It was found by the erstwhile Judicial Member that assessee fulfilled the conditions of being a developer as subsequently interpreted by the Hon'ble Bombay High Court. With regard to clarificatory amendment to sub-section (13) of section 80IA by Finance Act 2007 & 2009 whereby the assessee is not held eligible for deduction u/s.80IA(4A). In this regard, we find that the amendment of 2007 debars the sub-contractor from availing benefits u/s.80IA(4A). The amendment of 2009 is not applicable in the case where the assessee executed the work by shouldering Investment & technical risk by employing team of technically & administratively qualified persons and it is liable for liquidated damages if failed to fulfill the obligation laid down in the agreement and also securing by Bank guarantee. As the assessee has fulfilled the said conditions is evident as discussed above. Practically, the opinion of the Third Member of the Hon'ble Tribunal has been overruled by the Hon'ble Bombay High Court that even a contractor is a developer and further interpretation of the amendments by Finance Act, 2009 and the conditions to be fulfilled by an assessee to be termed as developer for the purpose of section 80IA has been followed by various Tribunals." 7.2 During the course of appeal proceedings, the appellant filed copies of the agreements substantiating the following: i) Involvement in making investment ii) Shouldering technical risk iii) Liquidated damages iv) Employment of technically and administratively qualified team
4 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd.,
7.3 The appellant cited relevant clauses in the tender documents to substantiate that the above conditions as laid down in the case of M/s.B.T.Patil & Sons Belgaum Construction Private Ltd. is fulfilled. Payment of security deposit, earnest money deposit, interest bearing advances in the form of mobilization advance as well as the advances against machinery and plant by the Northern Frontier Railway to the appellant at 18% per annum, liability to reimburse compensation of workmen, discretion of the appellant to source men and material as per appellants expertise and experience are shown as examples for investment risk. Liability of the contractor to maintain safety precautions, responsibility to undertake study reports to assess the reliability and accuracy of the information, responsibility for the design are cited as examples for technical risk. The appellant has shown the relevant clauses for undertaking liquidated damages in the event of failure to execute the contract as per the agreement and also the liability of the appellant for workers claim. The appellant also provided information relating to the technical and managerial capabilities of the teams involved. 7.4 The appellant also cited the relevant clause of the tender document to show that after the completion and handing over of the project to Northern Frontier Railway it is also the responsibility of the appellant to maintain all the works except earth work for further period of 6 months. In the case of Indira Sagar Project (Package-65), the appellant is required to maintain the project for 2 years after commissioning of the project. These indicate that the appellant is not only responsible for the development of the project but also to maintain the same for a specified period of time as mentioned in the tender document. Considering the fact that the appellant has shouldered the investment and technical risk by employing team of technically and administratively qualified persons and it is liable for liquidated damages if failed to fulfill the obligation laid down in the agreement, respectfully following the decision of the jurisdictional High court in the case of ABG Heavy Industries Limited and also the jurisdictional ITAT in the case. of B. T. Patil & Sons Belgaum Construction Private Ltd., it is hereby held that the appellant is entitled for the deduction u/s. 80IA(4) of the Act and accordingly the disallowance made by the AO is hereby deleted. 6. Against the above order of CIT(A), Revenue is in further appeal before us.
5 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., 7. We have considered rival contentions and found that four projects which have been tabulated on page no. 1 of the paper book are not new projects. All the four projects have been started in earlier years either in AY. 2005-06 or AY. 2006-07. Not only that, the profit derived from these projects were claimed to be eligible for deduction in earlier years wherein the claim was disallowed by the Assessing Officer on the same reasoning but ultimately allowed by the Hon'ble Tribunal. In respect of two out of the four projects wherein deduction has been claimed for about Rs. 4.65 crores out of Rs. 5.50 crores, deduction was also claimed in the subsequent year, i.e. AY. 2009-10. In that assessment year also the deduction was initially rejected by the Assessing Officer but ultimately allowed by the Hon'ble Tribunal. 8. We had carefully gone through the orders of the authorities below as well as order of the Tribunal placed in the Paper Book. The Hon'ble Tribunal have dealt with the provisions of S.80IA(4) of the Act, the facts of the projects undertaken by the assessee and after detailed analysis have held that the assessee is eligible for deduction u/s. 80IA(4) of the Act. Respectfully following the above referred two orders of the Tribunal which pertain to earlier years, i.e. AY. 2005-06 to 2007 -08 as well as for later year i.e. A.Y. 2009-10 wherein the same projects have been held to be eligible for deduction and the assessee has been held to be developer, the assessee's claim have been rightly allowed by the CIT (A). Respectfully following the order of the Tribunal in assessee’s own case, we do not find any infirmity in the order of CIT(A) for
6 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., allowing assessee’s claim for deduction u/s.80IA(4) during the year under consideration. 9. The assessee has raised two grounds in its appeal, the same are reproduced hereinbelow: "Ground No. 1:- On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the double addition made in the assessment order of Rs.2,65,61,873/- over and above the additional income disclosed of Rs.3 Cr. The appellant prays that the said disallowance may please be deleted. Ground No. 2'- On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in upholding the double addition made in the assessment order of Rs.99, 79, 733/-, over and above the additional income disclosed of Rs.1 Cr. The appellant prays that the said disallowance may please be deleted"
Rival contentions have been heard and record perused. Facts in brief are that a search was carried out at the premises of Unity group on 23.11.2007. During the course of search, a letter was addressed by Shri Abhijit K. Avarsekar to the investigation wing dated 12.12.2007 wherein an income of Rs. 9.5 crores was offered on behalf of various group entities. In the above said letter, there was no break-up given as to which entity of the group and to which assessment year the disclosure of Rs. 9.5 crores pertains. Even before Tribunal to clarify the above position further, an affidavit of the director has been filed to state that no break-up was given in the above referred letter. 11. Subsequently, Shri Abhijit K. Avarsekar was asked to give break-up of the above referred declaration of Rs. 9.5 crores while recording his statement by the investigation wing on 11.01.2008. The relevant
7 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., question and the answer of the above referred statement has been reproduced by the Assessing Officer on page No. 2 and 3 of his order. The break-up of Rs. 9.5 crores given in the said statement and the remarks thereon are as under. Sr. Amount Particulars Remarks No. (Rs.) 1 3 crores Unrealised income There is no dispute from unsold flats on this. 2 3 crores In the case of No further details or assessee for break-up given. This A.Y.2008-09 amount is in dispute. 3 1.5 crore Expenses incurred There is no dispute by assessee’s on this. executive on DDA Project 4 35 lacs In the hands of There is no dispute Kishore Avarsekar on this. 5 35 lacs In the hands of There is no dispute Pushpa on this. 6 30 lacs In the hands of There is no dispute Abhijit K. Avarsekar on this. 7 1 crore On account of other No further details or contingency and break-up given. This discrepancies found amount is in dispute in the group concern for current year
However, while filing return of income the assessee retracted from the above statement qua the following two items: (a) The adhoc disclosure of income of Rs. 3 crores In the hands of assessee for A.Y. 2008-09. (b) Adhoc disclosure of the income of Rs. 1 crore in the hands of group concerns.
8 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., 13. During the course of assessment proceedings, the assessee was asked to give break-up of Rs. 3 crores for which the declaration was made. As there was no such income earned by the assessee, the assessee's representative gave the break-up of Rs. 3 crores which primarily includes statutory disallowances and part disallowance of its claim u/s. 80IA(4) of the Act as well as certain expenditure outside the books of account as per various seized annexures. The break-up given during the course of assessment proceedings have been reproduced by the Assessing Officer on page No. 5 of his order, the same is as under: Particulars A.Y. Amount On account of disallowance 2008-09 25,98,406 u/s.14A On account of disallowance 17,476 u/s.36(1)(va) On account of A-08 1,99,850 2008-09 On account of A-11 5,17,500 On account of A-12 23,42,900 On account of A-22 3,88,377 On account of disallowance of 2008-09 2,39,35,991 claim u/s.80IA Total 3,00,00,000
However, the Assessing Officer has rejected the above break-up by observing in para 5.4 of his order that the technical disallowance cannot be part of the additional disclosure. The Assessing Officer has further observed that there were instances of expenditure outside the books of account which aggregates to Rs.2,06,88,485/- as per the table given in Annexure-A to the assessment order. On this basis, the
9 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., Assessing Officer has made the addition of Rs. 3 crores to the total income of the assessee. 15. As regards the additional income of Rs. 1 crore, although the Assessing Officer has not made any discussion in the assessment order, from the discussion made in the CIT (A)'s order, it is evident that the Assessing Officer has reduced an amount of Rs. 20,267/-, being the amount declared by Unity Realty and Developer Ltd and added the balance amount of Rs. 99,79,733/-. The CIT(A), vide order dated 30.12.2013, has upheld the disallowance made by the Assessing Officer stating that since neither the statement made under section 132(4) by Mr. Abhijit Avarsekar was withdrawn nor the undue influence under which such statement could be made was established, there is no reason to disbelieve the admission of undisclosed income made in the statement. Further it was held by the CIT(A) that the assessee's request for setting off the undisclosed income to the other disallowances made under section 80IA(4), section 14A and section 36(1)(va) of the Act was rightly denied by the Assessing Officer. 16. The CIT(A) further held that out of the additional undisclosed income admitted of Rs.1 crore for discrepancies and other contingencies found in the group concerns, a sum of Rs.20,267/- is brought to tax in the case of Unity Realty and Developer Ltd. and Rs.99,79,733/- is brought to tax in the case of the assessee. The CIT(A) held that the assessee's request for setting off the undisclosed
10 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., income to the other disallowances made under section 80IA(4), 14A and 36(1)(va) of the Act was rightly denied by the Assessing Officer. 17. Against the above order of CIT(A), assessee is in further appeal before us. 18. It was contended by learned AR that all the figures appearing in the table in Annexure-A to the assessment order have been explained. It has been already explained that the first two figures pertain to earlier assessment years. It has been reiterated that the addition cannot be sustained on this basis. In any case, there are no evidence to support the adhoc declaration of Rs.3 crore and Rs.1 crore. 19.The AR read the grounds of appeal and gave a brief background of the case. The AR gave reference of that letter dated 12.12.2007 which was sought from the A.D. The AR referred to page 3 of the paperbook (Assessee Appeal) filed on 09.11.2015 wherein the oath of Mr. Abhijit Avarsekar, MD of Unity Group is reproduced. The reason for which the letter dated 12.12.2007 was sought in earlier hearings leading to adjournments, was misconceived by the DR. It was brought to our attention that the letter dated 12.12.2007 did not provide the break-up of additional income of RS.9.5 cr offered. Attention was invited to Page 6 of the paper book (assessee appeal) wherein a certified copy of typed statement of Abhijit Avarsekar was provided. The relevant part was read out by the AR whereby it was pointed out that the letter dated 12.12.2007 did not provide a break-up
11 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., of the additional income but via the said letter additional income was only disclosed. 20. The AR then proceeded to read page 3 of the assessment order whereby the break-up of the additional income of Rs.9.5 Cr is provided by Abhijit Avarsekar in the statement recorded under section 132(4). The relevant part was read out by the AR. It was brought to our attention that out of 9.5 crores, 3 crores were towards anticipated/unrealized income on account of unsold flats at Avarsekar Height, near City Bakery and Worli. In the case of Unity Infraprojects Limited (own case) Rs. 4.5 crores were disclosed out of which Rs. 3 crores pertains to the assessment year under consideration. Further break up of balance amount was read out. The AR also brought to the attention of the Members that the additional income of 3 crores was not offered to tax in the return on income filed for the assessment year. The disallowances made by the A.O. as mentioned on page 11 of the assessment order were read out by the AR. It was further contended by the AR that no material was found to tax the said 3 crores disclosure. Nothing was on record to uphold the assessing officer's order. Further it was stated that nowhere in the Assessment Order there is mention of any evidence on the basis of which addition of Rs. 3 crores is done by the A.O. The AR also mentioned that the A.O. made the addition just because rounded up figures were declared by Mr. Abhijit Avarsekar in the statement.
12 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., 21. The AR then again pointed out that the assessee has not offered the declared amount in the Return of Income. The A.O. was of the view that if the amount is disclosed by the assessee then the same should be taxed. The AR then read from para 5.1 on page no. 2 of the paperbook wherein the oath of Mr. Abhijit Avarsekar is recorded and the disclosure of 9.5 crores is also mentioned. The AR again stated that the additional income of Rs. 3 crores pertaining to year under consideration is not offered to tax. The AR referred to the table on page number 4 of the assessment order wherein breakup of the disclosure pertaining to seized material viz. Annexure 3, Annexure 3 and Annexure 4 has been offered to tax in earlier years which amounts to approx. 1.43 cr. As such additional income of Rs.1.5 crores is offered to tax in earlier years and there is no dispute for that amount. The AR then showed the breakup of 3 crores pertaining to the assessment year under consideration as restated in the assessment order. The appellant was asked to provide a break up of 3 crores. The AR referred to the table on page 5 of the assessment order wherein the breakup of the disclosure of Rs. 3 crores was given by the assessee. The break up provided by the appellant stated that Rs. 3 crores included disallowances under section 14A , 36(l)(va) and disallowance of claim under section 80lA. The balance amount remaining of Rs.3 crores was disclosed on account of A-OS, A-ll, A-12 and A- 22 being seized material. The AR said that the claim u/s.80IA is a legal ground and it is to be considered separately. As such it cannot be part of the disclosure
13 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., of Rs.3 crores. The AR argued that there is no evident break up of Rs. 3 crores but since the appellant was hard pressed to provide a break- up of the Rs. 3 crores, he submitted the table as reflecting on page 5 of the assessment order taking into consideration the technical disallowances. AR said that we are in agreement with the Assessing Officer that the disclosure includes technical disallowances which need to be assessed on legal grounds. 22. The AR then referred page 3 of the assessment order wherein it was evident that there is no evidence on record and addition is made only on the basis of statement of Mr. Abhijit Avarsekar under section 132(4). The AR then referred to page 5 of the assessment order. Further the AR read the relevant paper on the said page wherein it is mentioned by the A.O. that "assessee has separately disclosed Rs. 1.43 crores in various assessment years on account of cash payment to Delhi Development Authorities. Assessee has also stated on oath that he is separately disclosing Rs. 3cr in this relevant assessment year 2008-09 to cover up all discrepancies". The interpretation of the A.O. is thus misconceived. UIL has already offered an amount of Rs. 1.43 crores (approx Rs. 1.5 crores) and it is also accepted by the A.O. The AR gave the reference of page 5 and then of page 13 of the assessment order to the tables showing the description of seized materials. The AR then referred to page 4 & 5 of assessment order wherein he informed the members that these claims are made in the previous as well as subsequent years and the claim for same projects
14 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., have been taken in the year under consideration and then he read out para 5.4 (iii) on page 6 of the assessment order wherein the A.O. clearly mentions that Rs. 1.43 crores has been disclosed in various assessment years. 23. With regard to addition of Rs. 1 Crore, AR referred page 11 of the assessment order and pointed that although the Assessing Officer has not made any discussion in the assessment order, from the discussion made in the CIT (A)'s order, it is evident that the Assessing Officer has reduced an amount of Rs. 20,267/-, being the amount declared by Unity Realty and Developer Ltd and added the balance amount of Rs. 99,79,733/-. The addition of Rs.99,79,733/- was on the same basis as in the ground no 1 above, i.e. bifurcation via statutory disallowances under section 14A , 36(1)(va) and disallowance of claim under section 80lA was not accepted. 24. On the other hand, learned DR argued that search was conducted at the residential premises of Mr. Ujjwal Gupte and many documents related to Unity Group were found at his premises. The DR said that Mr. Ujjwal Gupte was the person who used to make the necessary arrangements on behalf of the Unity Group being a confidante of Unity Group. Due to the material found at his premises the MD of Unity Group had to disclose the amount. The DR further added that the unaccounted amount which is disclosed during search will go untaxed and that is why the amount is added in the assessment order even though the same is not offered by UIL in its Return of Income. The DR
15 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., referred to Annexure-A on page 13 of the assessment order which gives details of the seized material. An amount of Rs.1,21,23,601/- and Rs.51,16,757 is on account of A-2 and A-3 respectively of the seized material. Annexure-A further reflects amounts of Rs.1,99,850/-, Rs.5,17,000/-, Rs.23,42,900/- and Rs.3,88,377/- on account of Annexure A-8, A-11, A-12 and A-22 being part of sized material. The DR further states that the aggregate of Annexures amount to Rs.2,06,88,485/-. The DR also states that thus the appellant has disclosed an income of Rs.3 crores to cover up all the discrepancies. 25. We have considered rival contentions and carefully gone through the orders of the authorities below and the documents filed before us which have already been filed before lower authorities. From the record we found that the declaration made during the search was of adhoc amount. No incriminating material supporting the addition has been found during the course of search. Since, there was no corroborative evidence and, hence, the addition cannot be sustained being without any material and purely based on the statement. As regards the disclosure of an amount of Rs. 3 crores nothing has been stated in the statement and as regards the disclosure of Rs. 1 crore, it is merely stated to cover up any discrepancy and that too in the group cases without specifying the name of the entity. 26. Now coming to the incriminating documents tabulated by AO in annexure-A, we found that out of Rs. 2,06,88,485/- first two items being Rs.1,21,23,601/- and Rs. 51,16,757/- are in respect of the notings
16 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., made in Annexure A-2 and A-3. It has been categorically stated that Annexure A-2 and A-3 pertain to the earlier years, i.e. A.Ys. 2004-05, 2005-06 and 2006-07. This has been mentioned in the assessment order itself on page No. 4 wherein the figures appearing in the seized paper of Annexure A-2, A-3 and A-4 have been tabulated. 27. We also found that the figures given in Annexure-A to the assessment order are not correct and the same have been rectified as per the submissions filed before the Assessing Officer himself. This is evident from the submissions in the rejoinder given to the CIT(A) on page no. 36 and 37 of the paper book. Accordingly, two incorrect figures of Annexure A-2 and A-3 being Rs.1,21,23,601/- and Rs.51,16,757/- have been rectified and the total amount pertaining to assessment year 2004-05, 2005-06 and 2006-07 as per Annexure A-2, A-3 and A-4 have been tabulated on page no. 37 of the paper book which comes to Rs. 1,43,98,656/-. The same table has been reproduced by the Assessing Officer on page No. 4 of his order. 28. We also found that such corrected figures which aggregate to Rs. 1,43,98,656/- are part of the declaration of Rs.1,50,00,000/- (being part of the break-up of Rs.9,50,00,000/-). The same have been taxed for A.Ys. 2004-05, 20005-06 and 2006-07. It is clear from the above that the break-up mentioned by the Assessing Officer on page No. 4 or page No. 5 or the one in Annexure- A to the assessment order do not corroborate the addition made by him.
17 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd.,
Now, coming to other four figures mentioned in Annexure-A to the assessment order, we found that these figures pertain to Annexure A- 8, A-11, A-12 and A-22 which falls in A.Y. 2008-09. As per our considered view, the same is required to be added in the year under consideration. Therefore, to this extent i.e. Rs. 1,99,850/-, Rs. 5,17,000/-, Rs. 23,42,900/- and Rs. 3,88,377/- the addition has to be confirmed in the year under consideration. We direct accordingly. 30. Now coming to the break-up of Rs. 3,00,00,000/- given by the assessee during the course of assessment proceedings which has been reproduced by the Assessing Officer on page No.5 of the assessment order, we found that the first two items of the table i.e. Rs. 25,98,406/- and Rs.17,476/- have been added by the Assessing Officer to the total income of the assessee separately and, hence, no such addition could be made as a part of additional income declared. Further, the Assessing Officer himself has stated that the statutory disallowance cannot form part of the declaration and, hence, he has rejected such break-up. Here, we are in agreement with the view of the Assessing Officer that statutory disallowance cannot form part of adhoc declaration. However, the correctness of the addition on account of adhoc declaration has to be examined on the strength of its own merit, accordingly we confirm the addition of Rs.1,99,850/-, Rs.5,17,000/-, Rs. 23,42,900/- and Rs. 3,88,377/-. The last amount of the table being
18 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., Rs. 2,39,35,991/- being disallowance of the part of the claim u/s. 80IA(4) of the Act is again a statutory disallowance and cannot form part of disclosure. In any case, the issue of disallowance of the claim u/s. 80IA(4) of the Act is subject-matter of Departmental appeal before us.By following the order of Tribunal in assessee’s own case, we have deleted the disallowance of deduction claimed u/s.80IA(4). 31. Thus, the ad hoc addition of Rs. 3 crores (and for that matter the adhoc addition of Rs. 1 crore) cannot be supported by any figures mentioned in Annexure A-2 or Annexure A-3. 32. Now, we take the issue of adhoc declaration of Rs. 1 crore, there are no evidence in support of such income and the declaration itself was made to cover up any discrepancy. Further, no entity was specified while making the declaration. 33. It was argued by learned AR that the addition cannot be made merely on the basis of the statement recorded during the course of search. It is settled legal position that addition cannot be made merely on the basis of statement which has been retracted while filing the return of income for which there is no corroboration. In this regard, reliance was placed on the following observation made by the Hon'ble Mumbai Bench of the Tribunal in the case of Shri Pandoo P. Naig for A.Y. 2008-09 in ITA No. 7089/Mum/2011 and 7364/Mum/2011 and Ors. dated 24.06.2016. Relevant observation of the order is reproduced below:
19 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd.,
'In the case of "Basant Bansal vs. ACIT" reported in 2015) 63 axmann.com199 (Jaipur Trib.), having somewhat similar facts,the assessee therein during the search and seizure action u/s 132 of the Act offered a summary discloser of income as undisclosed and the department accepted the summary surrender of income and thereafter advance tax for the said surrendered of income was also deposited, but thereafter it was contended by the assessee that the surrender was made under threat or coercion and that no incriminating material was found during the search action. The stand of the department was that the admission was voluntary and was not under a mistaken belief of fact or law and that the assistance had enough time to go through the facts of their case, law applicable in their case and take advice from their counsels and advisors before filing the letter of surrender of undisclosed/unaccounted income and that the admission by them was final and binding on them,' The co- ordinate Jaipur Bench of the Tribunal, after overall appreciation of the fact and evidences before it observed that the assessee's surrender was not based on any incriminating material and that the discloser being not voluntary and extracted by the department in creating a coercive situation cannot be relied solely to be basis of addition as undisclosed income. The co- ordinate bench of the Tribunal while relying upon various case laws of the higher authorities observed that it is well settled legal position that merely on the basis of a statement which is not supported by the department with cogent corroborative material cannot be a valid basis for sustaining such ad-hoc addition. The co-ordinate Jaipur Bench of the Tribunal (supra) further observed that the issue of existence of pressure, threat coercion during search proceedings is to be judged by reference to the existing facts and circumstances, human conduct and preponderance of possibilities. During the search proceedings, record relating thereto being in exclusive custody of the searching officers, it is their wish and will which prevails during the fateful period that it is almost impossible for the assessee to adduce demonstrative evidence of exerting such pressure. The co-ordinate bench of the Tribunal (supra) while holding so, apart from relying upon various decisions of the higher courts has also relied upon the decision of the Tribunal in the case of "Dy CIT vs. Pramukh Builders" (2008) 112 ITD 179 (Ahd) wherein it has been held that even in the absence of proof of coercion or pressure, the statement by itself cannot be taken as conclusive. Therefore, merely in the absence of proof of pressure, threat coercion or inducement the statement cannot be held as conclusive and additions cannot be made by solely relying on a statement or a letter."
20 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd.,
Attention of the Bench was further invited to Instruction no. 286/2/2003/IT(Inv) dated 10.03.2003 which reads as under: 'Instances have come to the notice of the Board where assessees have claimed that they have been forced to confess the undisclosed income during the course of the search & seizure and survey operations. Such confessions, if not based upon credible evidence, are later retracted by the concerned assessees while filing returns of income. In these circumstances, on confessions during the course of search & seizure and survey operations do not serve any useful purpose. It is, therefore, advised that there should be focus and concentration on collection of evidence of income which leads to information on what has not been disclosed or is not likely to be disclosed before the Income Tax Departments. Similarly, while recording statement during the course of search it seizures and survey operations no attempt should be made to obtain confession as to the undisclosed income. Any action on the contrary shall be viewed adversely. Further, in respect of pending assessment proceedings' also, assessing officers should rely upon the evidences/materials gathered during the course of search/survey operations or thereafter while framing the relevant assessment orders.
From the above referred instruction issued by the Central Board of Direct Taxes, the following points emerges. (i) The Board has noticed the claims have been made by the assessees about forced confession during the search and survey operations.
(ii) The Board is of the view that such confessions, if not based upon credible evidence and later retracted while filing return of income do not serve any useful purpose.
21 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., (iii) The Board has advised that focus should be on collection of evidence of income.
(iv) The Board has further directed that no attempt should be made to obtain the confession.
(v) Ultimately the Board has warned officers that any contrary action shall be viewed adversely.
In view of the above submission, we observe that the Board itself is of the view that in the absence of credible evidence the confessional statement would not serve any useful purpose. In fact going further i.e. from 10.03.2003 onwards, the Board mandatorily directed the officers that while recording statement, no attempt should be made to obtain confession as to the undisclosed income. Therefore, in the present case not only the recording of confessional statement but making the addition solely on the basis of the statement is against the binding instructions of the CBDT. 37. In view of the above discussion, we confirm the addition of Rs.1,99,850/- Rs.5,17,000/-, Rs.23,42,900/- and Rs.3,88,377/- out of the total addition made by AO.
22 ITA No.1304/Mum/2014, 1761/Mum/2014 Unity Infraprojects Ltd., 38. In the result, appeal of the assessee is allowed in part in terms indicated hereinabove, whereas appeal of Revenue is dismissed. Order pronounced in the open court on this 03/02/2017 Sd/- Sd/- (PAWAN SINGH) (R.C.SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 03/02/2017 Karuna Sr.PS Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. BY ORDER, 6. Guard file. सत्यापित प्रतत //True Copy// (Asstt. Registrar) ITAT, Mumbai