Income Tax Appellate Tribunal - Mumbai
Unique Star Developers, Mumbai vs Dcit Cc 47, Mumbai on 11 May, 2017
आयकर अपीऱीय अधिकरण, मुंबई न्यायपीठ "एफ", मुंबई IN THE INCOME TAX APPELLATE TRIBUNAL BENCH "F" MUMBAI BEFORE SHRI D.T.GARASIA, JM AND SHRI RAJESH KUMAR, AM I.T.A. No.1077/Mum/2014 (निर्धारण वर्ा / Assessment Year : 2008-09) M/s Unique Star Developers, Dy. Commissioner of Income 201, Shraddha Residncy, Tax-Central Circle-7, बनाम/ Chandavarkar road, Mumbai.
Borivali (W), Vs.
Mumbai-400092
स्थायी ऱेखा सं ./ PAN : AACFU0114F
(अपीऱाथी /Appellant) : (प्रत्यथी / Respondent)
अपीऱाथी की ओर से / Appellant by : Shri Sashi Tulsiyan
प्रत्यथी की ओर से/ Assessee by : Mrs.Padmaja
सुनवाई की तारीख /Da te o f He a r in g : 15.2.2017
घोषणा की तारीख /Da te o f Pro n ou n ce me nt : 11.5.2017
आदे श / O R D E R
PER RAJESH KUMAR, A. M:
This is an appeal filed by the assessee against the order dated 27.12.2013 passed by the ld.CIT(A)-38, Mumbai for the assessment year 2008-09.
2. The various grounds taken by the assessee are as under :
―1.a) On the facts and in the circumstances of the case and in law the learned CIT(A) erred in confirming .the Assessment Order framed U/S 153A of the Income Tax Act, 1961 even though there was no legal and proper search in as much as no appellant specific panchanama was drawn and no incriminating material pertaining to the appellant was found and seized.2
ITA No.1077/M/2014
b) On the facts and in the circumstances of the case and in law the learned CIT(A) erred in holding that the panchnama drawn in the name of Shri Harshad Doshi evidenced search even in the case of the appellant even though no incriminating material pertaining to the appellant was either found or seized in the premises searched.
2. Without prejudice to the legal ground above:
a) The Ld. CIT(A) erred in confirming the disallowance of the claim of deduction of Rs.6,84,62,992i'- u/s 80IB(10) of the Income Tax Act,1961 on the ground that the project approval as required u/s 80IB(10) of the Act is never obtained in the name of the appellant. In doing so the learned CIT(A) did not properly appreciate the contention of appellant that the appellant had developed an approved project and the approval has been obtained by Shri Harshad Doshi member of the appellant AOP as evidenced by the letter issued by Mira Bhayander Mahanagarpalika under Right to Information Act(RTI Act). The order of the learned CIT(A) on this point is contrary to the ratio of the Judgments of the following cases:
i) Commissioner of Income Tax Vs Vandana Properties (76 DTR 363) (In The Bombay High Court).
ii)CommissioD;er of Income Tax Vs Radhe Developers (341 ITR 403) (In The Gujarat High Court).
b) On the facts and in the circumstances of the case, the learned CIT(A) erred in holding that the appellant has not commenced a legally approved project in terms of the Income Tax Act which may be termed as 'an approved project' discarding the fact that approval Dt.27.11.1997 was specifically given to Shantistar Builders alone only for 13 buildings of Sector No.1 of Shantinagar Project and it was not a joint approval for Shantistar Builders and others as in the case of approval Dt.27.01.2006. Shri Harshad P.Doshi was given Development rights only in the year 2000 vide agreement Dt.12.09.2000 and thereafter entire layout of Sector No.1 was approved for the first time on 27.01.2006 and also disregarding the clarification given by the Local Authority vide their letter Dt.21.04.2011 'in response to our application under Right to Information Act that no approval for construction of buildings in Sector 0.1 of shantinagar Project was givento Shri Harshad P. Doshi pnor to the one given by us vide our letter No.MB/MNPINR/2600105-06 dt.27.01.2006 confirming the fact that approval Dt.27.01.2006 was the first approval so far as H. P. Doshi group related buildings are concerned.3 ITA No.1077/M/2014
c) On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the contention of Assessing Officer that the commencement certificate is not in the name of the appellant discarding the fact that the Commencement Certificate No. MB/MNPINR/2600105-06 dated 27.01.2006 was issued in the name of "M/s Shanti Star Builders and Others" and the clarification issued by Mira Bhayander Mahanagarpalika under Right to Information Act(RTI Act) vide their letter dated 22.10.2010 clearly stated that the Commencement Certificate No.MB/MNPINR/2600105-06 dated 27.01.2006 was given to Mls.
Shantistar Builders and Harshad P. Doshi jointly confirming the term "others" representing Mr. Harshad P. Doshi who is one of the members of assessee AOP.
d) On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming the contention of Assessing Officer that the project was not commenced by the appellant within the prescribed time as laid down under the Income Tax Act. Discarding the clarification given by the local authority vide their letter dated 21.04.2011 in response to our application under Right to Information Act that as per their record no permission I approval is given to Mr. H. P. Doshi for construction of any building in sector no. 1 of shantinagar project prior to the one given vide Commencement Certificate No.MB/MNPINR/2600105-06 dated 27.01.2006. 3.0n the facts and in the circumstances of the cases, the CIT(A) erred in confirming the contention of Assessing Officer to levying interest uls234B and 234C.‖
3. In the ground No 1 of appeal, the assessee has raised legal ground that assessment order was famed u/s 153A of the Income Tax Act, 1961 when there was no proper and valid search in as much as no specific panchanama was drawn in the name of the assessee and no incriminating documents were found and seized against the assessee during the alleged search from the premises search which belonged to persons other than the assessee 4 ITA No.1077/M/2014 3.1 The ld. CIT(A) erred in holding that the assessee has not commenced a legally approved project in terms of Income Tax Act, 1961; 3.2 The ld. CIT(A) erred in confirming the action of the AO on the ground that the commencement certificate is not in the name of the assessee which was issued in the name of M/s Shanti Star Builders and others; 3.3 The ld.CIT(A) erred in confirming the finding of the AO that the project was not commenced by the assessee within the prescribed period as per the Income Tax Act, 1961.
4. The facts of the case are that the appellant AOP was formed vide joint venture agreement dated 01.04.2006 consisting of three members viz. Shri Harshad Doshi, Shri Chandrakant Doshi and Shri Hemal Doshi having profit sharing ratio of 90%, 5% and 5% respectively. The main member of the AOP Shri Harshad P Doshi expired on 14.08.2009 and the business was mainly looked after by his nephew Shri Dilesh C Shah. In the year under appeal, the appellant has developed a project namely "Harsh Vihar" at Mira Road. The appellant started construction in the immediately preceding previous year and completed the project during the year. The Appellant followed project Completion Method and it accordingly filed its Return of income on 1.10.2008 for the assessment AY 2008-09 declaring gross income of Rs. 6,84,62,992/- & claimed deduction u/s 80- IB(10) of the Act to the tune of Rs.6,84,62,992/-. During the period relevant to the assessment year under consideration the office address of the appellant was 5 ITA No.1077/M/2014 ―201, Shraddha Residency, Chandavarkar Lane, Behind BMC Garden, Borivali (W), and Mumbai-400092. A search was conducted at the residential premises of the member of the AOP on 17.10.2008, wherein panchanama was drawn in the name of members of the AOP and certain documents were seized. However, no documents were seized with regard to the appellant AOP. The AO issued and served a notice u/s 153A, dated 12.10.2010 and in response to which, the assessee filed return of income on 2.8.2010. The AO framed the assessment u/s 143(3) r.w.s 153A assessing the total income of the assessee at Rs.6,84,62,992/- by disallowing the deduction u/s 80IB(10) of the Act. The disallowance has been made without reference to any seized documents while making assessment. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority. Before the appellate authority, the assessee has submitted extensive details/documents substantiating its claim and also argued to contest the legality of the assessment u/s 153A of the Act on the ground the appellant was never subjected to search u/s 132 of the Act. During the course of appellate proceedings the AO provided with the copy of the search warrant for the premises being residence of the member of the AOP the appellant, wherein the name of the appellant was found mentioned. Based on the said search warrant, the AO submitted that search has even been conducted in the case of the appellant as well. The FAA on the basis of search warrant and panchanama for the said premises held that the search has been executed even 6 ITA No.1077/M/2014 in the case of the appellant. The ld. CIT(A) dismissed the appeal of the assessee by observing as under :
―Decision:
9.0 I have carefully examined the facts of the case, the stand taken by the A.O in the assessment order and in the remand report, the grounds of appeal, the written submissions and further rejoinder filed by the appellant during the hearing proceedings.
9.1 The appellant's contention that there was no search action u/s.132 of the Act in the case of the appellant is not true. The perusal of the warrant of authorization issued shows the name of appellant along with the names of some other persons as a joint warrant of authorization. The following names are included in the warrant of authorization:
(i) Shri Harshad Poonamchand Doshi
(ii) M/s. Unique Shanti Developers
(iii) M/s. Harsh Unique Developers
(iv) M/s. Unique Star Developers
(v) M/s. Harsh Deep Constructions
(vi) M/s. Unique Star Constructions
(vii) M/s. Harsh Developers 9.2 From the above, it can be seen that the appellant is one of the person against whom the warrant of authorization has been issued.
9.3 The issue of warrant in the joint names has come up for decision before the larger bench of Hon'ble High Court of Allahabad in the case of CIT vs. Devesh Singh, Income Tax Appeal NO.99 to 110 of 2010 dated 23.07.2012 [24 taxmann.com 26) (Full Bench). In the earlier decision of High Court of Allahabad in the case of Raghuraj Pratapsingh vs. ACIT [Writ Petition No.5731 (MB) of 2004] decided on 14.07.2006 the division bench held that the warrant of authorization issued in joint names does not suffer from any infirmity and at the same time another division bench of the same court in Income Tax Appeal No.21 of 2009 in the case of Smt. Vandana Verma decided on 09.10.2009 held that the joint warrant of authorization cannot be issued and it would be incumbent upon the authority to issue warrant in individual name and if the warrant has been issued in the joint names, the assessment will have to be made collectively 7 ITA No.1077/M/2014 names of both the partners in the status of AOP (Association of Persons) or BOI(bodyof Individuals). Finding conflicting views expressed in two sets of cases decided by bench had different coordinate benches of the Allahabad High Court, the division bench had referred the case of Shri Devesh Singh to a larger bench to resolve the controversy in question which is of public importance. The larger bench, after hearing the case, came "we find that the warrant of authorisation under Section 132 of the Act has been issued on 10th November, 2006 in the joint name of three persons. We are, therefore, of the considered opinion that in view of the provisions of Section 292CC, as inserted by Finance Act, 2012 in the Statute Book i.e. the Income-tax Act, 1961, the assessments made in the individual capacity of each persons named in the warrant of authorisation was perfectly within the jurisdiction of the Assessing Authority and the Commissioner of Income Tax (Appeals) as also the Tribunal were not justified in annulling the assessment on the ground that if the warrant of authorisation was issued jointly in the name of more than one person, the assessment could not have been made in the capacity of an individual. We, therefore, set aside both the orders passed by the Commissioner of Income Tax (Appeals) anq th.e Tribunal and remarid the matter to the Commissioner of Income Tax Appeals to decide the appeals on merits. The substantial question of law on which the appeals have been admitted is decided in favour of the Revenue by holding that where the warrant of authorisation has been issued jointly the assessment can be made individually.
In view of the retrospective effect having been given to Section 292CC of the Act, the law propounded in the cases of Smt. Vandana Verma and Smt. Madhu Chawla loses its significance."
9.4 In view of the above decision as well as the retrospective amendment made to section 292CC of the Act, the warrant of authorization issued jointly including the name of the appellant is valid and a separate assessment made in the case of the appellant on the basis of a joint warrant of authorization is also valid. 9.5 The appellant's arguments that there was no search action in the premises of the appellant and therefore there is no search which effectively took place in the case of the appellant is not the correct position of law. The warrant of authorization is always , issued to search a particular place in connection with the persons named in 8 ITA No.1077/M/2014 the warrant It is not necessary that the premises in possession of the person named in the warrant of authorisation alone can be searched but the correct position of law is that in connection with the person named in the warrant any place can be searched whether in possession of that person or not. In fact the reason to believe as required u/s.132(1) of the Act is only against the person and not against the place. In connection with the person authorised u/s.132(1) of the Act, there is no bar in respect of which place to be searched as long as the authorised officer has reason to suspect that the money bullion, jewellery or other valuable article or thing, books of account and other documents of the person named in the warrant of authorization is suspected to be kept in that place. Therefore, it is not correct to say that since there is no search in the premises in possession of the appellant no valid search has been conducted in spite of the fact that the appellant name appears in the warrant of authorization and search has taken place in the premises as mentioned in the warrant of authorization.
9.6 The appellant's submission that the warrant of authorization has been merely issued and it has not been executed is also found to be not true. The warrant of authorization has been duly executed in the joint names. The signatures of witnesses alongwith the signatures of the persons in possession of searched premise appear on the warrant of authorization indicating the execution of search u/s 132 of the Act, Ashas been already held that the joint names included in the warrant of authorization will not vitiate the assessment proceedings, it is hereby held that the assessment made u/s 153A r.w.s.143(3) of the Act in pursuance of search u/s 132 of the Act in the case of the appellant is valid and accordingly the ground of the appellant is dismissed.‖ Dismissed‖ Aggrieved by the order of FAA, the assessee is in appeal before us.
5. The issue raised in the ground no.1 is against the confirmation of assessment order by the ld.CIT(A) as framed by the AO under section 143(3) r.w.s.153A of the Act despite the fact that there was no valid, legal and proper search conducted on the assessee because no specific panchanama was drawn 9 ITA No.1077/M/2014 and no incriminating material relating to the assessee was found and seized from the premises searched. The assessee has also challenged the order of the ld.CIT(A) upholding the order of the AO on the ground that panchanama drawn in the name of Shri Harshad P Doshi which was the proof of search even in the case of assessee even when no incriminating material was either found or seized in the premises searched. The ld. AR vehemently submitted before us that the assessment order in question was void ab-initio and bad in law as the assessment has been framed under section 153A of the Act even though no search was actually conducted in the case of the appellant. The ld. Counsel submitted that the prescribed conditions as laid down for assumption of jurisdiction u/s 153A of the Act were not satisfied and the therefore the assessment framed under section 143(3) r.w.s. 153A of the Act was without valid jurisdiction and should be quashed. The ld. AR while referring to the provisions of section 153A of the Act and section 132(1) of the Act submitted before the Bench that there were specific circumstances as mentioned in clauses (a) to (c) of section 132(1) of the Act in which the prescribed authority is empowered to issue warrant authorizing the conduct of search. The ld. AR argued that as per the provisions of section 153A(1)(a), the AO is empowered to issue notice within the prescribed period in the cases where search has been initiated and the said section is only procedural/machinery conclusion. Whereas the provisions of section 153A(1)( b) provides for assessment or re-assessment 10 ITA No.1077/M/2014 the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted u/s 132 of the Act or requisition is made u/s 132A of the Act. While referring to the provisions of section 153B, the ld. AR argued that the authorization of warrant shall be deemed to be executed consequent upon search as recorded in the last panchanama drawn in relation to a person in whose case warrant of authorization is issued. The ld. AR submitted that the panchanama has to be drawn in relation to the persons on which the search was conducted whereas in the case of the assessee there was no panchanama executed and premises of the assessee were not searched. Therefore, there was no search conducted and panchanama drawn as the proof of conduct of the search which was vital. Finally the ld.AR stressed upon the fact that the search has to be carried out in the case of the assessee in order to fame the assessment under section 153A of the Act and conjoint reading of section 153A of the Act and 153B of the Act adequately clarify that assessment for preceding six assessment years were permissible to be framed only when there was a search conducted. In defense of his arguments the ld.AR also placed reliance on a serious of decisions namely
(i) Hon'ble Karnataka High Court in the case of ITO V/s Wipro Finance Ltd reported in 323 ITR 467 (Kar), (ii) M/s Harsh Deep Construction V/s DCIT in ITA Nos.1941 and 1942 /Mum/2014(AY-2008-09) dated 11.5.2016,(iii)Special Bench of the Delhi Tribunal in the case of Promain Ltd V/s DCIT reported in (2006)95 11 ITA No.1077/M/2014 ITD 489 (SB)(iv) J M Trading Corporation V/s ACIT (2008) 20 SOT 489 and (v) Delhi Bench of the Tribunal in the case of Sarvamangalam Builders and Developers Pvt ltd V/s ACIT in ITA No.115 to 117/Del/2011. In the Special Bench decision, the ld. AR highlighted that it is not only initiation of search which was required to be proved by warrant of search authorizing search but the AO has to prove that the search has actually been carried out in respect of the said persons through Panchanama in order to justify the notice issued for assessment under search proceedings. The ld. AR argued that search at the residence of member of assessee AOP would certainly not fulfill the prescribed conditions to authorize the search assessment under 153A of the Act in the case of assessee AOP and it was absolutely clear that no panchanama has been drawn which means that no search has taken place to provide legal basis for search assessment under section 153A of the Act. It would be contrary to the provisions of law to assume that once the warrant has been signed there is initiation of search for setting in motion the proceedings u/s 153A of the Act. The ld. AR further argued that the FAA was grossly wrong in holding that where the warrant issued in the name of the assessee and panchanama was drawn with the name of the assessee being mentioned and stated in the said panchanama there would be execution of search justifying the action u/s 153A of the Act. The ld. AR further contended that the FAA has failed to appreciate the issue from the legal perspective by overlooking and ignoring the fact that no search was 12 ITA No.1077/M/2014 conducted at the business premises of the assessee at Shradha Residency, Borivali (W). The ld. Counsel submitted that it would be inconceivable that that the business premises of the assessee would be spared from proceedings u/s 132(1) of the Act in search proceedings. Finally, the ld.AR while summing up his arguments submitted that there was no conduct of search on the business premises of the assessee, no documents were seized and no incriminating documents were found and seized in the premises belonging to the member of assessee AOP and not the assessee and no specific panchanama was drawn corroborating the fact that search was actually conducted in the assessee's premises and therefore the proceedings under section 153A of the Act were totally unsustainable invalid and consequently has to be quashed. In defense of his arguments, the ld. AR relied on a series of decisions namely J M Trading Corporation V/s ACIT reported in (2008) 20 SOT 489 (ITAT, Mum), Dr.Mansukh Kanjibhai Shah V/s ACIT reported in (2012) 18 ITR 80) (Ahd) and Sarvamangalam Builders and Developers Pvt ltd V/s ACIT in ITA No.115 to 117/Del/2011. The ld. AR submitted that in the case of Sarvamangalam Builders and Developers Pvt ltd(supra) it has been held by the Hon'ble High Court that no assessment under section 153A of the Act can be made where the residential premises of the assessee is not subject to search, no documents were seized from the premises searched and no panchanama were drawn in the name of the assessee. The ld. AR also distinguished the decision relied upon by 13 ITA No.1077/M/2014 rebuttal the ld.CIT(A) in the case of CIT V/s Devesh Singh reported in 76 DTR 403(All) by submitting that in the panchanama was drawn though jointly in the name of all the parties, but in the present case search was not conducted at all and no panchanama was drawn. The ld. AR also distinguished the decision of the Hon'ble High Court in the case of MDLR Resorts Pvt Ltd V/s CIT and ors (2014) 316 ITR 407 (Del) by submitting that in that case there was no dispute as to conduct of search and seizure operation and assessee was subject to search, non preparation of panchanama in the name of the assessee and the documents were seized relating to the assessee and were mentioned in the annexure to the panchanama whereas in the present case no search had taken place and no material incriminating or otherwise was found or seized from the premises subjected to the search. The ld. AR submitted that when the name of the assessee has not mentioned in the panchanama and no material was seized with regard to the assessee it was not omission on the part of the search party to mention its name but a clear proof of the facts that no search had taken place. The ld. AR also submitted that provisions of section 153A of the Act inserted by the Finance Act in the year 2003 and in the explanatory note issued by the departmental circular No.7 of 2003 dated 5.9.2003 the scope of provisions in para 65.4 were explained which states that the AO shall issue notice to a person on whom a search was conducted to furnish return of income in respect of six assessment years immediately preceding the assessment year relevant to 14 ITA No.1077/M/2014 the previous year in which the search was conducted under section 132 of the Act or requisition was made under section 132A of the Act. Subsequently, the amendment was brought by Finance Act, 2008 and the circular No.1/2009 dated 27.3.2009 again reiterated that the provisions of section 153 of the Act came into operation where the search is conducted under section 132 of the Act or books of account or other documents or any assets are requisitioned under the provisions of section 132A. Thus the ld. AR submitted that the provisions of section 153A comes into operation only where search is conducted and panchanama is drawn up consequent to search. Accordingly, the ld.AR submitted that when no search is conducted and no panchanama is drawn which has exactly happened in the present case, the assessment as framed under section 153A was without jurisdiction , invalid and deserved to be quashed.
6. The ld. DR while opposing the arguments and submissions of the ld.AR strongly pleaded before the Bench that the search warrant in fact issued exactly on the date when the search was conducted in the case of the assessee and therefore the assessment under section 153A was correctly framed by the AO and upheld by the ld.CIT(A). The ld. DR submitted that in all these cases the search was conducted and accordingly assessments were framed and the same has been affirmed by the ld.CIT(A) by dismissing the appeal of the assessee. The ld. DR in support of his arguments heavily relied upon the following decisions :
15ITA No.1077/M/2014
i) MDLR Resorts (P.) Ltd. v/s CIT [2013] 40 taxmann.com 365 (Delhi)
ii) CIT V/s Devesh Singh ((2012) 24 Taxmann.com 26 (All)(FB);
Finally, the ld. DR prayed before the Bench that in view of the foregoing facts the appeal of the assessee raising technical issue should be dismissed by upholding the order of the FAA.
7. In the Rebuttal , the ld. AR submitted that there is no substance in the arguments of the ld.DR as the premises of the assessee-AOP were not searched and no incriminating documents were found and seized during the course of search proceedings. The undisputed fact is that the warrant of search was executed in which the name of the assessee AOP was also mentioned along with members of AOP, whereas the search was only conducted in the residential premises of the members of the AOP and not at the premises of the AOP.
8. We have heard the rival contentions and perused the material placed before us including the impugned orders and decisions relied upon by the parties. The undisputed facts of the case are that the joint warrant of search was issued under section 132(1) of the Act in the name of the assessee -AOP and its members. The premises of the assessee were not searched and no incriminating documents were found and seized from the premises searched which belonged to members of AOP and not AOP assessee. There was no panchanama drawn in the name of the assessee AOP. The technical issued raised by the AR for 16 ITA No.1077/M/2014 adjudication before us is as to whether the search can be said to have been taken place, conducted and concluded when no actual search was taken place in the premises of the assessee and no panchanama was executed. The panchanama is most important and vital documents in the search as period of limitation is reckoned from the last panchanama drawn and now issue is whether the assessments framed u/s 153A of the Act was valid or not. In view of the aforesaid defects and deficiencies in the search proceedings, the provisions of section 153A, 153B and 132(1) are relevant and needs to be understood in order to reach a correct conclusion. The provisions of section 153A, 153B and 132(1) are reproduced below :
"153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall--
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years [and for the relevant assessment year or years] referred to in clause
(b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;
(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made 17 ITA No.1077/M/2014 153B. (1) Notwithstanding anything contained in section 153, the Assessing Officer shall make an order of assessment or reassessment,--
(a) in respect of each assessment year falling within six assessment years referred to in clause (b) of sub-section (1) of section 153A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed;
(b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed :
(2) The authorisation referred to in clause (a) and clause (b) of sub-section (1) shall be deemed to have been executed,--
(a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; or
(b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer.
132. (1) Where the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that--
(a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of section 131 of this Act, or a notice under sub-section (4) of section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents as required by such summons or notice, or
(b) any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, any books of account or other documents which will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act, or 18 ITA No.1077/M/2014
(c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property),
9. It is clear from the perusal of the above provisions that the section 153A(a) of the Act authorizes the AO to issue notice in a case where the search has been initiated and thus it is only machinery section. Section 153A(b) of the Act also authorizes the AO to assessee or re-assess the income of six assessment years immediately preceding assessment years relevant to the previous year in which the search has been conducted or requisition is made. The said sub- section using the term ―search is conducted‖ had also specified assessment year for which the re-assessment proceedings are triggered after search. It is clear from the above that the provisions of section 153A of the Act come into play only after search has been conducted. The provisions of section 153B of the Act provides that authorization of warrant shall be deemed to be executed upon the conclusion of search as recorded in the last panchanama drawn in relation to the persons in whose case the warrant or authorization has been issued. So, in all the sections the term used is important that fresh panchanama drawn in relation to any person. Thus, in order to complete the search there is a initiation of proceedings u/s 132(1) of the Act, conduction of search in terms of search warrant issued which includes search in the premises of the assessee and other 19 ITA No.1077/M/2014 places and also the last stage panchanama which is conclusive proof of conclusion of search from which the period of limitation will be calculated as provided u/s 153A of the Act. The provisions of Act very clearly and unambiguously provide for initiation of search, conduct of search and conclusion of search and only then the AO can assume jurisdiction u/s 153A of the Act . In the present case, before us search has been initiated as the name of the assessee's AOP appear on the warrant of authorization issued u/s 132(1) besides mentioning the names of the members of assessee AOP at all but the search was not conducted on the premises of the AOP, whereas the search was conducted on the members of AOP with no incriminating material relating to assessee was found in the premises searched belonging to the members of the assessee AOP. Finally, the search was concluded in the name of the members of AOP where panchanama was drawn duly but no panchanama was drawn in the name of the assessee -AOP and therefore, the limbs and contents to be satisfied for assessment of jurisdiction u/s 153A were not satisfied. In the case of M/s Harsh Deep Construction (supra), it has been held as under :
"Held
10. As noticed earlier, in the instant case, though the warrant of authorisation was prepared in the name of the assessee, yet there was no commencement or initiation of search in pursuance of the said warrant. When there is no commencement of search at all, the question of invoking the provisions of sec. 153A shall not arise. We notice that the Ld CIT(A) has expressed the view that the search need not take place at the business premises of the assessee itself, but it can be conducted in any 20 ITA No.1077/M/2014 other place also. There should not be any dispute with the observations so made by Ld CIT(A). But the important point is that the search in any other place should have taken place in pursuance of warrant of authorisation issued in the name of the assessee. In the instant case, the search at the residential premises of Shri Harshad Doshi has taken place in pursuance of warrant of authorisation issued in his name and not in the name of the assessee herein. Hence we find merit in the contentions of the assessee that the assessment order passed for AY 2008-09 u/s 153A of the Act is not valid‖ In the case of Promain Ltd (supra), the Delhi Special Bench of the Tribunal has held as under :
" Having held that the Tribunal cannot adjudicate upon the action of the DI/CIT under section 132(1), the next question is whether the Tribunal can examine the validity of any aspect of the search, i.e., from commencement till completion thereof. As already pointed out, the scheme of Chapter XIV- B requires the Assessing Officer to examine such aspects at three stages. The first stage is when the Assessing Officer has to issue notice under section 158BC. At this stage, he is required to satisfy himself that search has been initiated and carried out in the case of an assessee on whom such notice is to be served. In this connection he should see the authorization issued under section 132(1) and the panchanama prepared by the search party so as to satisfy himself that search was initiated and carried out in the case of the person on whom notice under section 158BC is to be served. In this connection he should see the authorization issued under section 132(1) and the panchanama prepared by the search party so as to satisfy himself that search was initiated and carried out in the case of the person on whom notice under section 158BC is to be served. The scope of examination is very limited, i.e., to ascertain that search operation was carried out in the case of such person and nothing more. If the Assessing Officer does not satisfy himself in this regard, then the assessee has the right to object to the validity of the assessment before the appellate authority on the ground that no search was initiated/conducted in the case of the appellant‖. 21 ITA No.1077/M/2014 Thus, it is clear from the above judgment that search at the residence of the members of the appellant AOP would not fulfill the prescribed conditions to authorise search and the assessment order u/s 153A of the Act. It is therefore, very clear that where no panchanama has been drawn it can be presumed that no search has taken place to provide a legal basis for search and consequent assessment under section 153A of the Act and it would be totally illegal to assume that once the warrant has been signed there is initiation of proceedings u/s 153A of the Act. We, therefore are not in agreement with the conclusion drawn by the ld. CIT(A) that once the warrant issued in the name of the assessee and panchanama was drawn though the assessee's name was not there in the panchnama, there was a proper execution of search justifying the action u/s 153A of the Act. In this case, we find that premises of the assessee are at Shraddha Residncy, Chandavarkar road, Borivali (W), Mumbai-400092. It is very surprising that according to the AO and FAA, the search was conducted on the assessee but the business premises of the assessee were spared from proceedings u/s 132(1) of the Act and even no incriminating material was found and seized from the premises of members of AOP assessee. We, therefore, are of the view that in view of the fact that there was no search conducted in the premises of the assessee and no punchnama was drawn up, the assessment proceedings u/s 153A of the Act were without valid jurisdiction. The case of the assessee also find support from the decision in the case of J M Trading 22 ITA No.1077/M/2014 Corporation(supra) in which , the co-ordinate Bench of the Tribunal has held as under :
―Held :Section 132 provides the acts and deeds to be carried out by the search team at the premises of the assessee. The conduct of search includes acts, deeds and things enumerated under section 132 which an authorized officer is bound to carry out in order to complete the process of search. Search is an invasion of privacy of the assessee and all proceedings connected with search need to be carried out within the framework of the provisions of the Act. In case of non-compliance to the provisions of the Act by the Authorised Officer, such searches are invalid and illegal. In the instant case, no search was conducted against the assessee as the premises occupied by the assessee were not entered upon and searched by the Authorised Officer. Mere search of the premises owned by the assessee but rented to another concern does not by any implication prove the conduct of search against the assessee in view of the fact that the assessee was not available at the address searched upon. Mere mentioning of name in the panchanama does not lead to the conclusion that a valid search was conducted against the assessee. In the totality of circumstances, where no search had been conducted against the assessee there was no merit in the issue of notice under section 153A under which the jurisdictional area of operation is six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted. In case, no search is conducted against a person, the period of operation to which the provisions of section 153A would apply, cannot be determined and the invoking of provisions of section 153A is baseless. Though the provisions of section 158BC are not applicable to searches conducted after 31-5-2003, but the provisions of section 132 are continuing on the statute implying thereby that the provisions of section 153A are only applicable in case valid search is conducted against the assessee under section 132. Accordingly, the assessments made against the assessee under the provisions of section 143(3) read with section 153A were to be declared as null and void and the AO is directed to cancel the same‖ The appeal filed by the department before the jurisdictional High Court against the finding of the Tribunal was also dismissed by the Hon'ble Bombay High Court and the Special Leave Petition filed before the Hon'ble Apex Court stood 23 ITA No.1077/M/2014 dismissed which confirms the fact that the search has to be conducted in the business premises occupied by the assessee in order to initiate assessment proceedings u/s 153A of the Act.
In the case of Dr. Mansukh Kanjibhai Shah V/s CIT (supra), The Tribunal held as under :
―The warrant of authorization being issued in the name of the trust and the assessee, being the Managing Trustee of the Trust, but no search operation was conducted in premises of assessee and in the warrant of authorization The address of the place to be searched is not the address of the assessee-individual, no panchanama is also drawn in pursuance of the warrant of authorization in the case of the assessee, no documents were seized or impounded as such from the assessee, no documents were sized or impounded as such during he course of search from the assessee, he AO was not justified in initiating proceedings or assuming valid jurisdiction under section 153A against the assessee‖ In the case of Sarvamangalam Builders and Developers Pvt ltd (supra), it has b been held by the Delhi Tribunal as under :
―Held :
13. In view of the above discussion, we hold that since no search was conducted on the premises of the assessee and the search conduced was conducted on a premises not owned by the assessee, the proceedings u/s 153A of the Act are invalid and bad in law, Accordingly, the orders of the authorities below are set aside quashed‖
10. From the above discussion, we are of the view that in order to initiate assessment proceedings, u/s 153A of the Act, the premises of the appellant has to be searched and panchanama has to be specifically drawn in the name of the 24 ITA No.1077/M/2014 assessee but in the present case before us no search was carried out at the business premises of the assessee and so much so that no incriminating documents were found and seized from premises searched of others and no panchanama was drawn in the name of the assessee. The case law relied upon by the ld. DR in the case of Devesh Singh(supra), we find that the facts of the case in hand and that of relied upon by the ld.DR are clearly distinguishable as in the said case panchanama was drawn jointly in the name of all parties and there was no doubt as to conduct of the search on various parties. However, no search has actually been taken place on assessee-AOP and the name of the assessee did not appear on the panchanama neither the business premises of the assessee searched nor were there any incriminating documents found and seized from the premises of members of assessee AOP. Similarly, in the case of MDLR Resorts Pvt (supra), the findings was also distinguishable on facts as in the said case there was no dispute with regard to search and seizure conducted and it has not been denied by the assessee. No panchanama was drawn in the name of the assessee, however, documents seized relating to the assessee were mentioned in the annexed to the panchanama and therefore there was no dispute regarding the question of time of completion of assessment u/s 153A of the Act. Whereas in the case of the assessee no search has taken place and no incriminating material was found and seized from the premises subjected to search which belonged to member of AOP Shri Harshad P Doshi, and the 25 ITA No.1077/M/2014 assessee has been denying the fact that the search has ever been conducted on the premises of the assessee. In other words, when the name of the assessee does not appear in the panchanama and no material is seized with respect to the assessee from business premises of membership of AOP searched it could not be taken as omission on the part of the search party of mentioning the name but it is clear proof and conclusive proof that no search was at all conducted. We are therefore of the considered view that no search has been conducted in the case of the assessee in view of the discussion hereinabove and accordingly, we are of the considered view that the order of the ld.CIT(A) deserved to be set aside and accordingly, we hold that the proceedings under section 153A of the Act is without any valid jurisdiction so is the consequent assessment order also passed u/s 143(3) r.w.s.153(A) of the Act and hence quashed. The ground of appeal is allowed.
11. In the second ground which is without prejudice to ground no 1, the assessee has challenged the confirmation of disallowance of claim of deduction of Rs.6,84,62,992/- under section 80IB(10) of the Income Tax Act on the ground that necessary approvals as required by the assessee u/s 80IB(10) of the Act were never obtained from the designated authorities by the assessee.
12. The brief facts and chronology of events are as under:
a. In terms of agreement for development dated 11.10.1998 between M/s Shanti Builders and Shri Harshad Rai Poonamchand Doshi, development 26 ITA No.1077/M/2014 rights were transferred on certain plots in favour of late Mr. Doshi for a consideration of Rs. 30 Lacs. The plots under consideration bearing different survey numbers admeasured 2,19,287 sq. yards. b. In terms of development agreement dated 12/09/2000 entered into between M/s Shanti Star Builders and late Mr. Harshad Doshi, it was stated that the development granted to Mr. Doshi in terms of agreement of 1998 were not available for construction of projects for certain reasons. In its place the builder had made available the plot bearing survey No.131(old survey no.745) and 100 (old survey No.746) admeasuring 2,91,655 sq.feet for construction of building. This plot was located in sector 1. The builder thereafter executed a Power of Attorney in favour of Mr. Harshad P Doshi to enable him to obtain various permissions from government department for purposes of construction of residential project. c. Another Power of Attorney was executed in favour of Mr. Harshad P Doshi and his wife Madhuben Doshi by the landlords of the plot of land of which Mls Shanti Star Builder were the developers. Mr. Harshad Doshi had acquired development rights from M/s Shanti Star Builders. d. In April 2006, a Joint Venture was created cornpnsmg of Mr. Harshad Doshi, Mr.Chandrakant Doshi & Mr. Hemal Doshi to execute the project as Mr. Harshad Doshi who had acquired the development rights was 27 ITA No.1077/M/2014 handicapped and was not in a position to move about and attend the affairs of construction and co-ordination with various departments by himself. The assessee along with Mls Shanti Star Builders has applied for sanction of construction plan as per the details furnished before the Commissioner, Bhayander Municipal Corporation and the commencement certificate was granted accepting assessee's request. e. The appellant had constructed a housing project on the plot of land where the approvals are received and have completed the project as per the specifications and have received Occupancy Certificate for the said project. The same was also certified by the Architects namely M/s Avinash Mhatre & Associates.
13 The ld AO rejected the appellant claim u/s 80IB(10) by citing the followings reasons:-
a. The assessee did not receive any legal sanction from the local authority and the project was not started legally. It has been stated by the AO that firstly the commencement certificate dated 27.01.06 was in the name of "Shanti Star Builders and Others" and secondly the commencement certificate was applied on 04.01.06 and on the date of its issue the appellant AOP was not in existence.28 ITA No.1077/M/2014
b. The provisions of section 80IB(10) of the Act do not envisage commencement of project by one entity and completion by another entity for purposes of eligibility.
c. Shree Harshad P. Doshi member of AOP acquired the right of development through the power of attorney and he was not exclusive owner of land on which the project was developed. The claim of approval on the basis of certificate from local authority cannot be accepted.
d. In response to inquiry letter issued, M/s Shanti Star Developers had accepted that certain development right were transferred in sector no.1 vide agreement dated 12.09.2000 to Mr. Harshad Doshi however as per the AO there was however no transfer of ownership of land.
e. The completion certificate dated 01.10.2007 did not mention the name of the assessee or its AOP members.
f. As per the AO M/s Shanti Star Developers was eligible for claiming deduction U/S 80IB(10) of the Act but they had not preferred such claim.
g. In the Commencement Certificate dated 27.01.2006 it was mentioned in para 4 that the plot of land cannot be sub divided without the prior approval of Municipal Corporation. The documents on record did not evidence any approval granted by Municipal Corporation to the appellant.29 ITA No.1077/M/2014
h. The Commencement Certificate refers to approval of original plan in Nov
97. Accordingly the claim of the appellant disqualified as the benefit was available only for those projects which commenced construction after 01.10.98 .
14. The CIT(A) confirmed the order of assessing officer account of the fact that:
a) The AOP was not the owner of the land on which the project was developed.
b) It was not in existence on the date on which commencement certificate was issued.
c) The commencement and occupancy certificate were not issued in the name of the AOP.
d) The commencement certificate refers to the approval of original plan prior to 01.10.98.
15. The ld AR for the assessee submitted that the Ld. CIT(A) has completely misunderstood the facts of the case and passed a perverse order. Moreover, the entire assessment has been framed u/s 153A of the Act even though no incriminating material has been seized or found during the search which had taken place at the premises of the third party. The assessment order nowhere 30 ITA No.1077/M/2014 stated that the material seized in the course of search evidenced the existence of any undisclosed income on part of the appellant to justify assessment u/s 153A of the Act. Coming to the facts of the case the ld counsel for the assessee submitted that in terms of agreement for development dated 11.10.1998 between M/s Shanti Star Builders and Shri Harshad Rai Poonamchand Doshi, development rights were transferred on certain plots in favour of late Mr. Doshi for a consideration of Rs. 30 Lacs. The plots under consideration bearing different survey numbers admeasured 2,19,287 sq. yards. In terms of development agreement dated 12/09/2000 which was entered into between M/s Shanti Star Builders and late Mr. Harshad Doshi, it was stated that the development rights granted to Mr. Doshi in terms of agreement of 1998 were not available for construction of projects for certain reasons. In its place the builder had made available the plot bearing survey no 131(0Id survey no 745) and 100 (old survey no 746) admeasuring 2,91,655 sq. feet for construction of building. This plot was located in sector 1. The builder thereafter executed a Power of Attorney in favour of Mr. Harshad Doshi to enable him to obtain various permissions from government department for purposes of construction of residential project. Another Power of Attorney was executed in favour of Mr. Harshad Doshi and his wife Madhuben Doshi by the landlords of the plot of land of which M/s Shanti Star Builder were the developers. Mr. Harshad Doshi had acquired development rights from M/s Shanti Star Builders. In April 2006, a Joint 31 ITA No.1077/M/2014 Venture was created comprising of Mr. Harshad Doshi, Mr. Chandrakant Doshi & Mr. Hemal Doshi to execute the project as Mr. Harshad Doshi who had acquired the development rights was handicapped and was not in a position to move about and attend the affairs of construction and co-ordination with various departments by himself. The assessee along with M/s Shanti Star Builders has applied for sanction of construction plan as per the details furnished before the Commissioner, Bhayander Municipal Corporation and the commencement certificate was granted accepting assessee's request. The appellant had constructed a housing project on the plot of land where the approvals were received and have completed the project as per the specifications and have received Occupancy Certificate for the said project. The same was also certified by the Architect namely M/s Avinash Mhatre and Associates. The conditions as specified in the provisions of section 80(IB)(10) of the Act nowhere prescribe the ownership of the plot of land in order to be eligible for deduction under the said section. The main intention of introducing this section was to provide tax benefits to the person who undertakes housing project and constructs as per the scheme and specifications approved by appropriate authority. Thus, the deduction is mainly for the person who undertake such development of the project. This can be clearly seen from the conditions prescribed in the section wherein all the conditions as required to be fulfilled is clearly provided and thus where no condition as to the ownership of plot on which the project is to be 32 ITA No.1077/M/2014 constructed is provided and therefore, the same cannot be enforced. What is essential is that the assessee should construct a building approved as a housing project by the local authority and such construction should be by the assessee in its capacity as a developer and not as a contractor. It is therefore apparent that the eligibility criteria for grant of deduction u/s 80IB(10) applies to the undertaking which executes the project and the eligibility conditions are project centric and not assessee centric. This issue has been settled by the various judicial authorities. Reliance for this proposition is placed on the decision of Hon'ble ITAT Ahmedabad in the case of Radhe Developers and Others v/s ITO reported at 113 TTJ 300(Ahm) (Page No. 296-311 of the Paper Book).
16. We have heard the rival contentions and perused the materials on records including the impugned orders including the case laws relied upon by the parties. As per the provisions of section 80IB (10) of the Act, certain conditions are to be fulfilled in order to claim benefit under this section in respect of eligible project as prescribed as under:
―a) the housing project should be approved before 31.03.2008 by a local authority;
b). the construction of the project should commence after 01.10.1998;
c). the construction should be completed before 31.03.2008 where the approval was received before 01.04.2004 and within 4 years from the end of the financial year in which the housing project is approved by the local authority on or after 01.04.2004 and before 31st Day of March, 2005; 33 ITA No.1077/M/2014
d). where the housing project is approved on or after 15t day of April, 2005 the project should be completed within 5 years from the end of the financial year in which the housing project is approved;
e). the project should be on a plot of land having minimum area of 1 acre;
f). the residential unit in the project has a maximum built area of 1000 square feet where the residential unit is situated in Delhi or Mumbai or within twenty-five kilometres from the municipal limits of these cities and one thousand and five hundred square feet at any other place;
g). the built up area of the shops and other commercial establishment included in the housing project does not exceed the prescribed percentage or the prescribed limit of the built up area.‖ The project under consideration was approved on 27.1.2006 and the project was completed as per the occupancy certificate issued on 1.10.2007. The total area constructed and completed of building was 12439.70 Square mtr. which is equivalent to 133901 sq.ft which is more than 1 acre and the built up area of each completed flat in the said project was not more than 1000 sq. ft. The above facts have been confirmed by M/s Avinash Mhatre & Associates , architect by issuing the certificate to this effect. In our opinion the having considered the facts of the case of the assessee in the light of the provisions of the act and ratio laid in the various decisions relied by the ld AR we hold the assessee has satisfied all the conditions of section 80(IB)(10) of the Act as developer and is entitled to deduction under the said section while coming to this conclusion, we 34 ITA No.1077/M/2014 extract relevant observations of the Ahmedabad Bench of the Tribunal in the case of Radhe Developers and others (supra) as under :
"A bare reading of the provision ofs.80-IB (l 0), as they stood in the year under consideration, shows that the requirements for claiming deduction for housing project are that (i) there must be an undertaking developing and building housing project (U) such housing project is approved by local the authority (iii) the development and construction of housing project has commenced on or after J day of October, 1998; (iv) the housing project is on a size of a plot of land which has minimum area of one acre; and (v) the residential unit developed and built has a built up area of 1,000 sq. ft . if it is situated in Delhi and Mumbai or within 25 kms of municipal limit of these cities and J,500 sq. ft. at any other places. There is no other condition, which is to be complied by an assessee for claiming deduction on profits of the housing project. The contention of the Revenue authorities that to claim deduction under s. 80IB(lO), there is a condition precedent that the assessee must be owner of the land on which housing project is constructed has no face. There is no such condition as appearing in the provisions of the section. It might be true that the land belongs to the person who has entered into an agreement with the assessee to develop and build housing project but on a perusal of the agreement it is evident that the development and building work has been carried out by the assessee in pursuance of a tripartite agreement and it is not by the landowners. Therefore, the mere fact that the Landlord and the undertaking developing and building housing project, are two different entities would not make any difference. The deduction would be eligible to the person who is developing and building housing project and not to mere owner thereof."
The facts of the case of the assessee are squarely covered by the ratio laid down in the above decisiuon. We , therefore ,respectfully following the above decision of the Tribunal, we allow this ground of appeal. Therefore, on this issue also the assessee succeeds.
35ITA No.1077/M/2014
17. In the result, the appeal of the assessee is allowed Order pronounced in the open court on 11th May, 2017.
Sd sd (D.T.GARASIA) (RAJESH KUMAR) Judicial Member Accountant Member मुंबई Mumbai; ददन ुंक Dated :11th May,2017 Sr.PS:SRL:
आदे श की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to :
1. अपीऱाथी / The Appellant
2. प्रत्यथी / The Respondent
3. आयकर आयुक्त(अपीऱ) / The CIT(A)
4. आयकर आयुक्त / CIT - concerned
5. ववभागीय प्रतततनधि, आयकर अपीऱीय अधिकरण, मुंबई / DR, ITAT, Mumbai
6. गार्ड फाईऱ / Guard File आदे श नस र/ BY ORDER, True copy उि/सह यक िुंजीक र (Dy./Asstt. Registrar) आयकर अिीऱीय अधिकरण, मुंबई / ITAT, Mumbai