Income Tax Appellate Tribunal - Mumbai
Akshar Developers, Navi Mumbai vs Acit Cen Cir 3, Thane on 28 February, 2018
1
Akshar Devlopers group
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "A", MUMBAI
Before Shri Mahavir Singh(JUDICIAL MEMBER)
AND
Shri G Manjunatha (ACCOUNTANT MEMBER)
I.T.A No.6242/Mum/2016
(Assessment year: 2009-10)
&
I.T.A No.2676 to 2678/Mum/2017
(Assessment years: 2010-11, 2011-12, 2012-13)
Akshar Developers vs ACIT, Cent.Cir.3, Thane
nd
225, 2 Floor, Big Splash
Plot No.78/79, Near Navratna
Hotel, Sector 17, Vashi
Navi Mumbai 400 705
PAN : AAKFA0455B
I.T.A Nos.6245 & 6246/Mum/2016
(Assessment years: 2009-10 & 2010-11)
&
I.T.A No.2675/Mum/2017
(Assessment year: 2011-12)
Bachubhai Patel vs ACIT, Cent.Cir.3, Thane
nd
225, 2 Floor, Big Splash
Plot No.78/79, Near Navratna
Hotel, Sector 17, Vashi
Navi Mumbai 400 705
PAN : ADEPP8750F
I.T.A Nos.6243 &6244/Mum/2016
(Assessment years: 2009-10 & 2010-11)
&
I.T.A. Nos. 2672 & 2673/Mum/2017
(Assessment years 2011-12 & 2012-13)
Hari Bachubhai Mujat vs ACIT, Cent.Cir.3, Thane
nd
225, 2 Floor, Big Splash
Plot No.78/79, Near Navratna
2
Akshar Devlopers group
Hotel, Sector 17, Vashi
Navi Mumbai 400 705
PAN : AFZPM9318P
Appellants by Ms Ritika Agarwal / Shri Salman
Balbale
Revenue by Shri R.P. Meena
Date of hearing 10-01-2018
Date of pronouncement 28-02-2018
ORDER
Per G Manjunatha, AM :
This bunch of appeals filed by different assesses are directed against the orders of the CIT(A)-11, Pune dated 30-09-2016 and 13-01- 2017. Since facts are common and also inter-connected in some cases, these appeals were heard together and are disposed of by this common order, for the sake of convenience.
ITA No.6246/Mum/2016 & 2676 to 2678/Mum/2017
2. The assessee has taken more or less common grounds of appeal for all the years. For the sake of brevity, the grounds of appeal taken up for the assessment year 2010-11 is reproduced below:
"The Appellant individual is aggrieved by the order dated 30/9/2016 passed by the learned CIT(A) Pune 11 u/s 250 of the Income-tax Act, 1961 and is in appeal :-
1. Because, the Id. CIT(A) has erred in holding that the issuance of notice u/s 143(2) of the Act is not mandatory for carrying out assessment proceedings u/s 153A of the Act and accordingly holding that the impugned assessment order is valid.
2. Because, Id. CIT(A) has erred in holding that the Appellant was not entitled to make fresh claim in the return filed u/s 153A 3 Akshar Devlopers group of the Act even though the material relating to the claim was available on record,
3. Because the Id. CIT(A) has erred in law in rejecting the Appellant's claim for deduction u/s 80IB (10) to the tune of Rs.6,78,84,612/- at the threshold itself without going into the merits of the claim.
4. Because the Id. CIT(A) has erred in law in upholding the assessment order passed u/s 143(3) r.w.s,153A assessing total income at Rs.6,78,99,609/-"
3. From these grounds of appeal, the assessee has challenged the assessment order passed by the AO u/s 143(3) r.w.s. 153A of the Act on the ground that the AO has failed to issue notice u/s 143(2) of the Act which is mandatory for carrying out assessment proceedings u/s 153A of the Act and accordingly the impugned assessment order is bad in law. The assessee also took up a ground challenging the action of the CIT(A) in sustaining addition made by the AO towards unaccounted cash receipts on the basis of rough cash book found and seized during the course of search and also admission of the assessee during the course of search in the statement recorded u/s 132(4) of the Act. The assessee also challenged the action of the Ld.CIT(A) in rejecting the claim of deduction u/s 80IB(10) of the Act in respect of eligible housing project on the ground that no new claim could be made in return filed u/s 153A of the Act.
4. The brief facts of the case extracted from the assessment order for AY 2010-11 are that the assessee is a partnership firm engaged in the business of builder and developer. The assessee has filed its return of 4 Akshar Devlopers group income for the AY 2010-11 on 30-11-2011 declaring total income at Rs.2,18,00,520. A search and seizure action u/s 132(1) of the Act was conducted on 28-11-2011 at the business premises of the assessee and its partners. During the course of search, certain incriminating materials in the form of note books found and seized from the residential premises of Shri Hari Bachubhai Mujat (Bharat Patel), one of the main persons and partner in the assessee firm. The rough cash books containing record of receipt and payments of unaccounted cash transactions were found and seized. Bundle No.1 contained written pages 1 to 46 and Bundle No.2 contained written pages 1 to 22. The entries recorded contained date-wise details of cash brought to the house and cash taken out of the house. These entries are thus under the columns in and out. The name of the persons bringing the cash in or taking the cash out are also mentioned. Invariably, these persons were employees of Akshar group. The entries in the rough cash book also contained narration to the entry. There were two kinds of entries being recorded in rough cash book. Some of the entries indicated receipt of fresh cash by the Akshar group whether as sale proceeds / cash loans or money from investors and corresponding payment of money to different persons whether as investment or as repayment of loan or as expenditure. The second kind of entries where the employees have brought the available cash to home and taken out on the next day or shortly thereafter. Against these 5 Akshar Devlopers group entries, no narration is given and only the names of the employees is mentioned. During the course of search, when the rough cash book was confronted to the assessee, the partner of the firm Shri Hari Bachubhai Mujat, in his statement recorded on 30-09-2011 admitted that these are on-money received in his real estate business from group firms and companies and also payment of money for various purposes including expenditure and investment which are not recorded in his books of account and accordingly agreed that he was not in a position to comment on various discrepancies pointed out in the rough cash book and hence in order to buy peace of mind and to avoid litigation, he surrendered an undisclosed income of Rs.16 crores in various business concerns and in the name of family members. The partner of the firm, Shri Hari Bachubhyai Mujat has reiterated his admission in the statement recorded u/s 132(4) on 07-10-2011.
5. Consequent to search, notice u/s 153A of the Income-tax Act was issued on 19-01-2013 requesting to prepare a true and correct return of total income. In response to the notice, the assessee has filed the return of income on 23-09-2013 declaring total income at Rs.1,54,36,700 after claiming deduction of Rs.89,94,609 u/s 80IB(10) of the Income-tax Act, 1961. The case has been selected for scrutiny and notices u/s 143(2) and 142(1) of the Act along with questionnaire were issued. In response to the notices, the authorized representative of the assessee appeared 6 Akshar Devlopers group from time to time and filed various details, as called for. During the course of assessment proceedings the AO observed from the return of income filed by the assessee that though the assessee has admitted undisclosed income of Rs.12,19,50,872 in respect of unaccounted cash transactions recorded in rough cash book, failed to admit such undisclosed income in the return of income u/s 153A of the Act. Therefore, called upon the assessee to explain as to why the undisclosed income admitted during the course of search in the statement recorded u/s 132(4) cannot be added. In response to the showcause notice, assessee has filed a reply in the form of a booklet explaining the reasons for not admitting the undisclosed income admitted during the course of search. According to the assessee, there was a mistake in disclosure of Rs.14,19,10,000 made during the course of search on account of unaccounted cash receipts found in rough cash books No.1 & No.2. The assessee also suggested two methods of determining undisclosed income, according to which the assessee has worked out peak cash theory for determining undisclosed income in respect of unaccounted cash receipts and cash payments as per rough cash book. Alternatively, the assessee pleaded for a reasonable rate of profit on the receipts treating the same to be on-money. The assessee has filed a working of gross receipts as per the rough cash book which worked out to Rs.27.59 crores the details of which has been reproduced 7 Akshar Devlopers group by the AO in the assessment order at para 5.3 on pages 7 & 8. As per the workings provided by the assessee, out of the total receipts of Rs.46.23 crores as recorded in rough cash books, the assessee has determined net cash receipts of Rs.27.59 crores attributable to its business receipts on which a reasonable net profit of 10% may be estimated. In the total cash receipts, the assessee has deducted cash drawn from bank, cash with employees, loan received from individuals. Similarly, the assessee has worked out peak cash theory as per the rough cash book and determined peak cash balance as on 02-06-2010 which worked out to Rs.2,73,87,071/- which has been distributed equally between two partners and suggested for addition. To substantiate plea of peak cash credit theory, the assessee has further argued that unsecured loans from various individuals are not on-money and the details of the above payments are recorded in RCB Bundle No.1. Similarly, receipt of on-money amounting to Rs.3.82 crores from different projects, which has been handed over to Shri Hari Bachubhai Mujat, as admitted by Shri Manoj B Gogta and the amount of Rs.2.21 crores arising from Hari Bachubhai Mujat's account already stood accounted for. For advocating peak cash theory, the assessee has given various reasons as per which the RCB is a cash book recording inflow and outflow of cash including cash recorded in regular cash book. The said RCB contained entry of cash for credit for group as a whole but not 8 Akshar Devlopers group specific to any single entity in the group. The inflow is in the form of cash withdrawals from bank, receipt of investors money, sale proceeds of land, unsecured loan, return of payment from employee, etc. the outflow is in the form of cash deposit in bank, repayment of loan, money given to broker of land, repayment to investor, expenses and money given to employees. The inflow and outflow matches with total money inflow at Rs.41.21 crores and total money outflow at Rs.41.73 crores. There is no evidence to support the true nature of these entries and this can be explained only through personal knowledge and belief. The cash found recorded in other seized documents is also recorded in RCB and, therefore, the RCB is the best document which contained total transactions of the group as well including the assessee firm. Therefore, it is very difficult to ascertain true nature of these entries and accordingly, a reasonable income may be determined either by going on the basis of peak cash theory or by estimation of income.
6. The AO, after considering submissions of the assessee and also on analyzing the seized materials and statement recorded from the partner Hari Bachubhai Mujat observed that the assessee has categorically admitted during the course of search that the entries contained in rough cash book are on-money received from its real estate business and also payment to unaccounted expenditure in respect of its business and accordingly, worked out an undisclosed income of Rs.16,04,84,872/- and 9 Akshar Devlopers group offered for 3 years vide its letter dated 17-10-2011. These transactions were not recorded in the regular books of account. This fact has been confirmed in the statement recorded u/s 132(4) on 29/9/2011and 17-10- 2011. The amount of unexplained cash credit though disclosed by the assessee firm during the search operation, neither was the same offered in the return of income nor did the assessee pay any tax on it. Therefore, there is no merit in the contention of the assessee that the source of such investment is already explained and no separate addition can be made. The AO further observed that after going through the submissions in respect of the plea of peak cash credit theory as suggested by the assessee keeping in view the nature of transactions, the entries reflected in the documents found and seized by the search party, he was of the opinion that the assessee's plea for peak cash credit theory does not hold good as it can be applied only when the assessee has rotated its cash and also there was frequent withdrawal and deposit of cash in the books of account. The transaction recorded in the RCB are not homogenous in nature and reflects receipt of unaccounted cash and its application as investment and expenditure. The entries recorded in RCB-1 and RCB-2 are outside the books of account and hence, there is no merit in the arguments of the assessee that peak credit theory needs to be followed to ascertain correct income. The AO, after considering the submissions of the assessee explaining the peak cash 10 Akshar Devlopers group theory and also on analysis of cash book prepared by the department on the basis of rough cash book observed that on analysis of entries found in the RCB, the receipts are mainly on account of amount received from investors and payments are related to investments made by the assessee, expenditure in respect of its project and cash given to employees of the group. Since the assessee has not been able to explain the true nature of entries recorded in the rough cash book and also the fact that it has admitted undisclosed income during the course of search and also in the post search investigation, rejected explanations of the assessee with regard to the peak cash theory and estimation of reasonable net profit of gross profit considering it as on-money and made addition of Rs.12,19,50,872 to the total income of the assessee.
7. Similarly, during the course of assessment proceedings, the AO noticed that the assessee has claimed deduction u/s 80IB(10) for Rs.89,94,609 and which was not claimed in the original return of income filed u/s 139(1), therefore, called upon the assessee to explain as to why deduction claimed u/s 80IB(10) shall not be disallowed. In response to notice, the assessee submitted that it is in the business of development of housing project and its housing project has fulfilled the terms and conditions specified u/s 80IB(10), therefore, it has claimed deduction from profits and gains of business from eligible business project. The assessee further submitted that it has derived profit from the project 11 Akshar Devlopers group named, 'Sreeji Heights' which is eligible for deduction u/s 80IB(10). Originally said claim was not made in the return of income since the assessee was under mistaken understanding of law that since they have constructed commercial units, they cannot claim benefit u/s 80IB(10). However, the Hon'ble Bombay High Court has, in the case of Brahma Associates reported in (2011 51 DTR 298 (Bom) held that the claim is fully allowable in case the project was approved prior to amendment made in law w.e.f. 01-04-2005. Since its housing project was approved on 16-04-2004, the project is eligible for benefit u/s 80IB(10) of the Act. The AO, after considering relevant submissions of the assessee and also on analysis of the provisions of section 80IB(10) held that the assessee is not eligible for deduction u/s 80IB(10), as the assessee did not claim such deduction in the return of income filed u/s 139(1). The AO further observed that the provisions of section 153A is for the benefit of revenue as such, the assessee cannot take the benefit of re-assessment contemplated u/s 153A so as to claim any fresh deduction which was not made in the original return. Insofar as deduction claimed u/s 80IB(10), after considering the details filed by the assessee with regard to 'Sreeji Heights' project, the AO has observed that the assessee has not fulfilled terms and conditions prescribed in section 80IB(10) so as to claim deduction from profits and gains, since the assessee has constructed certain flats having built up area of more than the specified limit provided 12 Akshar Devlopers group u/s 80IB(10) and also it has sold more than one flat to a single customer. The assessee has developed 'Sreeji Heights' project on the land which has an area of more than one acre. The AO has discussed the project in the light of details filed by the assessee and brought out clear facts that the assessee has not complied with all the conditions specified in section 80IB(10), therefore, not eligible for deduction u/s 80IB(10) in respect of profits and gains. Since the assessee firm has failed to claim deduction in original return filed u/s 139(1) and also its claim is not in accordance with the provisions of section 80IB(10), therefore, rejected the claim made by the assessee and made addition of Rs.89,94,609 to the total income.
8. Aggrieved by the assessment order, the assessee preferred appeal before the CIT(A). Before the CIT(A), the assessee has taken up a legal plea inasmuch as the assessment order passed by the AO u/s 143(3) r.w.s. 153A is bad in law as the AO has not issued mandatory notice which was required to be issued mandatorily u/s 143(2), therefore, the assessment order passed by the AO is null and void. In this regard assessee relied upon certain judicial precedents. As regards addition made by the AO towards unaccounted cash transactions, the assessee has reiterated its submissions made before the AO to argue that the partner has admitted undisclosed income at the time of search without examining the seized material. However, on verification of the seized 13 Akshar Devlopers group material found during the course of search it has worked out each and every entry appearing in the rough cash book Nos.1 & 2 and found that many entries already stood recorded in the regular books of account in the form of cash withdrawal from bank and cash deposits. Therefore, the assessee has suggested for a peak credit theory to determine the undisclosed income in respect of on-money received from construction business as the RCB contains total cash receipts and cash payments of the group as a whole which is operating more than 5-6 firms and all are involved in the business of real estate development. The assessee further submitted that though it has admitted undisclosed income in the statement recorded u/s 132(4), such admission is not based on any evidence. Therefore, there is no reason for the AO to make addition only on the basis of admission of the assessee that the RCB is a cash book recording inflow and outflow of cash including cash recorded in regular cash book and the said RCB contains entry of cash of the group as a whole not specific to any single entity in the group. The assessee further submitted that even on analysis of the cash book prepared by the department in tally software clearly reveals that the AO is not able to ascertain the true nature of transactions recorded in respect of receipts as well as payments. Therefore, he erred in not considering the method suggested by the assessee to determine the undisclosed income. The assessee also suggested for estimation of reasonable net profit on total 14 Akshar Devlopers group receipts from the cash book for which a separate working has been furnished as per which total receipts as per the RCB is worked out at Rs.27.59 crores.
9. Insofar as deduction claimed u/s 80IB(10), the assessee has reiterated its submissions made before the AO to argue that the assessment for the assessment year in question is abated as on the date of search which is evident from the fact that the due date for issue of notice u/s 143(2) for the AY 2010-11 would be expired on 30-09-2011 whereas the search took place on 29-09-2011. When the search took place, the assessment has been abated, therefore, the assessee can make any claim which was not made in the original return filed u/s 139(1) and accordingly, the AO was erred in rejecting the claim of the assessee even though its claim is in accordance with provisions of section 80IB(10) of the Act. Insofar as merits of the case, the assessee has submitted that it has fulfilled all conditions specified under section 80IB(10) so as to claim deduction. Therefore, the AO was incorrect in rejecting its claim even though the assessee has made a claim on the basis of decision of the jurisdictional High Court in the case of Brahma Associates (supra) wherein it was categorically held that the requirement of construction of commercial space within the specified limit is applicable for the project which have been approved on or after 01-04- 2005 whereas assessee's project has been approved on 16-10-2004. 15
Akshar Devlopers group Insofar as other conditions that it has constructed certain flats over and above the specified limit fixed for construction of each flat even if there are certain flats which are constructed over and above the specified super built up are, there is no bar in claiming deduction towards eligible project on proportionate basis.
10. The CIT(A), after considering relevant submissions of the assessee and also relying upon plethora of judgements observed that the assessee has admitted undisclosed income in respect of transactions recorded in rough cash book Nos.1 & 2 during the course of search in the statement recorded u/s 132(4), further followed by second statement recorded on 17-10-2011, wherein it was once again clarified that undisclosed income admitted during the course of search is voluntary and also on the basis of incriminating materials found as a result of search. The above statements given during the course of search have not been retracted so far. There is no allegation that the statements were recorded under duress or coercion. Therefore, there is no reason for the assessee to go back from the admission of undisclosed income while filing return of income. The CIT(A), further observed that even going by the facts of the case it was abundantly clear that entries contained in RCBs 1 & 2 were mainly related to assessee's construction business where it is common to receive on-money in respect of sale and purchase of properties. Accordingly, the assessee has recorded all cash 16 Akshar Devlopers group transactions relating to receipt of on-money and payment of unaccounted expenditures. Even on going by the entries in the RCBs which have been analysed in tally software by the department, the trial balance extracted from the tally software clearly establishes the fact that the receipt of cash predominately relates to amounts received from investors and the payments are related to amounts paid for investments, expenses, department payments and the remaining amount is shown as advance to the employees. The assessee has failed to explain the true nature of transaction either in respect of receipts or in respect of payments. Under these circumstances, it is natural for going on the basis of admission of the assessee as the assessee best know the transaction recorded in its books of account. The assessee has consciously admitted undisclosed income after analysing the seized books of account. Therefore, the AO was right in rejecting assessee's peak credit theory and estimation of reasonable net profit as both are applicable under different set of facts. The CIT(A) also rejected the alternative plea of the assessee that the unaccounted income should be taxed in the hands of the partners of the firm as the assessee has offered the income in the name of the firm at the time of search. Therefore, the AO has rightly made addition in assessee's case.
11. Insofar as deduction claimed u/s 80IB(10), the CIT(A) observed that in view of the fact that the assessee has not made any claim in 17 Akshar Devlopers group respect of deduction u/s 80IB(10) in original return filed u/s 139(1) and also the fact the assessee cannot make new and fresh claims in the returns filed u/s 153A, the claim made by the assessee u/s 80IB(10) is not allowable. The CIT(A), after considering the facts and also on analysis of certain judicial precedents, including decision of the jurisdictional High Court in the case of Continental Warehousing Corporation (Nava Sheva) (2015) 58 Taxman.com 78 and in the case of Murli Agro Products ITA No.36 of 2009 judgement dated 29-10-2010 held that the assessee cannot make any fresh claim in respect of assessment years which have been unabated as on the date of search. Insofar as merits of the deduction claimed u/s 80IB(10), though the CIT(A) has not discussed the allowability of deduction u/s 80IB(10) in AY 2010-11, discussed the issue in the assessment year 2011-12 and observed that the assessee is eligible for proportionate deductions in respect of housing project where the assessee has fulfilled the conditions in respect of size of flat. Similarly, the CIT(A) has discussed the issue of construction of commercial area in the housing project and held that the provision inserted by Finance (No.2) Act, 2004 with effect from 01-04-2005 is not applicable in assessee's case as the assessee's project was approved on 16-10-2004. Insofar as two flats sold to one individual, the CIT(A) observed that clauses (e) and (f) have been inserted with effect from 01-04-2010, whereas the occupancy certificate 18 Akshar Devlopers group in respect of the said project was received on 22-09-2008. Therefore, the provisions of clauses (e) and (f) cannot be applied to the assessee's project. Insofar as proportionate deduction towards project which fulfils the conditions prescribed u/s 80IB(10), CIT(A) observed that merely because one building, i.e. B-Wing does not satisfy the requirement of section 80IB(10) would not result in nullifying the claim of the assessee for the entire project. Similarly, the CIT(A) has discussed the applicability of jurisdictional High Court decision in the case of Brahma Associates (supra) and observed that the AO was wrong in not following the decision on the ground that SLP was filed against the decision does not stop the applicability of the ratio laid down by the courts. The CIT(A) further observed that though the assessee has fulfilled the above conditions could not able to counter, the AOs finding with regard to the project 'Sreeji Heights' that the project was situated within a distance of 25 kms from Mumbai Metropolitan limits. Accordingly, the issue has been set aside to the file of the AO and directed him to allow the deduction u/s 80IB(10) on the flats not exceeding the limits of building or as prescribed in the Act on a proportionate basis after satisfying himself about all other conditions specified in the section. Aggrieved by the order of CIT(A), assessee is in appeal before us.
19
Akshar Devlopers group
12. The first issue that came up for our consideration from ground 1 is challenging the validity of assessment order passed by the AO u/s 143(3) r.w.s. 153A on the ground that the AO has not issued notice u/s 143(2) of the Act which is mandatory for carrying out assessment proceedings and accordingly, the impugned assessment order is invalid. The Ld.AR for the assessee, at the time of hearing submitted that she did not want to press the ground and hence ground No.1 is dismissed, as not pressed.
13. The next issue that came up for our consideration is addition made by the AO towards undisclosed unaccounted cash transactions of Rs.12,19,50,872 on the basis of rough cash books 1 & 2 found and seized during the course of search and also on the basis of admission of the assessee in the statement recorded u/s 132(4) of the Act. During the course of search two notebooks inventorised as Bundle No.1 & 2 were found and seized from the residential premises of Shri Hari Bachubhai Mujat wherein certain cash transactions in respect of receipts and payments were recorded. When the RCBs 1 & 2 have been confronted to the assessee, the partner of the firm admitted that the transactions recorded in RCBs 1 & 2 are unaccounted transactions in respect of on-money received towards sale of flats, unsecured loan received from various parties, cash withdrawal from bank and payment 20 Akshar Devlopers group towards various expenses in relation to projects executed, cash deposit in bank and amount paid for purchase of properties and repayments of loans. During the course of search, in the statement recorded u/s 132(4), Shri Hari Bachubhai Mujat admitted that he was unable to find out exact nature of transactions recorded in the RCB 1 & 2 and accordingly came forward to admit additional undisclosed income of Rs.16,04,84,872 spread over to 3 assessment years starting from A.Y. 2010-11 as per the statements dated 29-09-2011 and 127-10-2011. The AO made additions towards unaccounted cash transactions on the ground that the assessee has failed to offer any explanations for not admitting undisclosed income in the return of income filed u/s 153A, though it has been admitted in the statement recorded u/s 132(4). The AO also rejected assessee's plea for determination of undisclosed income on the basis of peak credit theory and also estimation of reasonable net profit on total receipts.
14. The Ld.AR for the assessee submitted that the Ld.CIT(A) erred in not accepting the peak theory adopted by the assessee and offered as income by the partners of the assessee firm without appreciating the fact that it is very difficult to ascertain true nature of transactions recorded in rough cash books No.1 & 2 as the said seized RCBs 1 & 2 contained total cash receipts and payment of Akshar group as a whole, but not 21 Akshar Devlopers group confined to the assessee firm alone. The Ld.AR further referring to the paper book filed during the course of hearing submitted that the assessee firm has worked out peak credit theory on the basis of RCBs 1 & 2 and analysed total transactions recorded in receipts as well as payments in respect of all the payments and determined peak cash as on 02-06-2010 which worked out to Rs.2,73,83,071 which has been distributed equally between two partners and considered in their individual hands. The Ld.AR further submitted that even going by the analysis of rough cash book 1 & 2 made by the AO by entering into the transaction in tally software, it is abundantly clear that the AO failed to establish the true nature of transactions and hence made additions only on the basis of surrender made during the course of search ignoring the fact that the surrender was made without going through the seized materials. The Ld.AR further submitted that the transactions recorded in RCB 1 & 2 relate to total group which included on-money received from sale of flats, unsecured loan borrowed from certain persons and also cash withdrawals from bank. Certain transactions have already been recorded in regular books of account. Therefore, making addition only on the basis of admission without any corroborative evidence to establish that it represents undisclosed income of the assessee is incorrect. The Ld.AR further submitted that when it is not possible to ascertain to any true nature of transaction, the best method to determine 22 Akshar Devlopers group undisclosed income is to peak credit theory which has been accepted by the Courts, including the Hon'ble Andhra Pradesh High Court in the case of CIT vs Purshottam Jhawar (2013) 40 taxman.com 533 wherein the court held that application of peak credit concept for quantifying the undisclosed income is not contrary to the provisions of the Act. The Ld.AR further submitted that in case, the peak credit theory is not acceptable, then the second method for determination of undisclosed income is estimation of reasonable net profit on total receipts recorded in undisclosed rough cash book. Therefore, requested for estimation of net profit of 10% on total receipts quantified on the basis of those cash book at Rs.27.59 crores.
15. The Ld.DR, on the other hand, strongly supported the order of the CIT(A) and submitted that the assessee has failed to admit undisclosed income admitted during the course of search in the statements recorded u/s 132(4) which was further supported by incriminating material in the form of RCB 1 & 2 which contained unaccounted receipts from business and payment in respect of expenditure and on that basis, the assessee has admitted undisclosed income. Therefore, the AO was right in making addition on the basis of admission of the assessee which was not retracted by filing any letter. The Ld.DR further submitted that admission is best piece of evidence which can be relied upon by the 23 Akshar Devlopers group authorities when such admission is corroborated by sufficient evidence in the form of incriminating materials. In this case, admittedly, the search party found and seized rough cash book wherein various unaccounted transactions have been recorded and when these have been confronted to the assessee, the assessee has admitted undisclosed income, therefore, there is no reason for the assessee to go back from its admission. The Ld.DR further submitted that even going by the analysis of rough cash book made by the AO by entering into transactions recorded in RCBs 1 &2 in tally software, it was abundantly clear that most of the transactions relate to on-money received from sale of flats which is accounted for under the head 'receipts from investors and payments are related to expenses and amount shown as advance to employees. Taking into account the admission of the assessee and analysis of rough cash book, the AO has rightly come to the conclusion that the assessee's admission in respect of undisclosed income is supported by incriminating material and hence, the order of the AO should be upheld.
16. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The facts with regard to the seizure of two RCBs 1 & 2 and admission of additional income on the basis of rough cash book is not disputed. The assessee 24 Akshar Devlopers group has admitted the fact that transactions recorded in seized materials relate to its business activity and amount received from parties towards on-money received for sale of flats and also payments towards unaccounted expenses in respect of its project. The partner of the firm, Shri Hari B Mujat has admitted the fact that entries recorded in RCBs 1 & 2 are unaccounted transactions in respect of receipts and payments and accordingly voluntarily admitted undisclosed income of Rs.16,04,84,872 spread over to 3 assessment years in the statement recorded u/s 132(4) on 29-09-2011 and 17-10-2011. It is also an admitted fact that the assessee has filed letter on 02-09-2013 in the form of a separate booklet which contains 16 pages wherein it was submitted before the AO that disclosure made during the course of search in respect of undisclosed income was made without going through the seized materials and after analysis of the seized materials it has come to the notice that there was a mistake in disclosure of Rs.14,19,10,000 and accordingly suggested 2 methods to compute the undisclosed income i.e. one on the basis of peak cash theory where the assessee has arrived at peak cash balance of Rs.2,73,87,071 on 02-06-2010 and second, estimation of reasonable net profit on total receipts recorded in RCB excluding cash with employees and cash drawn from bank which worked out to Rs.27.89 crores. To substantiate the plea of peak cash credit theory, the assessee firm further submitted that the assessee has 25 Akshar Devlopers group analysed the transactions and as per which certain credits appeared in RCB are unsecured loan received from Smt. Janaki Shah of Rs.45 lakhs, profit on sale of Ulve land of Rs.1.27 crore, transaction with Rameshbhai Rs.78.58 lakhs and transaction with Shri ML Shah of Rs.1.05 crore and all these are not on-money receipts and the details of the above payments are recorded in RCB 1. The assessee further submitted that receipt of on-money amounting to Rs.3.82 crores from different projects and Rs.2.21 crores arising from Hari Mujat account already stood accounted for in RCB. Therefore, no separate addition for the aforesaid amount is required. The sum and substance of the arguments of the assessee is that admission of additional income during the course of search in the statement recorded u/s 132(4) is not correct and which is not supported by any materials and hence, determination of income should be on the basis of peak credit theory or estimation of reasonable net profit from total receipts.
17. The AO has made addition on the basis of admission of the assessee during the course of search. According to the AO, admission is the best piece of evidence and hence, the assessee cannot go back from its admissions without any valid retraction with supporting evidence. The AO further was of the opinion that even going by the analysis of RCB 1 on the basis of trial balance prepared in tally software, though the receipts and payments are almost equal, the receipt side 26 Akshar Devlopers group comprise of major amount received from investors which is nothing but on-money received from sales and payment side consists of expenses incurred for projects and amount given to employees. Therefore, he opined that admissions made by the assessee is on the basis of incriminating material found as a result of search in the form of RCB. No doubt, admission in the course of search by way of a statement u/s 132(4) is the best piece of evidence, but not conclusive one. Unless the admission is corroborated by further evidences in the form of incriminating material, the AO cannot make addition only on the basis of admission by the assessee. We further notice that the assessee has analysed RCB 1 & 2 and as per which the RCB is a cash book recording inflow and outflow of cash including cash transactions recorded in regular cash book. The said RCB contains entry of cash for group as a whole, but not specific to any single entity in the group. The inflow is in the form of withdrawals from bank, receipts from investors money, sale proceeds of land, return of payment from employees, etc. The outflow is in the form of cash deposit to bank, repayment of loan, money given to broker, land cost, repayment to investors, expenses and money given to employees. The inflow and outflows are closely matches with total money in which is at Rs.41.27 crores and total money "out" is at Rs.41.37 crores. There is no evidence to support the true nature of these entries and this can be explained only through personal 27 Akshar Devlopers group knowledge and belief. Even going by the analysis of the AO on the basis of trial balance prepared on the basis of RCB 1 & 2, the AO is unable to identify true nature of transactions recorded in RCB 1 & 2. The trial balance extracted by the AO is part of assessment order at para 4.1 on pages 4 to 6. On analysis of the trial balance prepared by the AO, we find that the credit side represents amount received from investor. The payment side represents amount paid for investments, expenses for the project, cash deposits to bank, departmental payments and amount paid to employees. The assessee explains that the amount paid to employees represents amount taken by the group either for expenses or payments for purchase of properties. Therefore, we are of the considered view that it is very difficult to ascertain the true nature of transactions recorded in rough cash book 1 & 2 on the basis of analysis made by the AO. Under these circumstances what would be the method to determine undisclosed income from these transactions. The assessee argued for peak credit theory. The assessee has arrived at a peak cash credit as on 02-06-2010 at Rs.2,73,87,071 which was distributed equally between two partners. The assessee also worked out gross receipts recorded in RCB and after reducing cash with for employees and cash drawn from bank, determined total receipts of Rs.27.59 crores. Peak cash credit theory advocated by the assessee cannot be accepted as it applies only in a case where the cash has been 28 Akshar Devlopers group rotated several times by depositing and withdrawing from banks or used in the business. The basic idea behind the peak credit theory is to avoid double addition and to bring only the actual income of the assessee where there are large number of unexplained credit and debit entries. In the assessee's case, it is not the case. According to the assessee's admission, the transactions recorded in RCB 1 & 2 are transactions pertaining to its business activity and hence, the peak credit theory advocated by the assessee has been rejected.
18. Coming to the second method suggested by the assessee to determine undisclosed income on the basis of estimation of reasonable profit on total receipts. It is an admitted fact that even the assessee is not able to ascertain true nature of transactions recorded in RCB. Even the AO failed to identify the true nature of transactions which is evident from the analysis of transactions recorded in RCB 1 & 2 through preparation of trial balance. Under these circumstances, the best method to determine undisclosed income is to estimate reasonable net profit on total receipts pertaining to assessee's business excluding loan transactions and cash withdrawals from bank. The assessee has arrived at a net receipt of Rs.27.59 crores which has been extracted at para 5.3 of AOs order. The assessee has pleaded for 10% net profit on total receipts. There is no uniform yardstick for estimation of net profit. The estimation of net profit depends upon facts of each case and nature 29 Akshar Devlopers group of business activity carried on by the assessee. The assessee is in the business of construction and development of flats. Normally, the net profit percentage in unaccounted transactions is quite more than the net profit in normally accounted transactions. In the case of construction business, the statute itself has provided for 8% net profit in cases of certain class of assesses where the turnover does not exceed specified limit. Though the provisions of section 44AD cannot be strictly applied to the facts of assessee's case, a clue from the said provision can be drawn to estimate net profit as the assessee's nature of business squarely fit into the class of assessee where the provisions of section 44AD applies. Therefore, keeping in view the facts and circumstances of this case and also drawing a clue from the provisions of section 44AD, further, considering the fact that these are unaccounted transactions, a reasonable net profit of 15% would meet the ends of justice. Therefore, we direct the AO to estimate net profit of 15% on total receipts quantified by the assessee.
19. The next issue that came up for our consideration is denial of deduction u/s 80IB(10) of the Act, in respect of housing project. The fact with regard to the impugned claim are that the assessee is in the business of development of flats. During the year under consideration, the assessee has developed a housing project named 'Sreeji Heights'. 30
Akshar Devlopers group The housing project consisting of 5 complex, i.e. A, B, C, D & E. The assessee has not claimed deduction u/s 80IB(10) of the Act in original return filed u/s 139(1) of the Act. The deduction u/s 80IB(10) has been claimed in the return filed u/s 153A. The assessee has explained the reasons for not claiming deduction u/s 80IB(10) in the original return filed u/s 139(1) and also explained the reasons for making such claim in revised return filed u/s 153A. According to the assessee, when original return of income was filed, it was under a mistaken understanding of law that if the housing project consists commercial portion which exceeds certain specified limit, then the assessee is not eligible for deduction u/s 80IB(10) and accordingly did not make any claim in the return of income. When the revised return was filed u/s 153A, the law has been changed in view of the decision of Hon'ble jurisdictional High Court in the case of CIT vs Brahma Associates (supra), wherein the Hon'ble Court held that the claim is fully allowable in case the project was approved prior to amendment brought in law wef 01-04-2005. Since the assessee's project has been approved prior to the amendment, i.e. on 16-10-2004, the assessee has made a claim for deduction u/s 80IB(10).
20. The AO disallowed deduction u/s 80IB(10) of the Act, on the ground that the assessee has not made any claim in original return filed u/s 139(1) and the fresh claim made in revised return filed u/s 153A cannot be accepted as the provisions of section 153A is for the benefit of the 31 Akshar Devlopers group Revenue and hence, the assessee cannot make any fresh claim which was not made earlier. The AO further observed that even on merits, the assessee's claim is not admissible as the assessee has not satisfied all conditions specified in section 80IB(10) so as to claim deduction which is evident from the fact that the assessee has constructed certain flats which are having super built up area of more than the specified limit. The area of the plot on which the project 'Sreeji Heights' stands is more than an acre which is again in violation of the conditions specified in section 80IB(10) of the Act. The permissible commercial are is maximum 2,000 sq.ft. or 5% of the aggregate built up area of the housing project, whichever is less, whereas the assessee has constructed commercial area of 2,194.84 sq.mtrs which is more than the specified limit. The assessee has sold more than two flats to a single person in violation of clause (e) & (f), therefore, the AO opined that the assessee's claim is not in accordance with provisions of section 80IB(10) of the Act.
21. It is the contention of the assessee that the assessment for the AY 2009-10 onwards are abated which is evident from the fact that search action u/s 132(1) was carried out on 29-09-2011 and the time limit for issue of notice u/s 143(2) was expired on 30-09-2010 but no such notice was served on the assessee and the time limit for completion of assessment u/s 143(3) was due on 31-03-2012. Therefore, the assessment for the assessment year 2009-10 and subsequent years are 32 Akshar Devlopers group abated and hence, the assessee can make a fresh claim which is very clear as per the provisions of section 153A, where it was specifically stated that the AO shall assess or re-assess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made. The assessee further contended that it has made a claim for deduction u/s 80IB(10) by filing a letter on 29-03-2011 much before the date of search which is has the effect of amending the returns, therefore, the claim made by the assessee is not a fresh claim but in continuation of claim made in the original return by filing a return. The Ld.AR further submitted that even otherwise, as per the provisions of section 153A, if the assessments are abated as on the date of search, then the assessee can make a fresh claim which is evident from the fact that the Hon'ble jurisdictional High Court in the case of CITvs Continental Warehousing Corporation (Nava Sheva) Ltd 2015) 374 ITR 645 (Bom) and in CIT vs Gurinder Singh Bawa (2016) 386 ITR 483 (Bom) it was held that the assessments / re-assessment proceedings that are pending on the date of conducting search u/s 132 shall stand abated and not the assessments / re-assessments already finalised for those assessment years covered u/s 153A. In this case, the assessment for the assessment year 2009-10 onwards are abated as the time limit for completion of assessment u/s 143(3) in respect of assessment year 33 Akshar Devlopers group 2009-10 was due to expire on 31-03-2012 which is after the date of search i.e. on 29-09-2011 and the time limit for issue of notice u/s 143(2) for the assessment year 2010-11 due to expire on 30-09-2011, therefore, the claim made by the assessee u/s 80IB(10) of the Act is in accordance with the provisions of law and further supported by various decisions of jurisdictional High Court. The assessee further contended that where the assessments were pending for adjudication as on the date of search and has been abated, the assessee can always make a claim which was not made earlier in the return filed u/s 153A, as the provisions of section 153A equally apply to the assessee as well as the revenue, as per which the AO can assess or re-assess the total income of the six years immediately preceding the year in which search took place on the basis of books of account and other materials found as a result of search and the assessee can make a true and correct return where it can make a claim which was not made earlier.
22. The Ld.DR, on the other hand, strongly supporting the order of CIT(A) submitted that the AO as well as the CIT(A) has brought out clear facts to the effect that the claim made by the assessee u/s 80IB(10) is a fresh claim which was not made in the original return filed u/s 139(1). As per the provisions of section 153A if the assessments are concluded on the date of search, the assessee cannot make any fresh claim to reduce the income already admitted in the original return. In this case, though 34 Akshar Devlopers group the assessee has not made claim of deduction u/s 80IB(10) in original return reduced the income by making fresh claim which was not in accordance with law. The Ld.DR further submitted that even on merits, the AO has brought out clear facts that the assessee has not satisfied with any of the conditions specified u/s 80IB(10) so as to be eligible for deduction and hence, the AO rightly rejected the claim made by the assessee and his finding should be upheld.
23. We have heard both the parties, perused the material available on record and gone through the orders of authorities below. The facts with regard to the execution of housing project which is eligible for deduction u/s 80IB(10) is not disputed by the lower authorities. The AO rejected the claim made by the assessee on the ground that the assessee has made a fresh claim in return filed u/s 153A which was not made in return filed u/s 139(1), therefore opined that the assessee cannot make a fresh claim in the return filed u/s 153A, as the said provisions are beneficial provision for the Revenue and also where the assessments are unabated / concluded, as on the date of search, no fresh claim can be made. According to the AO, even on merits, the assessee is not eligible for deduction u/s 80IB as the assessee's housing project does not satisfy any of the conditions specified therein which is evident from the fact that the assessee has sold more than one flat to a single individual which is contrary to the clauses (e) and (f). The assessee has constructed 35 Akshar Devlopers group commercial portion in the building in excess of specified limit provided u/s 80IB(10). The assessee has constructed certain flats which are having super built up area of more than the specified limit. The project 'Sreeji Heights' has been developed on a land having more than 1 acre and also the project was within a distance of 25 kms from the Mumbai Metropolitan limits. The Ld.CIT(A) has concurred with the findings of the AO insofar as fresh claim made by the assessee in return filed u/s 153A and observed that the assessee cannot make a fresh claim which was not made in the original return filed u/s 139(1) where the assessment has been concluded or reached finality as on the date of search. However, differed with the findings of the AO insofar as merits is concerned and observed that the deduction cannot be denied merely for the reason that the assessee has sold 2 units to one buyer, through one agreement on the ground that clauses (e) and (f) inserted by the Finance Act wef 01- 04-2010 is not applicable to the facts of the assessee's case as the assessee's project has been completed before the insertion of clauses
(e) and (f) which is evident from the fact that the occupancy certificate in respect of the said project was received on 22-09-2008. The CIT(A) further observed that the restriction of commercial area on the housing project was inserted by Finance (No.2) Act, 2004 wef 01-04-2005 whereas the assessee's project was approved on 16-10-2004, therefore, even if the commercial area is more than the specified limit, there is no 36 Akshar Devlopers group bar for claiming deduction u/s 80IB(10) as per the law laid down by the jurisdictional High Court in the case of CIT vs Brahma Associates (supra) The CIT(A) further observed that merely because one building, B-Wing does not satisfy the requirement of section 80IB(10) would not result in nullifying the claim of the assessee for the entire project. The assessee is entitled to have benefit of deduction in respect of residential units satisfying the requirements u/s 80IB(10) as held in the following cases:-
1. Vishswas Promoters Pvt Ltd vs ACIT & Ors (2013) 214 Taxman.524
2. CIT vs Vandana Properties (2012) 19 taxman.com 16
24. The CIT(A) also negated the observations of the AO with regard to the applicability of the decision of the Hon'ble Bombay High Court in the case of Brahma Associates (supra) by holding that the AO was wrong in not following the decision on the ground that SLP was filed against the decision. In any case, as of now, the decision has been upheld to be correct by Hon'ble Apex Court and the SLP of the Income-tax Department is dismissed. The AO has mentioned that almost 1/3 of the flats have built up area in excess of the prescribed limits. The assessee has asked for a proportionate deduction on the flats which fulfilled the requirements of section 80IB(10) on proportionate basis excluding the flats having built up area in excess of 1000 sq.ft. However, the CIT(A) further observed that the assessee has not been able to counter the AOs 37 Akshar Devlopers group finding that the project, 'Sreeji Heights' was within a distance of 25 kms from the Bombay Metropolitan limits. Accordingly, the AO was directed to allow deduction u/s 80IB(10) on the flats not exceeding limits of built up area as prescribed in the Act on prorata basis. The revenue has not challenged the findings of the AO, insofar as merits of the deduction claimed u/s 80IB(10) and hence, the findings of the CIT(A) has become final. As regards observations of the CIT(A) with regard to the distance of the project, 'Sreeji Heights', the assessee has submitted that its project, 'Sreeji Heights' is within 25 kms from the metropolitan limits of Mumbai for which he has furnished Google map and also extract from MCGM website as per which the project is 25 kms away from metropolitan limits of Mumbai. The Ld.AR also filed certain case laws to support her arguments that the distance from the municipal limits should be measured by road, but not as crow flies. Accordingly, the Hon'ble Bombay High Court in the case of Nitish Ramchandra Choradia ITA Nos 18 to 23 of 2015; 121 to 129 of 2013; 131 of 2013; 140 of 2013 and 151 of 2015 dated 30-03-2015 has taken a view that the distance between the municipal limits of the assessee's property is to be measured having regard to the shortest road distance and not as the crow flies, i.e. a straightline distance as canvassed by the revenue. However, these facts were not before the AO. Therefore, we are of the view that the AO may examine the claim of the assessee in the light of the evidences filed and 38 Akshar Devlopers group also the decision of jurisdictional High Court cited by the assessee.
25. As regards the observations of the CIT(A) with regard to the claim of the assessee in the return filed u/s 153A, we find that the Hon'ble jurisdictional High Court in the case of Continental Warehousing Corporation (Nava Sheva) Ltd (supra) and CIT vs Gurinder Singh Bawa (supra) have taken a view that no addition can be made in the assessments which have been concluded / unabated as on the date of search in the absence of any seized materials. The ratio laid down by the Hon'ble jurisdictional High Court in those cases is that in case of unabated assessments, there is no scope for the AO to make any addition on the basis of regular books of account and if at all any addition can be made, it should be on the basis of seized materials. In other words, if assessments are abated, then the AO is having jurisdiction to assess or reassess total income on the basis of return of income filed filed by the assessee u/s 153A, including incriminating material found as a result of search. Going by the same analogy, if the assessments are abated as on the date of search, the assessee is at liberty to file a true and correct return making a claim which was not made earlier in the original return filed u/s 139(1) if such claim is allowable under the Act. In this case, on perusal of the facts available on record, we find that the search took place on 29-09-2011, the dispute involved with regard to the claim of deduction u/s 80IB(10) pertains to AY 2009-10 to 2012-13. The 39 Akshar Devlopers group assessment for the assessment year 2009-10 has been unabated / concluded as on the date of search as the time limit for issue of notice u/s 143(2) has been expired on 30-09-2010 even though no assessment has been framed u/s 143(3). Insofar as assessment year 2010-11 onwards, the time limit for issue of notice u/s 143(2) was due on 30-09- 2011, 30-09-2012 and 30-09-2013 and all the dates are after the date of search. Therefore, we are of the view that the assessment for AY 2009- 10 is unabated and AY 2010-11 onwards are abated and in view of the ratio of the Hon'ble jurisdictional High Court in the case of Continental Warehousing Corporation (Nava Sheva) Ltd and Gurinder Singh Bawa, the assessee can make a fresh claim which was not made in the original return u/s 139(1) is abated assessments. Accordingly, the assessee is eligible for deduction u/s 80IB(10) as per the claim made in the return filed u/s 153A of the Act and hence, we direct the AO to admit the claim of the assessee and make a limited verification insofar as the observation of the CIT(A) with regard to the distance of the project before allowing the claim. In the result, the ground raised by the assessee insofar as deduction u/s 80IB(10) for the assessment year 2009-10 has been rejected and in respect of AYS 2010-11 to 2012-13 is allowed. 26 . The next issue that came up for our consideration for AY 2011-12 is reduction in the value of closing stock. The assessee firm had disclosed closing stock of city center project at Rs.145,01,67,054 in the return of 40 Akshar Devlopers group income filed u/s 139(1). However, while filing the return u/s 153A of the Act, the closing stock was valued at Rs.143,28,67,054. The said difference was Rs.1, 73,00,000 on account of reduction of loss on sale amounting to Rs.1,73,00,000 made to M/s Bombay Infrastructure Ltd which were included in closing work-in progress. The loss was supposed to be recovered from M/s Bombay Infrastructure Ltd. Since M/s Bombay Infrastructure Ltd did not reimburse the said loss, the assessee has written off the same; hence, the profit otherwise earlier overstated of Rs.173 lakhs was brought down to correct figure. In support of its arguments, filed auditor's report and other evidences. The AO rejected the arguments of the assessee and added an amount of Rs.173 lakhs to the total income towards suppressed stock on the ground that the said claim was not supported by the letter from M/s Bombay Infrastructure Ltd. the assessee submitted before the AO that due to strained relations with the buyer, it could not able to get confirmation from the party; however, the AO has not disputed the consideration received from M/s Bombay Infrastructure Ltd for the sale of those shops. The fact of the matter is that the assessee is in receipt of sale consideration which is less than the cost incurred on the construction of shop at city centre mall. The facts stand admitted based on evidences. The entries in books which was wrongly made earlier has been corrected now and has merely been brought in conformity with the 41 Akshar Devlopers group primary documents for costs and sale proceeds.
27. The Ld.AR for the assessee submitted that the Ld.CIT(A) having accepted the fact that the assessee has explained the facts with regard to the reduction in work-in-progress due to the loss incurred on sale of two shops at city centre mall, failed to delete addition made by the AO by holding that the assessee has failed to furnish any evidence that the loss pertaining to AY 2009-10 and 2010-11 was not claimed in the respective assessment years. The Ld.AR further submitted that the Ld.CIT(A) has erred in upholding the addition of Rs.173 lakhs as suppression of stock being irrecoverable loss written off during the year on the misinterpretation of the facts and information. The assessee has furnished necessary evidence to rectify the mistakes in passing entries in the books of account in respect of loss incurred on sale of flats to M/s Bombay Infrastructure Ltd. The AO merely, on the basis of non furnishing of confirmation from the party, has made addition even though the facts clearly indicate that the assessee has incurred loss in respect of sale of shops which has been reduced in closing work-in-progress.
28. The Ld.DR, on the other hand, strongly supported the order of the CIT(A).
29. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The AO made addition of Rs.173 lakhs towards suppression of closing stock on 42 Akshar Devlopers group the ground that the assessee has failed to furnish any evidence including confirmation from M/s Bombay Infrastructure Ltd towards loss incurred on sale of 2 shops at City Centre Mall. The Ld.CIT(A), while approving the findings of the AO has held that even going by the details submitted by the assessee it is very clear that the assessee has failed to explain how it has incurred loss of Rs.173 lakhs in respect of sale of City Centre Mall to M/s Bombay Infrastructure Ltd. The relevant portion of the order of the CIT(A) is extracted below:
"54. It appears from the letter that the appellant had sold the city mall in three years. The sales made in the year ending on 31/03/2009 relevant to asst.year 2009-10 allegedly resulted in loss of Rs.31,84,564/- The sales made in the year ending on 31/03/2010 relevant to asst year 2010-11 resulted in loss of t 2,76,53,618/~. The sales made in the year ending on 31/03/2011 relevant to asst year 2011-12 resulted in profit of ? 1,35,38,1827-. The appellant claims that thus there has been overall loss of ? 1,73,00,0007- in this project and the same has been claimed in the return filed in response to the notice u/s 153A. The loss has been claimed as downward revision in the closing stock of WIP.
55. Even if the above details furnfshed by the appellant are to be believed, there is no evidence furnished by the appellant that the loss pertaining to asst years 2009-10 and 2010-11 was not claimed in the respective asst years. The details as available on the record show that the loss if any, had already been claimed and there was nothing to be set off during this year by way of reduction in the value of the closing stock."
30. Facts are not clear. The assessee claims that it has furnished necessary evidences to justify reduction in value of closing work-in- progress in respect of loss incurred on sale of City Centre Mall to M/s Bombay Infrastructure Ltd. The CIT(A), on the other hand, observed that 43 Akshar Devlopers group the assessee has not filed any evidences. The assessee has filed various details to explain the loss. Therefore, we are of the considered view that the issue need re-examination from the AO in the light of evidence filed by the assessee; hence, we set aside the issue to the file of the AO and direct him to consider the evidence filed by the assessee and to decide the issue afresh in accordance with law after affording opportunity of hearing to the assessee. In the result, ground raised by the assessee is allowed, for statistical purpose.
31. In the result, appeal filed by the assessee in ITA No.6242/Mum/2016 for AY 2009-10 is dismissed and appeals filed by the assessee in ITA Nos.2676/Mum/2017, 2677/Mum/2017 & 2678/Mum/2017 for assessment years 2010-11, 2011-12 & 2012-13, respectively are partly allowed for statistical purpose.
ITA Nos 6243 & 6244/Mum/2016, 2672 & 2673/Mum/2017, 6245 & 6246/Mum/2016 & 2675/Mum/2017
32. This bunch of 7 appeals filed by two different assessees are directed against separate, but identical orders of CIT(A)-11, Pune dated 16-01- 2017 for the assessment years 2009-10, 2010-11, 2011-12 and 2012-13. In these appeals, the assessee have taken up more or loss common grounds of appeal for all the years. Therefore, for the sake of convenience and brevity, the grounds of appeal appearing in appeal for AY 2009-10 in ITA No.2675/Mum/2017 are reproduced below:- 44
Akshar Devlopers group The Appellant individual is aggrieved by the order dated 16.1.2017 passed by the learned CIT(A) Pune-11 u/s 250 of the Income-tax Act, 1961 and is in appeal :-
1. Because, the Id. C1T(A) has erred in holding that the issuance of notice \ u/s 143(2) of the Act is not mandatory for carrying out assessment I proceedings u/s 153A of the Act and that the impugned assessment / ^J order is valid.
2(i) Because, the Id. CIT(A) has erred in holding the add back of interest income of Rs. 133,84,004/- by the AO on account of income accrued but not due.
(ii) Because, the Id. CIT(A) has erred in holding that the deed of addendum dated 31/3/2009 to the partnership deed was an after thought although the same was validly executed and formed part of auditor's report in all years.
(iii) Because, the Id. CIT(A) has erred in failing to consider that the partnership firm M/s Akshar Developers had capitalized the interest accrued to the partners in the work-in-progress of the on going project "Decorium" in their return of income filed u/s 153A.
3(i) Because, the Id. CIT(A) has erred in upholding AO's action of considering the impact of seized material in the hands of M/s Akshar Developers even though the material pertained to several entities co-owned by the Appellant and another.
(ii) Because, the ld.CIT(A) has erred in upholding AO's action of rejecting the offer of business income to the tune of Rs.1,36,93,535/- in the hands of the Appellant on account of peak working of the seized material."
33. From these grounds of appeal, the assessees have challenged the assessment order passed by the AO u/s 143(3) r.w.s. 153A on the ground that the impugned assessment orders are bad in law as the AO has failed to issue mandatory notice u/s 143(2) of the Act. The assessee has taken up a ground challenging the action of the CIT(A) in upholding the addition made by the AO towards interest on capital of partners accrued but not due and consequent deduction towards interest paid to others against income from business. The assessees also have taken a ground for AY 2012-13 challenging the addition made by the AO towards short term capital gain declared in original return filed u/s 139(1) but not 45 Akshar Devlopers group declared in revised return filed in response to notice issued u/s 142(1).
34. The brief facts of the case extracted from ITA No.2675/Mum/2017 are that the assessee had filed his original return of income on 11-01- 2013 declaring total income of Rs.1,52,81,625. A search and seizure action u/s 132 of the Act, was conducted on 29-11-2011 and accordingly notice u/s 153A was issued on 11-03-2013. The assessee has filed a return u/s 153A on 02-09-2013 disclosing income of Rs.1,55,85,230. In the return filed u/s 153A, the assessee has included an amount of Rs.1,36,93,535 on account of disclosure made during the search towards unaccounted cash receipts recorded in rough cash book 1 and excluded an amount of Rs.1,33,84,004 being the interest from partnership firms which was offered in the original return filed u/s 139(1). The AO completed the assessment u/s 153A, determining the total income at Rs.1,53,75,700 excluding the offer of additional income of Rs.1,36,93,535 but adding back interest accrued but not due from partnership firms. The assessee carried the matter in appeal before the first appellate authority. Before the CIT(A), assessee had taken up a legal plea inasmuch as that the assessment order passed by the AO is bad in law and liable to be quashed as the AO did not issue the mandatory notice u/s 143(2) required to be issued after the return was filed in response to notice u/s 153A. The assessee also filed elaborate written submissions in respect of addition made by the AO towards 46 Akshar Devlopers group interest on capital from partnership firm and also exclusion of disclosure made during the course of search.
35. The CIT(A), after considering relevant submissions of the assessee, rejected the ground taken insofar as validity of assessment for non issue of notice u/s 143(2) by holding that the provisions of section 153A are quite different and notice u/s 143(2) is not a must for making assessment u/s 153A of the Act. Insofar as addition made by the AO towards interest on partners' capital account received from partnership firms, the whole argument and the scheme of the so-called amendment deed appear to be an afterthought. It is seen from the records that though the amendment deed is claimed to be dated 31-03-2009, the assessee has disclosed the interest income in his return of income filed u/s 139(1) right upto AY 2012-13. The original return for the assessment year 2011-12 was filed as late as 11-01-2013 in which the interest income was included. Thus, the fact of the amendment deed and as a consequence of non due of interest income came to assessee's mind only filing 153A returns. The CIT(A) further observed that even on going by the details filed by the assessee, the original return of income of the partnership firm of Akshar Developers for the assessment year 2011-12 reveals that the firm had profit of Rs.4,64,17,370 before depreciation and interest to partners account and the firm had claimed deduction towards interest paid to partners u/s 40(b) and net profit of Rs.2,22,07,217 only offered to 47 Akshar Devlopers group tax. In the return filed in response to 153A notice, the position remains the same, except that the resultant income has been claimed exempt u/s 80IB(10) of the Act. With these observations, the CIT(A) upheld addition made by the AO towards interest from partnership firm. Similarly, the CIT(A) has enhanced the assessment insofar as deduction claimed by the assessee towards interest paid to others against income from business by holding that the assessee has not explained any nexus between interest expenditure and income disclosed. The CIT(A) further observed that it can be presumed that the assessee claims that while interest payable on his borrowings accrues immediately and interest receivable on his lending or investment in the firms would accrue in future when the firms profits are recorded or determined to the satisfaction of the assessees and its partners. This dual approach is nothing but an attempt to avoid payment of tax. With these observations and also relying upon certain judicial precedents, enhanced the assessment to the extent of interest deduction claimed against income from business. As regards assessment of income determined on the basis of seized material in the hands of M/s Akshar Developers and not in the hands of the assessee, the CIT(A) observed that the issue has been discussed in detail in the appellate order in the case of Akshar Developers, wherein the addition made by the AO has been confirmed and hence, there is no point in taxing the same income again in the 48 Akshar Devlopers group hands of the assessee. The exclusion of such income from assessee's income has been rightly done by the AO. This ground of appeal was, therefore, dismissed. Aggrieved by the CIT(A)'s order, the assessee is in appeal before us.
36. The first issue that came up for our consideration is addition made towards interest on capital accrued but not due from partnership firm. The facts with regard to the impugned addition are that in the original return of income filed, the assessee had included interest accrued but not due from the partnership firm M/s Akshar Developers. However, in the return filed in response to 153A notice, the assessee excluded this amount on the ground that interest had not been accrued during the previous year. According to the assessee, the firm has made provision for interest on capital account on the basis of partnership deed and credited interest on capital to a separate account and debited to work-in- progress account without treating it as revenue expenditure. The assessee further submitted that the partners have mutually decided to alter the partnership deed insofar as interest on capital clause is concerned and accordingly as per the addendum to partnership deed dated 31-03-2009, interest on capital shall be payable to partners only after the project is complete and profit is determined as the market condition had worsened. Thus, in view of the amendment to partnership deed, interest on capital account is accrued but not due from the said 49 Akshar Devlopers group partnership firm and hence, the same has not been offered to tax in the return filed u/s 153A of the Act. Though, the assessee has included interest on capital in the original return of income filed u/s 139(1) such inclusion was made erroneously without considering the legal implication to the addendum to partnership deed. The assessee further submitted that the firm has amended the partnership deed by way of addendum deed dated 22-04-2015 reversing interest credited to partners' account and also reduced closing work-in-progress and this fact has been confirmed by the auditors in their audit report in Form 3CB for the year ended 31-03-2016. Accordingly, the assessee claims that the fact of interest being contingent exists even prior to search in returns for AYs 2009-120 and 2010-11 and the lower authorities have not controverted these vital facts; hence, it is not an afterthought, therefore, the assessee has rightly corrected legal position in the revised return filed u/s 153A of the Act.
37. The AO, after considering relevant submissions of the assessee and also taking into account various evidences filed by the assessee observed that the assessee has included interest on capital accrued from partnership firm in the original return filed u/s 139(1). However, without there being any material changes in the facts, excluded interest in revised return filed u/s 153A, on the basis of amended partnership deed which is nothing but an afterthought to defer payment of taxes. The AO 50 Akshar Devlopers group further observed that the question of accrual of interest from partners' capital account is fully dependent upon the clauses in partnership deed, but not by the conduct of the assessee. The assessee may amend the partnership deed to its convenience so as to defer payment of taxes but, what law says is important. Once, interest clause was provided in partnership deed, as per which the assessee needs to provide interest on capital whether or not paid. Moreover, the assessee has included interest in its return of income even after amendment to partnership deed dated 31-03-2009 which is a clear case of afterthought by the assessee, therefore, cannot be accepted.
38. The Ld.AR for the assessee submitted that the Ld.CIT(A) was erred in upholding addition made by the AO towards interest on capital from partnership firm accrued but not due without appreciating the fact that the partnership firm has reversed interest payable to partners by reducing it from work-in-progress as the said interest has not been claimed as revenue expenditure, but only capitalized to work-in-progress. The Ld.AR further submitted that taxability of any receipt including interest depends upon accrual of income which is, in this case, not accrued to the assessee because the partnership firm has deferred payments of interest on partners' capital account due to adverse market conditions by amending the partnership deed, interest on capital clause. The assessee also amended partnership deed once again to reverse 51 Akshar Devlopers group interest credited to partners' capital account and accordingly reversed interest on capital account to partners by reducing it from work-in- progress. To this effect furnished copies of financial statements of partnership firm for the year ending 31-03-2016 along with auditors' report wherein reversal of interest has been confirmed by the auditors by way of notes to tax audit report. The Ld.AR further submitted that once interest has been reversed in the partnership firm account and not claimed as deduction against profits, taxing the same in the hands of the partners amounts to double taxation of same amount which is not permissible in law.
39. The Ld.DR, on the other hand, strongly supported the order of the CIT(A).
40. We have heard both the parties and perused material available on record. The AO made addition towards interest accrued but not due on partners' capital account from partnership firm, M/s Akshar Developers on the ground that the assessee has included interest on capital in original return filed u/s 139 whereas excluded such interest in revised return filed u/s 153A without there being any material changes in facts. The AO further observed that intereston capital to partners has been provided and debited to the P&L Account of the firm and simultaneously credited to the capital account of the partners under double entry system of accounting, therefore, the assessee is bound to include the same in its 52 Akshar Devlopers group computation of income and accordingly, the same is added u/s 28 of the Act. It is the contention of the assessee that interest on partners' capital account accrued but not due has been included in original return on the basis of partnership deed as per which the partners were entitled for interest on capital; however, due to changed business conditions, the partners have mutually decided to defer payment of interest by amending interest on capital clause in the partnership deed by an addendum to partnership deed dated 31-03-2009. The assessee also contended that the partners have entered into one more amendment to partnership deed by amending interest on capital clause and decided not to pay any interest on partners' capital account because of adverse business conditions and accordingly whatever interest has been credited to partners' capital account has been reversed simultaneously reducing it from work-in-progress as the same had been debited to work-in-progress without treating it as revenue expenditure.
41. Having heard both the sides, we find that the controversy has to be resolved in the light of legal position that whether the assessee can exclude interest on capital in the return filed u/s 153A, which was earlier included in return filed u/s 139(1) of the Act. The assessee claims that the assessment for AY 2009-10 onwards are abated in view of the fact that the search took place on 29-09-2011 and the assessment for the AY 2009-10 onwards were abated as the due date for issue of notice u/s 53 Akshar Devlopers group 143(2) was due on 30-09-2010 and time limit for completion of assessment was due on 31-03-2012. Insofar as assessment year 2010- 11 onwards, the time limit for issue of notice u/s 143(2) was due to expire on 30-09-2011, therefore, the assessment for AY 2010-11 and subsequent years are certainly abated, therefore, in view of the decision of jurisdictional High Court in the case of Continental Warehousing (Nava Sheva) Ltd (supra) and CIT vs Gurinder Singh Bawa (supra) wherein the law has been explained with reference to 153A assessment and accordingly, there is no scope of any addition in respect of concluded / unabated assessments without there being any seized materials. In other words, the assessments which are pending as on the date of search shall abate and accordingly, the AO shall assess or re-assess the total income on the basis of regular books of account and other seized material found during the course of search. The sum and substance of the ratio of judgments of jurisdictional High Court is that in case of abated assessments, the scope of assessment is not limited to seized materials, but on the basis of regular books of accounts and return filed by the assessee. Going by the same analogy, when the AO is permitted to assess or re-assess total income on the basis of regular books of account and seized materials, the assessee also can make a fresh claim in respect of items which have not been claimed in the original return of income or make any deductions which were not claimed in the original 54 Akshar Devlopers group return of income. Therefore, we are of the considered view that if an assessment is abated, then the assessee can make a fresh claim including deduction or exclusion of any item of income if such exclusion or inclusion is in accordance with the provisions of Act. In this case, on the basis of information available on record, we find that the search took place on 29-9-2011and as on the date, the time limit for issue of notice u/s 143(2) for AY 2009-10 was expired on 30-09-2010. Therefore, we are of the view that the assessment for AY 2009-10 was concluded / unabated and hence, the assessee cannot make any fresh claim or exclusion of income in the revised return u/s 153A of the Act. Accordingly, ground raised by the assessee for AY 2009-10 is rejected.
42. Having said so, let us come to AY 2010-11 onwards. Admittedly, on the basis of date of search, the assessment for AY 2010-11and onwards have been abated as the time limit for issue of notice u/s 143(2) was due to expire on 30-09-2011, therefore, going by the ratio of judgments of the jurisdictional High Court in Continental Warehousing (Nava Sheva) Ltd (supra) and CIT vs Gurinder Singh Bawa (supra), we are of the view that the assessee can make a fresh claim of any item of income in accordance with law. In this legal background, if we examine the issue before us in respect of taxability of interest accrued but not due on partners' capital account from partnership firm, the assessee sought to exclude interest on capital in the returns filed u/s 153A on the ground 55 Akshar Devlopers group that such interest has not been due to the assessee in view of the addendum to partnership deed where the partners have mutually decided to postpone payment of interest and subsequently reversed interest by making simultaneous adjustment to work-in-progress. According to the assessee, interest accrued but not due on partners' capital account is not taxable, as the firm has not claimed deduction towards interest on capital in its books of account u/s 40(b) as it has reversed interest in the financial year 31-03-2016 for which necessary amendments to partnership deed have been executed and also reversed interest entry in firm's books of account.
43. Having heard both the sides, we find that the issue of taxability of interest on capital has to be seen in the light of whether such interest has been really accrued to the assessee in the light of real income theory. The question whether real income has materialised has to be examined in the context of commercial and business realities in the circumstances in which the assessee is placed and not with reference to system of accounting. The accrual of income does not depend upon the accounts of the assessee. Whatever position of accounts, income would have to be referred back to the chargeable accounting period during which such profits or gains are actually arisen / accrued and the assessee would be liable to be taxed in respect of the same. In this case, it is an admitted fact that the assessee has included interest on capital in original returns, 56 Akshar Devlopers group whereas the same has been excluded in revised return for which the assessee has filed necessary evidence and also explanations. No doubt, the taxability of interest on partners' capital u/s 28 of the Income- tax Act, 1961 depends upon the method of accounting followed by the partnership firm, further supported by clauses in partnership deed for payment of interest subject to certain conditions specified u/s 40(b) of the Act. If the partnership firm debits interest on capital to partners' and claims interest on capital as deduction u/s 40(b) then certainly interest on capital is taxable in the hands of partners whether or not such interest has been paid to the partners. In this case, it is the claim of the assessee that interest on capital is credited to partners' capital account and debited to work-in-progress without treating it as revenue expenditure. The assessee further claims that such interest has been reversed in the financial year 2016 and simultaneously reducing it from work-in-progress. If the claim of the assessee is found to be correct, then there is no question of taxing interest on capital in the hands of the partners, because such interest has not been claimed as deduction in the partnership firm's profits. But, facts are totally different. The Ld.CIT(A) observed that for the AY 2011-12, the partnership firm M/s Akshar Developers has claimed interest on capital u/s 40(b) against profits in the statement of total income in original return filed u/s 139(1) and in a return filed in response to notice u/s 153A, the position remains 57 Akshar Devlopers group same. The facts are contradictory to each other. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in the light of contradictory facts and if the AO finds that the partnership firm has claimed interest on capital against from profits then certainly, the assessee cannot excluded interest on capital in its return of income. If the firm has not claimed interest on capital against its profits and reversed interest on capital by reducing it from work-in-progress, then certainly, exclusion made by the partners in their individual hands in revised return is in accordance with law. Therefore, we direct the AO to verify these facts and take an appropriate decision in the light of our observation above. Hence, the ground raised by the assessees for the AYs 2010-11 to 2-12-13 in both the assessee's case are set aside to the file of the AO.
44. The next issue that came up for our consideration for AY 2-12-13 is addition made by the AO towards short term capital gain and long term capital gain on the basis of original return of income filed u/s 139(1) ignoring revised return filed by the assessee in response to notice u/s 142(1) of the Act. The facts with regard to the impugned dispute are that the assessee has shown income of Rs.2,30,17,500 under the head 'short term capital gain' on sale of asset while filing return of income u/s 139(1) on 31-03-2013. However, while filing the return of income on 02-03- 2013 in compliance to notice u/s 142(1) of the Act, the assessee has 58 Akshar Devlopers group calculated long term capital gain on the said property after claiming deduction u/s 54F of Rs.1,36,90,055. According to the assessee, in the original return filed u/s 139(1) gain on sale of asset was erroneously considered as short term capital gain on the basis of holding period of asset taken from date of acquisition as per registration of agreement instead of booking date on 21-08-2007. In the revised return, the said mistake has been corrected by taking booking date and accordingly, asset has been held for a period of more than 36 months, therefore, gain has been considered as long term capital gain. The assessee further claimed that even in respect of sale consideration and cost of acquisition, there is an error in considering sale consideration and cost of acquisition, therefore, the mistakes have been rectified by adopting correct figure of sale consideration and cost of acquisition in the revised return filed u/s 142(1) of the Act. The AO rejected the claim of the assessee on the ground that the assessee has failed to file any evidence in respect of re- computation of capital gain by filing necessary evidence to justify the date of acquisition of the property and also cost of improvement and re- investment in purchase of another house property u/s 54 of the Act. The AO further observed that the date of purchase of one property has been shown from FY 2008-09 which is held for less than 36 months. According to the assessee, it had inadvertently excluded stamp duty and registration charges in respect of 7 shops. The sale consideration has 59 Akshar Devlopers group been incorrectly recorded which resulted into double deduction of cost of acquisition in respect of 7 shops. Further, in respect of shop No.11, date of acquisition was wrongly mentioned as 01-04-2010 instead of 14-03- 2008. Thus, there was a wrong calculation of capital gain under the head short term instead of long term.
45. Having heard both the sides and considered material on record, we find that the assessee has revised computation of capital gain in respect of sale of property and shifted short term capital gain declared in original return to long term capital gain in the revised return filed u/s 142(1) by changing the date of acquisition of property, according to which, the period of holding of asset is more than 36 months. As per the workings furnished by the assessee showing computation of capital gain as per original return of income filed u/s 139(1) and as per return filed u/s 142(1), there is a mismatch of date of acquisition of property, cost of acquisition and sale consideration. The assessee claims that while adopting cost of acquisition, it has inadvertently omitted to included registration charges and stamp duty. Similarly, the assessee claims that cost of acquisition was deducted twice from the sale consideration which resulted in double deduction and under statement of capital gain in respect of two shops. The assessee has filed various details to justify its arguments that the property has been purchased on 21-08-2007 by way of booking advance, however, in the return the date of acquisition has 60 Akshar Devlopers group been taken as per registration of agreement. The facts are not clear. One side the AO claims that the assessee has not furnished any evidence to justify the date of acquisition of property, cost of improvement and exemption claimed in respect of 54F towards re- investment in purchase of property. On the other hand, the assessee has filed various details including copies of agreement, sale deeds and letter of allotment for booking the flat. The assessee also filed a chart explaining various expenditure incurred in the assessment year 2009-10 for improvement of property. We do not know whether these documents have been furnished before the AO at the time of assessment proceedings or not. Therefore, we are of the considered view that the issue needs to be re-examined by the AO in the light of additional evidence filed by the assessee. Therefore, we set aside the issue to the file of the AO and direct him to examine the claim of the assessee in the light of additional evidence and if the assessee is able to justify the date of acquisition of the property on 21-08-2007 by filing necessary evidence, then the AO is directed to treat gain from sale of property under the head 'long term capital gain' instead of short term capital gain. If the assessee has considered the date of acquisition on the basis of allotment letter without there being any agreement, then the holding period of the asset should be considered from the date of agreement but not from the date of allotment letter. Similarly, the assessee has claimed 61 Akshar Devlopers group various expenditure to justify improvement to the asset. If the assessee is able to establish expenditure incurred with necessary evidences and also source, then the AO is required to examine the evidences before taking any decision to allow cost of improvement. If the assessee is able to justify the cost of improvement with necessary evidence, then the AO is directed to allow cost of improvement as claimed by the assessee.
46. In the result, ground raised by the assessee for AY 2012-13 is allowed for statistical purposes.
47. The remaining effective ground pending for our adjudication for all the assessment years in both the cases are legal grounds challenging the validity of assessments in the light of non issue of notice u/s 143(2) for the AYs 2009-10 and 2011-12 and in respect of 2012-13 challenging the action of Ld.CIT(A) holding that consequent to the annulment of assessment, the original return of income filed on 31-03-2013 in compliance to notice u/s 142(1) r.w. intimation u/s 143(1) has attained finality and thus, the subsequent return filed on 23-09-2013 has become non est. Since the issues involved in all the years has been set aside to the file of the AO for verification in all the assessment years in respect of both the assessees, the legal ground raised by the assessees in all the years become infructuous and hence, the same are dismissed.
48. In the result, the appeals filed by the assesses in ITA No 6244 /Mum/2016 for AY 2009-10 is dismissed; for AYs 2010-11 to 2012-13 in 62 Akshar Devlopers group ITA No. 6245/Mum/2016; 2672 & 2673/Mum/2017, 6245 & 6246/Mum/2016 & 2675/Mum/2017are partly allowed for statistical purpose.
49. As a result, appeal filed by the assessee in ITA No.6242/Mum/2016 for AY 2009-10 is dismissed and appeals filed by the assessee in ITA Nos.2676/Mum/2017, 2677/Mum/2017 & 2678/Mum/2017 for assessment years 2010-11, 2011-12 & 2012-13, respectively are partly allowed for statistical purpose and the appeals filed by the assesses in ITA No. ITA No 6244 /Mum/2016 for AY 2009-10 is dismissed; for AYs 2010-11 to 2012-13 in ITA No. 6245/Mum/2016; 2672 & 2673/Mum/2017, 6245 & 6246/Mum/2016 & 2675/Mum/2017are partly allowed for statistical purpose.
Order pronounced in the open court on 28th February, 2018.
Sd/- sd/-
(Mahavir Singh) (G Manjunatha)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai, Dt : 28th February, 2018
Pk/-
Copy to :
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
/True copy/ By order
Sr.PS, ITAT, Mumbai