Vildirect: IncomeTax-caselaws-2016-VIL-987-ITAT-BLR

2016-VIL-987-ITAT-BLR

Income Tax Appellate Tribunal BANGALORE

I.T.A. Nos.1186 to 1188 & 1197 & 1198/Bang/2013

Date: 27.07.2016

SHRI GOPAL S PANDITH, PROP. PANDITH DEVELOPERS

DY. COMMISSIONER OF INCOME TAX

Appellant By : Shri Chandrashekar, Advocate.
Respondent By : Smt. Neera Malhotra, CIT (D.R)

BENCH

SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER

JUDGMENT

Per Shri Vijay Pal Rao, J.M.

These five appeals by the assessee are directed against the composite order of Commissioner of Income Tax (Appeals) dt.19.5.2013 arising from Assessment Order passed under Section 153 r.w.s. 143(3) of the Income Tax Act, 1961 (in short 'the Act') from 20.5.2006 to A.Y. 2009-10 respectively.

2. First we take up the appeal for Assessment Year 2005-06 wherein the assessee has raised the following grounds :

1. The learned Commissioner of income Tax (appeals) erred in holding that non issue of an opportunity of being heard by the Additional Commissioner before approving an order of assessment u/s. 153A r.w.s. 143(3) of the Act will not vitiate assessment proceedings completed u/s. 153A r.w.s. 143(3) of the A ct.

2. The action of the learned CIT (A) is contrary to the procedure contemplated by the CBDT.

3. The learned Commissioner of Income Tax(Appeals) ought to have held the notice issued u/s. 153A of the Act, is illegal since return is called without granting statute recognised period for compliance and there is no reasons either recorded or communicated to know how the learned Assessing authority has exercised his discretion for compliance to the notice u/s. 1534A of the Act.

4. The appellant respectfully submits a period of clear 30 days to 45 days was considered reasonable for compliances with regard to filing of return in response to notices.

5. The learned Commissioner of Income Tax (Appeals) ought to have held the notice issued u / s . 143(2) of the Act, relates to the original return filed u/ s. 139 of the Act and not to the proceedings initiated u/s 153A of the Act, since the learned Assessing Authority has considered the income returned in the original return.

6. The learned Commissioner of Income Tax (Appeals) erred in holding the sum of Rs.ll,97,996/- the income earned on sale of Agri.Land is assessable under the head Business not under the head Capital Gains.

7. The learned Commissioner of Income tax (Appeals) erred in holding the appellant is not entitled to exemption u/s. 548 of the Act.

8. The ld. Commissioner of Income tax (Appeals) ought to have deleted the addition made on account of sale of Agrl. Land, as said transaction was shown in the return of income filed u/s. 139 of the Act and the assessment for the assessment year 2005-06 does not get abated.

9. The ld. Commissioner of Income tax (Appeals) erred in upholding the levy of interest u/s. 234 8 as consequential.

The appellant crave leave of the Hon'ble Tribunal to raise such other ground or grounds at the time of hearing.”

3. Ground Nos.1 & 2 are regarding validity of assessment framed under Section 153A of the Act due to non-offering an opportunity of being heard to the assessee before approving the assessment order.

4. The learned Authorised Representative of the assessee has submitted that as per the provisions of section 153D of the Act no order of assessment or reassessment under Section 153A shall be passed by the Assessing Officer below the rank of Joint Commissioner without prior approval of the Joint Commissioner. The learned Authorised Representative has submitted that the assessee ought to have been given an opportunity of hearing before granting the approval under Section 153A r.w.s. 153D and therefore the alleged approval is not valid and consequently assessment order passed under Section 153A is invalid and liable to be quashed. In support of his contention, he has relied upon the decision dt.30.3.2012 of Pune Bench of this Tribunal in the case of Akhil Ghulamali Somji Vs. ITO in ITA Nos.455 to 458/PN/2010. Thus the learned Authorised Representative has pleaded that in the absence of proper approval the assessment is liable to be set aside.

5. On the other hand, the learned Departmental Representative has submitted that there is no requirement of any opportunity of being heard to the assessee at the time of approval of the Joint Commissioner for framing the assessment under Section 153A. The learned Departmental Representative has further submitted that the assessee has not disputed that the Assessing Officer got the approval of the Joint Commissioner before passing the impugned assessment under Section 153A and therefore there is no error or illegality in the order of the assessment.

6. We have considered the rival submissions as well as the relevant material on record. The assessee has challenged the validity of assessment order passed under Section 153A on the ground that the assessee was not given an opportunity of hearing prior to grant of approval by the Joint Commissioner for framing the assessment under Section 153A of the Act. The learned Authorised Representative has placed reliance on the provisions of section 153D of the Act as well as the decision in the case of Akhil Ghulamali Somji Vs. ITO (supra). For ready reference we quote the Sectin153D as under :

“153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153A or the assessment year referred to in clause (b) of sub- section (1) of section 153B, except with the prior approval of the Joint Commissioner:

Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer with the prior approval of the Commissioner under sub-section (12)of section 144BA.”

The plain reading of the provisions of section 153D reveals that there is a requirement of taking approval by Assessing Officer below the rank of Joint Commissioner before passing an assessment order under Section 153A of the Act from Joint Commissioner. Therefore the condition mandated under Section 153D of the Act does not indicate that such approval must be given after hearing the assessee on the issue of approval. Thus we find that there is no such requirement of granting an opportunity of hearing to the assessee by the Joint Commissioner prior to giving the approval as per Section 153D of the Act of order of assessment or reassessment under Section 153A of the Act. Pune Bench of this Tribunal in the case of Akhil Ghulamali Somji Vs. ITO (supra) has held in paras 13 & 14 as under :

“13. In the case of CIT Vs. Ratnabai N.K. Dubhash (Mrs.) (Supra), the difference between cancellation and amendment of assessment in view of the provisions of Sections 143, 144B, 153 and 251 of the I.T. Act 1961 has been dealt with. The Hon’ble High Court has been pleased to hold as under :

“In view of the above discussion, we are of the clear opinion that incases falling under section 144B of the Act, the quasi-judicial function of the Income-tax Officer as an assessing authority comes to an end the moment the assessee files objections to the draft order. The power to determine the income of the assessee thereafter gets vested in the Inspect-ing Assistant Commissioner to whom the Income-tax Officer is required to forward the draft order together with objections. The only thing that remained to be done by the Income-tax Officer is to pass a final order in accordance with the directions given by the Inspecting Assistant Commissioner. The function of the income-tax Officer to make the final assessment under section 144B(5) of the Act is more in the nature of a ministerial function because he can pass the order only in accordance with the directions of the Inspecting Assistant Commissioner. He cannot vary ordepart from the directions given by the Inspecting Assistant Commissioner. Moreover, the requirements of section 144B of the Act re mandatory. The Income-tax Officer has no option but to follow the same. He cannot make the final order on the basis of the draft order without forwarding the same to the Inspecting Assistant Commissioner along with the objections and without obtaining the directions of the Inspecting Assistant Commissioner. An assessment made by the Income-tax Officer in violation of the provisions of section 144B of the Act would be an assessment without jurisdiction. In the instant case, the admitted position is that on receipt of the draft order of assessment, the assessee did file objections and the Income-tax Officer completed the assessment himself on the basis of the draft order without forwarding the draft order and the objections to the Inspecting Assistant Commissioner and obtaining directions from him. Such an order, on the face of it, is beyond the powers of the Income-tax Officer under section 143 read with section 144B of the Act and, hence, without jurisdiction. The Tribunal, in our opinion, was, therefore, justified in its conclusion that the assessment was liable to be annulled. It was right in holding that the assessment order passed by the Income- tax Officer the instant case without reference to the Inspecting Assistant Commissioner had rightly been annulled by the Commissioner of Income-tax (Appeals). In view of the above, we answer the question referred to us accordingly in favour of the assessee and against the Revenue.

This reference is disposed of accordingly with no order as to costs."

14. In the case of CIT Vs. SPL’s Siddharth Ltd. (Supra), before the Hon’ble Delhi High Court, the facts were that notice issued by the A.O u/s. 147 r.w.s 148 of the Act for re-opening the assessment for the A.Y. 2002-03 was set aside by the Tribunal on the ground that the requisite approval of Addl. Commissioner of Income Tax, which is mandatorily required, was not taken. Since 4 years had elapsed from the end of the relevant A.Y, the A.O u/s. 151(1) of the Act was required to take approval of the competent authority. The Hon’ble Delhi High Court after discussing the issue in detail and the case laws cited before it has been pleased to approve the decision of Tribunal. In view of these decisions and the position of law provided u/s. 153D of the Act, we hold that the assessment orders impugned framed in absence of obtaining prior approval of the Joint Commissioner for the A.Ys. under consideration are invalid as null and void and are quashed accordingly.”

Thus it is clear that the issue before the Tribunal in the case of Akhil Ghulamali Somji Vs. ITO (supra) was passing the assessment order under Section 153A of the Act without prior approval of the Joint Commissioner. There is no quarrel on that proposition of law and the grievance of the assessee is only non-grant of opportunity of hearing to the assessee and not that the assessment order passed by the Assessing Officer without approval. The assessee has not raised this issue or disputed the approval granted by the Joint Commissioner. Accordingly, in view of our above discussion this ground raised by the assessee is bereft of any merit or substance and the same is rejected.

7. Ground Nos.3 & 4 are regarding validity of invoking the provisions of section 153A by issuing a notice under Section 153A of the Act.

8. The learned Authorised Representative of the assessee has submitted that the Assessing Officer has provided less than 15 days in the notice issued under Section 153A of the Act to file the return of income which is contrary to the minimum period of 15 days provided under the statute. He has referred to the provisions of section 158BC of the Act and submitted that the period prescribed for filing the return shall not be less than 15 days but not more than 45 days. Therefore the notice issued under Section 153A of the Act is invalid as the assessee was not given the minimum period of 15 days and further when there is no reason recorded by the Assessing Officer for providing the period less than 30 days renders the notice issued under Section 153A of the Act is invalid and consequently the assessment is liable to be quashed.

9. On the other hand, the learned Departmental Representative has submitted that there is no such minimum time period is provided under Section 153A rather the return of income is required to be filed within a period as provided in the notice itself issued under Section 153A of the Act. He has referred to the provisions of section 153A and submitted that the provisions itself is simple and clear and therefore no such condition can be imported in the provision when nothing is provided of giving the minimum period of 15 days for filing the return of income. He has further contended that even otherwise the assessee has filed the return of income after about 5 months from the date of notice issued under Section 153A of the Act which was considered by the Assessing Officer and therefore the assessee cannot take a plea that the assessee was not given the minimum period of 15 days.

10. We have considered the rival submissions as well as the relevant material on record. As regards the time period within which the assessee is required to furnish the return in response to notice under Section 153A is concerned, we find that there is no such time specified in the provisions of section 153A(1)(a) which reads as under :

“ 153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall-

(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;”

Thus the language of the provision is plain and unambiguous and the assessee is required to furnish the return within such period as prescribed in the notice itself. Therefore there may be issue of reasonable time period in the notice however it cannot be termed as not less than 15 days. The reasonable time period depends on the facts and circumstances of the case. Therefore the minimum period of 15 days as contended by the assessee cannot be imported to the provisions of Sections 153A(1)(a) when this provision begins with a non- obstante clause then the provisions of sections 139, 147, 148, 149, 151 and 153 shall have no over-riding effect on this provision. When the new provisions for assessment or reassessment in case of search under Section 132 of the Act was introduced and the legislature has intentionally not provided any such minimum time period allowing the assessee to furnish the return of income than the time period provided under Section 158BC cannot be read into this section. Even otherwise we find that the notice under Section 153A(1)(a) was issued on 24.9.2009 wherein the Assessing Officer has given time period for furnishing the return as 30 days from the date of service of notice. Even otherwise the period of 30 days provided by the Assessing Officer for furnishing the return of income is a reasonable period. Further the assessee furnished its return of income in response to the said notice under Section 153A only on 3.2.2010 which is more than 4 months after the date of issue of notice under Section 153A. In view of the facts and circumstances when the Assessing Officer has granted 30 days to furnish the return in response to the notice under Section 153A and thereafter the assessee furnished the return only after more than 4 months which was accepted by the Assessing Officer, the objection raised by the assessee is devoid of any merit or substance and therefore rejected.

11. Ground No.5 is regarding invalid notice issued under Section 143(2) of the Act.

12. The learned Authorised Representative of the assessee has submitted that the Assessing Officer issued a notice under Section 143(2) after filing the return in response to notice under Section 153A of the Act however, the Assessing Officer chose to consider the return originally filed by the assessee under Section 139 of the Act and therefore the notice issued by the Assessing Officer under Section 143(2) relates to the original return filed by the assessee under Section 139 of the Act and not relates to the return filed under Section 153A. Thus the learned Authorised Representative has submitted tht the assessment framed under Section 153A of the Act is without jurisdiction and liable to be cancelled. He has referred to the assessment order and submitted that the Assessing Officer took the return of income while computing the total income of the assessee from the return filed under Section 139 and not from the return filed under Section 153A of the Act.

13. On the other hand, the learned Departmental Representative has submitted that the Assessing Officer has clearly mentioned in the assessment order that the total income declared by the assessee in the original return filed under Section 139 was Rs. 4,37,080 however in the return of income in response to the notice under Section 153, the assessee has declared a net income of Rs. 4,20,460 which is less than the income declared in the original return. Therefore, by considering the income declared by the assessee in the original return filed under Section 139 was consciously taken into consideration by the Assessing Officer and which does not mean that the notice issued under Section 143(2) of the Act after the return of income filed by the assessee in response to the notice under Section 153A is a notice under Section 143(2) in respect of the original return.

14. We have considered the rival submissions as well as the relevant material on record. The objection of the assessee against the notice under Section 143(2) is purely based on one fact that while computing the total income of the assessee, the Assessing Officer took the return of income declared in the original return filed under Section 139 of the Act. We find that the assessee filed the return of income on 03.02.2010 in response to notice issued under Section 153A. Subsequently a notice under Section 143(2) was issued on 10.2.2010. Therefore, it is manifest from the facts of the case that the notice in question was issued only after the return of income filed by the assessee in response to notice under Section 153A and it cannot be said that the said notice issued under Section 143(2) was in relation to the original return when the time period for issuing notice was already expired. Therefore there cannot be any correlation between the total income computation and notice issued under Section 143(2) so claimed by the assessee. The Assessing Officer has discussed this issue in para 6 and pointed out that in the return filed in response to the notice under Section 153A the assessee has declared les income than income declared in the original return filed under Section 139 of the Act and therefore the Assessing Officer took the total income returned by the assessee as declared in the original return while computing the total income. When the notice under Section 143(2) was issued after the return of income filed by the assessee in response to notice under Section 153A and further there was no time available to the Assessing Officer to issue notice on the original return of income then in the facts and circumstances of the case we find that the notice in question was issued only in respect of the return filed by the assessee under Section 153A of the Act. Hence this ground of the assessee is rejected.

15. Ground Nos.6 to 8 are regarding the income earned on sale of agriculture land is assessed as income from business instead of capital gains. The assessee earned an income of Rs. 11,97,996 from sale of Adyar Site. The assessee claimed the said income as capital gains and also claimed deduction under Section 54B of the Act. The Assessing Officer found that the income is taxable not as Short Term Capital Gains (‘STCG’) but as income from profit and gain of business. The Assessing Officer accordingly rejected the claim of deduction under Section 54B by holding that the said property was not an agriculture land. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed as the CIT (Appeals) has confirmed the finding of the Assessing Officer by considering the fact that the asset in question was shown as business asset in the books of accounts. Further a substantial improvement has been made in the said property. The CIT (Appeals) again recorded the fact that the interest paid on the land obtained for the said property has not been capitalized but claimed against the regular income. In the Wealth Tax Return, the assessee has shown this property as taxable asset even after the search in question and issuing a questionnaire to the assessee. Further the assessee has reported his nature of business as land developer and promoter. Accordingly, the CIT (Appeals) held that the income from sale of the property in question is taxable under the head ‘profit and gains of the business’. Consequently, the claim of deduction under Section 54B was also denied.

16. Before us, the learned Authorised Representative of the assessee has submitted that in the original return of income the assessee has shown this income as capital gains and there was no incriminating material found during the search to warrant the addition of this amount by treating the same as income being profit and gain from business and profession. The learned Authorised Representative of the assessee has submitted that when the time limit for issuing the notice under Section 143(2) was expired on the date of search then the assessment was not pending but was already over as on the date of search and proceedings under Section 153A are in the nature of reassessment as the original assessment for the year under consideration did not get abate. He has referred the return of income filed under Section 139 and submitted that the original return was filed on 29.10.2005 and therefore the time limit for issuing notice under Section 143(2) was already expired on the date of search on 13.2.2009. Hence the assessment was not abated and in the absence of any fresh material, no addition can be made by the Assessing Officer. He has relied upon the decision dt.15.6.2014 of Delhi Bench of this Tribunal in the case of Sanjay Agarwal in ITA No.3184/Del/2013 and submitted that the scope of determining the total income in the reassessment famed under Section 153A is only addition of amounts those flow from the incriminating material found during the course of search.

17. On the other hand, the learned Departmental Representative has submitted that the assessee has claimed the exemption under Section 54B in the return filed in response to the notice issued under Section 153A therefore this is a fresh claim made by the assessee in the return filed under Section 153A and further the assessee has offered himself as income of STCG from sale of agriculture land. He has relied upon the orders of the authorities below and submitted that when the assessee has shown this property in question as business asset then the sale of same will give rise to the business income and not as capital gain. Even if it is treated as capital gain, it will be STCG as admitted by the assessee and the deduction under Section 54B of the Act cannot be allowed when the land has not been used for atleast two years prior to the sale for agriculture purpose.

18. We have considered the rival submissions as well as the relevant material on record. We find that there is no tax effect even if the income from sale of this property is treated as STCG instead of business income treated by the Assessing Officer and the only difference is because of the claim under Section 54B of the Act. There is no dispute that the land in question was not used for agriculture purpose in the two years immediately preceding the date on which the transfer took place. Therefore mandatory condition of use of the land for agriculture purposes for two years immediately prior to the sale is not specified. Once the assessee failed to satisfy the condition under Section 54B for availing the deduction then the issue of treatment of the income as business income or STCG becomes academic in nature being revenue neutral. Accordingly, in the facts and circumstances of the case, we dismiss these grounds of the assessee's appeal.

Assessment Year 2006-07

19. For the Assessment Year 2006-07, the assessee has raised following grounds :

“ 1. The learned Commissioner of income Tax (appeals) erred in holding that non issue of an opportunity of being heard by the Additional Commissioner before approving an order of assessment u / s . 153A r.w.s. 143(3: of the Act will not vitiate assessment proceedings completed u/ s. 153A r.w.s. 143(3) of the Act.

2. The action of the learned CIT (A) is contrary to the procedure contemplatedby the CBDT.

3. The learned Commissioner of Income Tax(Appeals) ought to have held the notice issued ix] s 153A of the Act, is illegal since return is called without granting statute recognised period for compliance and there is no reasons either recorded or communicated to know how the learned Assessing authority has exercised his discretion for compliance to the notice u / s . 1534A of the Act.

4. The appellant respectfully submits a period of clear 30 days to 45 days was considered reasonable for compliances with regard to filing of return in response to notices.

5. The learned Commissioner of Income Tax (Appeals) ought to have held the notice issued vi] s 143(2) of the Act, relates to the original return flied u/ s. 139 of the Act and not to the proceedings initiated u / s . 153A of the Act, since the learned Assessing Authority has considered the income returned in the original return.

6. The learned Commissioner of Income Tax (Appeals) erred in upholding the adoption of income under head "POOJA" at Rs. 35,00,000/- as against Rs. 3,22,553/-admitted by appellant, rejecting the appellant's contention that the offer is Gross receipt and not net income.

7. The Learned Commissioner of Income Tax (Appeals) erred in holding the loan from Mr. Sunil Patil is assessable as unexplained Credit for the assessment year 2006-07.

8. The learned Commissioner of' Income tax (Appeals) ought to have deleted the addition made on account of Cash Credit since the said transaction was considered while framing the assessment ujs.143(3) of the Act made on 21- 11-2008 and there is no material to suggest that the loan is not genuine.

9. The learned Commissioner of Income Tax (Appeals) ought to have held that the assessment for the assessment year 2006-07 does not get abated.

10. The learned Commissioner of Income tax (Appeals) erred in upholding the levy of interest u/s.234B as consequential.

The appellant crave leave of the Hon'ble Tribunal to raise such other ground or grounds at the time of hearing.”

20. Ground Nos.1 & 2 are regarding validity of assessment on the ground of non-grant of opportunity of hearing to the assessee for granting approval by the Joint Commissioner. This issue is identical to the issue involved in Ground Nos.1 & 2 of the Assessment Year 2005-06. In view of our finding on this issue for the Assessment Year 2005-06, these grounds of the assessee’s appeal stand dismissed.

21. Ground Nos.3 & 4 are regarding the validity of notice issued under Section 153A on the ground that the assessee was not given a clear 30 days notice. This issue is identical to the issue involved in Ground Nos.1 & 2 of the Assessment Year 2005-06. In view of our finding on this issue for the Assessment Year 2005-06, these grounds of the assessee’s appeal stand dismissed.

22. Ground No.5 is not pressed by the ld. A.R. and the same is dismissed as not pressed.

23. Ground No.6 is regarding addition on account of income for performing Pooja.

24. The assessee is a professional priest. The assessee was earning income from performing Pooja. The Assessing Officer noticed that the assessee has not disclosed the income for performing Pooja in the original return filed before the date of search. In response to the notice under Section 153A, the assessee declared income from Pooja of Rs. 3,22,553 on the gross receipts of Rs. 14,75,000 after claiming expenses of Rs. 11,52,447. During the course of search, document No. A/GSP/2 dt.13.2.2009 was seized and as per the noting in page 36 to 38 of this seized document, the assessee earned income of Rs. 35 lakhs for the Assessment Year 2006-07. In the statement recorded under Section 32(4) on 13.2.2009, the assessee stated that the assessee earned substantial income from Pooja in the form of cash and the same has not been disclosed in the income tax return. Accordingly, the assessee admitted the receipt from Pooja income for the Assessment Year 2006-07 of Rs. 35 lakhs for the Assessment Year 2007-08 of Rs. 20 lakhs and for the Assessment Year 2008- 09 of Rs. 20 lakhs. Thus the assessee admitted the total income from Pooja for three assessment years at Rs. 75 lakhs. Vide letter dt.6.4.2009 the assessee retracted his admitted income from Pooja and submitted that the actual income from Pooja is only Rs. 10,12,800 on the gross receipts of Rs. 50,64,000 for the Assessment Years 2006-07 to 2008-09. Hence the assessee retracted its earlier statement recorded on 13.2.2009. The Assessing Officer again recorded the statement of assessee on 13.4.2009 wherein the assessee has took a stand that after reducing the expenses from the admitted Pooja income for the Assessment Year 2006-07 is only of Rs. 18,29,800. The Assessing Officer did not accept the contention of the assessee and made the addition of Rs. 35,00,000 as disclosed by the assessee in the statement recorded on 23.2.2009. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed.

25. Before us, the learned Authorised Representative of the assessee has submitted that the original return under Section 143(3) was concluded and therefore, in the absence of any incriminating material, no addition can be made on the basis of the statement recorded during the search. He has further contended that the assessee has immediately after the statement recorded on 13.2.2009 filed a letter dt.6.4.2009 and explained that the actual gross receipts from Pooja was Rs. 50,64,000 for all the three years for the Assessment Years 2006-07 to 2008-09. Further the Assessing Officer recorded the statement on 13.4.2009 wherein the assessee has explained that the actual gross receipts for the three assessment years is Rs. 50,64,000 and after reducing the expenses actual income from Pooja was only Rs. 10,12,800. The learned Authorised Representative has further submitted that for the Assessment Year 2009-10, the Assessing Officer has relied upon a different document being seized material wherein the Pooja income for the Assessment Year 2006-07 is shown only Rs. 15 lakhs. Thus the learned Authorised Representative has submitted that when the Assessing Officer has relied upon two different materials for the purpose of making addition in different years which shows different amounts of income then the addition made by the Assessing Officer without corroborating evidence of correct Pooja income is not sustainable.

26. On the other hand, the learned Departmental Representative has submitted that the addition is not based merely on statement recorded under Section 132(4) of the Act but there is a seized material clearly showing the income of the assessee from Pooja at Rs. 35 lakhs for the year under consideration. The assessee has not disputed the seized material therefore, a subsequent retraction of the assessee is nothing but an after thought without any supporting evidence. He has relied upon the orders of authorities below.

27. We have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. The first objection by the learned Authorised Representative is that the original assessment was completed under Section 143(3) and in the reassessment under Section 153A, no addition can be made except based on seized material. We find that the Assessing Officer has placed a copy of the seized material at page 10 of the assessment order which clearly shows different entries recorded by the assessee including an entry of Mandir and Pooja of Rs. 35 lakhs for the F.Y. 2005-06. Therefore, the addition made by the Assessing Officer is not based merely on statement recorded under Section 132(4) of the Act. It is pertinent to note that the assessee in the statement had estimated the undisclosed income of Rs. 75 lakhs for 3 assessment years under consideration which matches the figures and amounts shown in the seized document relating to Pooja income of Rs. 35 lakhs, Rs. 20 lakhs and Rs. 20 lakhs for the Assessment Year 2006-07 to 2008-09 respectively. We find that there is no ambiguity in the statement of assessee regarding the Pooja income which has been clearly corroborated by the seized material. Thus when there is a sufficient evidence being seized material which corroborates the statement of the assessee recorded under Section 132(4) on 23.2.2009 then the subsequent retraction of the statement by the assessee withut any corroborating evidence cannot be accepted as the assessee has not explained the facts and circumstances under which he had admitted a wrong income in the statement and how the income shown in the seized material is not correct. Therefore mere retraction of statement without explaining the circumstances as well as corroborating evidence, it cannot be accepted being an after thought. Accordingly, we do not find any substance in this ground of the assessee and the same is dismissed.

28. Ground Nos.7 to 9 are regarding the addition on account of loan from Mr. Sunil Patil as unexplained credit.

29. A sum of Rs. 42 lakhs was shown in the name of Mr. Sunil Patil on 31.3.2006. The Assessing Officer made enquiry at the address furnished by the assessee by issuing a notice under Section 133 dt.6.8.2010. However the said letter was returned unserved with the remark unclaimed. When the assessee was confronted with this evidence, he mentioned that whereabouts of Mr. Sunil Patil was not known however, payment was received through cheques and therefore, it was pleaded that genuineness cannot be doubted. Since the assessee failed to discharge its onus to prove the genuineness / identity and credit-worthiness of the creditor, the Assessing Officer made addition of the said amount as undisclosed income. On appeal, the CIT (Appeals) has allowed telescoping to the extent of Rs. 35 lakhs being the addition made on account of Pooja income and confirmed the remaining addition of Rs. 7 lakhs.

30. Before us, the learned Authorised Representative has submitted that the original assessment was completed under Section 143(3) wherein the Assessing Officer accepted the credit in the name of Mr. Sunil Patil and therefore in the absence of any seized material during the search, the addition is not warranted. He has relied upon the decision of Hon’ble Delhi High Court in the case of Anil Kumar Bhatia 352 ITR 493 (Del).

31. On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below and submitted that this issue was not examined by the Assessing Officer while passing the order under Section 143(3) of the Act.

32. We have considered the rival submissions as well as the relevant material on record. There is no quarrel on the proposition that if the assessment for a particular assessment year is not pending as on the date of search then it willmay not abate because of the search and seizure action under Section 132 of the Act but the Assessing Officer shall reassess the total income of the assessee. Therefore if during the search proceedings no incriminating material or other evidence found then a particular income or item of income which is accepted in the assessment under Section 143(3) cannot be reassessed. In the case on hand though the assessee has submitted that the Assessing Officer accepted the credit in the name of Mr. Sunil Patil of Rs. 42 lakhs and there is no evidence or seized material found during the search to support the undisclosed income. However from the record produced before us, we find that the assessee has filed a return of income on 3.2.2010 along with the Balance Sheet wherein this amount of unsecured loan in the name of Mr. Sunil Patil has been shown and it is not clear whether this record was filed by the assessee along with the return of income filed on 24.11.2006 on which the assessment was completed for the year under consideration. Accordingly, we direct the Assessing Officer to verify whether this unsecured loan in the name of Mr. Sunil Patil was duly disclosed in the return filed on 24.11.2006 or during the assessment proceedings completed vide order dt.21.11.2008. This issue is set aside to the record of Assessing Officer for proper verification and re- adjudication.

33. For the Assessment Year 2007-08, the assessee has raised the following grounds :

“ 1. The learned Commissioner of income Tax (appeals) erred in holding that non issue of an opportunity of being heard by the Additional Commissioner before approving an order of assessment u/s 153A r.w.s. 143(3) of the Act will not vitiate assessment proceedings completed u/s 153A r.w.s. 143(3) of the act.

2. The action of the learned CIT (A) is contrary to the procedure contemplatedby the CBDT.

3. The learned Commissioner of Income Tax(Appeals) ought to have held the notice issued u/s 153A of the Act, is illegal since retum is called without granting statute recognised period for compliance and there is no reasons either recorded or communicated to know how the learned Assessing authority has exercised his discretion for compliance to the notice u / s 1534A of the Act.

4. The appellant respectfully submits a period of clear 30 days to 45 days was considered reasonable for compliances with regard to filing of return in response to notices.

5. The ld. Commissioner of Income Tax (Appeals) ought to have held the notice issued u/s 143(2) of the Act, relates to the original return filed u/s 139 of the Act and not to the proceedings initiated u/s 153A of the Act, since the learned Assessing Authority has considered the income returned in the original return.

6. The ld. Commissioner of Income Tax (Appeals) erred in upholding the adoption of income under head "POOJA" Rs. 20,00,000/- as against Rs. 3,60,220/- admitted by appellant, rejecting the appellant's contention that the offer is Gross receipt and not net income.

7. The ld. CIT (Appeals) ought to have considered the repayment of loan to Mr. Sunil Patil during the year 2007-08 as available to set off against the income assessed under unexplained investment for the same reasons for deleting the additionofRs.12,50,000 under unexplained credit.

8. The learned CIT (Appeals) ought to have deleted the addition since the borrowal was shown in the return of income filed under Section 139 of the Act and the assessment for the assessment year 2007-08 does not get abated since notice under Section 143(2) was issued and time to issue such a notice had expired.

9. The Learned Commissioner of Income Tax (Appeals) erred in upholding the disallowance made u/s. 40A(3) of the Act without considering the contention that section 40A(3) is not applicable and addition is not warranted.

10. The Learned Commissioner of Income Tax (Appeals) erred in upholding the addition of Rs. 3 lakhs made applying the provisions of section 69B of the Act.

11. The Learned CIT(A) ought to considered the repayment of loan to Mr. Sunil Patil as available for set of, having held the loan borrowed from Mr. Sunil Patil is not genuine.

12. The learned Commissioner of Income tax (Appeals) erred in upholding the levy of interest u / s . 234 B as consequential.

The appellant crave leave of the Hon'ble Tribunal to raise such other ground or grounds at the time of hearing.”

34. Ground Nos.1 & 2 are regarding validity of assessment under Section 153A on the ground of non-grant of opportunity of hearing to the assessee for granting approval by the Joint Commissioner. This issue is identical to the issue involved in Ground Nos.1 & 2 of the Assessment Year 2005-06. In view of our finding on this issue for the Assessment Year 2005-06, these grounds of the assessee’s appeal stand dismissed.

35. Ground Nos.3 & 4 are regarding the validity of notice issued under Section 153A on the ground that the assessee was not given a clear 30 days notice. This issue is identical to the issue involved in Ground Nos.1 & 2 of the Assessment Year 2005-06. In view of our finding on this issue for the Assessment Year 2005-06, these grounds of the assessee’s appeal stand dismissed.

36. Ground No.5 is not pressed by the ld. A.R. and the same is dismissed as not pressed.

37. Ground No.6 is regarding addition on account of income for performing Pooja. This issue is identical to the issue involved in Ground Nos.1 & 2 of the Assessment Year 2005-06. In view of our finding on this issue for the Assessment Year 2005-06, these grounds of the assessee’s appeal stand dismissed.

38. Ground Nos.7 & 8 are not pressed by the ld. A.R. and the same is dismissed as not pressed.

39. Ground No.9 is regarding disallowance made under Section 40A(3) of the Act.

40. During the course of assessment proceedings, the Assessing Officer asked the assessee to provide all the expenses claimed in excess of Rs. 20,000. The assessee vide letter dt.27.10.2010 submitted that details will be filed in due course however the assessee did not furnish any such requisite information to the Assessing Officer. Accordingly, the Assessing Officer took the information regarding the payments in excess of Rs. 20,000 in cash from the ledger account of the assessee and made an addition of 20% of Rs. 4,30,800 amounting to Rs. 86,160 under Section 40A(3) of the Act.

41. Before us, the learned Authorised Representative submitted that the amount taken out by the Assessing Officer from the ledger account has not been claimed as business expenditure and therefore the same cannot be disallowed under Section 40A(3) of the Act. He has further contended that this is also a double addition as an amount of Rs. 3 lakhs in the name of Smt. Vani Mahesh was also added by the Assessing Officer under Section 69B of the Act as unexplained investment.

42. On the other hand, the learned Departmental Representative has contended that there is no double addition as far as this amount of Rs. 3 lakhs in the name of Smt. Vani Mahesh. He has referred to the finding of CIT (Appeals) and submitted that the addition made on account of unexplained credit is a different transaction. He has relied upon the orders of the authorities below.

43. Having considered the rival submission as well as relevant material on record, we find that the Assessing Officer made the addition under Section 40A(3) of the Act when the assessee has not furnished the details of the expenditure of more than Rs. 20,000 in cash. The Assessing Officer took the figures from the ledger account however, the assessee claimed that the amount was not claimed as a business expenditure therefore it cannot be disallowed. Further the assessee also claimed that this is a double addition of the same amount of Rs. 3 lakhs in the name of Smt. Vani Mahesh as the Assessing Officer has made an addition on additional investment under Section 69B of Rs. 3 lakhs. Since the relevant record has not been examined by the Assessing Officer and also not available before us therefore in the facts and circumstances of the case, we set aside this issue to the record of Assessing Officer for proper examination of the relevant record as well as the details to be filed by the assessee and then decide the same after affording an opportunity of hearing to the assessee.

44. The assessee has also raised an additional ground which reads as under :

“1. The learned CIT (Appeals) erred in holding that the addition of Rs. 39,00,000 has been made on seized material and payments have been made to Mr. Hiren Kumar Patel. Order of the learned CIT (Appeals) is opposed to law.”

45. We have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. This is not a new plea raised by the assessee before us but this addition was made by the Assessing Officer based on the seized material and the assessee has also challenged the action of the Assessing Officer before the CIT (Appeals) however in the ground raised before us in Form 36, the assessee did not raise this ground in the original ground filed along with Form 36. Thus we find that inadvertently the assessee could not raise this ground which has arisen from the impugned orders of the authorities below. Having regard to the facts and circumstances when this ground is arisen from the impugned orders then we do not find any reason for not admitting the ground for adjudication on merit. Hence we admit the additional ground for adjudication on merit.

46. During the course of search the document was seized and from analysis of page 75 of the seized material, the Assessing Officer noted that the assessee has paid total amounting to Rs. 19 lakhs to one Mr. Hiren Kumar Patel. The assessee claimed that the figure written as 19 represents only Rs. 19,000 and not Rs. 19 lakhs. The Assessing Officer noted that the amount mentioned in the seized material are in the form of abbreviation and which represent the amount in lakhs, not in thousands. The Assessing Officer has observed that the assessee himself has written Rs. 19 lakhs in the form of “19”. Therefore the Assessing Officer treated this amount as Rs. 19 lakhs as against the claim of Rs. 19,000. The CIT (Appeals) has confirmed the action of the Assessing Officer.

47. Before us, the learned Authorised Representative of the assessee has submitted that there is nothing on record to prove that the assessee has paid the alleged amount of Rs. 58 lakhs to Mr. Hirenkumar Patel. He had submitted that the amounts noted down in the margins of the diary entry rewritten in thousands and not in lakhs. He has submitted that these amounts in the margin clearly shows that they represent entries in the diary and not an extra payment which is not recorded in the said diary. The assessee right from the beginning has explained this before the Assessing Officer. He has not paid the alleged amount of Rs. 58 lakhs as stated by the Assessing Officer what the payments were made, the same were recorded in the books of account. The learned Authorised Representative has submitted that the payments made during the year under consideration were only Rs. 82.50 lakhs and the same is recorded in the books of account. There is no material on record to say that the assessee has taken the said sum of Rs. 58 lakhs from Mr. Hirenkumar Patel. The learned Authorised Representative has further submitted that it is only an allegation and assumption of the Assessing Officer and not a real transaction of payment made by the assessee.

48. On the other hand, the learned Departmental Representative has submitted that the Assessing Officer has analysed the entries at page No.75 of the seized material as reproduced by the Assessing Officer at page 30 of the assessment order from which it is clear that the assessee has paid a sum of Rs. 18 lkahs on 7.8.2006 and again paid Rs. 1 lakh on 18.8.2006, total amounting to Rs. 19 lakhs which has been written in the margin as a figure of 19. Therefore the remaining amount written in the margin in the abbreviated form represents the amounts in lakhs and not in thousands as claimed by the assessee. He has relied upon the orders of the authorities below.

49. We have considered the rival submissions as well as the relevant material on record. The Assessing Officer made total addition of Rs. 58 lakhs on account of undisclosed investment being payment made by the assessee out of the books to one Mr. Hirenkumar Patel. The CIT (Appeals) while confirming the addition has granted the benefit of telescoping to the extent of an addition of Rs. 39 lakhs on account of Pooja income and therefore confirmed addition of remaining amount of Rs. 19 lakhs. The limited controversy before us is whether the abbreviated or coded amounts written in the margins of the diary at page 75 of the seized material represents the amounts in lakhs or in thousands. The Assessing Officer has considered these amounts as payments made by the assessee in lakhs and therefore calculated the total payment made by the assessee out of books of Rs. 58 lakhs. For ready reference we reproduce the entries as well as the numbers written in the margin of the seized documents at page No.75 which is reproduced by the Assessing Officer at page 30 of the assessment order as under :

HIREN KUMAR NAVINCHANDRA

04-08-2006	Ch.No.055331 of the Dhanalakshmi Bank and M.G.Road.	16,65,000 1,00,000
		17,65,000
07-08-06	Cash 35,000	18,00,000
18-08-06 +5 Road 19+1+5+5 30 12/10/06 30+5 – 17/12 35+12+6 53.+ .5	Ch.No.55339 of the Dhanalakshmi Bank and M.G.	1,00,000

From the numbers written in the margin it is clear that the Assessing Officer took the first number being 19 as sum total of Rs. 18 lakhs + Rs. 1 lakh, the payment made by the assessee on 7.8.2006 and on 8.8.2006 respectively. The other numbers mentioned in the margins are not recorded in the books of accounts therefore those were considered by the Assessing Officer as payment out of books. As it is apparent from these numbers written in the margin that a proper care was taken for distinguishing the amounts in thousands by putting a point (.) before the number as in the case of last number written as 0.5. Therefore the other numbers written in the margin with the dates clearly indicates the payment made by the assessee in lakhs. Therefore we do not find any error or illegality in the orders of the authorities below on this issue and confirm the addition of Rs. 19 lakhs as sustained by the CIT (Appeals).

Assessment Year 2008-09,

50. The assessee has raised the following grounds : Repr.

“ 1. The learned Commissioner of income Tax (appeals) erred in holding that non issue of an opportunity of being heard by the Additional Commissioner before approving an order of assessment u/s 153A r.w.s. 143(3) of the Act will not vitiate assessment proceedings completed u/s 153A r.w.s. 143(3) of the act.

2. The action of the learned CIT (A) is contrary to the procedure contemplatedby the CBDT.

3. The learned Commissioner of Income Tax(Appeals) ought to have held the notice issued u/s 153A of the Act, is illegal since return is called without granting statute recognised period for compliance and there is no reasons either recorded or communicated to know how the learned Assessing authority has exercised his discretion for compliance to the notice u / s 1534A of the Act.

4. The appellant respectfully submits a period of clear 30 days to 45 days was considered reasonable for compliances with regard to filing of return in response to notices.

6. The ld. Commissioner of Income Tax (Appeals) erred in upholding the adoption of income under head "POOJA" Rs. 20,00,000/- as against Rs. 3,85,376/- admitted by appellant, rejecting the appellant's contention that the offer is Gross receipt and not net income.

7. The ld. CIT (Appeals) erred in ;holding the appellant has made an additional investment of Rs. 15,00,000 on Flat and that requires to be assessed u/s. 69B of the Act.

8. The learned CIT (Appeals) having ;upheld the addition made on account of POOJA the learned CIT (Appeals) ought to have considered the same as available for set repayment of against the addition sustained on account of additional investment on Flat.

9. The Learned Commissioner of Income Tax (Appeals) erred in holding the income on sale of Moodabidri Property as assessable under the head “Business” and not under the head capital gain.

10. The Learned Commissioner of Income Tax (Appeals) having upheld the income from contract ought to have directed the ld . Assessing Authority to consider the addition as accretion to the opening account of work in progress for the year 2009 - 10 .

11. The Learned CIT(A) erred in upholding the disallowance made under Section 40A(3) of the Act without considering the contention that provisions of section 40A(3) of the Act without considering the contention that provisions of section 40A(3) of the Act without considering the contention that provisions of section 40A( 3) are not applicable and addition is not warranted.

12. The learned Commissioner of Income tax (Appeals) erred in upholding the addition of R s . 22 , 444 / - made under the longer payable. head Credits no Longer payable.

13. The learned CIT (Appeals) erred in upholding the levy of interest u/s.234B as consequential.

The appellant crave leave of the Hon'ble Tribunal to raise such other ground or grounds at the time of hearing.”

51. Ground Nos.1 to 6 are identical to the grounds stand disposed of in view of our findings in the Assessment Year 2005-06.

52. Ground No.7 is the addition of Rs. 15 lakhs sustained by the CIT (Appeals) under Section 69B of the Act being investment in Flat. The assessee has purchased a residential Flat No.1504 for Rs. 33 lakhs as per the sale agreement dt.13.2.2009. The document was impounded during the search and seizure action. However the sale consideration is shown only at Rs. 15 lakhs. In the statement recorded under Section 132(4) on 13.4.2009, the assessee stated that the Flat was in incomplete state and the owners did not complete the construction and because of this he paid to the owner only Rs. 15 lakhs and he himself spent Rs. 18 lakhs for completion work. However he has accounted only Rs. 3 lakhs out of the above additional work and the balance of Rs. 15 lakhs was spent out of his unaccounted income. Thus the assessee admitted the unaccounted income of Rs. 15 lakhs being investment in the Flat. The Assessing Officer accordingly made an addition of the said amount of Rs. 15 lakhs under Section 69B of the Act. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed.

53. Before us, the learned Authorised Representative of the assessee has submitted that when there is an addition on account of Pooja income of Rs. 20 lakhs then the benefit of telescoping against the addition of unexplained investment could have been given.

54. On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below.

55. Having considered the rival submission as well as the relevant material on record. We find merits in the submission of the learned Authorised Representative that when there is an addition on account of Pooja income for Rs. 20 lakhs for the year under consideration then the benefit of telescoping of the said amount shall be given against the addition of unexplained investment. Even otherwise if an addition of Rs. 20 lakhs was made by the Assessing Officer and was sustained by the CIT (Appeals) on account of unaccounted Pooja income then to the extent of the addition the source of investment stand explained. Therefore we direct the Assessing Officer to allow the telescoping benefit of the Pooja income against the addition if it is not allowed against some other addition.

56. Ground No.9 is regarding the income of sale of property assessed as business income as against capital gains.

57. During the previous year relevant to the assessment year under consideration, the assessee sold Moodabidiri property i.e. Pandit Health Resort & Spa for a consideration of Rs. 2.5 Crores to M/s. Benefit Filmcity (India) Pvt. Ltd., Mumbai. This land was purchased by the assessee on 30.07.2004 for a consideration of Rs. 40 lakhs and was sold on 14.9.2007 after development and setting of Hotel under the name Pandit Health Resort & Spa. The Assessing Officer noted that that this property is nothing but a resort set up by the assessee for carrying out his hotel business. When the construction work was in progress, he sold the property. The assessee claimed the income from sale of property as income from capital gains. The Assessing Officer assessed the said income as business income by considering the fact that the assessee has shown this property in his Balance Sheet as business asset. The CIT (Appeals) confirmed the action of the Assessing Officer.

58. Before us the learned Authorised Representative has submitted that the assessee purchased the land in the year 2004 and sold after 4 years. There is no dispute that this land was a capital asset and the profit arising from the sale of land is nothing but capital gain. The property was developed as an asset and not for doing the business of hotel/spa. When the property was not used for business purpose then it is only a capital asset and sale of its results in capital gain and not business income.

59. On the other hand, the learned D. R. has submitted that the assessee has claimed the interest expenditure against the business income and has not capitalized the same in the cost of the asset and therefore it was a business asset. He has relied upon the orders of the authorities below.

60. We have considered the rival submissions as well as the relevant material on record. There is no dispute that this land was purchased in the year 2004 and was sold in the year 2007 therefore the assessee retained this land for more than 3 years. It is not the case of the revenue that the land was shown as stock in trade. Therefore even if the land was shown as business asset and it was sold prior to the completion of construction work. It would not partake the character of business undertaking or asset on which depreciation is allowed. Therefore this land was sold as an individual asset and not as a particular unit of business of the assessee. Accordingly, we are of the view that the gain arisen from the sale of land will be assessed as ‘Long Term Capital Gain’ (LTCG). However if any gain is earned on the construction part of the property, the same will be assessed as STCG. Accordingly, principally we allow the claim of the assessee and direct the Assessing Officer to accept the claim of LTCG to the extent of the land and if any gain is earned by the assessee on account of construction of the property, the same will be treated as STCG.

61. Ground No.10 is regarding addition on account of contract receipts.

62. The Assessing Officer noted that the assessee has not declared any income in respect of certain projects from which substantial work in progress has been declared. Accordingly, the Assessing Officer made an addition of Rs. 11,61,020 based on the working provided by the assessee. The CIT (Appeals) has confirmed the action of the assessee.

63. Before us, the learned Authorised Representative of the assessee has submitted that the project was not completed during the year and the assessee has offered the income from the said project for the assessment year 2009-10. He has referred the return of income and computation of income for the Assessment Year 2009-10 wherein the assessee has offered revenue receipts of Rs. 3.32 Crores. Thus the learned Authorised Representative has submitted that there is a double addition to the extent of Rs. 11,61,020 which was assessed by the Assessing Officer during the year under consideration.

64. On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below.

65. We have considered the rival submissions as well as the relevant material on record. We find that the assessee has offered the income from this project for the Assessment Year 2009-10. Therefore the addition made by the Assessing Officer from this project for the year under consideration is required to be reduced from the income for the Assessment Year 2009-10 to avoid double taxation of the same income. Accordingly, we direct the Assessing Officer to take necessary step in this aspect.

66. Ground No.11 is regarding disallowance under Section 40A(3) of the Act which is identical and stand dismissed in view of our finding for the Assessment Year 2005-06.

67. Ground No.12 is regarding addition under Section 41(1) of the Act. The Assessing Officer has made an addition of Rs. 22,444 on account of amounts standing to the credit as on 31.3.2008. The learned Authorised Representative of the assessee has submitted that the Assessing Officer has already made an addition of Rs. 2,22,444 under Section 41(1) being the amount standing to the credit as on 31.3.2006. Therefore this amount of Rs. 22,444 has already been added as income for the Assessment Year 2006-07 and a such no further separate addition is called for.

68. On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below.

69. Having considered the rival submission as well as relevant record, we are of the view that if this amount of Rs. 22,444 is part of sum of Rs. 2,22,444 being an addition made by the Assessing Officer under Section 41(1) of the Act for the Assessment Year 2006-07 then this addition cannot be made for the year under consideration. Hence, we direct the Assessing Officer to verify the fact as pointed out by the assessee and then decide the same accordingly.

70. For the Assessment Year 2009-10, the assessee has raised the following grounds :

“ 1. The learned Commissioner of Income Tax (Appeals) erred in upholding the adoption of income under head "POOJA" Rs. 30,00,000j- as against RsA,09,165j- admitted by the appellant, rejecting the appellant's contention that the offer is Gross receipt and not net Income.

2. The Authorities below erred in adopting the income from pooja at Rs. 30,00,000/-, as there is no material to suggest that the appellant has earned such income.

3. The Learned Commissioner of Income Tax (Appeals) erred in rejecting the set off of short term loss claimed on sale of SBI Mutual Fund to the extent of Rs. 4,24,380j-, holding the income from Mutual Funds are exempt u/ s . 10(35) of the Act.

4. The learned Commissioner of Income Tax (Appeals) erred in rejecting the set off of profit profit estimated on contract receipts estimated on percentage completion method for the assessment year 2008-09, on the ground appellant was unable to show which contract had been completed.

5. The learned Commissioner of Income Tax (Appeals) erred affirming the rejection of claim of set off of income estimated on percentage completion method, without considering that the appellant had taken up contract of only one project, which was completed in financial year 2008-09.

6. The learned CIT (Appeals) erred in upholding the levy of interest under Section 234B as consequential.

The appellant crave leave of the Hon'ble Tribunal to raise such other ground or grounds at the time of hearing.”

71. Ground Nos.1 & 2 are regarding addition on account of Pooja income. These grounds are identical to that of the earlier assessment year and therefore in view of our finding for the Assessment Year 2005-06 this issue is decided against the assessee.

72. Ground No.3 is regarding rejecting the claim of setting off of STCG from sale of mutual fund units. The Assessing Officer disallowed the claim of Short Term Capital Loss on sale of SBI Mutual Fund units to be set off against the business income on the ground that the income from Mutual Fund is exempt under Section 10(35) of the Act. The CIT (Appeals) has confirmed the action of the Assessing Officer.

73. We have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. There is no dispute that the income from Mutual Fund in question is exempt under Section 10(35) of the Act therefore, any loss from the same source cannot be allowed to be set off against the taxable income. Accordingly, we do not find any error or illegality in the orders of the authorities below.

74. Ground No.5 is regarding the setting off of the income estimated by the Assessing Officer on percentage completion method for the Assessment Year 2008-09 against the income offered during the year on completion of the project.

75. We have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. While dealing with an identical issue for the Assessment Year 2008-09, we have directed the Assessing Officer to set off the income assessed in the said assessment year based on the percentage of uncompleted project against the income of the project offered by the assessee on completion during the year under consideration. Accordingly this ground stand disposed off.

76. The assessee has raised an additional ground which reads as under :

“1. The learned CIT (Appeals) erred in holding that the deposits inthenames of the family members of the appellant are assessable in the hands of the appellant for the Assessment Year 2009-10. Order of the learned CIT (Appeals) is opposed to law.”

Though this issue was raised by the assessee before the CIT (Appeals) but could not succeed however in the original grounds raised along with Form No.36, the assessee inadvertently did not raise this ground and accordingly filed the additional ground.

77. Having considered the facts and circumstances of the case as well as submissions of the parties, we find that this is not a fresh plea raised by the assessee but the additional ground raised is emanating from the impugned orders of the authorities below. Accordingly, we admit the additional ground for deciding on merits.

78. During the course of search and seizure operation, a Fixed Deposit of Rs. 28 lakhs was detected in the name of Smt. Rajeshwari G Pandit, Smt. Sushma G Pandit and Smt. Sabitha G Pandit, the family members of the assessee. In the statement recorded under Section 132(4) of the Act on 13.4.2009, Smt. Rajeshwari G Pandit has stated that the investment in the Fixed Deposit is made by her husband (the assessee) and the details and source of funds are available with him. The Assessing Officer accordingly made an addition by holding that the Fixed Deposit was made out of the funds of Sri Gopal S Pandit, the assessee. The assessee challenged the action of the Assessing Officer before the CIT (Appeals). However, the CIT (Appeals) has deleted the addition by granting the telescoping benefit of the addition of Rs. 30 lakhs made on account of undisclosed income from Pooja.

79. Before us, the learned Authorised Representative has submitted that the deposits were not made during the assessment year 2009-10 and therefore this cannot be assessed to tax during the year under consideration.

80. On the other hand, the learned Departmental Representative has submitted that this plea was not raised before the authorities below and therefore the assessee cannot be allowed to take a fresh plea.

81. Having considered the rival submissions and relevant material on record, we are of the view that the dates of deposits is matter of record as per the seized material available with the Assessing Officer and therefore if the deposits or part of the deposits were made in the earlier year then the addition to that extent cannot be made in the year under consideration. Accordingly, we direct the Assessing Officer to verify the dates of deposit in question and then decide this issue.

82. In the result, all the appeals of the assessee are partly allowed.

Order pronounced in the open court on 27th day of July, 2016.

DISCLAIMER: Though all efforts have been made to reproduce the order accurately and correctly however the access, usage and circulation is subject to the condition that VATinfoline Multimedia is not responsible/liable for any loss or damage caused to anyone due to any mistake/error/omissions.