Shri Upendrabhai N.Patel, Baroda V. The ACIT.,Cent.Circle-1, Baroda

ITA 1564/AHD/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9171 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 12-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALA PHILIPS
• Assessee Lawyers: M G PATEL
• Keywords: Bad and doubtful debts
• Section: 143(3); 37; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER SHRI UPENDRABHAI N. PATEL, 3, UTKANTH SOCIETY, B/H ALKAPURI CLUB ROAD, BARODA - 390007 PAN: ACWPP0823G (APPELLANT) VS THE ACIT, CENTRAL CIRCLE - 1, BARODA (RESPONDENT) REVENUE BY : S H RI LALA PHILIPS , SR. D . R. ASSESSEE BY: S H RI M.G. PATEL , A.R. DATE OF HEARING : 02 - 03 - 2 016 DATE OF PRONOUNCEMENT : 11 - 03 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 20 06 - 07 , AR ISES FROM ORDER OF THE CIT(A) - IV, AHMEDABAD DATED 04 - 03 - 2010 IN APPEAL NO. CIT(A) - IV/527 - B/CC - 1/ 08 - 09 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 1564 / A HD/20 10 A SSESSMENT YEAR 200 6 - 07 I.T.A NO. 1564 /AHD/20 10 A.Y. 2006 - 07 PAGE NO SHRI UPENDRABHAI N.PATEL VS. ACIT 2 2. THE ASSESEE S FIRST SUBSTANTIVE GROUND ASSAILS CORRECTNESS OF THE LOWER APPELLATE ORDER CONFIRMING DISALLOWANCES IN RESPECT OF LOSS ON ADVANCES WRITTEN OFF AMOUNTING TO RS. 18,50,000/ - AND RS. 1,90,451/ - IN ITS REVENUE ACCOUNT AS CLAIMED U/S. 28 R.W.S. 37 OF THE ACT. THIS AS SESSEE RUNS A PROPRIETARY BUSINESS BY THE NAME AND STYLE OF J. UPENDRA ENTERPRISES IN LAND DEVELOPMENT. HE WROTE OFF THE IMPUGNED SUM OF RS. 20,40,451/ - AS DEBTS SHOWN IN PROFIT AND LOSS ACCOUNT OF THE PROPRIETARY CONCERN. THE SAME COMPRISED OF ADVANCES T O M/S. MOOGAMBIGA SUPPLIES, RRRDA (RURAL RESEARCH AND REHABILITATION DEVELOPMENT AGENCY) AND MOLIN MISSION CHURCH OF RS. 1,90,450/ - , RS. 8,50,000/ - AND RS. 10 LACS RESPECTIVELY ON PURCHASE OF INTER ALIA MATERIALS, TRANSPORT, EARNEST MONEY DEPOSIT FOR OBTAI NING CONSTRUCTION WORK FOR BUILDING HOUSES ETC. IT EMERGES THAT THE ASSESSEE HAS ALSO INITIATED CRIMINAL PROCEEDINGS ALLEGING FRAUD AND CHEATING. THE ASSESSING OFFICER IN ASSESSMENT ORDER DATED 26 - 12 - 2008 INTER ALIA OBSERVED THAT THE ASSESSEE HAD NOT FUR NISHED RELEVANT ACCOUNTS AND WORK ORDER, DETAILS OF MEASURES UNDERTAKEN FOR RECOVERY OF DEBTS AND FAILED IN SUBSTANTIATING ITS CLAIM AS PER SECTION 36(1)(VII) R.W. SUB - SECTION 2 OF THE ACT. HE WOULD PLACE RELIANCE ON HON BLE JURISDICTIONAL HIGH COURT DECI SION IN (2007) 162 TAXMAN 114 (GUJ) DHAL EMPRISES AND ENGINEERS INDIA PVT. LTD THAT MERE DEBITING OF THE AMOUNT IN QUESTION IS NOT SUFFICIENT AND THE SAME HAVE TO BE WRITTEN OFF AS WELL. THIS DISCUSSION RESULTED IN THE IMPUGNED DISALLOWANCE BEING MADE IN ASSESSEE S CASE. 3. THE CIT(A) CONFIRMS ASSESSING OFFICER S FINDINGS AS UNDER: - I.T.A NO. 1564 /AHD/20 10 A.Y. 2006 - 07 PAGE NO SHRI UPENDRABHAI N.PATEL VS. ACIT 3 3.0 THE SECOND GROUND OF APPEAL IS REGARDING THE ADDITION OF RS - RS. 18,50,000/ - MADE BY DISALLOWING THE CLAIM OF BAD - DEBTS MADE U/S 36(1)(VII) OF THE ACT. THE ASSESSING OFFI CER HAD DISCUSSED THIS ISSUE IN PARA - 5 OF THE ASSESSMENT ORDER. 3.1 THE LD. COUNSEL HAD SUBMITTED ON THIS ISSUE AS UNDER: 1.0 THE APPLICANT HAS, DURING THE YEAR, WRITTEN OFF RS. 20,40,451/ - AS DEBTS AS SHOWN IN THE PROFIT & LOSS ACCOUNT OF J. UPENDR A ENTERPRISES (PROPRIETARY BUSINESS OF THE APPELLANT) SUBMITTED ALONGWITH THE RETURN OF INCOME AND TAX AUDIT REPORT. IN RESPECT OF ADVANCES MADE TO MOOGAMBIGA SUPPLIERS (PLS. SEE PAGE NOS. 187,188,192 TO 194 OF THE PAPER BOOK) FOR THE PURPOSE OF PURCHASE O F MATERIALS, TRANSPORT ETC., OUT OF THE SAME, AMOUNT OF RS.190450/ - REMAINED OUTSTANDING AND COULD NOT BE RECOVERED. FURTHER, THE APPELLANT ADVANCED SUM OF RS.WJ,00,0007 - TO MOLIN MISSION CHURCH (PL S. SEE PAGE NOS. 192,AND 193 OF THE PAPER BOOK) AN D RS. 8 ,50,000/ - TO RRRDA (RURAL RESEARCH & REHABI LITATION DEVELOPMENT AGENCY) (PL S. SEE PAGE NOS. 190 AND 191 OF THE PAPER BOOK) AS EARNEST MONEY DEPOSITS FOR OBTAINING CONSTRUCTION WORK FOR BUILDING HOUSES IN THIRUVALLUR DISTRICT AND SURROUNDING ARE AS FOR THE B ENEFIT AND WELFARE OF SC/ST PEOPLE AT AN ESTIMATED COST OF RS. 2,10, 000/ - AS PER HOUSE UNDER SCHEME OF RURAL RESOURCES RESEARCH & DEVELOPMENT AGENCY FOR WHICH THE S. ANANDARAJ WAS PRESIDENT. LATER ON IT WAS FOUND THAT SO CALLED OFFICE BEARERS AND MEMBERS O F THE AGENCY HAD THE SOLE INTENTION OF CHEATING THE APPELLANT AND MISAPPROPRIATE THE FUNDS FRAUDULENTLY CAUSING LOSS TO THE APPELLANT. A POLICE COMPLAINT, WHICH HAS BEEN DULY ACKNOWLEDGE THE PARTY FOR FRAUD IN OBTAINING ADVANCES AND CONSEQUENTLY MIS APPROP RIATING AGAINST THE FUNDS. THE APPELLANT COULD NOT RECOVER BACK THE AFORESAID AMOUNT IN SPITE OF EFFORTS PUT IN BY HIM AND HENCE THESE ADVANCES OFRS.20,40,451/ - WERE WRITTEN OFF. 1.1 THE ASSESSING OFFICER DISALLOWED CLAIM OF THE AP PELLANT ON THE GROUND TH AT SUCH ADVANCES WERE NOT TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE APPELLANT OF THE PREVIOUS YEAR IN WHICH AMOUNT OF SUCH DEBT OR PART THEREOF IS WRITTEN OFF OR OF I.T.A NO. 1564 /AHD/20 10 A.Y. 2006 - 07 PAGE NO SHRI UPENDRABHAI N.PATEL VS. ACIT 4 AN EARLIER PREVIOUS YEAR, OR HAD REPRESENTED MONEY LENT IN THE ORDINARY COURSE OF B USINESS OF BANKING OR MONEY LENDING WHICH IS CARRIED OUT ON BY THE APPELLANT. THE ASSESSING OFFICER FURTHER RELIED ON THE DECISION IN THE CASE OF DHALL ENTERPRISES & ENGINEERS (P) LTD. (162 TAXMAN 114 (GUJ), IN SUPPORT OF HIS CONTENTION THAT, MERE DEBITING THE AMOUNT TO PROFIT & LOSS ACCOUNT WAS NOT SUFFICIENT. 1.2 THE APPELLANT STRONGLY SUBMITS THAT THE APPELLANT HAS TAKEN SUFFICIENT STEPS TO RECOVER THE AMOUNT AND FILED CRIMINAL COMPLAINTS AGAINST THE PARTIES CONCERNED AND TILL DATE NO RECOVERY HAS BEEN MADE. FURTHER, AMOUNTS WERE GIVEN TO THE PARTIES CONCERNED IN COURSE OF BUSINESS OF CONSTRUCTION BY THE APPELLANT. AS THE SAME COULD NOT BE RECOVERED IN SPITE OF THE EFFORTS MADE BY THE APPELLANT, THE SAME WERE WRITTEN OFF AS BUSINESS LOSS AND SUCH LOSS IS ALLOWABLE U/S 27/37 OF THE INCOME TAX ACT, 1961 SINCE THE ADVANCE WERE GIVEN BY THE APPELLANT IN COURSE OF HIS BUSINESS. 1.3 OUR ABOVE CONTENTION IS SUPPORTED BY THE FOLLOWING DECISIONS: (I) LORDS DAIRY FARMS LTD. V. CIT (27ITR 700 (BOM)) ( II) MINDA HUF LTD. V. JT. CIT (101ITD 191 (DEL)) (III) CITV. I NDEN BISELERS(181 ITR69(MAD)) (IV) CIT V. ABDUL RAZAK & O. (136 ITR 825 (GUJ.)) 1.4 IT IS SUBMITTED THAT AS REGARDS DECISION OF DHALL ENTERPRISES & ENGINEERS (P) LTD. (207 CT R 729 (GUJ.)), THE SAME HAS BEEN OVERRULED BY THE DECISION OF THE HON'BLE SUPEME COURT IN CASE OF RAJENDRA Y. SHAH (313ITR 3(ST) ). SUPREME COURT, IN THE SAID APPEAL HAS DISMISSED SPECIAL LEAVE PETITON FILED BY THE DEPARTMENT AGAINST DECISION OF BOMBAY HIG H COURT IN DIRECTOR OF INCOME TAX V OMAN INTERNATIONAL BANK (313 ITR 128) HOLDING THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION OF BAD DEBT WHEN IT IS WRITTEN OFF AS IRRECOVERABLE IN THE BOOKS OF ACCOUNTS AND THERE WAS NO OBLIGATION ON THE ASSESSEE TO E STABLISH THAT THE DEBT HAS BECOME BAD. IN THE DECISION OF BOMBAY HIGH COURT, ORDER OF SPECIAL BENCH IN CASE OF DCIT V. OMAN INTERNATION BANK (287 ITR AT 8) HAS BEEN UPHELD. RELIANCE IS ALSO PLACED ON THE FOLLOWING JUDGMENTS WHEREIN IT IS HELD THAT ONCE THE AMOUNT IS I.T.A NO. 1564 /AHD/20 10 A.Y. 2006 - 07 PAGE NO SHRI UPENDRABHAI N.PATEL VS. ACIT 5 WRITTEN OFF IN THE BOOKS OF ACCOUNTS AS BAD DEBT, THE SAME HAS TO BE ALLOWED: I) CIT V STAR CHEMICALS (BOMBAY) (P) LTD. ( (313 ITR 126 (BOM) II) CIT V MORGAN SECURITIES & CREDITS (P) LTD. ((2007) 292 ITR 339 (DEL.)) HI) TRF L IMITED V. CIT (APPE AL NO. 5293 O F 2003) (S. C) 1.5 FURTHER, RELIANCE IS ALSO PLACED ON CBDT CIRCULAR NO. 551 DATED 23 RD JANUARY, 1990 (183 ITR (ST) 7, WHICH HAS BEEN DISCUSSED IN DELHI HIGH COURT DECISION IN CASE OF MORGAN SECURITES & CREDITS (P) LTD. 1 .6 IN VIEW OF THE SA ME, DECISION IN THE CASE OF DHALL ENTERPRISES & ENGINEERS (P) LTD. (SUPRA) IS NO LONGER A GOOD LAW. 1.7 IN VIEW OF THE SAME, ADVANCES OF RS. 20,40,451/ - WRITTEN OFF BE ALLOWED AS DEDUCTION AS BUSINESS LOSS. 3.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION O F THE LD. COUNSEL AND THE FACTS OF THE CASE. OUT OF THE AMOUNT OF R S. 18,50,000/ - , THE AMOUNT OF RS. 10,00,000/ - WAS GIVEN TO MOLIN MISSION CHURCH AND AN AMOUNT OF RS. 8,50,000/ - WAS GIVEN TO RRRDA (RURAL RESEARCH & REHABILATION DEVELOPMENT AGENCY) AS EARN EST MONEY DEPOSITS FOR OBTAINING CONSTRUCTION WORK. SINCE, THIS WAS RELATING TO EARNEST MONEY DEPOSITS, THE SAME DOES NOT RELATES TO REVENUE ACCOUNT AND THEREBY THE SAME CANNOT BE CHARGED TO PROFIT AND LOSS ACCOUNT AS AS BAD DEB TS. THE BASIC CONDITION OF S EC. 36(2) HAD NOT BEEN FULFILLED. THE LD. COUNSEL COULD NOT ESTABLISHED THAT THE DEBT OR PART THEREOF WAS EVER TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE APPELLANT. THE LD. COUNSEL'S PLEA THAT IT IS A LLOWABLE AS LOSS U/S 28/37 IS ALSO NOT ACCEPTABLE , IF THE APPEL LANT HAD CLAIMED THE DEDUCTION U/S 36(1)(VII), IT CANNOT BE ENTERTAINED IN SEC. 28/37 AS HELD BY THE MADRAS HIGH COURT IN THE CASE REPORTED IN 296 ITR 514 (MAD.). SECONDLY, EVEN IF IT IS TREATED AS LOSS, THE SAME WILL BE CAPITAL LOSS AND NOT THE REVENUE LOSS AS THE INITIAL PAYMENTS WERE MADE FOR EARNEST MONEY DEPOSITS. ANYHOW, AS PER THE DECISION OF THE HON,BLE GUJRAT HIGH COURT IN THE CASE OF DHALL ENTERPRISES 295 ITR 481 (GUJ.), THE BAD DEBTS CAN BE ALLOWED ONLY IF THE ASSESSEE PROVE THAT TH E DEBT HAD BECOME BAD. THE APPELLANT COULD NOT ESTABLISHED THE SAME AND THEREFORE, THE SAME CANNOT BE ALLOWED AS I.T.A NO. 1564 /AHD/20 10 A.Y. 2006 - 07 PAGE NO SHRI UPENDRABHAI N.PATEL VS. ACIT 6 BAD DEBT. THE DISALLOWANC E SO MADE FOR RS. 18,50,000/ - IS ACCORDINGLY CONFIRMED. THE SECOND GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 4. HEA RD BOTH SIDES. RELEVANT FINDINGS PERUSED. THERE CAN BE HARDLY ANY DISPUTE ABOUT THE LEGAL POSITIONS IN VIEW OF HON BLE APEX COURT DECISION IN TRF LTD. VS. CIT 323 ITR 397 THAT AFTER AMENDMENT IN SECTION 31(VII) OF THE ACT POST FACTO 01 - 04 - 1998 THAT IT IS NOT NECESSARY FOR AN ASSESSEE TO ESTABLISH THE DEBTS TO HAVE ACTUALLY BECOME BAD. IT IMPLIEDLY OVERRULED HON BLE JURISDICTIONAL HIGH COURT DECISION IN DHALL ENTERPRISES (SUPRA). WE FIND THAT THE ASSESSEE HAS FILED ALL NECESSARY DETAILS EVEN BEFORE THE CIT(A) QUA THE BAD DEBTS IN QUESTION. THERE IS NO EVIDENCE MUCH LESS COGENT ONE WITH BOTH THE LOWER AUTHORITIES SPECIFICALLY REBUTTING ASSESSEE S CONTENTIONS TO HAVE PAID THE IMPUGNED ADVANCES IN COURSE OF ITS BUSINESS OF CIVIL CONSTRUCTION AS MADE TO TH E THREE PARTIES GIVEN ABOVE. IT FURTHER TRANSPIRES THAT A CO - ORDINATE BENCH DECISION OF A TRIBUNAL IN CASE OF MINDA HUF LTD VS. JCIT (2006) 101 ITD 191 (DEL) HOLDS THAT WHEN ADVANCES GIVEN IN THE COURSE OF BUSINESS BECOME IRRECOVERABLE AND AN ASSESSEE WRI TE OFF THE SAME AS IRRECOVERABLE THEREBY CLAIMING A DEDUCTION, THE SAME AMOUNTS TO TRADING LOSS AS ALLOWABLE U/S. 37 OF THE ACT. THE REVENUE IS UNABLE TO EITHER POINT OUT ANY DISTINCTION ON FACTS OR LAW THERETO. WE ACCEPT ASSESSEE S ARGUMENTS AGAINST THE IMPUGNED DISALLOWANCE AND HOLD THAT ITS CLAIM OF BAD DEBTS IN QUESTION OF RS. 20, 40,451/ - IS ALLOWABLE AS LOSS U/S. 28/37 OF THE ACT. THIS SUBSTANTIVE GROUND SUCCEEDS. I.T.A NO. 1564 /AHD/20 10 A.Y. 2006 - 07 PAGE NO SHRI UPENDRABHAI N.PATEL VS. ACIT 7 5. THIS LEAVES US WITH ASSESSEE S SECOND SUBSTANTIVE GROUND CHALLENGING DISALLOWANC E OF RS. 24,95,442/ - OF LAND DEVELOPMENT EXPENSES. HE HAD DEBITED VARIOUS SUMS OF LEVELING EXPENSES, LAND WIRE FENCING EXPENSES AND LAND DEVELOPMENT EXPENSES OF RS. 8,54.440/ - , RS. 4,49,100/ - AND RS. 42,81,434/ - AS PER ASSESSMENT ORDER. HE WOULD SUBMIT T HE RELEVANT LEDGER ACCOUNT. THE ASSESSING OFFICER SOUGHT FOR RELEVANT DETAILS THEREOF LIKE BILLS, VOUCHERS AND REGISTERS AFTER NOTICING THAT WHOLE OF THE EXPENSES WERE INCURRED IN CASH. HE TOOK COGNIZANCE OF THE FACT THAT LAND DEVELOPMENT EXPENSES OF RS. 9,90,400/ - WAS INCURRED IN ASSESSMENT YEAR 2003 - 04 AND RS. 7,32,634/ - IN THE NEXT ASSESSMENT YEAR. THE ASSESSING OFFICER TREATED THE SAME AS PRIOR PERIOD EXPENSES DEBITED TO P & L ACCOUNT OF THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICER ACCORDINGL Y DISALLOWED THE IMPUGNED SUM FORMING GROSS TOTAL OF THE ABOVE TWO FIGURES COMING TO RS. 17,23,034/ - . IT EMERGES FROM THE CASE FILE THAT THE ASSESSING OFFICER THEREAFTER DISALLOWED 20% OF RS. 38,61,940/ - {(854,440/ - +449100+2558400 - (42,81,434/ - LESS 17, 23,034/ - )}BY HOLDING THE SAME TO HAVE BEEN INCURRED TOWARDS NON - BUSINESS PURPOSES COMING TO RS. 7,72,388/ - . THIS DISALLOWANCE IS ACCORDINGLY AGGREGATING TO RS. 24,95,422/ - I.E. RS. 17,23,034/ - + RS. 7,72,388/ - . 6. THE CIT(A) REJECTS ASSESSEE S ARGUMENTS AS FOLLOWS: - 5.2 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. COUNSEL AND THE FACTS OF THE CASE. AS FAR AS THE EXPENSES INCURRED IN THE EARLIER YEARS ARE CONCERNED, THE LIABILITY OF EXPENSES WAS NOT RELATED I.T.A NO. 1564 /AHD/20 10 A.Y. 2006 - 07 PAGE NO SHRI UPENDRABHAI N.PATEL VS. ACIT 8 TO THE YEAR UNDER CONSIDERATION. THE L D. COUNSEL COULD NOT PROVE THAT THE LIABILITY WAS MATERIALISED DURING THE YEAR UNDER CONDIDERATION. SINCE, THE EXPENSES WERE INCURRED IN THE A.Y. 2003 - 04 AND A.Y. 2004 - 05, THE SAME CANNOT BE ALLOWED. IN VIEW THEREOF, HAVE NO ALTERNATIVE EXCEPT TO CONFIRM THE FINDING OF THE ASSESSING OFFICER. THE DISALLOWANCES OF EXPENSES OF RS. 17,23,034/ - (RS. 9,90,400/ - + RS. 7,32,634/ - ) ARE ACCORDINGLY SUSTAINED. I HAVE ALSO GONE THROUGH THE DETAILS OF OTHER EXPENSES. THE LEVELING EXPENSES WERE PAID TO EIGHT - NINE PERSONS IN CASH ON SELF MADE VOUCHERS ON THE BASIS OF RS. 8,000/ - TO 9,400/ - PER DAY. THE LD. COUNSEL COULD NOT EXPLAIN AS TO WHAT WAS THE BASIS OF RS. 8,000/ - TO 9,400/ - PER DAY PER PERSON. THE LAND WIRE FENCING EXPENSES OF RS. 4,49,100/ - WERE PAID TO ONE SHRI BHARATBHAI PRAJAPATI ON THE BASIS OF RS. 18,500/ - RS. 19,000/ - AND RS. 19,500/ - PER DAY FOR TWENTY FOUR DAYS AND THE SAME WERE PAID IN CASH. THE LD. COUNSEL COULD NOT EXPLAIN AS TO WHAT WAS THE BASIS OF RS. 18,500/ - TO 19,500/ - PER DAY. LIKEWISE, THE LAND DEVELOPMENT EXPENSES OF RS. 25,58,400/ - WERE PAID TO SIX - SEVEN PERSONS ON THE BASIS OF RS. 12,000/ - TO 18,800/ - PER DAY PER PERSON AND THE SAME WERE PAID IN CASH. THERE WAS NO BASIS TO EXPENSES OF RS. 1,50,000/ - , RS. 2,50,000/ - , RS. 1,00,000/ - RS. 1, 25,000/ - , RS. 1,25,000/ - AND RS. 1,00,000/ - PAID RESPECTIVELY TO SHRI VINOD PATEL, SHRI ROHIT PATEL, SHRI BHARAT PATEL, SHRI SUDHIR PATEL, SHRI SANJAY PATEL (HUF) AND SHRI N.B. PATEL (HUF). NO VOUCHERS WERE SEEN TO BE MAINTAINED FOR THESE EXPENSES. THE LD. COUNSEL COULD NOT EXPLAIN THE BASIS AND THE PURPOSE OF THESE EXPENSES. THOUGH, COPIES OF VOUCHERS OF SOME OF THE EXPENSES WERE FURNISHED, THE SAME WERE NOT FURNISHED BEFORE THE ASSESSING OFFICER. THESE EXPENSES WERE INCURRED IN CASH AND ON SELF MADE VO UCH ERS WHERE THE ADDRESSES OF THE PAYEES ARE ABSENT. THE EXPENSES ARE THUS NOT SUBJECT TO VERIFICATION. SINCE, THE APPELLANT HAD NOT FURNISHED THE VOUCHERS BEFORE THE ASSESSING OFFICER AND COULD NOT EXPLAIN THE BASIS ' OF DAILY PAYMENTS EVEN DURING APPELLA TE PROCEEDINGS, THE ASSESSING OFFICER WAS JUSTIFIED IN J DISALLOWING 20% OF THE EXPENSES OF RS. 38,61,940/ - . THE FINDING OF THE ASSESSING OFFICER IS IN ORDER AND THE SAME IS SUSTAINED. THE DISALLOWANCES SO MADE ARE CONFIRMED. THE ADDITIONS OF RS. 24,95,42 2/ - ( RS. 9,90,400/ - + RS. 7,32,634/ - + RS. 7,72,388/ - ) ARE CONFIRMED. THE FOURTH GROUND OF APPEAL IS ACCORDINGLY DISMISSED. I.T.A NO. 1564 /AHD/20 10 A.Y. 2006 - 07 PAGE NO SHRI UPENDRABHAI N.PATEL VS. ACIT 9 7. WE HAVE HEARD BOTH THE PARTIES WHO REITERATE THEIR RESPECTIVE PLEADINGS FOR AND AGAINST THE SUBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL. THERE IS NO DISPUTE THAT THE ASSESSEE HAS CARRIED FORWARD THE LAND DEVELOPMENT EXPENSES AS INCURRED IN ASSESSMENT YEAR 2003 - 04 AND 2004 - 05 TO THE IMPUGNED ASSESSMENT YEAR UNDER THE HEAD FIXED ASSETS. HE FILES BEFORE US COPY OF THE RE LEVANT BOOKS OF ACCOUNTS, ASSESSMENT ORDER OF THESE TWO ASSESSMENT YEARS. HIS CASE IS THAT HE NEVER CLAIMED THE SAME IN THE SAID TWO ASSESSMENT YEARS AND ALSO THAT THE ASSESSING OFFICER FRAMED ASSESSMENT THEREIN WITHOUT RAISING ANY QUESTION. THE ASSESSEE S CASE ACCORDINGLY IS THAT HE HAS ONLY CLAIMED THE IMPUGNED EXPENDITURE IN THE RELEVANT PREVIOUS YEAR. WE CONFRONTED LD. DEPARTMENTAL REPRESENTATIVE WHO COUL D NOT REBUT THIS FACTUAL. IT FURTHER FOUND THAT THE ASSESSEE HAD INCURRED ALL THESE EXPANSES IN CASH. 8. WE NOW COME TO THE LATTER COMPONENT OF THE DISALLOWANCE (SUPRA) ON THE GROUND THAT THE SAME HAD NOT BEEN INCURRED FOR THE PURPOSE OF DEVELOPING THE LAND IN QUESTION. IT EMINATES DURING THE COURSE OF HEARING THAT NEITHER THE REVENUE HAS BEEN ABLE TO SUPPORT THE IMPUGNED DISALLOWANCE @ 20% HEREINABOVE AFTER POINTING OUT SPECIFIC MATERIAL REBUTTING CONTENTS OF THE RELEVANT EVIDENCE ON RECORD NOR THE ASSESSEE LEADS US TO ANY COGENT EVIDENCE FOR HAVING INCURRED WHOLE OF THE EXPENDITURE FOR DEVELO PING ITS AKOTA LAND STATED HEREINABOVE. WE OBSERVE IN THESE FACTS THAT BOTH THE PARTIES HAVE FAILED TO DISCHARGE THEIR RESPECTIVE ONUSES IN SUPPORT OF AND AGAINST THE LAND DEVELOPMENT CLAIM. WE FEEL APPROPRIATE IN THE LARGER INTEREST I.T.A NO. 1564 /AHD/20 10 A.Y. 2006 - 07 PAGE NO SHRI UPENDRABHAI N.PATEL VS. ACIT 10 OF JUSTICE IN THESE FACTS AND CIRCUMSTANCES THAT A LUMP SUM DISALLOWANCE OF RS. 2,50,000/ - INSTEAD OF RS. 24,95,422/ - IN QUESTION WOULD BE JUST AND PROPER. THE ASSESSEE ACCORDINGLY GETS PART RELIEF ON THIS ISSUE. 9. THIS ASSESSEE S APPEAL IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 11 - 03 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 1 1 / 03 /2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,