PACL India Ltd., New Delhi V. ACIT, Delhi

ITA 2894/DEL/2010

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3230 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: F
• Next Hearing Date: 29-03-2017
• Assessment Year: 2001-2002
• Appeal Filed On: 10-06-2010
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Keywords: Rejection of books of accounts; Unexplained investment; Business expenditure; Income from undisclosed sources; Principle of natural justice; Additional evidence; Initiation of penalty proceedings; Wrong claim; Difference of opinion; Corroborative evidences; Validity of assessment; Accommodation entries; Competent authority; Assessment record; Reason to believe; Documents seized; Change of opinion; Reassessment proceedings
• Section: 143(3); 142(1); 133A; 153A; 234B; 133(6); 37(1); 147; 131; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F , NEW DELHI BEFORE SH. I.C. SUDHIR , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER SL. NO. ITA/CO NO. APPELLANT RESPONDENT ASSESSMENT YEAR 1. ITA NO. 2894/DEL/2010 PACL INDIA LTD., 7 TH FLOOR, GOPAL DASS BHAWAN, 28, BARAKHAMBA ROAD, CANNAUGHT PLACE, NEW DELHI ACIT, CENTRAL CIRCLE - 4, NEW DELHI 2001 - 02 2. ITA NO. 6384/DEL/2012 PACL INDIA LTD., 7 TH FLOOR, GOPAL DASS BHAWAN , 28, BARAKHAMBA ROAD, CANNAUGHT PLACE, NEW DELHI ACIT, CENTRAL CIRCLE - 4, NEW DELHI 2008 - 09 3. ITA NO. 6385/DEL/2012 PACL INDIA LTD., 7 TH FLOOR, GOPAL DASS BHAWAN, 28, BARAKHAMBA ROAD, CANNAUGHT PLACE, NEW DELHI ACIT, CENTRAL CIRCLE - 4, NEW DELHI 2009 - 10 4. ITA NO. 5200/DEL/2013 PACL INDIA LTD., 7 TH FLOOR, GOPAL DASS BHAWAN, 28, BARAKHAMBA ROAD, CANNAUGHT PLACE, NEW DELHI DC IT, CENTRAL CIRCLE - 4, NEW DELHI 2010 - 11 5. ITA NO. 3694/DEL/2010 ACIT, CENTRAL CIRCLE - 4, ROOM NO. 318, IIIRD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI PACL INDIA LTD., 22, 3 RD FLOOR, AMBER TOWER, SANSAR CHAND ROAD, JAIPUR 2007 - 08 6. C.O. NO. 279/DEL/2010 [ARISING OUT OF ITA NO. 3694/DEL/2010] PACL INDIA LTD., 22, 3 RD FLOOR, AMBER TOWER, SANSAR CHAND ROAD, JAIPUR ACIT, CENTRAL CIRCLE - 4, ROOM NO. 318, IIIRD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI 2007 - 08 7. ITA NO. 3779/DEL/2011 ACIT, CENTRAL CIRCLE - 4, ROOM NO. 318, IIIRD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI PACL INDIA LTD., 22, 3 RD FLOOR, AMBER TOWER, SANSAR CHAND ROAD, JAIPUR 2007 - 08 8. C.O. NO. 325/DEL/2011 (ARISING OUT OF ITA NO. 3779/DEL/2011) PACL INDIA LTD., 22, 3 RD FLOOR, AMBER TOWER, SANSAR CHAND ROAD, JAIPUR ACIT, CENTRAL CIRCLE - 4, ROOM NO. 318, IIIRD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI 2007 - 08 9 ITA NO. 6461/DEL/2012 DCIT, CENTRAL CIRCLE - 4, ROOM NO. 318, IIIRD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI PACL INDIA LTD., 7 TH FLOOR, GOPAL DASS BHAWAN, 28, BARAKHAMBA ROAD, CANNAUGHT PLACE, 2008 - 09 2 NEW DELHI 10 ITA NO. 6462/DEL/2012 DCIT, CENTRAL CIRCLE - 4, ROOM NO. 318, IIIRD FLOOR, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI PACL INDIA LTD., 7 TH FLOOR, GOPAL DASS BHAWAN, 28, BARAKHAMBA ROAD, CANNAUGHT PLACE, NEW DELHI 2009 - 10 11. ITA NO. 5371/DEL/2013 DCIT, CENTRAL CIRCLE - 4, NEW DELHI PACL INDIA LTD., 7 TH FLOOR, GOPAL DASS BHAWAN, 28, BARAKHAMBA ROAD, CANNAUGHT PLACE, NEW DELHI 2010 - 11 PAN: AAACP4032A ASSESSEE BY NONE DEPARTMENT BY SMT. PARAMITA TRIPATHY, CIT(DR) DATE OF HEARING 29.03.2017 DATE OF PRONOUNCEMENT 2 8 . 0 4 . 2 0 1 7 ORDER PER O.P. KANT , A. M. : THESE APPEALS OF THE REVENUE AND ASSESSEE INCLUDING TWO CROSS OBJECTION S OF THE ASSESSEE, HAVE EMANATED FROM SEPARATE ORDERS OF THE LD. COMMISSIONER OF INCOME - TAX (APPEALS), [IN SHORT THE CIT - (A ) ] FOR DIFFERENT ASSESSMENT YEARS HAVING DETAILS BELOW: S. NO. ITA /CO . NO. A PPEAL OF CIT(A) DATE OF ORDER OF CIT( A ) ASSESSMENT Y EAR S ECTION OF INCOME - TAX ACT UNDER WHICH ASSESSMENT ORDER PASSED 1. ITA NO. 2894/DEL/2010 A SSESSEE CIT(A) - III, DELHI 30/03/2010 2001 - 02 U/S 153A R.W. S. 143(3) 2. ITA NO. 3694/DEL/2010 REVENUE CIT(A) - III, DELHI 28/05/2010 2007 - 08 U/S 153A R.W.S. 143(3) 3. C . O . NO. 279/DEL/2010 ASSESSEE CIT(A) - III, DELHI 28/05/2010 2007 - 08 U/S 153A R.W.S. 143(3) 4. ITA NO. 3779/DEL/2011 REVENUE CIT(A) - III, DELHI 16/05/2011 2007 - 08 U/S 143(3) R.W.S. 148 5. C . O . NO. 325/DEL/2011 ASSESSEE CIT(A) - III, DELHI 16/05/2011 2007 - 08 U/S 143(3) R.W.S. 148 6. ITA NO. 6461/DEL/2012 REVENUE CIT(A) - XXXIII, NEW DELHI 12/10/2012 2008 - 09 U/S 143(3) 3 7. ITA NO. 6384/DEL/2012 ASSESSEE CIT(A) - XXXIII, NEW DELHI 12/10/2012 2008 - 09 U/S 143 (3) 8. ITA NO. 6462/DEL/2012 REVENUE CIT(A) - XXXIII, NEW DELHI 31/10/2012 2009 - 10 U/S 143 (3) 9. ITA NO. 6385/DEL/2012 ASSESSEE CIT(A) - XXXIII, NEW DELHI 31/10/2012 2009 - 10 U/S 143 (3) 10. ITA NO. 5371/DEL/2013 REVENUE CIT(A) - XXXIII, NEW DELHI 13/06/2013 2010 - 11 U/S 143(3) 11. ITA NO. 5200/DEL/2013 ASSESSEE CIT(A) - XXXIII, NEW DELHI 13/06/2013 2010 - 11 U/S 143(3) 2. ALL THESE APPEALS ARE RELATED TO ONE ASSESSEE AND THUS SAME WERE HEARD TOGETHER AND DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR CONVENIENCE. 3. WHEN THESE APPEALS WERE CALLED FOR HEARING, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE APPEARED N OR ANY APPLICATION FOR ADJOURNMENT OR ANY WRITTEN SUBMISSION WAS PLACED BEFORE THE BENCH. ON PERUSAL OR RECORDS, WE FIND THAT THESE APPEALS ARE PENDING FOR A CONSIDERABLE PERIOD AND DESPITE SEVERAL OPPORTUNITIES GIVEN TO THE ASSESSEE, THE ASSESSEE IS NOT A PPEARING HIMSELF OR THROUGH HIS COUNSEL. THEREFORE, THESE APPEALS ARE PENDING FOR ADJUDICATION SINCE LONG FOR WANT OF PROSECUTION. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED OPINION THAT FURTHER ADJOURNMENT OF THE SE APPEALS WOULD NOT BE JUST AND PROPER AND THESE APPEALS MAY BE DISPOSED OFF ON THE BASIS OF RECORD AFTER HEARING, T HE LEARNED CIT(DR) APPEARING ON BEHALF OF THE REVENUE. WE, THEREFORE, PROCEED TO HEAR AND ADJUDICATE THESE APPEALS ACCORDINGLY. ITA NO. 2894/DEL/2010 FOR AY 2001 - 02 4. FIRST WE TAKE UP THE APPEAL OF ASSESSEE HAVING ITA NO. 2894/DEL/2010 FOR ASSESSMENT YEAR 2001 - 02. THE GROUNDS OF APPEAL REPRODUCED AS UNDER: 4 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE ORDER PASSED BY CIT(A) IS BAD IN LAW AND DE SERVES TO BE CANCELLED AS HE HAS PASSED AN ORDER WITHOUT CONSIDERING AND APPRECIATING THE FACTS OF CASE OF APPELLANT. 2(A) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE PROVISIONS OF THE INCOME TAX ACT UNDER WHICH THE ASSESSMENT O RDER IS FRAMED IS NOT APPLICABLE TO THE ASSESSMENT IN QUESTION AND THUS THE ASSESSMENT ORDER PASSED IS ILLEGAL AND VOID AB INITIO. IT REQUIRES TO BE CANCELLED ON THIS GROUND ITSELF. (B) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, T HE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT ASSESSMENT ORDER PASSED U/S 153A BY ASSESSING OFFICER IS BAD IN LAW AND DESERVES TO BE CANCELLED. 3(A) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS.5,47,350/ - BEING EXPENDITURE IN A GUEST HOUSE INCURRED FOR THE PURPOSES OF BUSINESS OF COMPANY. (B) IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE CIT( A) OUGHT TO HAVE APPRECIATED THAT PREMISES AT B - 1, SECTOR - 30, NOIDA WAS USED AS GUEST HOUSE OF COMPANY AND NOT AS RESIDENTIAL PREMISES AND DOCUMENTS BEING PAGE NO. 24, 26 & 28 OF ANN A - 6 FOUND AND SEIZED FROM SAID PREMISES REFLECTS EXPENDITURE INCURRED BY APPELLANT FOR ITS BUSINESS PURPOSE AND ALLOWABLE AS DEDUCTION U/S 37(1) OF THE ACT. 4. IN THE LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE APPELLANT DENIES HIS LIABILITY TO PAY INTEREST. 5. THE APPELLANT C RAVES LEAVE TO ADD, ALTER, AMEND AN D/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 5 . NONE REPRESENTED ON BEHALF OF THE ASSESSEE AND , THEREFORE , THE APPEAL WAS HEARD EX - PARTY QUA THE ASSESSEE. THE APPEAL OF THE ASSESSEE WAS DIS MISSED EARLIER ON TWO OCCASIONS AND RECALLED THEREAFTER. THE APPEAL OF THE ASSESSEE WAS FIR ST TIME DISMISSED BY THE INCOME TAX APPELLATE TRIBUN AL (IN SHORT THE TRIBUNAL ) ON 20/09/2011 DUE TO NON - REPRESENTATION BY THE ASSESSEE. IN THE MISCELLANEOUS 5 APPLICATION FILED FOR REVIVAL OF THE APPEAL, THE ASSESSEE SUBMITTED THAT THE COUNSEL OF THE ASSESSEE WHILE COMING TO THE TRIBUNAL TO ATTEND THE HEARING, MET WITH AN ACCIDENT AND AS SUCH FAILED TO CAUSE APPEARANCE BEFORE THE BENCH. IN VIEW OF THE SUBMISSION , THE APPEAL WAS RECALLED BY THE TRIBUNAL IN ORDER DATED 10/02/2012. AGAIN SECOND TIME , THE APPEAL WAS DISMISSED DUE TO NON - REPRESENTATION ON BEHALF OF THE ASSESSEE BY THE TRIBUNAL IN ORDER DATED 29/05/2014. THE APPEAL WAS AGAIN RECALLED AND CASE WAS FIXED ON 19/01/2015. DUE TO NON - FUNCTIONING OF THE BENCH , THE CASE WAS AGAIN FIXED ON 03/06/2015. AGAIN DUE TO NON - FUNCTIONING OF THE BENCH CASE WAS FIXED ON 21/09/2015. ON SAID DATE THE CASE WAS ADJOURNED TO 29/12/2015 ON THE RE QUEST ON BEHALF OF THE ASSESSEE . ON 29/12/2015 , AGAIN THE CASE WAS ADJOURNED TO 21 /04/2016 ON THE REQUEST OF THE P ERSON AUTHORIZED BY THE ASSESSEE ON THE GROUND THAT THE COUNSEL WHO HAD TO ATTEND HEARING WAS OUT OF TOWN , DUE TO SOME PERSONAL REASONS. CASE WAS AGAIN ADJOURNED TO 07/07/201 6 ON THE REQUEST OF THE AUTHORIZED PERSON OF THE ASSESSEE THAT LD. COUNSEL OF THE ASSESSEE COULD NOT APPEAR AS HE WAS OUT OF THE TOWN DUE TO SOME PERSONAL REASONS. THEREAFTER , DUE TO NON - FUNCTIONING OF THE BENCH FRESH NOTICES WERE ISSUED. THE NOTICE ISSUED ON 05/12/2016 , FIXING THE DATE 10/01/ 2017 AT THE ADDRESS PROVIDED IN FORM NO. 36 WRITTEN BACK WITH THE COMMENT OF THE POST OFFICE THAT REFUSED TO RECEIVE. NONE ATTENDED ON 10/01/2017 ON BEHALF OF THE ASSESSEE. AGAIN FRESH NOTICE WAS ISSUED ON 8/02/2017 BY REGISTERED POST AT THE ADDRESS PROVIDED IN FORM NO. 36 FIXING THE DATE ON 29/03/2017. ACCORDING TO THE RECORD, THIS NOTICE HAS NOT BEEN RETURNED BACK, AND THUS IT CAN BE SAFELY PRESUMED THAT IT WAS DULY SERVED UPON THE ASSESSEE. HOWEVER , NEITHER THE ASSES SEE NOR IT S REPRESENTATIVE ATTENDED THE HEARING ON 29/03/2017 AND THUS , THE APPEAL WAS HEARD EX PARTE QUA THE ASSESSEE. 6 . THE FACTS IN BRIEF OF THE CASE ARE THAT ORIGINAL RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31/10/2001 , DECLARING TOTAL INCOME OF 6 RS. 11,43,750/. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) ON 23/03/2004 A T TOTAL I NCOME OF RS. 1,05,33, 140/ - . ON APPEAL, THE FIRST APPELL ATE AUTHORITY CONFIRMED ALL THE ADDITIONS EXCEPT AMOUNT OF RS. 4,58,424/ - MADE ON ACCOUNT OF DISALLOWANCE UNDER SECTION 40A(7) OF THE ACT. SUBSEQUENTLY, SEARCH ACTION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE COMP ANY ON 22 /09/2005. CONSEQUENTLY, NOTICE UNDER SECTION 15 3A OF THE ACT WAS ISSUED ASKING THE ASSESSEE TO FILE RETURN OF INCOME. IN RESPONSE , THE ASSESSEE FILED RETURN O F INCOME ON 21/08/2006. HOWEVER , AGAIN THE ASSESSEE WAS SEARCHED UNDER SECTION 132 OF THE ACT ON 2 5/08/2006 AND IN VIEW OF ANOTHER SEARCH ACTION, THE 153A PROCEEDINGS INITIATED IN COMPLIANCE TO FIRST SEARCH ACTION DATED 22/09/2005 GOT ABETTED. THE ASSESSING OFFICER, AGAIN ISSUED NOTICE UND ER SECTION 15 3A OF THE ACT ON 14/11/2007, REQUIRING THE ASSESSE E TO FILE RETURN OF INCOME. IN RESPONSE THE ASSESSEE IN LETTER DATED 20/12/2007 SUBMITTED THAT RETURN OF INCOME FILED EARLIER ON 21/08/2006 SHOULD BE TREATED AS RETURN FILED IN COMPLIANCE TO THE NOTICE DATED 14/11/2007. SUBSEQUENTLY, NOTICE UNDER SECTION 1 43(2)/142(1) OF THE ACT WERE ISSUED AND ASSESSMENT WAS FINALIZED ON 30/12/2008. 6 .1 THE ASSESSEE COMPANY WAS HAVING ITS REGISTERED OFFICE AT JAIPUR AND CORPORATE OFFICE AT NEW DELHI. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF AGRICULTURAL LAND I N INTERIOR PARTS OF THE COUNTRY . THE BARREN LANDS PURCHASED WERE THAN DEVELOPED BY INCURRING EXPENSES ON LEVELING , B USH CUTTING ETC . AND SOLD TO WILLING CUSTOMERS. IN THE COURSE OF SEARCH ACTION DATED 22/09/2005 , A DIARY , INTERALIA , CONTAINING THE DETAILS OF CERTAIN EXPENSES/PAYMENT WAS SEIZED FROM THE PREMISES OF THE DIRECTOR OF THE COMPANY AND INVENTORISED AS ANNEXURE A - 7 . ACCORDING TO THE ASSESSING OFFICER , THE PAGE NO S. 24 , 26 AND 28 OF THE SAID DIARY CONTAINED PAYMENT OF RS. 5,47,350/ - . THE ASSESSEE CONTENDED THAT SAID PREMISES WAS THE GUEST HOUSE OF THE ASSESSEE 7 COMPANY AND THE COMPANY USED TO SEND ON ACCOUNT PAYMENT OF THE SAID PR EMISES TO INCUR THESE EXPENSES. ACCORDING TO THE ASSESSING OFFICER , SAID PREMISES WERE RESIDENTIAL PREMISES OF THE DIRECTOR OF THE ASSESSEE COMPANY IN VIEW OF THE STATEMENTS RECORDED OF THE PERSONS AVAILABLE AT THE PREMISES DURING THE COURSE OF SEARCH ACTI ON. THE ASSESSING OFFICER HELD THE EXPENSES PERSONAL EXPENSES OF THE DIRECTOR, WHICH COULDN T BE ALLOWED IN THE HANDS OF THE ASSESSEE COMPANY. ACCORDINGLY , HE DISA LLOWED THE SAID EXPENSES OF RS.5,47, 350/ - . THE LD . CIT - A UPHELD THE DISALLOWANCE . AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 8 . THE GROUND S NO. 1 AND 5 RAISED IN THE APPEAL ARE GENERAL IN NATURE AND THUS NOT REQUIRED TO BE ADJUDICATE D BY US AND ACCORDINGLY DISMISSED AS INFRUCTUOUS. 9 . IN GROUND NO. 2 , THE ASSESSEE HAS CHALLENGED ASSESSMENT ORDER COMPLETED U NDER SECTION 15 3A OF THE ACT. 9 .1 THE LD. CIT ( DR ) RELYING ON THE ORDER OF THE ASSESSING OFFICER, SUBMITTED THAT THE ASSESSMENT WAS COMPLETED AS PER THE PROVISIONS OF THE ACT AND THERE BEING NO ERROR IN THE SECTION UNDER WHICH THE ASSESSMENT WAS COMPLETED, THE GROUNDS OF THE ASSESSEE DESERVE TO BE DISMISSED. SHE FURTHER SUBMITTED THAT NO SUCH GROU ND WAS TAKEN BEFORE THE LD. CIT( A ) . 9 .2 WE HAVE HEARD THE SUBMISSION OF THE LD. CIT ( DR ) AN D PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT NO SUCH GROUND WAS TAKEN BEFORE THE LD. CIT( A ) . DESPITE THIS, W E FURTHER FIND THAT THE FIRST SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON 22/09/2005, AND SECOND SEARCH UNDER SECTION 132 OF T HE ACT WAS CONDUCTED ON 25/08/2006 . THE PROCEDURE FOR ASSESSMENT OF SEARCH CASES W.E.F. 01/06/2003 HAS BEEN LAID DOWN IN SECTION 153A , 153B AND 153C OF THE ACT . ACCORDING TO SECTION 153A(1)(B) OF THE ACT , IN CASE OF A PERSON WHERE A SEARCH IS INITIATED U NDER SECTION 132 OF THE ACT AFTER 31 ST OF MAY, 2003, THE 8 ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME OF SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN W HICH SUCH SEARCHES IS CONDUCTED . SI NCE IN THE CASE OF THE ASSESSEE , SECOND SEA RCH WAS CONDUCTED ON 25/08/2006 , THE RELEVANT SIX ASSESSMENT YEARS TO BE ASSESSE D ARE FROM ASSESSMENT YEAR 2000 - 01 TO 2006 - 07. SINCE THE YEAR UNDER CONSIDERATION IS WELL WITHIN THE PERIOD TO BE CONSIDERED FOR ASSESSMENT OR REASSESSMENT, CORRESPONDING TO TH E SECOND SEARCH ACTION DATED 25 /08/2006, T HE ASSESSING OFFICER HAS RIGHTLY COMPLETED ASSESSMENT UNDER SECTION 153A R.W.S 143(3) OF THE ACT AFTER TAKING PRIOR APPROVAL OF COMPETENT AUTHORITY, AND THUS, IN OUR OPINION, THE RE IS NO ERROR IN THE PROVISIONS OF THE ACT UNDER WHICH ASSESSMENT IS FRAMED. ACCORDINGLY , THE GROUND NO. 2 OF THE APPEAL IS DISMISSED. 10 . IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT ( A ) I N UPHOLDING THE ADDITION OF RS. 5,47,350/ - C LAIMED AS INCURRED ON GUEST HOUSE FOR THE PURPOSE OF BUSINESS OF THE COMPANY. 10 .1 THE LD. CIT ( DR ) RELIED ON THE F INDING OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH CLEARLY INDICATED THAT EXPENSES IN QUESTI ON WERE NOT IN THE NATURE OF GUESTHOUSE EXPENSES AND THUS CORRECTLY DISALLOWED BY THE ASSESSING OF FICER AND UPHELD BY THE LD. CIT( A ) . 10 .2 WE HAVE HEARD THE SUBMISSION OF THE LD. CIT ( A ) ON THE ISSUE IN DISPUTE AND PERUSED THE RELEVANT MATERIAL ON R ECORD. WE FIND THAT THE LD. CIT( A ) HAS DECIDED THE ISSUE IN DISPUTE AS UNDER: 3.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE APPELLANT. IT IS NOTED THAT DURING THE SEARCH ON 22.9.2005 A DIARY CONTAINING THE DETAILS OF TH E EXPENDITURE WAS SEIZED SHOWING THE FOLLOWING: A/6. 1.PAGE NO.24 08.04.2000 TO 10.04.2000 RS. 1,38,500/ - 2.PAGE NO.26 08.04.2000 TO 05.05.2000 RS. 2,82,350/ - 3.PAGE NO 28 06.50.2000 TO 19.05.2000 RS. 1.26.500/ - 9 THE ASSESSING OFFICER ASKED THE APPELLANT TO EXPLAIN THE SOURCE OF THE EXPENDITURE NOTED ON THESE DOCUMENTS. IT WAS SUBMITTED THAT THE PREMISES WAS THE GUEST HOUSE OF THE COMPANY AND THE COMPANY USED TO SEND THE ON ACCOUNT PAYMENT TO INCUR THESE EXPENSES. THE ASSESSING OFFICER AFTER EXAMINING THE DOCUMENTS HELD THAT THE PLACE IS USED BY SH. N.S. BHANGOO AS THE RESIDENCE WHENEVER HE VISITS DELHI AND THE EXPENDITURE IS PERSONAL IN NATURE. DURING THE APPELLATE PROCEEDINGS, THE COUNSEL WAS ASKED TO SUBMIT THE D ETAILS OF THE EXPENDITURE IN VIEW OF THE OBSERVATIONS OF THE ASSESSING OFFICER. IT WAS CONTENDED THAT THE EXPENDITURE NOTED IN THE DOCUMENTS IS CONNECTED WITH THE BUSINESS OF THE COMPANY, HOWEVER, NO DETAILS HAVE BEEN FILED TO REBUT THE OBSERVATIONS OF THE ASSESSING OFFICER. TO DECIDE THIS ISSUE, IT WILL BE RELEVANT TO REFER TO THE PROVISIONS OF SECTION 37(1) OF THE ACT: 37(1) ANY EXPENDITURE (NOT BEING EXPENDITURE OF THE NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CAPITAL EXPENDI TURE OR PERSONAL EXPENSES OF THE ASSESSEE) LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALLOWED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION. ONE OF THE MOST IMPORTANT CONDITIONS FOR ALLOWABILITY OF DEDUCTIONS UNDER SECTION 37(1) IS THAT IT MUST BE LAID OUT OR EXPENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS OR PROFESSION. THIS CAN BE DEALT IN FOLLOWING SUB - PARTS: FIRST CONDITION IS THA T THERE SHOULD BE BUSINESS OR PROFESSION. IT MEANS EXISTENCE OF BUSINESS IS PRE - CONDITION FOR ALLOWABILITY OF EXPENDITURE UNDER THIS SECTION. SO EXPENDITURE INCURRED BEFORE START OF BUSINESS AND AFTER CLOSE OF BUSINESS, ARE GENERALLY NOT ALLOWABLE UNDER TH IS SECTION. THERE ARE TWO PARTS OF THIS CONDITION. THERE SHOULD BE BUSINESS OR PROFESSION. IF THE PERSON IS NOT DOING BUSINESS THEN EXPENDITURE CANNOT BE ALLOWED UNDER THIS SECTION. THE BUSINESS SHOULD BE IN EXISTENCE. NEXT CONDITION IS THAT THE EXPENDITURE MUST BE LAID OUT OR EXPENDED. THERE ARE ALSO TWO PARTS OF THIS CONDITION: ONLY EXPENDITURES ARE ALLOWABLE IT SHOULD BE LAID OUT OR EXPENDED. SO FUTURE LIABILITIES OR CONTINGENT LIABILITIES ARE NOT ALLOWABLE. NEXT CONDITION IS THAT THE PURPOSE SHOULD BE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OR PROFESSION. THERE ARE ALSO TWO PARTS OF THIS CONDITION. THE FIRST CONDITION IS THAT THE EXPENDITURE SHOULD BE FOR THE PURPOSE OF B&P. SO WHAT IS BUSINESS PURPOSE IS VERY IMPORTANT. 10 EVEN IF THE PURPOSE IS BUSINESS THEN ALSO IT HAS TO BE FURTHER PROVED THAT THE EXPENDITURE IS WHOLLY FOR BUSINESS AND EXCLUSIVELY FOR BUSINESS. FROM THE ANALYSIS OF THE. PROVISIONS, THE FOLLOWING CONDITIONS ARE REQUIRED TO BE FULFILLE D BEFORE ALLOWABILITY OF DEDUCTION UNDER THIS POINT: 1. THERE SHOULD BE BUSINESS & PROFESSION. 2. THE BUSINESS SHOULD BE IN EXISTENCE. 3. THE PAYMENT SHOULD BE IN NATURE OF EXPENDITURE. 4. THE EXPENDITURE SHOULD BE LAID OUT OR EXPENDED. 5. THE PURPOSE SHOULD BE WHOLLY AND EXCLUSIVELY FOR THE BUSINESS. 6. THE EXPENDITURE SHOULD BE FOR THE PURPOSE OF BUSINESS. 3.4 ADVERTING BACK TO THE FACTS OF THE CASE, IT IS NOTED THAT THE APPELLANT HAS NOT DISCHARGED THE ONUS CAST ON HIM BY THE PROVISIONS OF SECTION 37(1) OF THE ACT. NO SUBMISSIONS/EVIDENCE IS FILED TO REBUT THE PRESUMPTION U/S 132(4A) OF THE ACT REGARDING THE EXPENDITURE MENTIONED IN THE DOCUMENTS SEIZED DURING THE SEARCH. IN VIEW OF TOTALITY OF FACTS AND CIRCUMSTANCE S, THE ADDITION MADE BY THE ASSESSING OFFICER IS SUSTAINED. 10 .3 I N OUR OPINION, THE FINDING OF THE LD. CIT - A ON THE ISSUE IN DISPUTE IS COMPREHENSIVE AND WELL REASONED AND THEREFORE NO INTERFERENCE ON OUR PART IS REQUIRED. ACCORDINGLY , WE UPHOLD THE FI NDING OF THE LD. CIT - A ON THE ISSUE IN DISPUTE AND DISMISS THE RELEVANT GROUNDS OF THE ASSESSEE. 11 . IN THE GROUND NO. 4, THE ASSESSEE HAS CHALLENGED LIABILITY TO PAY INTEREST. IN THE GROUND , THE ASSESSEE HAS NOT SPECIFIED THE INTEREST CHARGED UNDER ANY PARTICULAR SECTION, WITH WHICH IT WAS AGGRIEVED. IN OUR OPINION, CHARGING OF INTEREST IS CONSEQUENTIAL IN NATURE AND FURTHER, THE SECTION IS NOT PARTICULARLY SPECIFIED, WE ARE NOT REQUIRED TO ADJUDICAT E THE GROUND . ACCORDINGLY , WE DISMISS THE GROUND AS INFRUCTUOUS. 12 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. 11 ITA NO. 3694/DEL/2010 & C O NO.279/DEL/2010 FOR AY:2007 - 08 13 . NOW WE TAKE UP THE APPEAL OF THE REVENUE HA VING ITA NO. 3694/DEL/2010 AND CROSS O BJECTION OF ASSESSEE HAVING C . O . NO. 279/DEL/2010 FOR ASSESSMENT YEAR 2007 - 08. THE GROUNDS OF APPEAL READS AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.1,57,61,800/ - MADE BY THE AO AGAINST THE LAND DEVELOPMENT EXPENDITURE CLAIM OF THE COMPANY? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN BRUSHING ASIDE THE FINDINGS OF THE ENQUIRIES CONDUCTED BY THE DEPARTM ENT? 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE EXPENDITURE RELATING TO THESE CONTRACTORS/CONCERNS WERE NOT DEBITED TO THE P&L ACCOUNT DESPITE THE FACT THAT NO SUCH PLEA WAS TAKEN BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 14. CROSS O BJECTION S RAISED BY THE ASSESSEE READ AS UNDER: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN NOT CONSIDERING AND ADJUDICATING UPON GROUND NO. 1 OF ITS APPEAL BEFORE HIM CHALLENGING THE VALIDITY OF THE ASSESSMEN T ORDER IMPUGNED BEFORE HIM IN THE FOLLOWING TERMS: 1. THE ORDER PASSED BY THE AO IS ARBITRARY, BAD IN LAW AND WITHOUT JURISDICTION. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN NOT CON SIDERING AND ADJUDICATING UPON GROUND NO. 4 OF ITS APPEAL BEFORE HIM READING AS UNDER: 4. IN NOT AFFORDING US ADEQUATE OPPORTUNITY AND THUS CAUSING VIOLATION TO THE PRINCIPLES OF NATURAL JUSTICE 12 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS 1,57,24,188 CONTESTED VIDE GROUND NO 5 OF ITS APPEAL BEFORE HIM WITHOUT CONSIDERING GRANT OF RELIEF PRAYED FOR VIDE ITE M 5 (PARA 5.1 TO 5.3) OF THE RESPONDENT S WRITTEN SUBMISSIONS DATED 8 5.2010 BEFORE HIM. 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED, WHILE DISPOSING OF GROUNDS NO. 6 TO 8 OF ITS APPEAL BEFO RE HIM, IN NOT FULLY GRANTING THE RELIEF PRAYED FOR BY THE RESPONDENT VIDE PARA 6 TO 10 OF ITS WRITTEN SUBMISSIONS DATED 8.5.2010 BEFORE HIM BUT INSTEAD, CONFINING THE RELIEF BY DIRECTING THE ASSESSING OFFICER TO RECTIFY THE ERRORS POINTED OUT BY THE RESPO NDENT AT PARAS 8 TO 9.2 OF ITS SAID WRITTEN SUBMISSIONS BEFORE HIM. HE OUGHT ALSO TO HAVE APPRECIATED THAT APART FROM THE OTHER SUBSTANTIVE RELIEF SOUGHT BY THE RESPONDENT VIDE PARAS 6 TO 10 OF ITS WRITTEN SUBMISSIONS BEFORE HIM, THERE ALSO WERE OTHER ERRO RS IN THE ASSESSMENT ORDER IMPUGNED BEFORE HIM WHICH HAD BEEN SPECIFICALLY POINTED OUT BY THE RESPONDENT VIDE PARA 6.2 OF ITS WRITTEN SUBMISSIONS AND WHICH TOO DESERVED TO BE RECTIFIED IN THE SAME MANNER AS THE OTHER ERRORS WHOSE RECTIFICATION HAD BEEN DIR ECTED BY HIM. 5. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE RESPONDENT S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN OMITTING TO CONSIDER GROUND NO. 9 OF ITS APPEAL BEFORE HIM. HE OUGHT TO HAVE APPRECIATED, INTER ALIA, THAT IN REALITY, ALL THE GR OUNDS NO. 5 TO 9 OF THE RESPONDENT S APPEAL BEFORE HIM WERE REQUIRED TO BE CONSIDERED TOGETHER (INSTEAD OF CONSIDERING TOGETHER ONLY GROUNDS NO. 6, 7 AND 8, AS HAD BEEN DONE BY HIM) AND APPROPRIATE RELIEF AS PRAYED FOR BY THE RESPONDENT IN ITS WRITTEN SUBM ISSIONS (AS REFERRED TO IN THE PRECEDING GROUND) WAS REQUIRED TO BE GRANTED. 6. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS - OBJECTIONS EITHER BEFORE OR AT THE TIME OF HEARING OF THE CROSS - OBJECTIONS. 15 . THE FA CTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF FARMLAND AND SALE THEREOF. THE ASSESSEE PURCHASED AGRICULTURE LAND MAINLY IN RURAL AREAS IN INTERIOR PARTS IN VARIOUS STATES OF THE COUNTRY. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE DID NOT FILE ITS RETURN OF INCOME ON THE DUE DATE STIPULATED UNDER SECTION 139(1) OF THE ACT. EVEN NO TAX AUDIT REPORT WAS FILED BY THE ASSESSEE BEFORE THE DUE DATE . THE ASSESSING OFFICER ISSUED NOTICE UNDER SECT ION 142 (1) OF THE ACT ON 14/11/2007 ASKING THE ASSESSEE TO FILE THE RETURN OF INCOME WHICH WAS ALSO NOT COMPLIED. THE ASSESSEE FILED 13 RETURN OF INCOME ON 12/ 04/2008 DECLARING TOTAL INCOME OF RS.21,81,62, 814/ - . 15 .1 A NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 22/07/2008 AND ASSESSMENT WAS COMPLETED ON 31 /12/2008 AT TOTAL INCOME OF RS. 27,32,23,810/ - . THE ASSESSING OFFICER MADE FOLLOWING ADDITIONS TO THE RETURNED INCOME: SL. NO. A DDITION/DISALLOWANCE A MO UNT IN R UPEES DISALLOWANCE OF LAND DEVELOPMENT EXPENSES 1,57,61,800/ - UNACCOUNTED INCOME FROM SALE AND PURCHASE OF LANDS ADMITTED IN THE COURSE OF SEARCH ACTION DATED 25/08/2006 1,57,24,188/ - 1 5 .2 AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME - TAX ( APPEALS) WHO ALLOWED PART RELIEF TO TH E ASSESSEE. AGGRIEVED , BOTH THE R EVENUE AND ASSESSEE ARE IN APPEAL AND CROSS OBJECTIONS RESPECTIVELY, RAISING GROUNDS AS REPRODUCED ABOVE. 16 . THE R EVENUE IN ITS GROUNDS IS AGGRIEVED WITH THE DELETION OF THE DISALLOWANCE OF RS. 1,57,61,800/ - MADE BY THE ASSE SSING OFFICER AGAINST LAND DEVELOPMENT EXPENDITURE CLAIMED BY THE ASSESSEE. 16 .1 THE FACTS IN RESPECT OF THE ISSUE IN DISPUTE ARE THAT AFTER PURCHASING BARREN LANDS , THE ASSESSEE USED TO CARRY OUT CERTAIN DEVELOPMENT WORKS LIKE LAVELLING, B USH CUTTING, B OULDER REMOVING, PROVIDING IRRIGATION FACILITY AND FENCING ETC . ON THE LAND SITES LOCATED IN VARIOUS STATES OF THE COUNTRY . THIS WORK WAS USED TO EXECUTE THROUGH VARIOUS CONTACTORS. IN THE YEAR UNDER CONSIDERATION ALSO THE ASSESSEE CARRIED OUT SIMILAR LAND DEVELOPMENT ACTIVITY AND INCURRED TOTAL EXPENSES OF RS.141,21,31, 529/ - . THE AMOUNT WHICH WAS NOT OFFERED TO TAX IN VIEW OF VARIOUS SEIZED PAPERS, THOUGH ADMITTED DURING THE COURSE OF SEARCH ACTION 2 ,35,75,009 / - TOTAL 5,50,60,997 14 T HE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS NOT DEBITING WHOLE OF THE AMOUNT INCURRED DURING THE YEAR IN PROFIT AND LOSS ACCOUNT. THE ASSESSEE USED TO CLAIM IN PROFIT AND LOSS ACCOUNT ONLY THE EXPENSES RELATING TO LAND SOLD IN RESPECTIVE YEARS AND THE BALANCE USED TO DEBIT TO LAND ACCOUNT. THUS , THE REMAINING EXPENSES ON UNSOLD PLOTS WERE USED TO BE INCLUDED IN THE LAND COST, WHICH WAS A STOCK IN TRADE OF THE ASSESSEE AND SAME WAS DIRECTLY SHOWN IN THE BALANCE SHEET. WHENEVER THE LAND WAS S OLD, DEVELOPMENT EXPENSES CORRESPONDING TO THAT LAND WERE DEBITED TO PROFIT AND LOSS ACCOUNT . THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS REGULARLY FOLLOWING THIS PRACTICE. DURING T HE YEAR UNDER CONSIDERATION, THE ASSESSEE DEBITED L AND DEVELOPMENT EXPENSES OF RS.82,26,96, 286/ - FOLLOWING THE REGULAR PRACTICE OF DEBITING LAND DEVELOPMENT EXPENSES CORRESPONDING TO THE LAND SOLD. THIS CLAIM OF THE ASSESSEE WAS NOT FOUND VERIFIABLE BY THE ASSESSING OFFICER. IN EARLIER ASSESSMENT YEARS FROM ASSESSMENT YEAR 2003 - 04 TO 2006 - 07, THE ASSESSING OFFICER FOUND THAT THE ALLEGED CONTRACTORS, AGAINST WHOM THE ASSESSEE CLAIMED THE EXPENDITURE ON LAND DEVELOPMENT WERE NOT FOUND AT THE ADDRESSES ON VERI FICATION CARRIED OUT BY THE INSPECTORS OF THE INCOME T AX DEPARTMENT. 16 .2 THE ASSESSING OFFICER HAS MENTIONED IN THE ASSESSMENT ORDER THAT IN ASSESSMENT YEAR 2005 - 06, AFTER CONDUCTING DETAILED ENQUIRIES THE ITO WARD - 1( 1 ), NEW DELHI ALSO FOUND THAT THE CO NTRACTOR M /S . AI E STATE PRIVATE L IMITED HAD NOT CARRIED OUT ANY WORK AND ONLY PROVIDED ACCOMMODATION ENTRIES TO THE ASSESSEE. THE ITO , WARD 16(1), NEW DELHI ALSO HELD THAT M/S TASHI C ONTRACTORS P RIVATE L IMITED, TO WHOM ALSO THE ASSESSEE AWARDED CONTRACT, HAD PROVIDED ACCOMMODATION ENTRY AFT ER CHARGING 2% COMMISSION. THE INCOME TAX INSPECTOR WAS DEPUTED TO VERIFY ADDRESSES OF AS MANY 64 PERSONS BUT NONE OF THEM WERE FOUND AT THE ADDRESSES GIVEN BY THE ASSESSEE. 15 1 6 .3 SIM ILARLY , IN ASSESSMENT YEAR 2006 - 07, SH. PRADEEP KUMAR JINDAL, IN STATEMENT RECORDED BY THE INCOME TAX OFFICER, WARD - 1(1) , NEW DELHI ADMITTED FACTS OF HAVING NO WORK DONE , ONLY BILLS WERE RAISED, CHEQUE WERE RECEIVED AND REPAID IN CASH. HE PROVIDED TOTAL BILLS AMOUNTING TO RS.14,62,11,899/ - TO THE ASSESSEE THROUGH FIVE COMPANIES NAMELY M/S ANCHAL CONTRACTORS PRIVATE LIMITED, M/S ANCHAL TOWNSHIP PRIVATE LIMITED, M/S ANCHAL INFRASTRUCTURE PRIVATE LIMITED, M/S ANCHAL PROJECT PRIVATE LIMITED AND M/S ANCHAL BU ILDCON PRIVATE LIMITED. THE ASSESSING OFFICERS AT ROHTAK FINALISE ASSESSMENTS IN 27 CASES WHO HAD FILED A RETURN SHOWING INCOME FROM CONTRACT RECEIPT FROM THE ASSESSEE COMPANY. IN ASSESSMENT ORDERS OF THOSE PERSONS, THE RESPECTIVE ASSESSING OFFICERS FOUN D AFTER CONDUCTING DETAILED ENQUIRIES THAT ACTUALLY NO WORK WAS DONE BY THEM AND OUT OF THEM FIVE PERSONS CONFIRMED THIS FACT IN THE STAT EMENT RECORDED ON OATH. FURTHER , THE ASSESSING OFFICER MENTIONED ONE SH . BAHARAT RAM, PROPRIETOR OF M/S BHARAT BUILDERS , KAROL BAG , DELHI ALSO PARTICULARLY DENIED HAVING EXECUTED ANY CONTRACT AWARDED BY THE ASSESSEE IN THE STATEMENT RECORDED UNDER SECTION 131 OF THE ACT IN HIS OFFICE ON 01/05/2007. THE INSPECTORS VISITED ADDRESSES OF MORE THAN 100 ALLEGED CONTACTORS, BUT N O ONE WAS AVAILABLE AT THE ADDRESSES GIVEN BY THE ASSESSEE. 16 .4 DURING THE YEAR UNDER CONSIDERATION ALSO , THE ASSESSING OFFICER CARRIED OUT THE EXERCISE OF VERIFICATION OF ADDRESSES OF THE ALLEGED CONTACTORS. DURING THE YEAR ASSESSEE HAS SHOWN A CONTRAC T AWARDED TO M/S MANAMI CONSTRUCTION COMPANY P RI VATE LIMITED , KOLKATA . IN TH E ENQUIRIES CARRIED OUT BY THE DEPUTY DIRECTOR OF INCOME T AX, KOLKATA, IT WAS REVEALED THAT N O SUCH COMPANY WAS EXISTING AT THE ADDRESS GIVEN BY THE ASSESSEE AND THE PERSON AVAILABLE AT THE ADDRESS WAS ALSO NOT KNOWING ANYTHING ABOUT THAT COMPANY. 16 .5 THE ASSESSING OFFICER PROVIDED ALL THE INFORMATION AND EVIDENCES GATHERED TO THE ASSESSEE. IN RESPONSE THE ASSESSEE SUBMITTED THAT ALL 16 THOSE PARTIES WERE GENUINE AND EACH OF HAVING A PAN AND PAYMENTS MADE THROUGH ACCOUNT PAYEE CHEQUE , BUT THE ASSESSEE DID NOT FILE THEIR CONFIRMATIONS BEFORE THE ASSESSIN G OFFICER. IN THE CIRCUMSTANCES , T HE ASSESSING OFFICER OBSERVED THAT PAYMENTS MADE BY ACCOUNT PAYEE CHEQUE IS NOT CONCLUSIVE EVIDENCE OF SERVICES RENDERED BY THE PARTIES AND HELD THE FOLLOWING PARTIES AS NOT GENUINE AND CORRESPONDING EXPENDITURE WAS ACCORDINGLY DISALLOWED: SR. NO. NAME AMOUNT ADDRESS 1. A K ENTERPRISES 2960000 7/397 , BLOCK 7 , TRILOKPURI NEW DELHI 2. RAJESH CHOPRA 410000 B - 4/34 SEC - 7 ROHINI DELHI 3. RECONSTRUCTIONS 250000 MAVAI ROAD, OLD VIJAY NAGAR GHAZIABAD GHAZIABAD 4. A.D. ASSOCIATES 250000 MAVAI ROAD, OLD VIJAY NAGAR, GHAZIABAD 5. R.V.CONSTRUCTIONS 250000 MAVAI ROAD, OLD VIJAY NAGAR, GHAZIABAD GHAZIABAD 6. MANAMI CONSTRUCTION CO. PVT. LTD. 11641800 156A, LENIN SARANI, KOLKATA TOTAL 15761800 16 .6 THE LD. CIT - A DELETED THE ADDITION WITH FOLLOWING OBSERVATIONS: 3.5 THE ONLY GROUND OF THE A.O. FOR THE DISALLOWANCE OF THE LAND DEVELOPMENT EXPENDITURE IS THAT THE PARTIES WERE NOT FOUND ON THE GIVEN ADDRESSES AND IT CREATED THE SHADOW OF DOUBT IN MIND OF THE ASSESSING OFFICER THAT THE EXPENDITURE IS NOT GENUINE AND N O OTHER MATERIAL OR EVIDENCE IS GATHERED OR FOUND DURING THE SEARCH TO SHOW THAT THE CLAIM OF THE EXPENDITURE IS NOT GENUINE. IT IS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF LALCHAND BHAGAT REPORTED IN 37 ITR 288 THAT THE SUSPICION HOWEVER GREAT CAN NOT TAKE THE PLACE OF EVIDENCE. IT IS A MATTER OF RECORD THAT TWO SEARCHES WERE CONDUCTED AT THE PREMISES OF THE APPELLANT ON 22.09.2005 AND 25.08.2006 AND NO INCRIMINATING DOCUMENTS, BOOKS OF ACCOUNTS ETC. WERE FOUND OR SEIZED TO INDICATE THAT THE APPELLA NT HAD CLAIMED ANY BOGUS EXPENDITURE TO REDUCE THE BURDEN OF THE TAX LIABILITY. ONE SHOULD NOT FORGET THAT IT IS A SEARCH ASSESSMENT IN WHICH THE SEARCH PARTY IS SUPPOSED AND EXPECTED TO FIND OUT ALL THE INCRIMINATING DOCUMENTS, MATERIAL AND ALSO UNDISCLOS ED ASSETS. THE SEARCH ASSESSMENT, THEREFORE, STANDS ON A FOOTING DIFFERENT THAN A NORMAL ASSESSMENT. NO EVIDENCE OR OTHER MATERIAL DESPITE THE EXTREME STEP OF SEARCH WHICH AMOUNTS TO A SERIOUS INVASION OF THE RIGHTS OF THE TAX PAYER AND WHICH IS PERHAPS TH E LAST WEAPON IN THE ARSENAL OF THE DEPARTMENT WERE FOUND/SEIZED, 17 WHICH COULD BE ATTRIBUTED TO PATENTLY HYPOTHETICAL ADDITION MADE DURING THE ASSESSMENT PROCEEDINGS. IN VIEW OF THE TOTALITY OF FACTS AND CIRCUMSTANCES, THE ADDITION OF RS. 1,57,61,800/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF LAND DEVELOPMENT EXPENDITURE IS DELETED. FOR THE AFORESAID ADJUDICATION, IT WOULD NOT BE OUT OF PLACE TO MENTION HERE THAT THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MANMOHAN DAS REPORTED IN 59 ITR 699 HAD OBSERVED AS UNDER: - THE SECOND QUESTION PRESENTS LITTLE DIFFICULTY IN MAKING HIS ORDER OF ASSESSMENT FOR THE YEAR 1950 - 51, THE INCOME TAX OFFICER DECLARED THAT THE LOSS COMPUTED IN THAT YEAR COULD NOT BE CARRIED FORWARD TO THE NEXT YEAR UNDER SECTION 24(2) OF THE INCOME - TAX ACT, AS IT WAS NOT A BUSINESS LOSS. THE AMOUNT OF LOSS AS COMPUTED BY HIM, IF IT IS ESTABLISHED IN THE COURSE OF ASSESSMENT OF THE TOTAL INCOME THAT THE ASSESSEE HAS SUFFERED LOSS OF PROFIT. SECTION 24(2) CONFERS A STATUTORY RIGHT (SUBJECT TO CERTAIN CONDITIONS WHICH ARE NOT MATERIAL) UPON THE ASSESSEE WHO SUSTAINS A LOSS OF PROFITS IN ANY YEAR IN ANY BUSIN ESS, PROFESSION OR VOCATION TO CARRY FORWARD THE LOSS AS IS NOT SET OFF UNDER SUB - SECTION (1) TO THE FOLLOWING YEAR, AND TO SET IT OFF AGAINST HIS PROFITS AND GAINS, IF ANY, FROM THE SAME BUSINESS, PROFESSION OR VOCATION FOR THAT YEAR. WHETHER THE LOSS OF PROFITS OR GAINS IN ANY YEAR MAY BE CARRIED FORWARD TO THE FOLLOWING YEAR AND SET OFF AGAINST THE PROFITS AND GAINS OF THE SAME BUSINESS, PROFESSION OR VOCATION UNDER SECTION 24(2) HAS TO BE DETERMINED BY THE INCOME TAX OFFICER DEALING WITH THE ASSESSMENT IN THE SUBSEQUENT YEAR TO DETERMINE WHETHER THE LOSS OF THE PREVIOUS YEAR MAY BE SET OFF AGAINST THE PROFITS OF THAT YEAR. A DECISION RECORDED BY THE INCOME TAX OFFICER WHO COMPUTES THE LOSS IN THE PREVIOUS YEAR UNDER SECTION 24(3) THAT THE LOSS CANNOT BE SET OFF AGAINST THE INCOME OF THE SUBSEQUENT YEAR IS NOT BINDING ON THE ASS ASSESSEE. THE HON BLE SUPREME COURT HAS LAID DOWN THE PROPOSITION IN THIS CASE THAT WHETHER THE LOSS OF PROFITS OR GAINS IN ANY YEAR MAY BE CARRIED FORWARD TO THE FOLLOWING YEA R AND SET OFF AGAINST THE PROFITS AND GAINS OF THE SAME BUSINESS, PROFESSION OR VOCATION UNDER SECTION 24(2) HAS TO BE DETERMINED BY THE INCOME TAX OFFICER DEALING WITH THE ASSESSMENT IN THE SUBSEQUENT YEAR TO DETERMINE WHETHER THE LOSS OF THE PREVIOUS YEA R MAY BE SET OFF AGAINST THE PROFITS OF THAT YEAR. IN THE LIGHT OF THE OBSERVATIONS OF THE HON BLE APEX COURT, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE LAND DEVELOPMENT EXPENDITURE OF RS. 1,57,61,800/ - DISALLOWED BY HIM DURING THE YEAR UNDER CONSID ERATION IN THE YEAR IN WHICH THE SAME IS DEBITED TO THE BOOKS OF ACCOUNTS. 16 .7 F URTHER , THE LD. CIT ( A ) FOLLOWING THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. M AN MOHAN DAS , REPORTED IN 59 ITR 699 DIRECTED THE ASSESSING OFFICER TO EXAMINE THE LAND DEVELOPMENT EXPENDITURE DISALLOWED BY HIM DURING THE YEAR UNDER CONSIDERATION IN THE YEAR IN WHICH SAME WAS DEBITED TO THE BOOKS OF ACCOUNTS. 18 16 .8 THE LD. CIT ( DR ) BEFORE US CONTES TED THAT NO PLEA WAS TAKEN BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE EXPENDITURE RELATING TO THE CONTACTORS/CONCERNS DISALLOWED BY THE ASSESSING OFFICER WERE NOT DEBITED TO THE PROFIT AND LOSS ACCOUNT AND THEREFORE IN THE CIRCUMS TANCES THE ISSUE NEED TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER TO VERIFY WHETHER THE EXPENSES ON LAND DEVELOPMENT IN QUESTION WERE DEBITED IN THE PROFIT AND LOSS ACCOUNT OR NOT. 16 .9 NONE REPRESENTED ON BEHALF OF THE ASSESSEE AND THUS THE CASE IS HEARD EX PARTE QUA THE ASSESSEE. 17 . WE HAVE HEARD THE SUBMISSION OF THE LD. CIT ( DR ) AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN OUR OPINION, MAIN QUESTION WHICH ARISES IN THE FACTS AND CIRCUMSTANCES OF THE CASE IS WHETHER THE LAND DEVELOPMENT EXPEN SES IN QUESTION WERE DEBITED TO THE PROFIT AND LOSS ACCOUNT OR NOT. IF THOSE EXPENSES ARE NOT DEBITED TO THE PROFIT AND LOSS ACCOUNT, DISALLOWANCE OF THOSE IN THE YEAR UNDER CONSIDERATION ALSO DOES NOT ARISE. BUT BEFORE US , THE LD. CIT ( DR) HAS CONTESTED TH AT THIS FACT HAS BEEN ASSUMED BY THE LD. CIT ( A ) AND IT WAS NOT COMING OUT OF THE ASSESSMENT ORDER. FURTHER WE FIND THAT THE ASSESSEE EVEN DID NOT FURNISH CONFIRMATION LETTERS FROM THE ALLEGED CONTACTORS TO ESTABLISH THE SERVICES RENDERED BY THEM. THIS WAS THE BASIC REQUIREMENT, WHICH THE ASSESSEE WAS REQUIRED TO FULFILL TO DISCHARGE HIS ONUS PARTICULARLY IN THE CIRCUMSTANCES WHEN MANY PERSONS ALLEGED TO BE CONTACTORS HAVE ADMITTED OF NOT CARRYING OUT ANY CONTRACT WORK FOR THE ASSESSEE. IN THE CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE OF DISALLOWAN CE OF L AND DEVELOPMENT EXPENSES OF RS.1,57,61, 800/ - TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINING AFRESH AND DECIDE AFTER CARRYING OUT NECESSARY INQUIRIES AS DEEMED FIT . IT IS NEEDLESS TO MENTION THAT ASSESSEE SHALL BE AFFORDED SUFFICIENT OPPORTUNITY OF HEARING. ACCORDINGLY , 19 THE G ROUNDS OF APPEAL RAISED BY THE R EVENUE ARE ALLOWED FOR STATISTICAL PURPOSE. CROSS OBJECTION OF THE ASSESSEE 18 . I N GROUND NO. 1 OF THE CROSS OBJECTIONS, THE ASSESSEE IS AGGRIEVED WITH THE ORDER OF THE LD. CIT( A ) FOR NOT ADJUD ICATING THE GROUND NO. 1 RAISED BEFORE HIM CHALLENGING THE JURISDICTION OF THE ASSESSING OFFICER. BEFORE US THE LD. CIT ( DR ) SUBMITTED THAT THE ASSESSEE HAS NOT SPECIFIED PARTICULARLY AS HOW THE ORDER OF THE ASSESSING OFFICER WAS BAD IN LAW AND WITHOUT JURI SDICTION. ACCORDING TO HER , THE GROUNDS OF THE ASSESSEE BEIN G GENERAL IN NATURE THE LD. CIT( A ) HAS NOT SPECIFICALLY ADJUDICATED UPON THE GENERAL GROUNDS. IN VIEW OF CONTENTION OF THE LD. CIT ( DR ) , WE DO NOT FIND ANY SPECIFIC REASON IN THE GROUNDS OF THE ASSESSEE BEFORE THE LD. CIT (A) CHALLENGING THE JURISDICTION AND THEREFORE THE GROUND NO. 1 IS ACCORDINGLY DISMISSED. 19 . IN GROUND NO. 2 OF THE CROSS OBJECTION, THE ASSESSEE HAS RAISED THE ISSUE THAT IT S GROUND NO. 4 BEFORE THE LD. CIT ( A ) HAS NOT BEEN C ONSIDERED AND ADJUDICATED UPON, WHEREIN THE ASSESSEE RAISED THAT IN ABSENCE OF PROVIDING ADEQUATE OPPORTUNITY , THE ORDER OF THE ASSESSING OFFICER WAS IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE LD. CIT ( DR ) BEFORE US SUBMITTED THAT IT IS EVIDENT FROM THE ORDER OF THE ASSESSING OFFICER THAT INITIALLY, THE ASSESSEE DID NOT COMPLY WITH THE VARIOUS NOTICES ISSUED BY THE ASSESSING OFFICER AND FOR THAT PURPOSE THE ASSESSING OFFICER EVEN ISSUED PENALTY UNDER SECTION 271(1)(B) OF THE ACT. IN THE ASSESSMENT PR OCEEDING, VARIOUS PERSONS AUTHORIZED BY THE ASSESSEE HAVE ATTENDED THE ASSESSMENT PROCEEDING FROM TIME TO TIME AND CASE WAS DISCUSSED WITH THEM AND THEREFORE THERE WAS NO VIOLATION OF PRINCIPLE OF NATURAL JUSTICE BY THE ASSESSING OFFICER. 19 .1 WE HAVE HEARD THE SUBMISSION OF THE LD. CIT ( DR ) AND PERUSED THE IMPUGNED ASSESSMENT ORDER. WE OBSERVED THAT IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 143(2)/142(1) ISSUED BY THE ASSESSING OFFICER, 20 REPRESENTATIVE OF THE ASSESSEE SH. M . R . BHATNAGAR , CA ; SMT. PREM LATA MISHRA , CA HAVE ATTENDED FROM TIME TO TIME AND DISCUSSED THE CASE WITH THE ASSESSING OFFICER. IN THE GROUNDS RAISED, THE ASSESSEE HAS NOT POINTED OUT ANY OCCASION WHERE ASSESSEE HAS NOT BEEN PROVIDED OPPORTUNITY BY THE ASSESSING OFFICER. I N OUR OPINION, THERE IS NO VIOLATION OF NATURAL J USTICE IN ASSESSMENT PROCEEDINGS COMPLETED BY THE ASSESSING OFFICER. FURTHERMORE, THE LEARNE D CIT( A ) HAS ALREADY PROVIDED SUFFICIENT OPPORTUNITY AND HEARD THE ISSUES RAISED BY THE ASSESSEE AND ALLOWED THE AP PEAL PARTLY IN FAVOUR OF THE ASSESSEE. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES, THE GROUND RAISED IN CROSS OBJECTION IS DISMISSED. 20 . IN GROUND NO. 3 , THE ASSESSEE HAS CHALLENGED SUSTAINING OF ADDITION OF RS.1,57,24, 188/ - BY THE LD. CIT( A ) . THE LD. CIT ( DR ) SUPPORTED THE FINDING OF THE LEARNED CIT - A AND REQUESTED FOR UPHOLDING THE SAME IN VIEW OF THE DETAILS REASONING GIVEN BY THE LD. CIT - A. 20 .1 WE HAVE HEARD THE SUBMISSION OF THE LD. CIT ( DR ) AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED CIT - A, IN PARA - 4.3 OF THE IMPUGNED ORDER HAS DECIDED THE ISSUE IN DISPUTE AS UNDER: 4.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE APPELLANT. THE COUNSEL OF THE APPELLANT CONTENDED THAT THE AMOUNT OF CASH OF RS. 1,57,24,188/ - W AS OFFERED FOR TAXATION U/S 132(4) OF THE ACT AND FORMED PART OF THE DECLARATION OF RS. 23 CRORE MADE BY THE APPELLANT. THE PERUSAL OF THE BIFURCATION SUBMITTED BEFORE THE ASSESSING OFFICER REVEALS THAT THE AMOUNT OF CASH FOUND AND SEIZED DURING THE SEARCH DOES NOT FORM PART OF THE DECLARATION MADE BY THE APPELLANT AT THE TIME OF THE SEARCH. THE SUBMISSIONS MADE BY THE COUNSEL OF THE APPELLANT ARE DEVOID OF ANY MERIT. THE ASSESSING OFFICER HAS RIGHTLY TREATED THE CASH SEIZED AT THE TIME OF THE SEARCH AS UNE XPLAINED. AS SUCH, THE ADDITION MADE BY THE ASSESSING OFFICER BY TREATING THE CASH OF RS. 1,57,24,188/ - SEIZED DURING THE SEARCH AS UNEXPLAINED IS SUSTAINED. 20 .2 I T IS EVIDENT THAT THE AS SESSEE HAS ADMITTED CASH OF RS.1,57,24, 188/ - AS UNEXPLAINED AND OFFERED FOR TAXATION IN STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. BUT ON VERIFICATION BY THE ASSESSING OFFICER, THE AMOUNT DECLARED BY THE ASSESSEE IN THE RETURN OF INCOME AGAINST SAID DISCLOSURE O F RS. 1 ,57,24, 188/ - , WAS NOT FOUND. THIS 21 FACT HAS B EEN CONFIRMED BY THE LD. CIT - A A S WELL. IN VI EW OF THIS FACTUAL VERIFICATION , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT - A, AND ACCORDINGLY WE UPHOLD THE SAME. THE GROUND IS ACCORDINGLY DISMISSED. 21 . IN GROUND NO. 4, THE ASSESSEE HAS CHALL ENGED NOT ALLOWING RELIEF ON GROUND NO. 6 TO 8 RAISED BEFORE THE LD. CIT - A. 21 .1 BEFORE US, THE LD. CIT ( DR ) SUBMITTED THAT THE ASSESSING OFFICER HAS CONSIDERED ALL THE UNDISCLOSED INCOME ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF S EARCH AND AFTER REDUCING THE INCOME OF RS. 23 CRORE S DECLARED BY THE ASSESSEE, ADDITIO N FOR THE BALANCE AMOUNT OF RS.2,35,75, 009 / - HAS ONLY BEEN MADE IN THE FINAL COMPUTATION OF ASSESSED INCOME. SHE FURTHER SUBMITTED THAT IN RESPECT OF FACTUAL INACCURACIE S, THE LD. CIT - A HAS ALREADY DIRECTED THE ASSESSING OFFICER TO TAKE NECESSARY REMEDY ACTION AND THEREFORE THERE COULD NOT HAVE BEEN ANY GRIEVANCE TO THE ASSESSEE. 18.2 WE HAVE HEARD THE SUBMISSION OF THE LD. CITDR AND PERUSED THE RELEVANT MATERIAL ON RECO RD. THE LD. CIT - A IN THE IMPUGNED ORDER HAS MENTIONED THAT DURING THE APPELLATE PROCEEDING , THE SUBMISSION OF THE ASSESSEE WAS DISCUSSED WITH THE ASSESSING OFFICER AND REGARDING THE FACTUAL INACCURACIES, THE CONTENTION OF THE ASSESSEE WERE FOUND TO BE CORR ECT BY THE ASSESSING OFFICER AND ACCORDINGLY , HE WAS DIRECTED TO TAKE REMEDIAL ACTION. IN OUR OPINION, THE FINDING OF THE LD. CIT - A ON THE ISSUE IN DISPUTE ARE JUST, FAIR AND APPROPRIATE AND NO INTERFERENCE ON OUR PART IS REQUIRED. WE ORDER ACCORDINGLY. THE GROUND OF THE CROSS OBJECTION IS ACCORDINGLY DISMISSED. 22 . IN GROUND NO. 5 , THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 2, 35,75, 009/ - MADE BY THE ASSESSING OFFICER. 22 .1 BEFORE US , THE LD. CIT ( DR ) RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 22 .2 WE HAVE HEARD THE SUBMISSION OF THE LD. CIT (DR) AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ADDITION OF RS.2 , 35,75,009/ - 22 HAS BEEN MADE AFTER TAKING INTO ACCOUNT ADDITIONS PROPOSED AGAINST INCRIMINATING DOCUMENTS AND AFTER REDUCING THE AM OUNT OF RS. 23 CRORES DECLARED BY THE ASSESSEE. THE LEARNED CIT - A HAS CONSIDERED ALL THE ARGUMENTS OF THE ASSESSEE REGARDING THE ADDITIONS PROPOSED ON INCRIMINATING DOCUMENTS AND SURRENDERED UNDER SECTION 132(4) OF THE ACT. THE LD. CIT - A HAS HELD THAT NO E VIDENCE OR EXPLANATION HAS BEEN FILED BY THE ASSESSEE DURING THE APPELLATE PROCEEDING TO REBUT TH E PRESUMPTION UNDER SECTION 132 (4A) OF THE ACT AND ACCORDINGLY UPHELD THE ADDITION. THE RELEVANT FINDING OF THE LD. CIT IS REPRODUCED AS UNDER: 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE COUNSEL OF THE APPELLANT. IT IS PERUSED FROM THE ASSESSMENT ORDER THAT VARIOUS DOCUMENTS WERE SEIZED DURING THE SEARCH CONDUCTED ON 25.09.2005. THE ASSESSING OFFICER AFFORDED VARIOU S OPPORTUNITIES TO THE APPELLANT TO EXPLAIN THE DOCUMENTS SEIZED DURING THE SEARCH. THE ASSESSING OFFICER MADE THE VARIOUS ADDITIONS AS NO PLAUSIBLE EXPLANATION WAS FILED IN REGARD TO THE DOCUMENTS SEIZED DURING THE SEARCH. THE PROVISIONS OF SECTION 132(4A ) OF THE ACT CAST A REBUTTABLE PRESUMPTION ON THE APPELLANT TO EXPLAIN THE DOCUMENTS WHICH WERE SEIZED DURING THE SEARCH. FROM THE FACTS OF THE CASE, IT EMERGES THAT THE PRESUMPTION HAS NOT BEEN REBUTTED BY THE APPELLANT. NO EVIDENCE OR EXPLANATION HAS BEE N FILED DURING THE APPELLATE PROCEEDINGS TO REBUT THE PRESUMPTION UNDER SECTION 132(4A) OF THE ACT. IN VIEW OF THIS, IT IS HELD THAT THE ASSESSING OFFICER HAS RIGHTLY MADE THE VARIOUS ADDITIONS. HOWEVER, THE APPELLANT VIDE LETTER DATED 08.05.2010 SUBMITTED THAT THERE ARE FACTUAL MISTAKES IN THE ORDER OF THE ASSESSING OFFICER. THE SUBMISSION IN REGARD TO THE FACTUAL INACCURACIES IS REPRODUCED BELOW: 8. WITHOUT PREJUDICED TO THE FOREGOING, WE BEG TO POINT OUT THAT IN ARRIVING AT THE QUANTUM, THE LEARNED ASS ESSING OFFICER HAS MADE THE FOLLOWING ERRORS WHICH DESERVE TO BE RECTIFIED IN ANY CASE: (A) THE LEARNED ASSESSING OFFICER HAS INADVERTENTLY OMITTED TO CONSIDER THAT THE DEAL WITH JASWANT SINGH (FIRST ITEM IN THE TABLE IN THE ASSESSMENT ORDER) HAD NOT MATE RIALIZED AND. THEREFORE, THERE WAS NO QUESTION FOR MAKING ANY ADDITION ON THIS ACCOUNT; ACCORDINGLY, THE ADDITION TO THE EXTENT OF RS. 4,71,875 (RS. 9,28,125 MINUS RS. 4,56,250) IS REQUIRED TO BE DELETED; (B) THAT AS ONLY A BARE READING OF THE SEIZED PAPER NO. 77 WOULD SHOW, THE PAYMENT BY DD IN THE CASE OF SUKHA SINGH WAS RS. 90,00,000; THAT, HOWEVER, WHILE TABULATING IN THE ASSESSMENT ORDER, THE LEARNED ASSESSING OFFICER HAS ERRONEOUSLY TAKEN THAT AMOUNT AT O NLY RS. 9,00,000 I.E. HE HAS SHORT TAKEN THE AMOUNT OF PAYMENT BY DD BY RS.81,00,000 AND CORRESPONDINGLY, HE HAS ASSUMED THE LARGER AMOUNT OF CASH PAYMENT TO 23 THAT EXTENT; THAT, THEREFORE, EVEN ON THE STAND OF THE LEARNED ASSESSING OFFICER, THE ADDITION DES ERVES TO BE REDUCED BY RS. 81,00,000. 9.1 CONSIDERING THE ABOVE, WE WOULD URGE UPON YOUR HONOUR FOR KINDLY ORDERING FOR THE DELETION OF THE ABOVE ADDITION OF RS.3,63,07,499. WITHOUT PREJUDICE TO THIS PRAYER, WE WOULD URGE, IN THE ALTERNATIVE, THAT THE QUA NTUM OF THE ADDITION IS REQUIRED TO BE REDUCED BY RS. 85,71,875 (RS.4,71,875 PLUS RS. 81,00,000). 9.2 WHILE MAKING THE ABOVE PRAYER, WE BEG ONCE AGAIN TO DRAW YOUR HONOUR'S ATTENTION TO THE TABLE GIVEN AT PARA 6.1 HEREOF SHOWING DETAILS OF HOW THE ULTIMAT E ADDITION OF RS. 2,35,75,009 TO THE RETURNED INCOME MADE IN THE IMPUGNED HAD BEEN ARRIVED AT. OUT OF ABUNDANT CAUTION ONLY, WE BEG TO POINT OUT THAT THE RELIEF THAT MAY BE GRANTED IN RESPECT OF THE IMPUGNED ADDITION OF RS. 3,63,07,499 WILL NEED TO BE APPR OPRIATELY DEALT WITH CONSIDERING THE SAID TABLE. THE ACIT, CENTRAL CIRCLE - 4, NEW DELHI ATTENDED THE APPELLATE PROCEEDINGS. THE SUBMISSIONS OF THE APPELLANT WERE DISCUSSED WITH HIM. THE ASSESSING OFFICER VIDE LETTER NO. ACIT/CC - 4/2010 - 11/429 DATED 26.05. 2010 SUBMITTED THAT THE CONTENTION OF THE APPELLANT IN THIS REGARD HAS BEEN FOUND TO BE CORRECT. IN VIEW OF THIS, THE ASSESSING OFFICER IS DIRECTED TO TAKE THE REMEDIAL ACTION ACCORDINGLY. 22 .3 I N VIEW OF ABOVE, WE ARE OF THE OPINION THAT FINDING OF TH E LD. CIT - A ON ISSUE IN DISPUTE IS COMPREHENSIVE AND WELL REASONED AND NO INTERFERENCE ON OUR PART IS REQUIRED. ACCORDINGLY WE UPHOLD THE FINDING OF THE LD. CIT - A IN ON THE ISSUE IN DISPUTE AND DISMISS THE GROUND OF THE CROSS OBJECTION . 23 . GROUND NO. 6 OF THE CROSS OB JECTION BEING GENERAL IN NATURE, WE ARE NOT REQUIRED TO ADJUDICATE UPON AND DISMISSED AS INFRUCTUOUS. 24. IN THE RESULT , CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ITA NO. 3779/DEL/2011 & C.O. NO. 325/DEL/2011 FOR AY 2007 - 08 25 . NOW WE TAKE U P APPEAL OF THE R EVENUE HAVING ITA NO. 3779/DEL/2011 FOR ASS ESSMENT YEAR 2007 - 08 AND CROSS OBJECTION OF THE ASSESSEE HAVING C.O. NO. 325/DEL/2011. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 24 1. ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 43,57.22,000/ - MADE BY THE AO AGAINST THE LAND DEVELOPMENT EXPENDITURE CLAIM OF THE COMPANY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRE D IN LAW AND ON FACTS IN BRUSHING ASIDE THE FINDINGS OF THE ENQUIRIES CONDUCTED BY THE DEPARTMENT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE EXPENSES RELATING TO THESE CONTRACTORS/ C ONCERNS WERE NOT DEBITED TO THE PROFIT & LOSS ACCOUNT DESPITE THE FACT THAT NO SUCH PLEA WAS TAKEN BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THERE IS NOTHING ON RECORD TO SUBSTANTIATE SUCH CLAIM OF THE ASSESSEE. 4. THE ORDER OF THE I D. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE DURING THE COURSE OF THE HEARING OF THE APPEAL. 26 . THE CROSS OBJECTIONS OF THE ASSESSEE ARE AS UNDER: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE CIT(A) HAS ERRED IN UPHOLDING THAT THE VALIDITY OF ASSESSMENT ORDER PASSED U/S 143(3) R.W.S 148 OF THE I.T ACT, IT HAS BEEN PASSED IN CULMINATION OF REASSESSMENT PROCEEDINGS INITIATED WITHOUT JURISDICTION. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE CIT(A) HAS ERRED IN UPHOLDING THAT ASSESSING OFFICER HAD JURISDICTION TO INITIATE THE REASSESSMENT PROCEEDINGS, IN SPITE OF THE FOLLOWING: (A) THE INFORMATION RECEIVED BY THE LEARNED ASSESSING OFFICER FROM THE HON BLE CIT, DELHI - V, COULD AT BEST ONLY RAISE SUSPICIONS IN HIS MIND BUT COULD NOT FORM THE BASIS FOR HIM TO HAVE REASON TO BELIEVE THAT THE APPELLANT S INCOME HAD ESCAPED ASSESSMENT WITHO UT WHICH IT WAS NOT OPEN TO HIM TO INITIATE REASSESSMENT PROCEEDINGS U/S. 147; THAT THIS WAS ALL THE MORE SO ESPECIALLY IN THE BACKGROUND OF THE FACT THAT SIMILAR INFORMATION RECEIVED BY THE (SAME) LEARNED ASSESSING OFFICER AT THE TIME OF MAKING THE ORIGIN AL ASSESSMENT FOR THE PRESENT ASSESSMENT YEAR AND FOUR PRECEDING ASSESSMENT YEARS HAD BEEN USED TO JUSTIFY DISALLOWANCE OF LAND DEVELOPMENT EXPENSES WHICH HAD ALREADY BEEN DELETED IN FIRST APPEAL; (B) THE APPELLANT S PRESENT CASE WAS SQUARELY COVERED BY THE SECOND PROVISO TO SECTION 147. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE CIT(A) HAS ERRED IN CAPRICIOUSLY DEALING WITH THE GROUND RAISED BY THE APPELLANT THAT THE INTEREST LEVIED U/S 234B OF RS. 2,63,99,524/ - WAS INVALI D. CIT(A) HAS HELD THAT THE LEVY OF INTEREST WAS CONSEQUENTIAL IN NATURE WITHOUT APPRECIATING THE FACTS OF THE CASE. 25 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE, THE CIT(A) HAS ERRED IN CAPRICIOUSLY DISMISSING THE GROUND RAISED BY THE APPELLANT THAT INITIATION OF PENALTY PROCEEDINGS WAS NOT WARRANTED IN APPELLANT S CASE. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 27 . THE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSMENT WAS COMPLETED UNDER SECTION 15 3A READ WITH SECTION 143(3) OF THE ACT ON 31/12/2008 AT TOTAL INCOME OF RS. 27,32,23, 810/ - AS AGAINST RETURNED INCOME OF RS.21,81,62, 814/ - . THE ASSESSING OFFICER MADE D ISALLOWANCE FOR L AND DEVELOPMENT EXPENSES OF RS.1,57,61, 800/ - . SUBSEQUENT TO THE COMPLETION OF THE ASSESSMENT, THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 OF THE ACT ON 30/03/2010 AFTER RECORDING REASONS TO BELIEVE THAT INCOME ESCAPED ASSESSMEN T. IN THE REASONS RECORDED, THE ASSESSING OFFICER HAS MENTIONED OF RECEIPT OF INFORMATION FROM THE COMMISSIONER OF INCOME TAX, DELHI - V CONTAINING THE INFORMATION INTER ALIA THAT CONTRACT S AWARDED OF RS.43,57, 22,000/ - FOR LAND DEVELOPMENT TO VARIOUS PERSONS WERE ACTUALLY ACCOMMODATION ENTRIES AND NO WORK WAS CARRIED OUT BY THOSE PERSONS. NO RETURN OF INCOME WAS FILED BY THE ASSESSEE IN RESPONSE TO THE NOTICE DATED 30/03/2010 ISSU ED UNDER SECTION 148 OF THE ACT . THE ASSESSING OFFICER FURTHER ISSUED NOTICE UND ER SECTION 142(1) OF THE ACT ALONG WITH THE QUESTIONNAIRE, WHEREIN THE ASSESSEE WAS CONFRONTED WITH ALL THE DETAILS AND ASKED WAS ASKED AS WHY THE AMOUNT OF RS.43,57,22, 000/ - MAY NOT BE DISALLOWED. IN COMPLIANCE, ON 03/06/2010, SMT. SUDHA GUPTA, LD. A UTHOR IZED R EPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER AND SUBMITTED THAT THE RETURN OF INCOME ORIGINALLY FILED BY THE ASSESSEE COMPANY MIGHT BE TREATED AS HAVING FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. ON THE REQUEST O F THE LD. AR, THE ASSESSING OFFICER ALSO PROVIDED A COPY OF REASONS RECORDED FOR REOPENING OF THE 26 ASSESSMENT. THE LD. AR FURNISHED PHOTOCOPY OF AFFIDAVITS OF PERSONS WHO ALLEGEDLY BEEN AWARDED CONTRACT S FOR LAND DEVELOPMENT. THE LIST OF SUCH PERSONS MENTI ONED IN THE ASSESSMENT ORDER IS AS UNDER : SR. NO NAME OF THE PARTY LAND DEVELOPMENT EXPENSES CLAIMED AFFIDAVIT SIGNED BY 1 RUPA PROMOTERS PVT.LTD. 5,13,08,000 SH. RAJEEV KUMAR 2 RISHIKESH PROPERTIES PVT.LTD. 2,96,31,000 SH. RAJEEV KUMAR 3 RISHIKESH BUILDCON PVT.LTD 5,05,31,000 SH. RAJEEV KUMAR 4 R.S.M. CONSTRUCTIONS PVT. LTD. 2,00,00,000 SH. VIDYA SAGAR 5 ROSHAN BUILDTECH PVT. LTD. 1,46,00,000 SH. ATUL KUMAR 6 RUPAYAN DEVELOPERS PVT. LTD. 92,98,000 SH. SANJAY SHARMA 7 OMEGA NIRMAN PVT. LTD. 3,68,00,000 SH. PRADEEP SINGH 8 OM SHIV AM CONTRACTORS PVT.LTD. 3,08,56,000 SH. PRADEEP SINGH 9 NAINA PROMOTERS PVT. LTD. 69,42,000 SH. ASHOK KUMAR 10 RAJ BALA AGRO PVT. LTD. 97,10,000 SH. I V P GUPTA 11 P P BUILDMART PVT.LTD 3,58,20,000 SH. RAJEEV KUMAR 12 PAWANSUT CONTRACTORS PVT. LTD. 1,83,98,000 SH. VIDYA SAGAR 13 PRAKRIT HOTELS PVT. LIB. 1,31,00,000 NO AFFIDAVIT 14 NOVA BUILDCOM PVT. LIB. 6,66,00,000 NO AFFIDAVIT 15 NEEL KAMAL BUILDTECH PVT. LTD. 90,40,000 SH. SUSHIL TIWARI 16 RADHA BALLABH BUILDERS PVT.LTD. 21,96 000 SH. PRADEEP SINGH 17 RADHA BALLABH NEST BUILD PVT.LTD. 1,83,95,000 SH. PRADEEP SINGH 18 RADHA BALLABH CONSTRUCTIONS PVT.LTD. 1,24,97,000 SH. PRADEEP SINGH TOTAL 43,57,22,000 27 .1 FURTHER , THE ASSESSING OFFICER ASKED THE ASSESSEE TO PROVIDE COMPLETE DETAIL OF LAND DEVELOPMENT EXPENSES AND PRODUCE THE PERSON , WHO CLAIMED TO HAVE CARRIED OUT THE SAID LAND DEVELOPMENT WORK IN THE COPY OF AFFIDAVITS SUBMITTED . REGARDING THE LAND DEVELOPMENT EXPENSES DETAILS , THE ASSESSEE SUBMITTED THAT IT WAS NOT POSSIBL E TO PROVIDE DUE TO HUGE VOLUME . THE ASSESSING OFFICER POINTED OUT CERTAIN DISCREPANCIES IN THE AFFIDAVITS WHICH ARE LISTED ON PAGE 7 OF THE ASSESSMENT ORDER AS UNDER: ALL THE ABOVE ALLEGED AFFIDAVITS SUFFER FROM THE FOLLOWING INFIRMITIES: 27 (1) ALL ARE UNATTESTED PHOTOCOPIES. THE ORIGINAL AFFIDAVITS HAVE NOT EVEN BEEN PRODUCED FOR VERIFICATION. (2) ALL THE AFFIDAVITS HAVE, HOWEVER, BEEN FURNISHED ON BEHALF OF THE RESPECTIVE COMPANIES, BUT NONE OF THESE HAS ANY SEAL OF THE COMPANY WHICH IS MANDATORY AS PER COMPANY LAW. (3) OUT OF TOTAL 16 AFFIDAVITS, FOUR HAVE BEEN SIGNED BY THE SAME SH. RAJEEV KUMAR ( SR. NO. 1,2,3 AND 11), FIVE HAVE BEEN SIGNED BY THE SAME SH. PRADEEP SINGH ( SR. NO. 7 8,16,17 AND 18), TWO HAVE BEEN SIGNED BY THE SAME SH. VIDYA SAGAR ( SR. NO.4 AND 12) AND REST OF THE AFFIDAVITS ARE SIGNED BY OTHER INDIVIDUALS IN THE CAPACITY OF DIRECTORS/ AUTHO. SIGNATORIES. THIS PATTERN HAS BEEN HIGHLIGHT WITH AN INT ENTION TO POINT OUT THAT WHEN SINGLE PERSON IS MANAGING FIVE, FOUR OR TWO COMPANIES THEN THE TOTAL VOLUME OF WORK WHICH SHOULD HAVE BEEN PERFORMED CAN WELL BE IMAGINED. THIS FACT FURTHER LEND ABUNDANT CREDENCE TO THE FINDINGS GIVEN IN THE PARA 2 ABOVE, THA T THE EXECUTION OF SUCH HUGE WORK CONTRACTS WAS PRACTICALLY IMPOSSIBLE. 2 7 .2 THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE PARTIES FOR VERIFICATION, HOWEVER THE ASSESSEE FAILED IN PRODUCING ANY OF THE PERSONS FOR VERIFICATIONS OF THE DEPOSITI ONS MADE IN THE AFFIDAVITS. 2 7 .3 IN THE CIRCUMSTANCES, THE ASSESSI NG OFFICER MADE ADDITION OF RS.43,57,22, 000/ - TO THE LAST ASSESSED INCOME. 27 .4 AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT - A AND CHALLENGED THE LEGALITY OF REASSESSMENT PROCEE DING AS WELL AS MERIT OF THE ADDITION. THE LD. CIT - A UPHELD THE LEGALITY OF THE REASSESSMENT PROCEEDINGS HOWEVER ALLOWED RELIEF TO THE ASSESSEE ON MERIT OF THE ADDITION HOLDING AS UNDER: SINCE THE ENTIRE DISALLOWANCE IN THIS CASE IS BASED ON THE INFORMATION PROVIDED BY THE AO S OF THE RECIPIENT COMPANIES, WHICH HAVE NOT BEEN INDEPENDENTLY SUBJECTED TO FURTHER VERIFICATION BY THE AO AND CROSS EXAMINATION OPPORTUNITY HAS BEEN DENIED TO THE APPELLANT, WHO HAS DISCHARGED THE PRIMA - FACIE BURDEN OF SUB STANTIATING THE EXPENSE, THEREFORE THE DISALLOWANCE MADE BY THE AO FOR RS. 43,57,22,000/ - BEING NOT SUSTAINABLE, IS DIRECTED TO BE DELETED. 27 .5 FURTHER , THE LD. CIT - A OBSERVED THAT THE EXPENSES IN QUESTION WERE CAPITALIZED TO THE COST OF THE LAND AND NOT DEBITED IN THE PROFIT AND LOSS ACCOUNT AND THUS CANNOT BE DISALLOWED AND THEREFORE HE ALSO 28 DIRECTED THE ASSESSING OFFICER TO EXAMINE THE GENUINENESS/ALLOWABILITY OF SUCH DEVELOPMENT EXPENSES IN THE YEAR IN WHICH SAME ARE DEBITED IN THE BOOKS OF ACCOUNT S AND CLAIMED AS AN EXPENSES. 27 .6 AGGRIEVED, THE R EVENUE IS IN APPEAL RAISING GROUNDS AS REPRODUCED ABOVE. 28 . BEFORE US, THE LD. CIT ( DR ) SUBMITTED THAT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO ESTABLISH THAT SAID EXPENSES WERE WHOLLY AND EXCLUSIVE LY INCURRED FOR THE PURPOSE OF THE BUSINESS. SHE ALSO FURTHER SUBMITTED THAT THE ASSESSEE HAD FILED AFFIDAVIT OF THE PARTIES IN SUPPORT ITS CLAIM OF THE EXPENSES AND THUS IT WAS ONUS OF THE ASSESSEE TO PRODUCE THOSE PARTIES FOR VERIFICATION, RATHER THAN AS KING THE ASSESSING OFFICER TO PRODUCE THEM FOR CROSS - EXAMIN ATION AND FAILURE IN PRODUCING THOSE PARTIES BY THE ASSESSEE, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE LAND DEVELOPMENT EXPENSES CORRESPONDING TO THOSE PARTIES. FURTHER FOR VERIFICATION OF THE FACT, WHETHER THE EXPENSES CORRESPONDING TO THE PARTIES WERE DEBITED IN THE PROFIT AND LOSS ACCOUNT WERE NOT, THE LD. CIT DR REQUESTED TO RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER. ON THE OTHER HAND, NONE REPRESENTED ON BEHALF OF THE ASSE SSEE AND THEREFORE THE APPEAL IS HEARD EX PARTE QUA THE ASSESSEE. 29 . WE HAVE HEARD THE SUBMISSIONS OF LD. CIT ( DR ) AND PERUSED THE RELEVANT MATERIAL ON RECORD. ALL THE THREE GROUNDS RAISED BY THE REVENUE ARE REL ATED TO THE DISALLOWANCE OF RS.43,57,22, 000/ - IN RESPECT OF LAND DEVELOPMENT EXPENDITURE AND THUS ALL THE GRO UNDS BEING INTERCONNECTED , ARE DECIDED TOGETHER. THE IDENTICAL ISSUE IN DISPUTE IN APPEAL IN ITA NO. 3694/DEL/2010 HAS ALREADY BEEN RESTORED BY US TO THE FILE OF THE ASSESSING OFFICER FO R DECIDING AFRESH, THUS FOLLOWING THE SAME FINDING, THE ISSUE IN DISPUTE IN THE PRESENT APPEAL IS ALSO RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH IN THE LIGHT OF THE DIRECTIONS GIVEN IN ITA NO. 3694/DEL/2010. IT IS NEEDLESS TO MENTIO N THAT THE ASSESSEE SHALL 29 BE AFFORDED REASONABLE OPPORTUNITY OF HEARING. ACCORDINGLY, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. CROSS OBJECTION OF THE ASSESSEE 30 . I N THE CROSS OBJECTION, THE ASSESSEE HAS CHALLENGED THE VALIDITY OF TH E REASSESSMENT PROCEEDING AS BEING WITHOUT JURISDICTION. 31 . THE LEARNED CIT ( DR ) RELIED ON THE ORDER OF THE LD. CIT - A AND SUBMITTED THAT ISSUE HAS BEEN DISCUSSED AT LENGTH BY THE LD. CIT - A IN VIEW OF THE DECISIONS OF THE HON BLE SUPREME COURT AND DELHI H IGH COURT. NONE REPRESENTED ON BEHALF OF THE ASSESSEE AND THUS THE CASE WAS HEARD EX PARTE QUA THE ASSESSEE. 32 . WE HAVE HEARD THE SUBMISSION OF THE LD. CIT ( DR ) AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE LD. CIT - A HAS DECIDED THE ISSUE IN DISPUTE AS UNDER: 15. FINDING ON GROUND NO. 1 & 2 I HAVE GIVEN A CAREFUL CONSIDERATION TO THE FACTS OF THIS CASE WHICH HAVE LED TO THE PRESENT REOPENING OF THE ORIGINAL ASSESSMENT ORDER, THE SUBMISSIONS MADE BY THE APPELLANT IN THE SOF AGAINST REOPENING AND THE VARIOUS DECISIONS CITED BEFORE ME WHICH HAVE BEEN DISCUSSED BRIEFLY AS ABOVE. THE LEGAL PARAMETERS FOR INITIATING PROCEEDINGS U/S.147 OF THE I.T. ACT HAVE BEEN WELL DEFINED BY VARIOUS COURTS. IT IS TRITE LAW THAT REASSESSMENT PROCEEDINGS ARE NOT INITIATED MERELY ON SUSPICION OR ASSUMPTIONS AND THAT THE ASSESSMENT PROCEEDINGS WHICH HAVE ACHIEVED FINALITY CAN BE DISTURBED ONLY WHEN THERE ARE COGENT REASONS FOR SUBSEQUENT REOPENING. THE BASIC OBJECTION BY THE APPELLANT VEERS AROUND THE PROPOS ITION THAT THE ISSUE OF DEVELOPMENT EXPENSES WAS ALREADY EXAMINED AT THE TIME OF ORIGINAL ASSESSMENT COMPLETED U/S 143(3) OF THE ACT AND THAT TOO BY THE SAME ASSESSING OFFICER AND THAT THEREFORE THE PRESENT REOPENING IS MERE CHANGE OF OPINION AND THEREF ORE NOT A VALID GROUND FOR REOPENING. I HAVE GIVEN DEEP THOUGHT OVER THE MATTER AND AM OF THE VIEW THAT THE INFORMATION RECEIVED FROM THE OFFICE OF CIT - V , DELHI REGARDING THE INVESTIGATION DONE BY THE AO S IN HIS CHARGE WAS WITH RESPECT TO A DIFFERENT SET OF 18 COMPANIES TO WHOM DEVELOPMENT CHARGES WERE PAID BY THE APPELLANT DURING THE RELEVANT PERIOD. IT IS ALSO NOTED THAT THE EXPENSES PAID TO THESE 18 PARTIES WAS NOT THE SUBJECT MATTER OF SCRUTINY AND CONSEQUENT ALLOWANCE OF SUCH EXPENSE BY - THE AO IN TH E ORIGINAL ASSESSMENT ORDER. IN ADDITION TO THIS THE ISSUE IS ALSO TO BE SEEN FROM THE PERSPECTIVE AS TO WHETHER THE INFORMATION RECEIVED SUBSEQUENT TO THE PASSING OF ORIGINAL ASSESSMENT ORDER CONSTITUTED VALID AND SUFFICIENT GROUND FOR REOPENING. IT IS W ELL SETTLED LAW, AS HAS BEEN HELD BY APEX COURT IN THE CASE OF ACIT VS. RAJESH JHAVERI STOCK BROKERS PVT. LTD. REPORTED IN (291 ITR 500) THAT SECTION 30 147 AUTHORISES AND PERMITS THE ASSESSING OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT . IT WAS FURTHER HELD AS UNDER: THE WORD 'REASON' IN THE PHRASE 'REASON TO BELIEVE' WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD E SCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO MEAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE ASSESSING OFFICER IS TO ADMINISTER THE STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS TO TAXPAYERS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES MANGANESE ORE CO. LTD. V. ITO [1991] 191 ITR 662. FOR INITIATION OF ACTION UNDER SECTION 147(A) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FUL FILMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS 'REASON TO BELIEVE', BUT NOT THE ESTABLISHED FACT OF ESCAP EMENT OF INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN A T THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION (SEE ITO V. SELECTED DALURBAND COAL CO. P. LTD. [1996] 217 ITR 597 (SC) ; RAYMOND WOOLLEN MILLS LTD. V. ITO [1999] 236 ITR 34 ( SC). THUS, AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION TO BE CONSIDERED IS, WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED REQUISITE BELIEF THAT, INCOME HAS ESCAPED ASSESSMENT. IN OTHER WORDS, IF THE ASSESSING O FFICER HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, HE HAS JURISDICTION TO RE - OPEN THE ASSESSMENT. THE DELHI HIGH COURT IN THE CASE OF AGR INVESTMENT LTD. VS. ADDL. CIT (239 CTR 378) HAS HELD, AFTER CONSIDERING ALL THE JUDGMENTS ON THE SUBJE CT THAT, ONCE SPECIFIC INFORMATION WAS RECEIVED, THEN THERE IS MATERIAL TO INITIATE PROCEEDINGS. IT WAS HELD THEREIN AS UNDER, IT IS ALSO NOTICEABLE THAT THERE WAS SPECIFIC INFORMATION RECEIVED FROM THE OFFICE OF THE DIT (INV - V) AS REGARDS THE TRANSACTION S ENTERED INTO BY THE ASSESSEE COMPANY WITH NUMBER OF CONCERNS WHICH HAD MADE ACCOMMODATION ENTRIES AND THEY WERE NOT GENUINE TRANSACTIONS. AS WE PERCEIVE, IT IS NEITHER A CHANGE OF OPINION NOR DOES IT CONVEY A PARTICULAR INTERPRETATION OF A SPECIFIC PROVI SION WHICH WAS DONE IN A PARTICULAR MANNER IN THE ORIGINAL ASSESSMENT AND SOUGHT TO BE DONE IN A DIFFERENT MANNER IN THE PROCEEDING UNDER SECTION 147 OF THE ACT. THE REASON TO BELIEVE HAS BEEN APPROPRIATELY UNDERSTOOD BY THE ASSESSING OFFICER AND THERE IS MATERIAL ON THE BASIS OF WHICH THE NOTICE WAS ISSUED . KEEPING IN VIEW THE LEGAL PROPOSITION REFERRED ABOVE, I AM OF THE CONSIDERED VIEW THAT, THE INFORMATION RECEIVED BY THE AO FROM OFFICE OF CIT - V, DELHI IN WHICH INTER ALIA VARIOUS GROUNDS WERE CITED [ WHICH HAVE BEEN REPRODUCED IN PARA 4 TO XI ABOVE] TO HOLD THAT THE COMPANIES RECEIVING DEVELOPMENT EXPENSES WERE NON GENUINE PARTIES, DID CONSTITUTE RELEVANT AND MATERIAL INFORMATION ON THE BASIS OF WHICH THE ASSESSING OFFICER HAD REASON TO BELIEVE THAT, I NCOME HAS ESCAPED ASSESSMENT. THE SAID REASON HAD A RATIONAL CONNECTION OR LIVE LINK WITH 31 THE FORMATION OF THE BELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE HANDS OF THE ASSESSEE. IT WAS A REASONABLE BONA - FIDE BELIEF. IT HAS TO BE NOTE D THAT, AT THE STAGE OF RECORDING REASONS AND ISSUING NOTICE U/S. 148, IT IS ONLY EXPECTED OF THE AO TO REACH A PRIMA FACIE CONCLUSION THAT, INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. IN MAHANAGAR TELEPHONE NIGAM LTD V CHAIRMAN, CBDT AND ANOTHER (246 ITR 173) THE HON'BLE DELHI HIGH COURT, HELD THAT, AT THE TIME OF INITIATION OF ACTION TO REOPEN THE ASSESSMENT THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT AND WHAT IS REQUIRED IS 'REASON TO BELIEVE' BUT 'NOT THE ESTABLISHED FACT OF ESCAPEMENT OF I NCOME''. IT WAS HELD THAT, AT THE STAGE OF ISSUE OF NOTICE, 'THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT TH E CONCERN AT THAT STAGE'. THEREFORE, THE SUBMISSION OF THE COUNSEL FOR THE APPELLANT THAT, THE AO HAD NO MATERIAL ON RECORD TO VALIDLY ISSUE NOTICE U/S 148 OF THE I.T. ACT IS NOT ACCEPTABLE AND AS SUCH INITIATION OF PROCEEDINGS IS UPHELD AND, THE GROUND OF APPEAL NO. 1 AND 2 ARE DISMISSED. 33 . T HE REASONS TO BELIEVE THAT INCOME ESCAPED ASSESSMENT RECORDED, BY THE ASSESSING OFFICER HAS BEEN REPRODUCED BY THE LD. CIT - A ON PAGE 4 OF THE IMPUGNED ORDER. THE LD. CIT - A HAS TAKEN INTO ACCOUNT ALL THE OBJECTION S OF THE ASSESSEE AGAINST REASSESSMENT PROCEEDINGS. THE LD. CIT - A HAS ALSO CONSIDERED THE ISSUE RACKED UP BY THE ASSESSEE THAT THE VERY SAME ISSUE OF LAND DEVELOPMENT EXPENSES HAD UNDERGONE THE SCRUTINY AS WELL AS APPELLATE PROCEEDINGS AND THEREFORE IT ACH IEVED FINALITY. THE ARGUMENTS OF THE ASSESSEE THAT THE REASON TO BELIEVE OF THE ASSESSING OFFICER ACTUALLY HAD ONLY REASON TO SUSPECT, WAS ALSO CONSIDERED. FURTHER THE ARGUMENT THAT REASSESSMENT PROCEEDING WAS MERELY CHANGE OF OPINION HAS ALSO BEEN CONSIDE RED BY THE LD. CIT - A. IN OUR OPINION THE FINDING OF THE LD. CIT - A ON THE ISSUE IN DISPUTE IS COMPREHENSIVE AND WELL REASONED AND NO INTERFERENCE ON OUR PART IS REQUIRED, ACCORDINGLY WE UPHOLD THE SAME AND DISMISS THE GROUNDS RAISED BY THE ASSESSEE IN THE C ROSS OBJECTION. 3 4 . ACCORDINGLY , THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ITA NO. 6461/DEL/2012 & 6384/DEL/2012 FOR AY: 2008 - 09. 35 . N OW WE TAKE UP APPEAL OF THE R EVENUE HAVING ITA NO. 6461/DEL/2012 AND APPEAL OF THE ASSESSEE HAVING ITA NO. 6384/DEL/2012 BOTH , FOR ASSESSMENT YEAR 2008 - 09. 32 36 . THE G ROUNDS OF APPEAL RAISED BY THE R EVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.6,37,85,561/ - MADE BY THE A.O. U/S 69B OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE C1T (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,78,28,308/ - MADE BY THE A.O. ON ACCOUNT OF CONSULTANCY CHARGES (COMMISSION/ BROKERAGE). 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED, IN VIOLATION OF THE RULE 46A OF THE INCOME - TAX RULES, 1962, BY NOT FOLLOWING THE DECISION OF HON BLE DELHI HIGH COURT IN THE CASE OF MANISH BUILD WELL PVT. LTD. 204 TAXMAN 106, WHE REIN IT WAS HELD BY THE HON BLE JURISDICTIONAL HIGH COURT TO GIVE TWO STAGE OPPORTUNITY UNDER RULE 46A, I.E. FIRST BEFORE ADMISSION OF ADDITIONAL EVIDENCES AND SECOND AFTER ADMISSION OF ADDITIONAL EVIDENCES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,74,20,000/ - MADE BY THE A.O. ON ACCOUNT OF LAND DEVELOPMENT EXPENDITURE. 5. THE ORDER OF THE CIT (A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 37 . G ROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS UNDER: 1. IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) ERRED IN SUSTAINING AN ADDITION OF RS. 87,43,250/ - UNDER THE HEAD LAND DEVELOPMENT EXPENSES. 2. IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED, WHILE SUSTAINING AN ADDITION OF RS. 87,43,250/ - , IN HOLDING TH AT CASH AVAILABLE IN THE BOOKS OF ACCOUNTS CANNOT BE ALLOWED TO BE UTILIZED FOR MAKING PAYMENT OUTSIDE THE BOOKS AND THEREFORE, WORKING OUT A NEGATIVE CASH BALANCE TO THIS EXTENT AS ON 26 - 09 - 2007. 3. IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN SUSTAINING FOLLOWING ADDITION MADE UNDER THE HEAD COMMISSION, BROKERAGE AND FARM LAND DEVELOPMENT EXPENSES IGNORING THE FACT THAT PAYMENT IS MADE THROUGH BANKING CHANNELS AND GENUINENESS OF THE PAYMENT IS NOT DOUBTED: (I) SHRI MAN PREET SINGH JANTA - RS. 10,00,000/ - (II) M/S ASSOCIATE SPACE DESIGNERS PVT. LTD. - RS. 9,00,000/ - (III) M/S ECON TRADE WORLD - RS. 17,50,000/ - (IV) M/S CONFLUENCE LEASING AND CREDIT LTD. - RS. 2,71,692/ - (V) M/S NILESH MARKETING PVT. LTD. - RS. 13,00,000/ - 33 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 38 . T HE FACTS IN BRIEF OF THE CASE ARE THAT FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOM E DECLARING TOTAL INCOME OF RS.20,78,86, 458/ - ON 17/02/2009 . THE YEAR UNDER CONSIDERATION WAS AFTER THE DATE OF SEARCH AND THEREFORE, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 31 /12/2009 AT TOTAL INCOME OF RS.32,08,85, 270 / - . IN THE CASE OF THE ASSESSEE , A SURVEY ACTION UNDER SECTIO N 13 3A OF THE ACT WAS ALSO CARRIED OUT. DURING THE COURSE OF SURVEY, CERTAIN INCRIMINATING DOCUMENTS PERTAINING TO THE YEAR UNDER CONSIDERATION WERE IMPOUNDED. IN THE ASSESSMENT COMPLETED , THE ASSESSING OFFICER MADE FOLLOWING ADDITIONS: I. C ASH PAYMENT FOR PU RCHASE OF LAND AMOUNTING TO RS. 7,25,28,811/ - II. PAYMENT MADE ON ACCOUNT OF COMMISSION/BROKERAGE ETC AMOUNTING TO RS.2,30,50,000/ - III. DISALLOWANCE OF LAND/ FARM DEVELO PMENT EXPENSES AMOUNTING TO RS. 1, 74,20,000/ - . 38 .1 AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT - A, WHO, PARTLY ALLOWED THE APPEAL OF TH E ASSESSEE. AGGRIEVED BOTH THE R EVENUE AND ASSESSEE ARE IN THE APPEAL RAISING GROUNDS AS REPRODUCED ABOVE. 39 . BEFORE US, THE LD. CIT ( DR ) , FIRST TOOK THE GRO UND NO. 3 OF THE APPEAL OF THE R EVENUE AND SUBMITTED THAT THE ASSESSEE HAD FILED ADDITIONAL EVIDENCES BEFORE THE LD. CIT - A , WHICH WERE OBJECTED BY THE ASSESSING OFFICER IN REMAND PROCEEDINGS . SHE FURTHER SUBMITTED THAT WHILE ADMITTING THOSE ADD ITIONAL EVIDENCES UNDER RULE 46A OF THE I NCOME TAX R ULES, 196 2 , THE LD. CIT - A HAS NOT FOLLOWED THE DECISION OF THE HON BLE DELHI HIGH COURT I N THE CASE OF MANISH BUILDWELL PRIVATE L IMITED, 204 TAXMANN 106, ACCORDING TO WHICH THE ASSESSING OFFICER SHOULD HAVE 34 BEEN PROVIDED TWO STAGE OPPORTUNITY UNDER RULE 4 6A, I.E. FIRSTLY FOR ADMISSION OF ADDITIONAL EVIDENCES AND SECOND, AFTER ADMISSION OF ADDITIONAL EVIDENCES. ACCORDINGLY , SHE SUBMITTED THAT THE GROUN D NO. 1 AND 2 OF THE R EVENUE S APPEAL AND GROUNDS NO. 1 TO 3 OF ASSESSEE S APPEAL NEED TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERING THOSE EVIDENCES AND DECIDING THE ISSUE AFRESH. ON THE OTHER HAND, NONE REPRESENTED ON BEHALF OF THE A SSESSEE AND THUS APPEALS WERE HEARD EX PARTE QUA THE ASSESSEE. 40 . WE HAVE HEARD THE SUBMISSION OF THE LD. CIT ( DR ) AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT ADDITIONAL EVIDENCES WERE SUBMITTED BY THE ASSESSEE IN RESPECT OF T HE ADDITIONS CH ALLENGED BY THE R EVENUE IN GROUND NO. 1 AND 2 OF THE APPEAL. THE GROUND NO. 1 TO 3 OF THE APPEAL OF THE ASSESSEE ARE ALSO CONNECTED WITH THE GROUND NO. 1 AND 2 OF THE APPEAL OF THE R EVENUE. 41 . IN THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER MADE ADDI TION FOR PAYMENT OF MONEY AMOUNTING TO RS.7,25,28,811/ - REFLECTED IN THE ANNEXURE A - 2 AND ANNEXURE A - 6 FOUND AND IMPOUNDED DURING THE COURSE OF SURVEY OPERATIONS. THE ASSESSEE CONTENDED BEFORE THE LD. CIT - A THAT THE EXPENSES CLAIMED IN SUBSEQUENT YEAR CORR ESPONDING TO THE PAYMENT MADE IN THE YEAR UNDER CONSIDERATION WERE REVERTED BACK AND THUS IT WAS PRESUMED THAT CASH WAS RECEIVED AGAINST THOSE PAYMENTS AND THEREFORE THIS CASH WAS AVAILABLE FOR MAKING PAYMENTS FOR LAND PURCHASES. THE CASH FLOW STATEMENT PR EPARED BY THE ASSESSEE WAS EXAMINED BY THE LD. CIT - A AND AFTER REMOVING THE TAX DEDUCTED AT SOURCE, HE FOUND NEGATIVE CASH ON 26/09/2007 TO THE EXTENT OF RS.87,43, 250/ - AND UPHELD THE ADDITION TO TH AT EXTENT. IN REMAND PROCEEDING, T HE ASSESSING OFFICER OBJ ECTED TO ADMISSION OF THE WORKING OF CASH FLOW SUBMITTED BY THE ASSESSEE , HOWEVER DID NOT COMMENT ON THE MERIT OF THE WORKING OF THE CASH FLOW STATEMENT. 35 42 . WITH REGARD TO ANOTHER ADDITION OF COMMISSION/BROKERAGE/FARMLAND D EVELOPMENT TO THE EXTENT OF RS. 2,30,50, 000/ - , DURING APPELLATE PROCEEDING BEFORE THE LEARNED CIT(A) , THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED COPY OF THE BILLS RAISED BY THE PARTIES AS ADDITIONAL EVIDENCE. DURING REMAND PROC EEDING , THE ASSESSING OFFICER OBJECTED TO ADMISSION OF ADDITIONAL EVIDENCES AND RAISED CERTAIN DISCREPANCIES IN THE ADDITIONAL EVIDENCES. THE ASSESSEE DID NOT COMPLY THE QUERIES RAISED BY THE ASSESSING OFFICER IN REMAND PROCEEDINGS. 43 . IN VIEW OF THE ABOVE, I T IS EVIDENT THAT THE LD. CIT - A HA S NOT COMPLIED WITH THE RULE 46A(3) OF INCOME TAX R ULES, 1962, ACCORDING TO WHICH THE LD. CIT - A BEFORE ADM ITTING THE ADDITIONAL EVIDENCES , WAS REQUIRED TO PROVIDE A REASONABLE OPPORTUNITY TO THE ASSESSING OFFICER FOR FOLLO WING PURPOSES : A. TO EXAMINE THE EVIDENCE PRODUCED BY THE ASSESSEE B. TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE. 44 . ON THE ISSUE OF PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER WHILE A DMITTING ADDITIONAL EVI DENCES , T HE HON BLE DELHI HIGH COURT I N THE CASE OF MANISH BUILDWELL P RIVATE L IMITED (SUPRA) HAS HELD AS UNDER: 23. IT IS FOR THE AFORESAID REASON THAT R. 46A STARTS IN A NEGATIVE MANNER BY SAYING THAT AN APPELLANT BEFORE THE CIT(A) SHALL NOT BE ENTITLED TO PRODUCE BEFORE HIM ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE ADDUCED BY HIM BEFORE THE AO . AFTER MAKING SUCH A GENERAL STATEMENT, WHICH IS IN CONSONANCE WITH THE PRINCIPLE STATED IN THE ABOVE JUDGMENT, EXCEPTIONS HAVE BEEN CARVED OUT THAT IN CERTAIN CIRCUMSTANCES IT WOULD BE OPEN TO THE CIT(A) TO ADMIT ADDITIONAL EVIDENCE. THEREFORE, ADDITIONA L EVIDENCE CAN BE PRODUCED AT THE FIRST 36 APPELLATE STAGE WHEN CONDITIONS STIPULATED IN THE R. 46A ARE SATISFIED AND A FINDING IS RECORDED. RULE 46A READS : '46A. PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE DEPUTY COMMISSIONER (APPEALS) AND COMMISSIONER (AP PEALS). (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS), ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE ASSESSING OFFICER, EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY : (A) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMIT EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRO DUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB - R. (1) UNLESS THE DEPUTY COMMISSIONER (APPEALS ) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. 37 (3) THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB - R. ( 1) UNLESS THE ASSESSING OFFICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS - EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITNESS IN REBUTTAL OF THE ADDITI NAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WI TNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY [WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE ASSESSING OFFICER UNDER CL. (A) OF SUB - S. (1) OF S. 251 OR THE IMPO SITION OF PENALTY UNDER S. 271.' WE ARE HIGHLIGHTING THESE ASPECTS ONLY TO PRESS HOME THE POINT THAT THE CONDITIONS PRESCRIBED IN R. 46A MUST BE SHOWN TO EXIST BEFORE ADDITIONAL EVIDENCE IS ADMITTED AND EVERY PROCEDURAL REQUIREMENT MENTIONED IN THE RULE HA S TO BE STRICTLY COMPLIED WITH SO THAT THE RULE IS MEANINGFULLY EXERCISED AND NOT EXERCISED IN A ROUTINE OR CURSORY MANNER. A DISTINCTION SHOULD BE RECOGNIZED AND MAINTAINED BETWEEN A CASE WHERE THE ASSESSEE INVOKES R. 46A TO ADDUCE ADDITIONAL EVIDENCE BEF ORE THE CIT(A) AND A CASE WHERE THE CIT(A), WITHOUT BEING PROMPTED BY THE ASSESSEE, WHILE DEALING WITH THE APPEAL, CONSIDERS IT FIT TO CAUSE OR MAKE A FURTHER ENQUIRY BY VIRTUE OF THE POWERS VESTED IN HIM UNDER SUB - S. (4) OF S. 250. IT IS 38 ONLY WHEN HE EXER CISES HIS STATUTORY SUO MOTU POWER UNDER THE ABOVE SUB - SECTION THAT THE REQUIREMENTS OF R. 46A NEED NOT BE FOLLOWED. ON THE OTHER HAND, WHENEVER THE ASSESSEE WHO IS IN APPEAL BEFORE HIM INVOKES R. 46A, IT IS INCUMBENT UPON THE CIT(A) TO COMPLY WITH THE REQ UIREMENTS OF THE RULE STRICTLY. 24. IN THE PRESENT CASE, THE CIT(A) HAS OBSERVED THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED BECAUSE THE ASSESSEE WAS PREVENTED BY ADDUCING THEM BEFORE THE AO. THIS OBSERVATION TAKES CARE OF CL. (C) OF SUB - R. (1) OF R. 46A. THE OBSERVATION OF THE CIT(A) ALSO TAKES CARE OF SUB - R. (2) UNDER WHICH HE IS REQUIRED TO RECORD HIS REASONS FOR ADMITTING THE ADDITIONAL EVIDENCE. THUS, THE REQUIREMENT OF SUB - RS. (1) AND (2) OF R. 46A HAVE BEEN COMPLIED WITH. HOWEVER, SUB - R. (3) WHICH INTERDICTS THE CIT(A) FROM TAKING INTO ACCOUNT ANY EVIDENCE PRODUCED FOR THE FIRST TIME BEFORE HIM UNLESS THE AO HAS HAD A REASONABLE OPPORTUNITY OF EXAMINING THE EVIDENCE AND REBUT THE SAME, HAS NOT BEEN COMPLIED WITH. THERE IS NOTHING IN THE ORDER OF THE CIT(A) TO SHOW THAT THE AO WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, THE END RESULT HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITTED AND ACCE PTED AS GENUINE WITHOUT THE AO FURNISHING HIS COMMENTS AND WITHOUT VERIFICATION. SINCE THIS IS AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORED THE MATTER TO THE CIT(A) WITH THE DIRECTION TO HIM TO COMPLY WITH SUB - R . (3) OF R. 46A. IN OUR OPINION AND WITH RESPECT, THE ERROR COMMITTED BY THE TRIBUNAL IS THAT IT PROCEEDED TO MIX UP THE POWERS OF THE CIT(A) UNDER SUB - S. (4) OF S. 250 WITH THE POWERS VESTED IN HIM UNDER R. 46A. THE TRIBUNAL SEEMS TO HAVE OVERLOOKED SUB - R. (4) OF R. 46A [SIC - S. 250] WHICH ITSELF TAKES NOTE OF THE DISTINCTION BETWEEN THE 39 POWERS CONFERRED BY THE CIT(A) UNDER THE STATUTE WHILE DISPOSING OF THE ASSESSEE S APPEAL AND THE POWERS CONFERRED UPON HIM UNDER R. 46A. THE TRIBUNAL ERRED IN ITS INTERPR ETATION OF THE PROVISIONS OF R. 46A VIS - - VIS S. 250(4). ITS VIEW THAT SINCE IN ANY CASE THE CIT(A), BY VIRTUE OF HIS COTERMINOUS POWERS OVER THE ASSESSMENT ORDER, WAS EMPOWERED TO CALL FOR ANY DOCUMENT OR MAKE ANY FURTHER ENQUIRY AS HE THINKS FIT, THERE W AS NO VIOLATION OF R. 46A IS ERRONEOUS. THE TRIBUNAL APPEARS TO HAVE NOT APPRECIATED THE DISTINCTION BETWEEN THE TWO PROVISIONS. IF THE VIEW OF THE TRIBUNAL IS ACCEPTED, IT WOULD MAKE R. 46A OTIOSE AND IT WOULD OPEN UP THE POSSIBILITY OF THE ASSESSEES CON TENDING THAT ANY ADDITIONAL EVIDENCE SOUGHT TO BE INTRODUCED BY THEM BEFORE THE CIT(A) CANNOT BE SUBJECTED TO THE CONDITIONS PRESCRIBED IN R. 46A BECAUSE IN ANY CASE THE CIT(A) IS VESTED WITH COTERMINOUS POWERS OVER THE ASSESSMENT ORDERS OR POWERS OF INDEP ENDENT ENQUIRY UNDER SUB - S. (4) OF S. 250. THAT IS A CONSEQUENCE WHICH CANNOT AT ALL BE COUNTENANCED. 45 . THUS , RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF MANISH BUILDWELL PRIVATE LIMITED (SUPRA), WE HOLD THAT THE A SSESSING OFFICER HAS NOT BEEN PROVIDED OPPORTUNITY TO COMMENTS ON THE MERIT OF THE ADDI TIONAL EVIDENCES AND NECESSARY I NQUIRY TO REBUT THOSE ADDITIONAL EVIDENCES, AND THUS WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE IS IN GROUND NO. 1 AND 2 OF THE APPEAL O F THE R EVENUE AND GROUND NO. 1 TO 3 OF THE APPEAL OF THE ASSESSEE FOR DECIDING AFRESH AFTER TAKING INTO ACCOUNT THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) . WE ORDER ACCORDINGLY. THUS , THE RESPECTIV E GROUNDS OF THE APPEAL OF THE R EVENUE AND THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. THE GRO UND NO. 3 OF THE APPEAL OF THE R EVENUE IS ACCORDINGLY ALLOWED ALSO. 40 46 . IN GROUND NUMBER 4, THE R EVENUE HAS CHALLENGED THE ADDITION OF RS.1,74,20, 000/ - ON ACCOUNT OF LAND DEVELOPMENT EXPENDITURE DELETED BY THE LD. CIT - A. 46 .1 WE FIND THAT THE ISSUE IN DISPUTE IS IDENTICAL TO THE GROUND NO. 1 RAISED BY THE REVENUE IN ITA NO. 3694/DEL/2010 AND IN ITA NO. 3779/DEL/2011, WHICH WE HAVE ALREADY RESTORED TO THE FILE OF THE ASSESS ING OFFICER FOR DECIDING AFRESH. FOLLOWING THE SAME FINDING, THE ISSUE IN DISPUTE, IS RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH. IT IS NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE AFFORDED SUFFICIENT OPPORTUNITY OF HEARING. ACCORD INGLY THE GRO UND NO. 4 OF THE APPEAL OF THE R EVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 47 . IN T HE RESULT, APPEALS BOTH OF THE R EVENUE AND ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO S . 6462/DEL/2012 & 6385/ DEL/2012 FOR AY:2009 - 10 48 . NOW WE TAKE UP APPEAL OF R EVENUE HAVING ITA NO. 6462/DEL/2012 AND APPEAL OF THE ASSESSEE HAVING ITA NO. 6385/DEL/2012 , BOTH FOR ASSESSMENT YEAR 2009 - 10. 49 . TH E GROUNDS OF APPEAL RAISED THE R EVENUE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED DELETING THE ADDITION OF RS.4,08,80,236/ - MADE BY THE A.O. ON ACCOUNT OF LAND DEVELOPMENT EXPENDITURE CLAIM OF THE COMPANY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED DELETING THE ADDITION OF RS. 10,33,30,407/ - MADE BY THE A.O. ON ACCOUNT COMMISSION/ BROKERAGE. 3. THE ORDER OF THE CIT (A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ ALL OF THE GROUNDS APPEAL BEFORE OR DURING THE COU RSE OF THE HEARING OF THE APPEAL. 50 . G ROUNDS OF APPEAL RAISED WITH ASSESSEE ARE AS UNDER: 1. IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS. 53,37,600/ - UNDER THE HEAD BROKERAGE IGNORING THE FACT THAT PAYMENT IS MADE THROUGH BANKING CHANNELS, GENUINENESS OF THE 41 PAYMENT IS NOT DOUBTED AN D SUCH PAYMENT OF BROKERAGE TO THESE PARTIES HAS BEEN ALLOWED IN EARLIER YEARS. 2.(I) IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING AN ADDITION OF RS. 3,48,27,265/ - OUT OF TOTAL ADDITION OF RS. 13,34,82,275/ - BEING 10% OUT OF EXPENDITURE OF RS. 1,33,48,22,756/ - UNDER THE HEAD COMMISSION AND MARKET DEVELOPMENT EXPENSES. (II) IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), WHILE CONFIRMING THE ADDITION OF RS. 3,48,27,265/ - , ERRED IN IGNORI NG THE FACT THAT THIS ADDITION WAS PART OF ADDITION MADE BY THE A.O. ON ESTIMATE BASIS AND SIMILAR ADDITION MADE ON ESTIMATE BASIS UNDER THE HEAD FARM DEVELOPMENT EXPENSES WAS DELETED BY HIM. (III) IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS. 47,09,396/ - AND OF RS. 3,01,17,869/ - (BEING PART OF ADDITION OF RS. 3,48,27,265/ - CONFIRMED BY HIM) IGNORING THE FACT THAT NO SUCH SPECIFIC ADDITION HAD BEEN MADE BY THE A.O. AND THERE IS NO SPECIFIC FIN DING THAT HE INTENDED TO MAKE ADDITION OF THESE AMOUNTS. (IV) IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS. 3,48,27,265/ - UNDER THE HEAD COMMISSION AND MARKET DEVELOPMENT EXPENSES IGNORING TH E FACT THAT PAYMENT IS MADE THROUGH BANKING CHANNELS, GENUINENESS OF THE PAYMENT IS NOT DOUBTED AND SUCH PAYMENT OF BROKERAGE TO THESE PARTIES HAS BEEN ALLOWED IN EARLIER YEARS. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 51 . THE F ACTS IN BRIEF OF THE CASE ARE THAT DURING THE RELEVANT PERIOD, A SURVEY ACTION UNDER SECTION 13 3A OF THE ACT WAS CONDUCTED ON 25/11/2008 AT THE BUSINESS PREMISES OF TH E ASSESSEE LOCATED AT 7 TH FLOOR, GOPAL DAS BHAWAN, BARAKHAMBA ROAD, NEW DELHI, DURING WHICH INCRIMINATING DOCUMENTS WERE IMPOUNDED. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED RETURN OF INCOME ELECTRONICALLY ON 30/09/2010 DE CLARING TOTAL INCOME O F RS.27,27,31, 417/ - . THE CASE WAS SELECTED FOR COMPULSORY SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 11/08/2010 WHICH WAS DULY SERVED UPON THE ASSESSEE. THE INCRIMINATING DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY WERE CONFRONTE D TO THE ASSESSEE AND ASS ESSMENT WAS COMPLETED ON 10/04/ 2011 AFTER MAKING FOLLOWING ADDITIONS TO THE RETURNED INCOME: 42 ( A ) LAND/FARM DEVELOPMENT EXPENSES (I) DIFFERENCE AMOUNT, THOUGH SURRENDERED BUT NOT DECLARED IN THE RETURN OF INCOME. 6,41, 600 (II) DISALLOWANCE IN RESPECT OF PARTIES NOT FOUND GENUINE IN EARLIER YEARS 1,71,09,000 (III) ESTIMATE AT THE RATE OF 10% IN CASE OF NON - VERIFIABLE PARTIES 2,37,12,364 TOTAL 4,15,21,836 (B) DISALLOWANCE OF BROKERAGE/COMMISSION EXPENSES (I) PAYMENTS TO CONCERNS MENTIONED IN ANNEXURE A4 NOT HAVING ADDRESS 53,37, 600 (II) DISALLOWANCE ON ESTIMATE BASIS AT THE RATE OF 10% OUT OF COMMISSION/MARKET DEVELOPMENT EXPENSES OF RS.1,33,48,22, 756/ - , DUE TO NON - VERIFICATION OF CASES UNDER 133(6), PART IES STATE NOT MENTIONED, AND PARTIES PAN NOT MENTIONED 13,34, 82, 275 TOTAL 13,88,19,875 51 .1 ON APPEAL, THE LEARNED CIT - A, ALLOWED PART RELIEF TO THE ASSESSEE. AGGRIEVED, BOTH THE R EVENUE AND THE ASSESSEE ARE IN APPEAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 52 . BEFORE US, LD. CIT ( DR ) RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT LD. CIT - A HAS NOT APPRECIATED THE FINDING OF THE ASSESSING OFFICER. SHE ACCORDINGLY PRAYED THAT ADDITION MADE BY THE ASSESSING OFFICER MIGHT BE SU STAINED IN FULL. ON THE OTHER HAND, NONE REPRESENTED ON BEHALF OF THE ASSESSEE AND THEREFORE THE CASE WAS HEARD EX PARTE QUA THE ASSESSEE. 53 . WE HAVE HEARD THE SUBMISSION OF THE LD. CIT ( DR ) AND PERUSED THE RELEVANT MATERIAL ON RECORD. 43 54 . IN GROUND NO. 1 , THE R EVENUE HAS CHALLENGED ADDITION OF RS.4,08, 80,236/ - DELETED BY THE LD. CI T - A, OUT OF THE ADDITION OF RS.4, 15,21,836 MADE BY THE ASSESSING OFFICER AGAINST LAND DEVELOPMENT EXPENSES. THE ADDITION OF RS. 4,15,21,836/ - C ONSIST OF THREE ITEMS OF RS. 6,41, 600/ - ; RS. 1,71,09,000 AND RS. 2,37,71, 236/ - . 5 5 . REGARDING THE FIRST ITEM OF RS.6,41, 600/ - , THE FACTS IN BRIEF ARE THAT ON THE BASIS OF THE MATERIAL FOUND DURING THE COURSE OF SURVEY PROCEEDINGS AND THE STATEMENT OF SH. K K BAKSHI, COO, OF THE ASSESSEE COMPANY, THE ASSESSEE COMPANY V IDE ITS LETTER DATED 24/04/2009 ADMITTED THAT THEY WERE UNABLE TO PRODUCE 10 PARTIES , TO WHOM PAYMENT OF RS.15,06,41, 600/ - WAS SHOWN IN F INANCIAL YEAR 2007 - 08 AND EXPENSES CORRESPONDING TO THOSE WERE DEBITED AS LAND DEVELOPM ENT EXPENSE DURING THE YEAR IN QUESTION. ACCORDINGLY , THE ASSESSEE COMPANY REVERSE D THE ENTRIES AN D SURRENDERED THE AMOUNT OF RS.15,06,41, 600/ - . DURING THE ASSESSMENT PROC EEDING , THE ASSESSING OFFICER OBSERVED THAT ASSESSEE OFFERED INCOME OF RS. 15 CRORES IN PROFIT AND LOSS ACCOUNT BY WAY OF REVERSAL OF LAND DEVELOPMENT EXPENSES CHAR GED TO PROFIT AND LOSS ACCOUNT, A ND THEREFORE HE ADDED THE BALANCE AMOUNT OF RS. 6, 47, 600/ - , WHICH WAS DECLARED DURING THE COURSE OF SURVEY HOWEVER NOT REVERSED IN THE PROFIT AND LOSS ACCOUNT OF THE YEAR UNDER CONSIDERATION. BEFORE THE LD. CIT - A, THE ASSESSEE SUBMITTED THAT IT RE VERSED THE ENTIRE AMOUNT OF RS.15,06,41,600/ - . ACCORDINGLY , THE LD. CIT - A HELD AS UNDER: C) DECISION I HAVE CONSIDERED THE ASSESSMENT ORDER, WRITTEN SUBMISSION & ARGUMENT OF LEARNED AR. AS EVIDENT IN PARA 5.1 OF ASSESSMENT ORDER REPRODUCED SUPRA, THE APPELLANT HAS MADE SURRENDER OF RS. 15,06,41,600 BEING TOTAL OF PAYMENT MADE TO 10 PARTIES UN DER THE HEAD 'LAND DEVELOPMENT EXPENSE & FURNISHED COPY OF LEDGER OF THESE 10 PARTIES. THESE PAYMENT WERE MADE IN F.Y. 07 - 08 BUT NOT CLAIMED EXPENSE IN A.Y. 08 - 09. THE EXPENDITURE WERE CLAIMED FOR A.Y. 09 - 10. DURING SURVEY OPERATION, APPELLANT COMPANY'S C .O.O. SH. K.K BAKSHI STATED THAT THESE 10 PARTIES CANNOT BE PRODUCED THEREFORE, THE REVERSAL ENTRIES WERE MADE & EXPENDITURE, WHICH WAS CLAIMED IN P & L A/C FOR A.Y. 08 - 09, WAS REVERSED, THEREFORE, EXPENDITURE IN RESPECT OF 10 PARTIES WAS NOT CLAIMED IN A. Y. 09 - 10. THE ASSESSING OFFICER ACCEPTED THAT THE DISCLOSURE OF RS. 15 CRORES IS BY WAY OF REVERSAL OF ENTRIES IN RESPECT OF THESE 10 PARTIES & ADDED THE BALANCE I.E. (SUM TOTAL OF PAYMENT MADE TO THESE 10 PARTIES 44 .RS.. 15.06,41,600, - RS. 15,00,000) IN TOTA L INCOME. LD. AR ARGUED THAT ONCE ENTIRE PAYMENT MADE TO 10 PARTIES ARE REVERSED, THE ENTIRE PAYMENT OF RS. 15,06,41,600 IS NOT CLAIMED IN EXPENDITURE. HENCE, SURRENDER IS FOR RS. 15,06,41,600 & NOT RS 15 CRORES, I AGREE WITH THE ARGUMENT OF LD. AR THAT ON CE ENTRIES IN RESPECT OF THESE 10 PARTIES ARE REVERSED, EXPENDITURE TO THE EXTENT OF RS. 15,06,41,600 WAS NOT CLAIMED, THEREFORE SURRENDER IS FOR RS. 15.06.41.600 - 00. THEREFORE, ADDITION OF RS. 6,41,600 IS NOT REQUIRED. ACCORDINGLY, I DIRECT A.O. TO DELE TE THE ADDITION OF RS. 6,41,600 ON THIS ISSUE. 56 . WE HAVE OBSERVED THAT, THE ASSESSING OFFICER IS CLAIMING THAT AMOUNT ONLY RS. 15 CRORE WAS CREDITED IN THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF REVERSAL OF ENTRIES OF LAND DEVELOPMENT EXPENSES, WHEREA S ACCORDING TO THE LD. CIT - A, THE ASSESSEE HAS REV ERSED THE ENTIRE AMOUNT OF RS.15, 06,41,600/ - . IN OUR OPINION, IT IS MATTER OF VERIFICATION FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY AND THUS , WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF FACTS FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND DECIDE THE ISSUE ACCORDINGLY. THE ASSESSEE IS DIRECTED TO PRODUCE ALL THE NECESSARY DOCUMENTS INCLUD ING BOOKS OF ACCOUNTS FOR VERIFICATION BY THE ASSESSING OFFICER. IT IS NEEDLESS TO MENTION, THAT THE ASSESSEE SHALL BE AFFORDED SUFFICIENT OPPORTUNITY OF HEARING. 56 .1 REGARDING THE SECOND DISALLOWANCE OF RS.1,71,09, 000/ - OUT OF THE LAND ALLOTMENT EXPENS ES, WE FIND THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE ON THE BASIS OF THE FINDING IN RESPECT OF PARTIES AS FOLLOWS IN EARLIER YEARS: S. NO. NAME OF THE PARTY CONSIDERED AS NOT GENUINE IN AMOUNT DEBITED IN A Y 2009 - 10 1 M/S GR DEVELOPERS, PROP. GOVIND RAM SAINI HUF, C - 392, SECTOR - 1, ROHINI, NEW DELHI 2008 - 09 87,40,000 2 M/S SPT IMPEX P LTD., 119/2, KISHAN KUNJ, LAXMI NAGAR, NEW DELHI 2008 - 09 51,30,000 3 M/S RELIABLE BUILDWELL (P) LTD. 1257/37, W, FALEHPURI COLONY, NEW DELHI 2008 - 09 13,69,000 4 M/S RAJ BALA AGRO P LTD 2007 - 08 18,70,000 1,71,09,000 45 56 .2 S INCE IN EARLIER YEARS, WE HAVE ALREADY RESTORED THE ISSUE OF DISALLOWANCE OF LAND DEVELOPMENT EXPENSES TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH, THEREFORE WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE OF L AND DEVELOPMENT EXPENSES OF RS.1,71,09, 000/ - , RELATED TO ABOVE PARTIES IN THE YEAR UNDER CONSIDERATION ALSO . IT IS NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE AFFORDED SUFFICIENT OPPORTUNITY OF HEARING ON THE ISSUE IN DISPUTE. WE ORDER ACCORDINGLY. 56 .3 RE GARDING THE DISALLOWANCE OF RS.2,37,71, 236/ - OUT OF THE LAND DEVELOPMENT EXPENSES IS CONCERNED, THE LD. ASSESSING OFFICER OBSERVED THAT THE ASSE SSEE FAILED TO SUBMIT COMPLETE ADDRESSES AND OTHER DETAILS IN RESPECT OF THE PARITES AND THEREFORE GENUINENESS OF THE EXP ENSES OF BALANCE AMOUNT OF RS.23,77,12, 364/ - UNDER THE HEAD LAND DEVELOPMENT EXPENSES WAS DOUBTFUL . IN VIEW OF THE FACTS ,THE ASSESSING OFFICER DISALLOWED 10% OF THE BALANCE AM OUNT OF RS.23,77,12, 364 / - , WHICH WAS WORKED OUT TO RS.2,37,71, 236/ - . ACCORDING TO THE LD. CIT - A , THE ASSESSING OFFICER HAS NOT POINTED OUT IN RESPECT OF WHICH PARTIES ADDRESSES WERE NOT FURNISHED AND WHICH REQUISITE DETAILS HAVE NOT BEEN FURNISHED. IN ABSE NCE OF SUCH FINDING, THE LD . CIT - A, FOUND THE ADDITIONS A S AD - HOC IN NATURE AND WITHOUT ANY ENQUIRY AND ACCORDINGLY HE DELETED THE ADDITION. 56 .4 WE HAVE OBSERVED THAT THE ASSESSEE HAS NOT DISCHARGED ITS ONUS OF PROVIDING COMPLETE ADDRESS AND OTHER DETA ILS IN RESPECT OF THE EXPENSES CLAIMED. IN ABSENCE OF THOSE DETAILS, THE ASSESSING OFFICER WAS HANDICAPPED IN CARRYING OUT ENQUIRIES. IN THE CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER AND DIRECT THE ASSE SSEE TO PROVIDE COMPLETE ADDRESSES AND OTHER REQUISITE DETAILS OF THE PARTIES. THE ASSESSING OFFICER IS DIRECTED TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. THE ASSESSEE SHALL BE AFFORDED SUFFICIENT OPPORTUNITY OF HEARING. THE FIRST GROUND OF APPEAL OF THE R EVENUE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 46 57 . THE GRO UND NO. 2 OF THE APPEAL OF THE R EVENUE AND GROUND NO. 1 AND 2 OF THE APPEAL OF THE ASSESSEE ARE INTERCONNECTED AND RELATED TO THE ADDITION OF RS.13,88,19, 875/ - MADE BY THE ASSESSI NG OFFICER AGAINST BROKERAGE/COMMISSION EXPENSES. 58 . THE DISALLOWA NCE CONSIST OF TWO ITEMS OF RS.53,37, 600 / - AND RS.13,34,82, 275/ - . 59 . RE GARDING THE DISALLOWANCE OF RS.53,37, 600/ - UNDER THE HEAD BROKERAGE AND COMMISSION EXPENSES, THE ASSESSING OFFICER OBSERVED THAT PAGES 108 TO 126 OF DOCUMENTS INVENTORISED AS ANNEXURE A4 IMPOUNDED DURING THE COURSE OF SURVEY ACTION , CONTAINED EXPENSES ON ACCOUNT OF COMMISSION/BROKERAGE MADE TO 18 PARTIES. THE ASSESSING OFFICE R OBSERVED THA T IN THE DOCUMENTS A SUM OF RS.41,64, 981/ - WAS SHOWN AS PAID TO VARIOUS PARTIES FOR BROKERAGE, BUT OUT OF THE SAID LIST IN CASE OF FOLLOWING THREE PARTIES, THE ASSESSEE FAILED TO PROVIDE ADDRESSES: DETAILS OF BROKERAGE PAID DATE NAME OF PARTY PAN ADDRESS AMOUNT (RS.) 03.31.2009 GALAXY DEVELOPERS BNFPS3552N - 25,24,390 12.11.2008 HIGH RISE REALTORS AUBPK9724G - 7,35,000 05.01.2008 V - TECH POWER SYSTEMS ACZPT3060E - 8,33,085 TOTAL 40,92,475 BROKERAGE PAID BELOW 5 LACS 4164981 60 . SIMILARLY THE ASSESSING OFFICER OBSERVED THAT PAN/ ADDRESSES IN RESPECT OF THE FOLLOWING PARTIES WERE ALSO NOT PROVIDED: COMMISSION /BROKERAGE PAID LIST AS PER ANNEXURE A - 4 PAGES 108 TO 126 / BROKERAGE PAID BELOW 5 LACS S. NO. NAME AMOUNT (RS.) 1. AMAR DEEP CONSTRUCTION (P) LTD. 117600 2. ARDENT CONSULTANCY SERVICES (P) LTD. 156000 3. CONFLUENCE LEASING & CREDIT LTD. 120000 4. DAZZLE HOLDING (P) LTD. 80000 5. ECON TRADE WORLD 200000 6. ISHAAN FININVEST & SECURITIES (P) LTD. 120000 7. MSR SECURITIES (P) LTD. 120000 47 8. PSC HOLDING (P) LTD. 60000 9. RAINBOW CREDIT & SECURITIES (P) LTD. 60000 10. SUNSTAR SECURITIES & CREDITS (P) LTD. 60000 11. SUREN ELECTRONIC & ELECTRICAL (P) LTD. 10000 12. YASHIKA FINLEASE & HOLDINGS (P) LTD. 141525 TOTAL 12,45,125 / - 61 . T HE LD. AO DISALLOWED THE CLAIM OF THE BROKERAGE FOR FOLLOWING REASONS: (I) PAYMENT TO THE PARTIES WERE MADE AS PER THE DIRECTION OF THE TOP MANAGEMENT (THREE PARITES) (II) THE ASSESSEE HAS NOT FURNISHED COMPLETE ADDRESSES OF THE PARTIES (THREE PARTIES) (III) THE ASSESSEE FAILED TO JUSTIFY THE NATURE OF PAYMENTS (IV) THE ASSESSEE HAS NOT BROUGHT ON RECORD COPY OF CONTRACT, NATURE OF SERVICES ETC PROVIDED BY THE CONCERNS (V) THE DOCUMENTS IMPOUNDED IN SURVEY REFLECT ALL THE HEADS THAT SUCH AS COMMISSION, BROKERAGE, FARM LAND DEVELOPMENT B UT AUTHOR OF THOSE DOCUMENTS DID NOT KNOW THE NATURE OF SERVICES PROVIDED BY THOSE CONCERNS . (VI) PAN OF 12 PERSONS IN THE SECOND LIST HAS NOT BEEN PROVIDED. 62 . THE LD. CIT - A CONFIRMED THE ABOVE DISALLOWANCES WITH FOLLOWING FINDING: C) DECISION I HAVE CONSIDERED THE FINDINGS OF A.O.. WRITTEN SUBMISSION & ARGUMENTS OF I.D. AR. A PERUSAL OF ASSESSMENT ORDER REVEALS THAT THE ADDRESS IN RESPECT OF 3 PARTIES NAMELY M/S GALAXY DEVELOPERS, HIGH - RISE REALTORS & V. TECH POWER SYSTEM COULD NOT HE GIVEN DURING ASS ESSMENT PROCEEDING. LD. AR IN WRITTEN SUBMISSION HAS STATED THAT ADDRESS WAS GIVEN. 1 HAVE PERUSED THE ASSESSMENT RECORD. THESE DETAILS WERE SUBMITTED ON 31.03.201 I. THE DETAIL FILED BY APPELLANT SHOWS THAT ADDRESS IN RESPECT OF THESE 3 PARTIES WERE NOT J ILED BEFORE A.O. FURTHER UNDER BROKERAGE HEAD, THE DETAILED ADDRESS OF VARIOUS PERSONS TO WHOM BROKERAGE PAID IS LESS THAN RS. 5 LAKHS WAS NOT PROVIDED. THEREFORE, BEFORE A.O. THE ADDRESS OF TOTAL 15 PARTIES IN RESPECT - OF WHOM ADDITION HAS BEEN MADE UNDER BROKERAGE HEAD' (3 1 12) WAS NOT FURNISHED. 48 EVEN PAN OF 12 PARTIES IN RESPECT OF WHOM PAYMENTS MADE LESS THAN 5 ' LAKHS WERE NOT FURNISHED. LD. AR S ARGUMENT THAT A.O. COULD HAVE OBTAINED THE IDENTIFY OF 3 PARTIES IN RESPECT OF WHOM PAN WAS AVAILABLE THRO UGH PAN DIRECTORY IS NOT CONVINCING. T HE ADDRESS AVAILABLE IN PAN DIRECTORY MAY NOT BE UPDATED. FURTHER, IT IS THE APPELLANT WHO POSSESS THE RECENT ADDRESS & IDENTITY OF PARTIES TO WHOM PAYMENT IS MADE. ONUS LIES ON APPELLANT COMPANY TO PROVE GENUINESS OF EXPENDITURE BY PROVIDING SUPPORTING EVIDENCE; UNDISPUTEDLY, THE PAYMENT HAS BEEN THROUGH BANKING CHANNELS, BUT QUANTUM & EXACT IDENTIFICATION OF SERVICES CAN ONLY BE SEEN EITHER THROUGH SOME CONTRACTUAL AGREEMENT OR BY BILLS OF THESE PARTIES OR AT LEAST A DDRESS. NONE OF THESE DETAILS WERE PROVIDED. IT MAY BE EMPHASISED THAT TOTAL CLAIM OF BROKERAGE PAID IS FOR RS. 4,89,82,052 - 00 & DISALLOWANCE IS FOR RS. 53,37,600 UNDER THIS HEAD. THE LD. AR HAS NOT SUBMITTED ANY BILLS OR CONTRACT IN SUPPORT OF SPECIFIC WORK DONE, EVEN AT APPELLATE STAGE. THEREFORE. 1 AM OF THE OPINION THAT THE DISALLOWANCE MADE UNDER BROKERAGE HEAD TO EXTENT OF RS. 53.37.600 00IS PROPER. ACCORDINGLY 1 CONFIRM THE ADDITION MADE BY THE A.O. 63 . W E FIND THAT THE LD. CIT - A HAS CONSIDERED THE SUBMISSION OF THE ASSESSEE AND CONCLUDED THAT THE ASSESSEE FAILED TO PROVIDE ADDRESSES OF THREE PARTIES AND PAN OUT 12 PARTIES. IN OUR OPINION, THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS OF PROVIDING THE BASIC DETAILS IN RESPECT OF THE PARTIES, WHI CH WAS IN ITS POSSESSION ONLY. I N THE CIRCUMSTANCES, WE FIND THE FINDING OF THE L D. CIT ON THE ISSUE IN DISPUTE A S WELL REASONED AND COMPREHENSIVE AND NO INTERFERENCE ON OUR PART IS REQUIRED. ACCORDINGLY W E UPHOLD THE DISALLOWANCE OF RS.53,37, 600/ - MADE BY THE ASSESSING OFFICER. 64 . WITH REGARD TO DISALLOWANCE OF RS. 13,34,48, 276/ - OUT OF COMMISSION AND MARKET DEVELOPMENT EXPENSES, THE LD. ASSESSING OFFICER CARRIED OUT ENQUIRIES UNDER SECTION 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF THE EXPENSES ON TE ST CHECK BASIS AND IN CASE OF FIVE PARTIES LETTERS SENT WERE RETURNED BACK WITH POSTAL REMARKS THAT NO SUCH PERSON IS RESIDING AT THIS ADDRESS . THE LIST OF PARTIES IS AS UNDER : S. NO. NAME ADDRESS AMOUNT 1 SH. RAVINDER SINGH PART - 11, MUBARKBAD ROAD, LNDER ENCLAVE, NANGLOI, DELHI - 110041. 1,10,241 2 SH. A.K. JAISWAL 96, BLOCK - B, RAVIDAS COLONY, NARELA, DELHI - 110033. 1,47,925 49 3 SH. JAI SHANKAR PANDEY B - 425, VIKAS KUNJ, NEW DELHI - 110059. 4,73,250 4 SH. NARAIN SINGH A - 6, LNDER ENCLAVE, PHASE - 2, NEW DELHI - 110041 3,79,465 5 SH. ARUN KUMAR RAI WZ - 15/C, NANGLI JALIB, B - L, JAN CITY, DELHI. 35,98,51 5 65 . THE ASSESSEE WAS ASKED TO JUSTIFY PAYMENT TO THOSE PARTIES. THE ASSESSING OFFICER ALSO OBSERVED THAT BALANCE PAYMENT TO THE PARTIES WAS ALSO NOT VERIFIABLE IN ABSENCE OF COMPLETE ADDRESS AND REQUISITE DETAILS PROVIDED BY THE ASSESSEE. AGAIN THE ASSESSING O FFICER TEST CHECKED ON RANDOM BASIS AND FOUND THAT IN FOLLOWING CASES DETAILS OF STATE AND PAN WAS NOT AVAILABLE: ( DETAILS OF COMMISSION PAID (STATE DETAIL NOT AVAILABLE) 5. NO. FA CODE FA NAME PAN AMOUNT (RS.) STATE 1 006355964 BRIJ GOPAL GUPTA AEOPG6187Q 699855 2 0510000236 DHANPATI DEVI AKHPD1391E 1097980 3 0529650001 SHIVCHARAN SAINI AQAPS4564R 1929705 4 0639150006 BISHNU SWAROOP MISHRA AHZPM7744F 668715 5 0639950001 SHUBHA SINHA AWGPS6957C 2193961 6 0595000053 MR. AMIT KUMAR AMSPK2351G 1312650 7 0597500012 MOHAMMAD SHARIF BFSPS6900P 1015287 0599650001 PRADEEP KUMAR A UVPP3882E 700131 9 0840007347 CHARAN SINGH S AUZPS4668M 503813 10 0840007445 TASLEEM AHMAD AEJPA9327H 1100936 11 0878750007 SANTRA DEVI AGQPD8521R 593572 12 0879150002 KAMLESH DEVI AQUPK9977A 991014 13 1030066818 SUMAN DEVI CBAPS5260F 509500 14 103064868 HEMANT KUMAR AJVPK7639K 524162 15 0220002604 SURENDER SINGH CHAUHAN BGEPS8316Q 942224 'DETAILS OF COMMISSION PAID (STATE DETAIL NOT AVAILABLE) S. NO. FA CODE FA NAME PAN AMOUNT (RS.) STATE 1 0140048234 MAMATHA P NULL 500150 KARNATAKA 2 0560000031 BHAGAT SINGH NULL 1190585 RAJASTHAN 50 3 063035754 SHAILENDRA PARTAP YADAV NULL 1235023 UP 4 063051310 LAX MI YADA NULL 1388682 UP 5 638250068 N. BEGAM NULL 2686247 UP 6 0720001841 SARITA VERMA NULL 910742 RAJASTHAN 7 0723503804 SURESH KUMAR SHARMA NULL 889579 RAJASTHAN 8 0780016672 S: ANTONYRAJ NULL 602839 TAMIL NADU 9 0788750022 K. VEENU REDDY NULL 516210 1014727 TAMIL NADU HARYANA 10 1030001139 OMBIR PATEL NULL 11 125205587 MAHENDRA KR. VISHWAKARMA NULL' 661900 UP 12 1258750025 RAJ MANI MAURYA NULL 534266 UP 13 1330007644 J SHANLHI NULL 739721 TN 14 1360004133 BAPURAO H. BALALE NULL 939887 MAHARASHTRA 15 1368750007 MANISHA SADASHIV BANKAR NULL 523806 MAHARASHTRA 66 . IN VI EW OF THE OBSERVATION, THE LD. A SSESSING O FFICER DISALLOWED THE 10% OF THE EXPENSES OUT OF THE C OMMISSION MAR KET DEVELOPMENT EXPENSES OF RS.1,33,48,22, 756 / - , WHICH WAS WORKED OUT TO RS.13,34,82, 275/ - . 67 . THE LEARNED CIT - A , OUT OF THE ABOVE DISALLOWANCE , SUSTAI NED THE DISALLOWANCE OF RS.3,48,27, 265/ - . THE FINDING OF THE LD. CIT - A IS REPRODUCED AS UNDER: C) DECISION I HAVE CONSIDERED THE FINDINGS OF A.O.. WRITTEN SUBMISSION OF L.D. AR & ARGUMENTS OF LD. AR. A.O. HAS MADE DISALLOWANCE AT THE RATE OF 10% OF ENTIRE EXPENSE OF RS.133,48,22,756 = 00 UNDER THE HEAD COMMISSION & DEVELOPMENT' EXPENSES ON THE FOLLOWING GROUNDS: - (I) IN 5 CASES MENTIONED IN 6.6 OF ASSESSMENT ORDER, NOTICE U/S 133(6) COULD NOT BE SERVED BY SPEED POST WITH THE REMARKS NO SUCH PERSON IS RESIDING AT THIS ADDRESS'. (II) ON ENQUIRY BY A.O., THE APPELLANT HAS FILED ADDRESS INCLUDING PAN OF VARIOUS PERSONS TO WHOM COMMISSION & DEVELOPMENT EXPENSE WAS PAID. THESE DETAILS WERE SUBMITTED BY APPELLANT BEFORE A.O. ON 31.03.2011. A.O. HAS TAKEN OUT LIST OF CASES WHERE STATE IS NOT MENTIONED IN FRONT OF PARTY NAME. THESE PARTIES ARE 15 IN NUMBERS. TOTAL PAYMEN TS MADE TO THESE 15 PARTIES COMES TO RS. 1,57,83,505 = 00. IN RESPECT OF OTHER 15 PARTIES, PAN I*S NOT AVAILABLE. TOTAL PAYMENT MADE TO THESE PARTIES ARE RS. 1,47,34,368 = 00. BOTH TYPES OF DETAILS HAS BEEN 51 SORTED OUT FROM DETAILS FILED BY APPELLANT & P RODUCED IN PARA 6.7 OF ASSESSMENT ORDER. A.O. ON THE BASIS OF THESE FINDINGS CONCLUDED THAT CERTAIN EXPENSES ARE NOT GENUINE & DISALLOWED 10% OF COMMISSION & MARKETING EXPENSE' ENOUGH TIME TO MAKE ENQUIRY BEFORE THE A.O. AS THE ASSESSMENT ORDER IS PASSE D 8 MONTHS PRIOR TO TIME BARRING DATES. HE FURTHER ARGUED THAT WORK WAS DONE BY THESE PERSONS 2 YEARS BACK. THEREFORE, THE APPELLANT WAS NOT HAVING CURRENT ADDRESS OF THESE PERSONS. I HAVE CONSIDERED THE ARGUMENTS OF LD. AR. HOWEVER, I DO NOT AGREE WITH TH E ARGUMENT OF LD. AR. IT IS THE APPELLANT WHO HAVE CLAIMED EXPENDITURE, THEREFORE ON US LIES ON HIM TO PROVIDE THE ADDRESS OF PERSON TO WHOM PAYMENT IS MADE & EXPENDITURE CLAIMED. IN ABSENCE OF ADDRESS OR ANY SUPPORTING EVIDENCE, A.O. CANNOT EXAMINE THE EX ACT NATURE & QUANTUM OF SERVICES RENDERED. LD. AR HAS FURTHER ARGUED THAT THESE EXPENDITURE ARE NEITHER PROVED CAPITAL OR PERSONAL IN NATURE, HENCE CANNOT BE DISALLOWED U/S 37 OF I.T. ACT. THIS ARGUMENT IS ALSO NOT ACCEPTABLE. THE ASSESSEE WHILE CLAIMING E XPENDITURE HAS TO PROVE IT IS A BUSINESS EXPENDITURE. EVEN DURING APPELLATE STAGE THE FRESH ADDRESS IN RESPECT OF THESE 5 PERSONS WERE GIVEN. THEREFORE, I CONFIRM THE ADDITION TO THE EXTENT OF PAYMENT MADE THESE 5 PERSONS AMOUNTING TO RS. 47,09,396 UNDER T HIS HEAD AS SERVICE RENDERED BY THESE PERSONS ARE NOT PROVED. ON THE ISSUE OF NON FURNISHING OF PAN & STATE IN RESPECT OF 30 PARTIES, 15 UNDER EACH CATEGORY, LD. AR HAS ARGUED THAT THROUGH PAN DIRECTORY, STATE COULD HAVE BEEN VERIFIED BY THE A.O. I DO NO T AGREE WITH THE ARGUMENT OF LD. AR. THE APPELLANT COMPANY SHOULD HAVE GIVEN COMPLETE ADDRESS OF THE PAYEE. A.O. HAS INSISTED AT LEAST STATE OF THE PARTIES, SHOULD BE GIVEN. EVEN STATE COULD NOT BE FURNISHED BY THE APPELLANT COMPANY. THEREFORE, APPELLANT C OMPANY DOES NOT POSSESS ENTIRE DETAILS OF EXPENDITURE. FURTHER, PAN IS NOT PROVIDED IN RESPECT OF 15 PAYEE. THE PAYMENT TO THESE PERSONS WAS QUITE SUBSTANTIAL FROM RS. 5 LAKHS TO 26 LAKHS. IN ABSENCE OF THE PAN OF THESE PERSONS, GENUINESS OF TRANSACTION IS NOT PROVED. IN ABSENCE OF THESE PRIMARY DETAILS, THE A.O. IN MY VIEW IS CORRECT IN DRAWING ADVERSE INFERENCE IN RESPECT OF THESE PARTIES. 1 HEREBY CONFIRM THE ADDITION MADE UNDER THIS HEAD TO THE EXTENT OF PAYMENT MADE TO THESE 30 PARTIES UNDER THIS HEAD TO THE EXTENT OF RS. 3,01,17,869 IS CONFIRMED. LD. AR HAS OBJECTED TO THE ESTIMATION OF ADDITION & RELIED ON ITS SUBMISSION MADE IN RESPECT OF ESTIMATED ADDITION UNDER THE HEAD FARM DEVELOPMENT EXPENSE' REPRODUCED ON PAGE 7(B) SUPRA. 1 AGREE WITH THE A RGUMENT OF LD. AR THAT ADDITION HAS TO BE MADE WITH RESPECT TO SPECIFIC PARTIES & NOT ON ESTIMATED BASIS. ADDITION CANNOT BE MADE ON ESTIMATED BASIS. ADDITION UNDER THIS HEAD IS CONFIRMED WHERE THE. APPELLANT COMPANY HAS NOT PROVIDED COMPLETE DETAILS IN SU PPORT OF EXPENDITURE CLAIMED AS DISCUSSED IN EARLIER PARAGRAPHS. THEREFORE, I RESTRICT THE ADDITION UNDER THIS HEAD TO THE EXTENT OF RS. 3.48.27.265 (RS. 47,09,396 + RS. 3,01,17,869) AS DISCUSSED SUPRA & BALANCE ADDITION OF RS. 10,33,30,407 (RS. 13,34,4 8,276 - 3,01,17,869) IS HEREBY DELETED. . 52 68 . WE FIND THAT THE ASSESSING OFFICER HAS MADE ESTIMATED DISALLOWANCE AT THE RATE OF 10% ON THE BASIS OF THE TEST CHECK OF THE RECORDS PRODUCED BY THE ASSESSEE. THE LD. CIT - A HAS RESTRICTED THE DISALLOWANCE IN RES PECT OF THE PARTIES THE ASSESSEE FAILED TO PROVIDE ADDRESSES AND REQUISITE DETAILS. IN OUR OPINION, IT WAS ONUS OF THE ASSESSEE TO PROVIDE COMPLETE DETAILS OF THE EXPENSES CLAIMED UNDER THE HEAD COMMISSION AND MARKET DEVELOPMENT EXPENSES FOR VERIFICATION B Y THE ASSESSING OFFICER. IN THE CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE AFRESH AFTER CARRYING OUT NECESSARY I NQUIRIES AS DEEMED FIT. THE ASSESSEE IS DIRECTED TO FILE COMPLETE ADDRESS AND PAN DETAILS AND OTHER EVIDENCE IN SUPPORT OF THE SERVICES RENDERED BY THE PARTIES BEFORE THE ASSESSING OFFICER. THE ASSESSEE SHALL ALSO BE AFFORDED SUFFICIENT OPPORTUNITY OF HEARING ON THE ISSUE IN DISPUTE BY THE LEARNED AO . 69 . ACCORDINGLY, THE GROUND NO. 3 OF APPEAL OF R EVENUE IS ALLOWED FOR STATISTICAL PURPOSES AND GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE IS ACCORDINGLY DISMISSED. THE GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 70 . IN THE RESULT, APP E AL OF THE R EVENUE IS ALLOWED FOR STATISTICAL PURPOSES AND APPEAL OF THE ASSESSEE IS ALLOWED PARTLY FOR STATISTICAL PURPOSES. ITA NO. 5371/DEL/2013 & 5200/DEL/2013 FOR AY: 2010 - 11 71 . NOW WE TAKE UP APPEAL OF THE R EVENUE AND ASSESSEE FOR ASSESSMENT YEAR 2 010 - 11 HAVING ITA NO. 5371/DEL/2013 AND ITA NO. 5200/DEL/2013 RESPECTIVELY. 72 . THE GROUND OF APPEAL RAISED BY THE R EVENUE IN ITA NO. 5371/DEL/2013 ARE REPRODUCED AS UNDER: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 10.0 CRORE MADE BY THE AO TO THE DECLARED PROFIT OF THE ASSESSEE COMPANY ON ACCOUNT OF STEEP DECLINE IN THE NET PROFIT. 53 II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN RESTRICTING THE ADDITION TO RS. 18,21,087/ - OUT OF TOTAL OF RS. 1,71,54,550/ - MADE BY THE AO ON ACCOUNT OF LAND AND FARM DEVELOPMENT EXPENSES. III. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT ( A) HAS ERRED IN RESTRICTING THE DISALLOWANCE TO RS. 1,63,80,358/ - OUT OF TOTAL OF RS. 22,64,08,533/ - MADE BY THE AO ON ACCOUNT OF BROKERAGE / COMMISSION EXPENSES. IV. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS ERRED IN BRUSHING ASIDE T HE FINDINGS OF THE SURVEY PROCEEDINGS / ENQUIRIES CONDUCTED BY THE DEPARTMENT. V. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS COMMITTED A SERIOUS INFIRMITY BY NOT APPRECIATING THE FACTUAL MATRIX IN RESPECT OF WHICH VARIOUS ADDITIONS WE RE MADE IN THE IMPUGNED ASSESSMENT ORDER. VI. THE ORDER OF THE CIT (A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. VII. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 73 . G ROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITA NO. 5200/DEL/2013 ARE REPRODUCED AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY LD. CIT(A) IS BAD IN LAW. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT(A) ERRED IN SUSTAINING AN ADDITION OF RS. 18,21,087/ - UNDER THE HEAD FARM DEVELOPMENT EXPENSES BY ERRONEOUSLY PRESUMING THAT THESE EXPENSES WERE DEBITED IN THE P&L ACCOUNT UNDER THAT HEAD. 3 , ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT(A) ERRED IN SUSTAINING AN ADDITION OF RS. 1,24,18,056/ - UNDER THE HEAD BROKERAGE 8S COMMISSION EXPENSES PAID TO 15 PERSON, MERELY ON THE GROUND THAT THE NAME OF THE STATE IS NOT MENTIONED IN THE DETAILS OF THESE PERSONS FURNISHED BY THE ASSESSEE . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT(A) ERRED IN SUSTAINING AN ADDITION OF RS. 39,62,302/ - UNDER THE HEAD BROKERAGE & COMMISSION EXPENSES PAID TO 14 PERSON, MERELY ON THE GROUND THAT THEIR PAN IS NOT MENTIONED IN THE DETAILS OF THESE PERSONS FURNISHED BY THE ASSESSEE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT(A) ERRED IN NOT ALLOWING THE BENEFIT OF TELESCOPING IN RESPECT OF ALLEGED NON GENUINE EXPENDITURE UNDER THE HEAD BROKERAGE & COMMISSION EXPENSES / FARM DEVELOPMENT EXPENSES AGAINST THE DISCLOSURE OF RS. 35 CRORES. 54 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR WITHDRAW ANY GROUND OF APPEAL. 74 . THE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 30/09/201 0 DECLARING TOTAL INCOME OF RS.57,71,39, 350/ - WHICH INCLUDED INCOME OF RS. 35 CRORE OFFER ED DURING THE COURSE OF SURVE Y PROCEEDINGS UNDER SECTION 133A OF THE INCOME TAX ACT C ARRIED OUT AT VARIOUS BUSINESS PREMISES OF THE ASSESSEE COMPANY ON 22/03/2010. THE CASE WAS SELECTED FOR COMPULSORY SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND DULY SERVED. IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE ACT ON 20/03/2013, THE ASSESSING OFFICER MADE FOLLOWING THREE ADDITIONS/DISALLOWANCES: 1. TRADING ADDITION RS.10,00,00, 000/ - 2. DISALLOWANCE ON ACCOUNT OF LAND/FIRM DEVELOPMENT EXPENSES RS.1,71,54, 550/ - 3. DISALLOWANCE OUT OF BROKERAGE/COMMISSION EXPENSES RS.22,64,08, 533/ - 75 . ON APPEAL, THE LD. CIT - A ALLOWED PART RELIEF TO THE ASSESSEE. AGGRIEVED, BOTH THE R EVENUE AND THE ASSESSEE ARE IN APPEAL RAISING THE GROUNDS AS REPRODUCED ABOVE. 76 . THE LD. CIT ( DR ) RELIED ON THE FINDING OF THE ASSESSING OFFICER AND SUBMITTED THAT IN LAST MANY YEARS , THE ASSESSEE HAS BEEN SUBJECTED TO EITHER SEARCH OR SURVEY ACTION AND LOT OF INCRIMINATING DOCUMENTS HAVE BEEN FOUND AND THE ASSESSEE HAS ALSO OFFERED CERTAIN AMOUNT FO R TAXATION ON ACCOUNT OF THE INCRIMINATING MATERIALS FOUND DURING THE COURSE OF SURVEY OR SEARCH ACTION. SHE SUBMITTED THAT IN SUCH CIRCUMSTANCES THE BOOK RESULTS OF THE ASSESSEE CLAIMING SUBSTANTIAL HIGHER EXPENSES ON PERSONNEL, SELLING AND ADVERTISING , GENERAL AND ADMINISTRATIVE EXPENSES CANNOT BE ACCEPTED AND ACCORDINGLY THE TRADING 55 ADDITION OF RS. 10 CRORE MADE BY THE ASSESSING OFFICER IS JUSTIFIED . SHE ALSO JUSTIFIED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER THE HEAD LAND DEVELOPMENT EXPENS ES AND BROKERAGE IN COMMISSION EXPENSES. ACCORDINGLY SHE PRAYED FOR UPHOLDING THE ORDER OF THE LD. ASSESSING OFFICER . ON THE CONTRARY, NONE ATTENDED ON BEHALF OF THE ASSESSEE AND THEREFORE APPEAL IS HEARD EX PARTE QUA THE ASSESSEE. 77 . WE HAVE HEARD THE S UBMISSIONS OF THE LD. CITDR AND PERUSED THE RELEVANT MATERIAL ON RECORD. 78 . GROUN D NO. 2 OF THE APPEAL OF THE R EVENUE AND GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE ARE CONNECTED AND RELATED TO THE ISSUE OF LAND /F ARM DEVELOPMENT EXPENSES. IN VIEW OF NOT PROVIDING COMPLETE ADDRESS OF THE PARTIES ETC , THE ASSESSING OFFICE R HAS MADE DISALLOWANCE OF RS.1,71,54, 550/ - ON ESTIMATE BASIS AT THE RAT E OF 10% OF THE EXPENSES OF RS.17,15,45, 510/ - CLAIMED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT. THE LD. CIT - A CO NFIRMED THE DISALLOWANCE OF RS.18,21, 087/ - CORRESPONDING TO PAYMENTS MADE TO 17 PARTIES IN RESPECT OF WHOM OF DETAILS WERE NOT FURNISHED ABOUT THE EXACT WERE DONE AND BALANCE AMOUNT WAS DELETED. THE REVENUE IS IN APPEAL IN RESPECT OF THE AMOUNT DELETED A ND THE ASSESSEE IS IN APPEAL IN RESPECT OF THE AMOUNT SUSTAINED. THE FACTS OF THE ISSUE IN DISPUTE ARE IDENTICAL TO THE ISSUE DECIDED IN ITA NO. 6462/DEL/2012 FOR ASSESSMENT YEAR 2009 - 10, WHEREIN THE MATTER IS IN RESTORED TO THE FILE OF THE ASSESSING OFFI CER FOR DECIDING AFRESH. THUS FOLLOWING THE SAME FINDING , WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH AFTER CARRYING OUT NECESSARY INQUIRES AS DEEMED FIT. THE ASSESSEE SHALL BE AFFORDED SUFFICIENT OPPORTUNITY OF HEARING ON THE ISSUE IN DISPUTE. ACCORDINGLY BOTH THE GROUND NO. 2 OF THE APPEAL OF THE R EVENUE AND GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 56 79 . THE GRO UND NO. 3 OF THE APPEAL OF THE R EVENUE AND GROUND NO. 3 AND 4 OF THE APPEAL OF THE ASSESSEE ARE CONNECTED AND RELATED TO THE ADDITION MADE BY THE ASSESSING OFFICER OUT OF THE BROKERAGE AND COMMISSION EXPENSES. THE ASSESSING OFFICER MADE ADDITION OF RS. 22,64,08, 533/ - N ON ACCOUNT OF DISALLOWANCE OF COMMISSION AND MARKETING DEVELOPMENT EXPENSES ON ESTIMATE BASIS AT THE RATE OF 10% OF THE TOTAL EXPENSES CLAIMED BY THE ASSESSEE. ON TEST CHECK OF THE EXPENSES, THE ASSESSING OFFICER FOUND THAT 15 PARTIES TO WHOM COMMISSION WAS PAID BUT NAME OF THEIR STATE WAS NOT KNOWN AND SIMILARLY 14 PARTIES IN RESPECT OF WHOM DETAILS OF PAN WAS NOT KNOWN. IN VIEW OF NON - VERIFICATION OF THE PARTIES, THE ASSESSING OFFICER DISALLOWED 10% OF EXPENSES OUT OF THE TOTAL EXPEN SES CLAIMED WITH ASSESSEE. THE LD . CIT - A SUSTAINED AMOUNT OF RS.1,24,18, 056/ - IN RESPECT OF THE 15 PERSONS WHERE STATE WAS NOT MENTIONED IN THE DETAILS PROVIDED BY THE ASSESSEE AND AMOUNT OF RS.39,62, 302/ - IN RESPECT OF 14 PERSONS, WHOSE PAN WAS NOT PROV ID ED. THUS , TOTAL AMOUNT OF RS.1,63,80, 358/ - WAS CONFIRMED BY THE LD. CIT - A AND RELIEF OF THE BALANCE AMOUNT WAS ALLOWED TO THE ASSESSEE. THE R EVENUE IS IN APPEAL AGAINST THE RELIEF ALLOWED AND THE ASSESSEE IN APP EAL IN RESPECT OF AMOUNT OF RS.1,24,18, 056/ - AND AMOUNT OF RS.39, 62 ,302/ - SUSTAINED BY THE LD. CIT - A. THE FACTS IN THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS OF THE APPEAL OF REVENUE IN ITA NO. 6462/DEL/2012 AND APPEAL OF THE ASSESSEE IN ITA NO. 6385/DEL/2012 FOR ASSESSMENT YEAR 2009 - 10, WHEREIN THE IDENTICAL ISSUE IN DISPUTE HAS BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH. THUS FOLLOWING THE SAME FINDING, WE FEEL IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRES H FOR THE YEAR UND ER CONSIDERATION ALSO. WE ORDER ACCORDINGLY. IT IS NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE AFFORDED SUFFICIENT OPPORTUNITY OF HEARING ON THE ISSUE IN DISPUTE. 57 80 . IN GROUND NO. 1 OF THE APPEAL, THE REVENUE CHALLENGED TRADING ADDIT ION OF RS. 10 CRORES DELETED BY THE LEARNED CIT - A. THE ASSESSING OFFICER MADE ADDITION IN VIEW OF STEEP RISE IN THE EXPENSES IN THE NATURE OF PERSONNEL , SELLING AND ADVERTISEMENT EXPENSES ETC AND DECLINE IN PROFIT AS COMPARED TO THE PAST YEARS. THE LD. CIT - A DELETED THE ADDITION ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY FINDING THAT EXPENDITURE CLAIMED BY THE ASSESSEE WAS BOGUS OR INADMISSIBLE. THE FINDING OF THE LD. CIT - A ON THE ISSUE IN DISPUTE IS REPRODUCED AS UNDER: 4.4 FINDINGS I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, WRITTEN SUBMISSION OF LD. AR. & HIS ARGUMENT DURING APPELLATE PROCEEDING. THE ASSESSING OFFICER HAS MADE AD HOC ADDITION OF RS. 10 CRORES ON BOOK PROFIT ON THE GROUND THAT NET PROFIT HAS GONE DOWN COMPARED TO LAST YEAR. HE HAS EXAMINED THAT CERTAIN EXPENSE SPECIALLY UNDER THE HEAD PERSONAL EXPENSE , GENERAL & ADMINISTRATIVE EXPENSES AND SELLING & MARKETING EXPENSE HAS GONE PERCENTAGE WISE UP IN RELATION OF TURN OVER COMPARED TO LAST YEAR. IN T HE ASSESSMENT ORDER HE HAS MENTIONED THAT TWO EXPENSES NAMELY LAND - COST AND DEVELOPMENT AND OTHER EXPENSE ON PERCENTAGE OF TURNOVER HAS GONE DOWN COMPARED TO LAST YEAR. HE HAS GIVEN THE FINDINGS THAT RISE IN PERSONAL EXPENSE, SELLING & MARKETING ETC. HAS NOT GIVEN RISE IN TURNOVER ON PROPORTIONATE BASIS. THE ASSESSING OFFICER IN HIS ORDER HAS APPREHENDED THAT THE DISCLOSURE MADE UNDER SECTION 133A OF I.T. ACT HAS BEEN SET OFF BY CLAIMING INFLATED EXPENSES, BUT NOT SUBSTANTIATED BY MAKING ANY ENQUIRIES TO PROVE HIS APPREHENSION. I HAVE CONSIDERED CAREFULLY THE ARGUMENTS OF LD. AR. LD. AR HAS ARGUED THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE ON AD HOC BASIS WITHOUT FINDING ANY IRREGULAR CLAIM OR BOGUS CLAIM OF EXPENSES. HE ARGUED THAT THE BOOKS OF ACCOUNTS ARE AUDITED UNDER C OMPANIES ACT & U/S 44AB OF I.T. ACT. ALL THE EXPENDITURE ARE PROPERLY VOUCHED AND BOOKS OF ACCOUNTS WERE PRODUCED DURING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC ITEM OF EXPENSE AS BOGUS BEFORE MAKING ADHOC ADDITIO N. HE FURTHER ARGUED THAT THE ASSESSING OFFICER HIMSELF STATED THAT LAND DEVELOPMENT EXPENSES WHICH IS MAJOR EXPENSE HAS GONE DOWN. THEREFORE, ASSESSING OFFICER ARBITRARILY ON THE BASIS OF PERCENTAGE RISE IN PARTICULAR EXPENSE WITH RESPECT TO TURNOVER HAS MADE ADDITION IGNORING THE AUDITED BOOKS OF ACCOUNTS. LD. AR HAS BROUGHT TO MY NOTICE THE COMPARISON OF NET PROFIT RATIO INCLUSIVE OF SURRENDER OF ADDITIONAL INCOME U/S 133A. HE ARGUED THAT THE SURRENDER OF ADDITIONAL INCOME OF RS. 35 - CRORES IS ON THE BA SIS OF UNACCOUNTED INVESTMENT I.E. APPLICATION OF INCOME. THEREFORE, THE DISCLOSURE OF CURRENT YEAR IS NOTHING BUT INCOME GENERATED. THEREFORE, HE ARGUED THAT THE SURRENDERED AMOUNT IF CONSIDERED, EVEN NET PROFIT RATIO IS NOT LOW. 58 AFTER CONSIDERING THE E NTIRE FACTS & ARGUMENTS OF LD. AR, I AGREE WITH THE ARGUMENTS OF LD. AR THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY FINDING THAT ANY EXPENDITURE CLAIMED BY THE ASSESSEE IS BOGUS OR IN ADMISSIBLE BEFORE ARRIVING THE AD - HOC ADDITION OF RS. 10,00 ,00,000/ - . IN THAT CIRCUMSTANCES, IT IS IMPROPER TO MAKE ADDITION JUST BY COMPARING CERTAIN EXPENSES VIS - A - VIS TURNOVER. LD. AR S ARGUMENT THAT CERTAIN EXPENDITURE SUCH AS ADVERTISEMENT, COMMISSION MAY GIVE RESULT IN TERM OF PROFIT OR INCREASE IN TURN OVER IN SUBSEQUENT YEARS APPEARS TO BE REASONABLE. AFTER TAKING INTO ACCOUNT OF JUDICIAL PRONOUNCEMENTS RELIED BY LD. AR THAT THE AD HOC ADDITION IS NOT PERMISSIBLE, I HEREBY DELETE THE ADDITION OF RS. 10,00,00,000/ - MADE BY THE ASSESSING OFFICER. I WILL DEAL WITH SPECIFIC DISALLOWANCE MADE BY ASSESSING OFFICER IN SUBSEQUENT GROUND OF APPEAL. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED. 81 . I N OUR CONSIDERED OPINION, NO TRADING ADDITION COULD HAVE BEEN MADE UNLESS DEFECTS ARE POINTED OUT IN THE BOOKS OF A CCOUNTS OR METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE AND THOSE BOOKS OF ACCOUNT ARE RE JECTED BY THE ASSESSING OFFICER . MERELY , ON THE GROUND THAT THE RATIO OF THE CERTAIN EXPENSES AS COMPARED TO TURNOVER HAS INCREASE D OR DECREASE D , CANNOT BE GROUND FOR REJECTION OF BOOKS OF ACCOUNTS. IN VIEW OF THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT FINDING OF THE LD. CIT - A ON THE ISSUE IN DISPUTE IS WELL REASONED AND COMPREHENSIVE AND NO INTERFERENCE ON OUR PART IS REQUIRED. ACCORDINGLY , GRO UND NO. 1 OF THE AP PEAL OF THE R EVENUE IS DISMISSED. 82 . THE GROUND NO. 4 AND 5 OF THE APPEAL OF THE R EVENUE ARE ALSO CONNECTED WIT H THE RELIEF ALLOWED BY THE LD. CIT - A IN RESPECT OF LAND /FARM DEVELOPMENT EXPENSES AND COMMISSION AND BROKERAGE EXPENSES. SINCE BOTH THE ISSUES HAVE ALREADY BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING AFRESH, THE GROUND NO. 4 AND 5 OF THE APPEAL OF THE R EVENUE ARE RENDERED INFRACTUOUS AND ACCORDINGLY NOT REQU IRED TO ADJUDICATE UPON. 83. GROUND NO. 6 AND 7 OF THE APPEAL OF THE R EVENUE ARE GENERAL IN NATURE AND NOT REQUIRED TO BE ADJUDICATED UPON SPECIFICALLY. 59 84 . IN GROUND NO. 5 OF THE APPEAL , THE ASSESSEE HAS RAISED THE ISSUE OF TELESCOPING OF THE EXPENSES OF BROKERAGE/COMMISSION AND F A RM DEVELOPMENT EXPENSES AGAINST THE DISCLOSURE OF RS 35 CRORE TOWARDS INVESTMENTS IN THE RETURN OF INCOME FILED. SINCE BOTH THE ISSUES OF EXPENSES ON BROKERAGE/COMMISSION AND LAND/FA RM DEVELOPMENT EXPENSES HAVE ALREADY BEEN RESTORED TO THE FILE OF THE ASSESSING OFFICER, THIS ISSUE IS RENDERED ONLY ACADEMIC AND NE E D NOT TO BE ADJUDICATE UPON BY US. 85 . THE GROUND NO. 1 AND 6 OF THE APPEAL OF THE ASSESSEE ARE GENERAL IN NATURE AND THUS DISMISSED AS INFRUCTUOUS. 86 . IN THE RESULT , THE APPEAL OF THE R EVENUE IS ALLOWED PARTLY FOR STATISTICAL PURPOSES, WHEREAS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 2 8 T H APRIL , 201 7 . S D / - S D / - ( I.C. SUDHIR ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 T H APRIL , 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI