The ACIT- 3(1), Indore V. M/s. Kalindi Construction Pvt. Ltd., Indore

ITA 308/IND/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4883 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 17-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: ANIL K KHANDELWAL
• Keywords: Additional evidence

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 308/IND/2013 A.Y. 2009-10 THE ACIT CIRCLE 3 (1) INDORE ... APPELLANT VS M/S. KALINDI CONSTRUCTION PVT. LTD. INDORE PAN AABCK 4281 F ... RESPONDENT DEPARTMENT BY SHRI R.A.VERMA, SR. DR ASSESSEE BY SHRI ANIL K KHANDELWAL, CA DATE OF HEARING 13-11-2013 DATE OF PRONOUNCEMENT 13-11-2013 2 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER D ATED 28 TH JAN 2013 OF THE LD. FIRST APPELLATE AUTHORITY, IND ORE. GROUND NOS.1 AND 1.1 PERTAINS TO DELETION OF ADDITION OF R S. 27,71,754/- MADE ON ACCOUNT OF DEVELOPMENT EXPENSES. DURING HEA R, THE CRUX OF ARGUMENTS ADVANCED BY SHRI R.A. VERMA, LD. SR. DR IS IN SUPPORT OF THE ADDITION ON THE GROUND THAT THE ADDI TION WAS RIGHTLY MADE IN PROPORTION TO SALES AND THE WORKING FILED B Y THE ASSESSEE, THUS, THE LD. CIT(A) DID NOT APPRECIATE T HE FACTS AND IT WAS NOT AN ADHOC ADDITION AS HAS BEEN MENTIONED IN THE IMPUGNED ORDER. ON THE OTHER HAND, THE LEARNED COUN SEL FOR THE ASSESSEE SHRI ANIL KHANDELWAL, CA DEFENDED THE ORDE R OF THE LD. CIT(A). 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS IN BRIEF AR E THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL 3 HOUSES MADE IN KALINDI MIDTOWN AT INDORE. THE ASSE SSEE DEBITED RS. 42,49,579/- IN ITS PROFIT AND LOSS ACCO UNT AS DEVELOPMENT EXPENSES LIKE BORING EXPENSES, GAS SYST EM, PAVER, PLANT PURCHASE, RAW MATERIALS USED IN DEVELOPMENT A ND SWIMMING POOL ETC. ALL THESE DEVELOPMENT EXPENSES W ERE CLAIMED DURING THE YEAR. THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER AS TO WHY SUCH EXPENSES SHOULD NO T BE ALLOWED IN PROPORTION TO SALES MADE DURING THE YEAR . FINALLY, THE ASSESSING OFFICER DISALLOWED RS. 27,71,154/- (RS. 4 2,49,579 MINUS RS. 14,78,425). ON APPEAL, THE LD. CIT(A) DEL ETED THE ADDITION AGAINST WHICH THE REVENUE IS IN APPEAL BEF ORE THIS TRIBUNAL. WE HAVE PERUSED THE RECORD AND CONSIDERED THE ARGUMENTS ADVANCED FROM BOTH SIDES. WE NOTE THAT EV EN IN THE ASSESSMENT ORDER IT HAS BEEN ACCEPTED BY THE ASSESS ING OFFICER THAT THE ASSESSEE DECLARED INCOME OF RS. 69,91,880 /- ON 30-09- 2009 FROM THE BUSINESS OF CONSTRUCTION OF RESIDENTI AL HOUSES, MEANING THEREBY, THE EXPENSES WERE DULY INCURRED. W ITHOUT INCURRING SUCH EXPENSES, NEITHER CAN BE A CONSTRUC TION/ 4 DEVELOPMENT NOR SALE. THE EXPENSES LIKE BORING, GAS SYSTEM, PAVER, RAW MATERIALS USED IN DEVELOPMENT AND SWIMMI NG POOL ETC. ARE DONE IN ONE GO OR IN ADVANCE. THEREFORE, T HERE IS NO QUESTION OF PROPORTIONATE DISALLOWANCE MORE SPECIFI CALLY WHEN THESE EXPENSES WERE ACTUALLY INCURRED. IT IS NOT T HE CASE THAT SAME EXPENSES HAVE BEEN CLAIMED BY THE ASSESSEE IN OTHER ASSESSMENT YEARS. EVEN OTHERWISE, IT IS A CONTINUOU S BUSINESS AND SUCH EXPENSES WERE NOT DOUBTED BY THE ASSESSING OFFICER. WE FURTHER NOTE WHEN SALE HAS STARTED AND INCOME HA S BEEN DULY DECLARED, THEREFORE, SUCH DEVELOPMENT EXPENSES ARE ALLOWABLE EXPENDITURE. IN VIEW OF THIS FACT, WE AFFIRM THE CO NCLUSION DRAWN BY THE LD. CIT(A). 3. THE NEXT GROUND PERTAINS TO DELETING THE ADDITIO N OF RS. 98,000/- MADE OUT OF BROKERAGE EXPENSES. THE CR UX OF ARGUMENTS ON BEHALF OF THE REVENUE IS THAT NEITHER THE BROKER RESPONDED TO THE INTIMATION SOUGHT U/S 133 (6) OF THE ACT NOR SUCH CONFIRMATION WERE FILED FROM THE BROKER BY THE ASSESSEE. IT WAS ALSO CONTENDED THAT IT IS CLEAR CUT CASE OF VIO LATION OF RULE 5 46A I.T. RULES IN ADMITTING THE ADDITIONAL EVIDENCE FILED BEFORE THE LD. CIT(A). WE NOTE THAT THE BASIS FOR MAKING THE A DDITION OF RS. 98,000/- NO MORE REMAIN IN EXISTENCE AS DURING APPE LLATE PROCEEDINGS REQUIRED CONFIRMATION FROM BOTH THE PAR TIES TO WHOM THE ASSESSEE MADE THE PAYMENTS WERE FILED. THE LD. CIT(A) HAS COTERMINOUS POWER WITH THAT OF THE ASSESSING OFFICE R AND ON EXAMINATION OF SUCH CONFIRMATION, FILED BEFORE HIM, HE DELETED THE ADDITION. THEREFORE, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 4. THE LAST GROUND PERTAINS TO DELETING THE ADDITIO N OF RS. 1.00 LAC OUT OF RETI, MORAM AND GITTI ETC. TREATING THE SAME AS PURCHASED FROM UNDISCLOSED SOURCES. THE LD. SR. DR DEFENDED THE ADDITION WHEREAS THE LEARNED COUNSEL FOR THE AS SESSEE SUPPORTED THE IMPUGNED ORDER. 4.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT DURING A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT MOST OF THE PAYMENTS WERE MADE IN CASH AND SELF MADE VO UCHERS WERE 6 PREPARED. THESE CASH PAYMENTS WERE UNVERIFIABLE, TH US HE MADE DISALLOWANCE OF RS. 1.00 LAC OUT OF RS. 64,57,643/- . IN VIEW OF UNCONTROVERTED FINDINGS CONTAINED IN THE ASSESSMENT ORDER, WE FIND NO MERIT IN THE CONCLUSION DRAWN BY THE LD. CI T(A). THEREFORE, THIS GROUND OF THE REVENUE IS ALLOWED. FINALLY, THE APPEAL OF THE REVENUE IS PARTLY ALLOW ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 TH NOV. 2013. SD/- SD/- (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED - 13 TH NOV. 2013 COPY TO APPELLANT/RESPONDENT/CIT/CIT(A)/DR RNM/-