Vinod Kumar Arora, Meerut V. ITO ward 2(4), Meerut

ITA 4971/DEL/2019

AI Insights

The case involves Vinod Kumar Arora, the appellant, contesting the decisions made by the Income Tax Officer (ITO) and the Commissioner of Income Tax (Appeals) [CIT(A)] regarding the assessment of his income for the year 2010-11. The primary issues in the appeal were the disallowance of Rs. 3,20,000 from development expenses and the valuation of closing stock which resulted in an additional income assessment of Rs. 10,25,844. The Tribunal's decision was based on the lack of supporting evidence from the appellant to substantiate his claims, leading to the dismissal of the appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122260 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 02-01-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 29-05-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Valuation report; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “SMC” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.4971/Del/2019 [Assessment Year : 2010-11] Vinod Kumar Arora, G-107, Shastri Nagar, Meerut. PAN-ABNPA5944K vs ITO, Ward-2(4), Meerut. APPELLANT RESPONDENT Appellant by None Respondent by Shri S.L. Anuragi, Sr.DR Date of Hearing 03.01.2023 Date of Pronouncement 13.02.2023 ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2010- 11 is directed against the order of Ld. CIT(A), Meerut dated 29.03.2019. 2. The assessee has raised following grounds of appeal:- 1. “That under the facts & circumstances of the case, the learned Lower Authority was not justified to confirm the disallowance of Rs. 3,20,000/- out of development expense. The confirmation of disallowance at Rs. 3,20,000/- is arbitrary, unjust, uncalled-for, and highly excessive. 2. That under the facts and circumstances of the case, the Ld. CIT (A) has erred to calculate value of stock of total land at cost, whereas the same ought to be on saleable area of land in stock plus development expenses. Addition of Rs. 10,25,844/- is therefore arbitrary, unjust, uncalled for and highly excessive. 3. That under the facts and circumstances of the case, the Ld. Lower Authority has erred to estimate the closing stock of business at Rs. 45,25,844/- as against disclosed by assessee at Rs. 35,00,000/- and by AO at 43,50,571/-. The enhancement & confirmation of Page | 2 addition of Rs. 10,25,844/- is therefore arbitrary, unjust, uncalled- for, and in any case highly excessive.” 3. At the time of hearing, no one attended the proceedings. It is seen from the records that no one has been attending the proceedings since 26.07.2021 despite notices sent through Registry. It is seen from the records that some of the notices have been returned back unserved by the Postal Authority. The assessee has not provided any current address to the Registry. Therefore, the appeal is taken up for hearing in the absence of the assessee and disposed off on the basis of material available on record. 4. Facts giving rise to the present appeal are that the assessee filed its return of income declaring total income at Rs.9,14,240/- on 31.03.2011. The case of the assessee was picked up for scrutiny assessment and the assessment was framed u/s 143(3) of the Income Tax Act, 1961 (“the Act”) by the Assessing Officer (“AO”) vide order dated 28.01.2013. Thereby, income of the assessee was assessed at Rs.78,76,365/-. The matter travelled upto the stage of the Tribunal and the Tribunal vide order dated 20.04.2014 partly allowed the appeal of the assessee and set aside the assessment order on three points. The AO thereafter, passed impugned assessment order making assessment at Rs.42,36,810/-. 5. Aggrieved against the findings of AO, the assessee carried the matter before Ld.CIT(A) who after considering the submissions, partly allowed the appeal of the assessee and deleted the addition of Rs.25,59,862/- in respect of addition made on account of difference between the closing stock as disclosed in the original assessment year. In respect of the addition of Rs.8,71,753/-, the addition was restricted to the extent of Rs.7,21,826/-. However, the Page | 3 addition of Rs.3,20,000/- was sustained. Thus, Ld.CIT(A) partly allowed the appeal of the assessee. 6. Aggrieved against the order of Ld.CIT(A), the assessee is in appeal before this Tribunal. 7. Apropos to Ground No. 1 raised by the assessee is against the sustaining of addition of Rs.3,20,000/- in respect of disallowance of development expenses. 8. Ld.Sr.DR supported the orders of the authorities below and submitted that before Ld.CIT(A), the assessee could not produce the supporting evidences. 9. I have heard Ld. Sr. DR and perused the material available on record. I find that Ld.CIT(A) in para 4.1 of its order has decided the issue by observing as under:- 4.1 GROUND NO 1: “The assessee has raised in this ground against the disallowance of Rs.3,20,000/- from the development charges. The assessee in support of his claim for development expenses had submitted valuation report of a registered valuer of Rs 41,44,000/- and on account of electrification charges etc for Rs 6,44,900/- totaling to Rs 47,85,909/-. However the assessee has claimed that actually he has incurred expenses of Rs.45,00,000/- which was taken for the purpose of claiming development expenses in the return of Income. Since the assessee has a share of 35.56% in the total land area so the share of assessee comes to Rs.16,00,200/- being 20% of the total cost of development of Rs.45,00,000/-. The A.O has not disputed the valuation report and other electrical expenses and has accepted the figure of Rs 16,00,200/- but has Page | 4 disallowed 20% expenses in the absence of complete documents and other evidences to cover the possible leakage. The fact remains that what has been submitted by way of valuation report is also an estimate as the report is not backed by any of the supporting documents of details of expenses of expenditure incurred. The A.O has been forced by facts and circumstances to make an estimated addition of 20% of such expenses, in appeal the only argument taken is that since the AO is willing to accept 80% of such expenses so why he could not accept the balance 20%. To my mind the argument of the LD. AR is not acceptable, he ought to have backed the Valuation report with proper supporting evidence. It is in the absence of such evidence that the AO was forced to make an estimated disallowance. There is no material before me produced by the Ld. AR to intervene in the matter except the arguments, I therefore find no reason to interfere and hereby confirm the Addition of Rs.3,20,000/-.” 10. Undisputedly, the Assessing Authority has made the impugned addition on the basis of estimation. Coupled with the fact that the Valuation Report was not supported by the relevant evidences. The assessee has filed Valuation Report by Sabharwal Associates who has computed total cost of construction at Rs.44,44,000/-. The grievance of the assessee is that the authority erroneously disallowed the expenses purely on estimation basis. I find that the AO has recorded the finding that the assessee failed to produce complete vouchers/bills in support of his claim. Looking to the facts of the present case where the assessee has claimed to have incurred expenses on development for claiming deduction of such expenditure, it was incumbent upon the assessee to produce complete vouchers and other credible evidence for proving the veracity of expenses. I therefore, do not see any infirmity into the impugned order of authorities below. Thus, Ground No.1 raised by the assessee is therefore, dismissed. Page | 5 11. Ground Nos. 2 & 3 raised by the assessee are against valuation of stock at a higher rate and thereby, making impugned addition of Rs.10,25,844/-. 12. Ld. Sr. DR supported the orders of the authorities below and contended that there is no infirmity into the orders passed by them. He contended that the AO thus, took the value of closing stock correctly. 13. I have heard Ld. Sr. DR and perused the material available on record. The AO has valued stocks at the rate of Rs.2,500/- per square meter and Rs.466/- per square meter on development charges. The assessee failed to controvert the finding of lower authorities. I do not see any reason to disturb the finding of Ld.CIT(A). Thus, Ground Nos. 2 & 3 raised by the assessee are dismissed. 14. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 13 th February, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI