M/s Reliable Lake Dew Residency, Bangalore V. ACIT, Bangalore

ITA 821/BANG/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1489 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 22-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S VENKATESAN
• Keywords: Set aside
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.821/BANG/2010 ASSESSMENT YEAR : 2005-06 M/S. RELIABLE LAKE DEW RESIDENCY, # 6, JAI PLAZA, 80 FT. ROAD, IST BLOCK, KORAMANGALA, BANGALORE 560 034. : APPELLANT VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 7(1), BANGALORE. : RESPONDENT APPELLANT BY : SHRI S. VENKATESAN, C.A. RESPONDENT BY : SHRI MANOJ KUMAR, ADDL. CIT(DR) O R D E R PER SMT. P. MADHAVI DEVI, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2005-06. 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) IN CONFIRMING THE DISALLOWANCES OF EXP ENDITURE MADE BY THE ASSESSING OFFICER. 3. THE BRIEF FACTS ARE THAT THE ASSESSEE IS A PARTN ERSHIP FIRM, WHICH CARRIES ON THE BUSINESS OF REAL ESTATE AND PROPERTY DEVELOPMENT ETC. FOR ITA NO.821/BANG/10 PAGE 2 OF 5 THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE DECLARED INCOME OF RS.1,93,74,988. DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3), THE AO OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINE SS OF REAL ESTATE AND THERE WERE TWO PARTNERS OF THE FIRM, VIZ., A. RAM AREDDY AND MRS. SUNANDAMMA, SHARING PROFIT & LOSS IN THE RATIO OF 5 5% AND 45% RESPECTIVELY. HE ALSO OBSERVED THAT A SURVEY ACTIO N U/S. 133A OF THE ACT WAS CARRIED OUT ON THE PREMISES OF THE ASSESSEE ON 21.3.06 DURING WHICH IT WAS FOUND THAT THE ASSESSEE WAS DEVELOPING A NUMBER OF REAL ESTATE PROPERTIES WITH THE BASIC NAME OF RELIABLE. AS PER INFORMATION FURNISHED BY THE ASSESSEE, THE ASSESSEE WAS DEVELOPING RELIABLE LAKE DEW RESIDENCY WITH 600 SITES, OUT OF WHICH 150 SITES BELONGED TO LAND OWNERS AND REMAINING TO THE ASSESSEE FIRM. HE FOUND THAT AT T HE TIME OF SURVEY, THE ASSESSEE WAS DEVELOPING VARIOUS OTHER PROPERTIES AL SO, BUT THEY ARE ALL RELATING TO SUBSEQUENT ASSESSMENT YEARS. 4. ON PERUSAL OF THE PROJECT SITE, IT WAS FOUND THA T ALMOST 80% OF THE PROJECT WORK WAS OVER AND MAJOR PORTION OF THE SITE S HAD ALREADY BEEN SOLD. ON PERUSAL OF THE EXPENDITURE CLAIMED BY THE ASSESS EE, THE LD. AO FOUND THAT THE EXPENDITURE ARE MAINLY ON ACCOUNT OF LABOU R EMPLOYED, FOR CLEARING SHRUBBERY AND ON ACCOUNT OF SALARY AND INCENTIVES T O THE EMPLOYEES AND ALSO OTHER PEOPLE WHO ARE FACILITATING THE SALE OF SITES, BUSINESS PROMOTION EXPENSES AND TRAVEL EXPENSES TO USA, CANADA, UK AND DUBAI. 5. THE ASSESSING OFFICER DISALLOWED PART OF SUCH EX PENDITURE ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE GENUINENESS OF SUCH EXPENSES OR THE NATURE OF INCURRING SUCH EXPEN DITURE. AGAINST THE DISALLOWANCES MADE BY THE AO, THE ASSESSEE PREFERRE D AN APPEAL BEFORE ITA NO.821/BANG/10 PAGE 3 OF 5 THE CIT(APPEALS), WHO CONFIRMED THE ORDER OF THE AO . AGGRIEVED THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE, SHRI S. VENKAT ESAN, HAS REITERATED THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUT HORITIES BELOW AND SUBMITTED THAT ALL THE BOOKS OF ACCOUNTS OF THE ASS ESSEE WERE DULY AUDITED AND THEREFORE THERE WAS NO OCCASION FOR REJECTING T HE BOOKS OF ACCOUNTS AND ENTRIES IN SUCH BOOKS OF ACCOUNTS SHOULD BE ACC EPTED. 7. HOWEVER, WITH REGARD TO GROUNDS 3 TO 7 RELATING TO THE DISALLOWANCE OF EXPENSES ON ACCOUNT OF LABOUR, TRAVEL AND BUSINE SS PROMOTION, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E BEING BUSY IN SOME PROFESSIONAL WORK, WAS NOT ABLE TO PRESENT THE CASE PROPERLY BEFORE THE AO AND THE CIT(APPEALS) AND HAS NOW ALL THE NECESSARY EVIDENCE TO CONVINCE THE AUTHORITIES. HE SUBMITTED THAT THE CIT(APPEALS )HAS JUST CONFIRMED THE ORDER OF THE AO TO HOLD THAT DISALLOWANCES ARE JUS TIFIED, WITHOUT PROPERLY APPRECIATING THE EVIDENCE. HE THEREFORE PRAYED THA T THE ASSESSMENT MAY BE SET ASIDE AND THE ASSESSEE MAY BE GIVEN A FRESH OPPORTUNITY TO PRESENT ITS CASE. 8. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AD BEEN GIVEN AMPLE OPPORTUNITIES BEFORE THE LOWER AUTHORITIES AND HENC E THE ASSESSEE NEED NOT BE GIVEN ANY FURTHER OPPORTUNITY. ACCORDING TO HIM, IT IS THE DUTY OF THE ASSESSEE TO PROVE HIS CLAIM WHICH HE HAS FAILED TO DO AND THEREFORE THE ADDITIONS WERE RIGHTLY CONFIRMED BY THE CIT(APPEALS ). ITA NO.821/BANG/10 PAGE 4 OF 5 9. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDE RED THE RIVAL CONTENTIONS, WE FIND THAT THE AO HAS MADE ADHOC DIS ALLOWANCES OUT OF THE TOTAL CLAIM OF EXPENDITURE. MOST OF THE EXPENSES A RE SUPPORTED BY SELF- MADE VOUCHERS AND AS RIGHTLY POINTED OUT BY THE LD. ACIT, THE ONUS IS ON THE ASSESSEE TO PROVE ITS GENUINENESS AS WELL AS TH E NECESSITY OF INCURRING SUCH EXPENDITURE. 10. THE AO HAS MADE DISALLOWANCES OF 10% TO 25% OF THE EXPENDITURE, WHICH HAS BEEN CONFIRMED BY THE CIT(APPEALS). AFTE R CONSIDERING THE DETAILS GIVEN BY THE ASSESSEE, THE AO HAS DISALLOWE D ONLY A PART OF THE EXPENDITURE, AS THE ASSESSEE HAS NOT BEEN ABLE TO P ROVE THE NECESSITY OF INCURRING SUCH EXPENDITURE. EVEN BEFORE US, THE A SSESSEE HAS FILED A PAPERBOOK CONTAINING BALANCE SHEET AND PROFIT & LOS S ACCOUNT FOR THE YEAR ENDING 31.3.2004, 31.3.2005 AND 31.3.2006, BUT NO E VIDENCE AS TO THE NECESSITY OF INCURRING SUCH HUGE EXPENDITURE ON ACC OUNT OF SALARY OR INCENTIVE, TRAVEL EXPENDITURE OR LABOUR EXPENDITURE HAS BEEN FILED OR POINTED OUT. IN VIEW OF THE SAME, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(APPEALS) AND THE ASSESSEES APPEAL IS ACCORDINGLY DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF MARCH, 2011. SD/- SD/- ( DR. O.K. NARAYANAN ) ( SMT. P. MADHAVI DEVI ) VICE PRESIDENT JUDICIAL M EMBER BANGALORE, DATED, THE 15 TH MARCH, 2011. DS/- ITA NO.821/BANG/10 PAGE 5 OF 5 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.