The ITO, Ward-1(3), Surat V. M/s. Maloo Finance & Builders Pvt.Ltd., West Bengal

ITA 863/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9598 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-06-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 21-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Keywords: Business expenditure; Corroborative evidences
• Section: 143(3)

Judgement Text

, A, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, A BENCH BEFORE S/SHRI G.D. AGRAWAL, VICE-PRESIDENT AND KUL BHARAT, JUDICIAL MEMBER) ITA NO.863/AHD/2011 [ASSTT.YEAR : 2007-2008] ITO, WARD-1(3) SURAT. /VS. M/S. MALOO FINANCE & BUILDERS P. LTD. C/O. C.S. BHATT & CO. 5013, TRADE HOUSE NR. RISHUBH PETROL PUMP RING ROAD, SURAT 395 002, GUJARAT. PAN : AABCM 5692 C ( / APPELLANT) ( / RESPONDENT) REVENUE BY : SHRI DINESH SINGH, SR.DR ASSESSEE BY : NONE DATE OF HEARING : 1 ST JUNE, 2015 DATE OF PRONOUNCEMENT : 11 TH JUNE, 2015 O R D E R PER KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (A)-I, SURAT DATED 21.1.2011. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THE APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION MADE O N ACCOUNT OF DISALLOWANCE OF 10% OF LAND DEVELOPMENT EXPENSES OF RS.33,08,950/- INSPITE OF THE ASSESSEES FAILURE TO PRODUCE BOOKS OF ACCOUNTS AND EVIDENCES TO PROVE ITS CLAIM. ITA NO.863/AHD/2011 -2- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) MAY BE SET ASIDE AND THAT OF THE AO MAY BE RESTORED TO THE ABO VE EXTENT. 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE CA SE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT WAS F RAMED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED T O AS THE ACT). BY FRAMING THE ASSESSMENT, THE AO MADE DISALLOWANCE OUT OF LAN D DEVELOPMENT EXPENSES AT THE RATE OF 10% AMOUNTING TO RS.33,08,950/- AND ALS O MADE ADDITION OF RS.1,26,000/- ON ACCOUNT OF INTEREST OTHER THAN SEC URITIES. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), WHO, AF TER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE ADDITION ON ACCOUNT OF LAND DEVELOPMENT EXPENSES, AND REJECTED THE CLAIM OF THE ASSESSEE OF INTEREST INCOME. 4. THE ONLY GROUND RAISED IN THE APPEAL IS AGAINST THE DELETION OF THE LAND DEVELOPMENT EXPENSES. 5. NONE APPEARED ON BEHALF OF THE ASSESSEE. THE AP PEAL WAS EARLIER FIXED FOR HEARING ON 9.6.2014, BUT NONE APPEARED AND THE CASE WAS ADJOURNED TO 28.7.2014. THE CASE WAS AGAIN ADJOURNED AND NOTICE OF HEARING WAS SENT TO THE ASSESSEE FOR 8.9.2014 AND SERVED UPON THE ASSESSEE. BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREAFTER, MATTER WAS FUR THER ADJOURNED TO 11.11.2014, BUT ON THAT DATE ALSO NONE APPEARED ON BEHALF OF TH E ASSESSEE, AND AGAIN ADJOURNED TO 24.12.2014, 16.2.2015 AND ON 11.3.2015 . FINALLY THE CASE WAS FIXED FOR HEARING ON 1.6.2015. THE NOTICE OF HEARI NG FIXING THE HEARING ON 1.6.2015 WAS RETURNED WITH REMARK UNCLAIMED. THE INCOME TAX OFFICER HAS VIDE LETTER DATED 26.11.2014 INFORMED THAT THE NOTI CE HAS BEEN SERVED AT THE LAST KNOWN ADDRESS OF THE ASSESSEE BY AFFIXTURE. UNDER THESE FACTS, THE CASE WAS TAKEN UP FOR HEARING IN THE ABSENCE OF THE ASSESSEE AND PROCEEDED TO DISPOSE OF THE APPEAL EX PARTE QUA THE ASSESSEE-RESPONDENT. ITA NO.863/AHD/2011 -3- 6. APROPOS GROUND NO.1, THE LEARNED DR, SHRI DINESH SINGH, ARGUED THAT THE ORDER OF THE CIT(A) IS NON-SPEAKING AND SUBMITTED T HAT BEFORE THE AO, DESPITE GIVING SUFFICIENT OPPORTUNITY, THE ASSESSEE FAILED TO FURNISH SUPPORTING EVIDENCES WITH REGARD TO THE LAND DEVELOPMENT EXPENSES. HE S UBMITTED THAT UNDER THESE CIRCUMSTANCES, THE CIT(A) WAS NOT JUSTIFIED IN DELE TING THE ADDITION. 7. WE HAVE HEARD THE LEARNED DR, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. WE F IND THAT THE AO IN PARA-8 OF HIS ORDER, HAS OBSERVED AS UNDER: 8. THE ASSESSEE COMPANY HAS FAILED TO PRODUC E BOOKS OF ACCOUNTS AND EVIDENCES IN SUPPORT OF CLAIM MADE UNDER THE H EAD OF LAND DEVELOPMENT EXPENSES. THE EXPENSES CLAIMED COULD NO T BE TREATED CORRECT TILL THE SAME ARE VERIFIABLE TO THE SUPPOR TING EVIDENCES AND OTHER DETAILS. THE EXPENSES CLAIMED WERE ACTUALLY/ FULLY UTILIZED FOR THE PURPOSE OF LAND DEVELOPMENT EXPENSES, ARE STILL UNA NSWERED. IN ABSENCE OF DETAILS, THE GENUINENESS AND CORRECTNESS OF EXPENSES CLAIMED COULD NOT BE ALLOWED IN TOTTO. FURTHER, THE ASSESSEE COMPANY HAS ALSO FAILED TO PROVE THE REASONABLENESS OF LAND DEVELOPMENT EXPENSES CLAIMED. ACCORDINGLY, 10% OUT OF THE LAND DEVELOPMENT EXPENSES ARE DISALLOWED WHICH COMES TO RS.33,08,950/- (10% OF RS.3,30,89,500) AND SAME IS ADDED TO THE TO TAL INCOME OF THE ASSESSEE COMPANY. SINCE THE ASSESSEE HAS FILED INAC CURATE PARTICULAR OF ITS INCOME AND CONCEALMENT OF INCOME, THE PENALT Y PROCEEDING U/S.271(L)(C) IS INITIATED. 8. HOWEVER, THE LD.CIT(A) DELETED THE ADDITION BY O BSERVING AS UNDER: 6. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND HA VE CONSIDERED THE RIVALS CONTENTIONS. I AM OF THE OPINION THE AOS ACTION OF DISALLOWING 10% OF LAND DEVELOPMENT EXPENSES IS NOT IN ACCORDAN CE WITH THE SETTLED LAWS AND THE VARIOUS CASE LAWS MENTIONED BY APPELLA NT THE COPIES OF WHICH HAVE BEEN SUBMITTED BEFORE ME. THE AO HAS NO T DONE PROPER HOMEWORK BEFORE COMING TO HIS DECISION. HE HAS SIM PLY DISALLOWED THIS AMOUNT WITHOUT LOOKING INTO THE EARLIER YEARS RECO RD. HENCE, IN VIEW OF THE CASE LAWS QUOTED BY THE APPELLANT, THE ADDITION MADE IS HEREBY DELETED AND THE APPEAL IS ALLOWED. AS FAR AS ADDITION ON ACCOUNT OF INTEREST INCOME IS CONCERNED, THE APPELLANT HAS NOT SUBMITTED ANY MATERIAL IN SUPPORT OF ITS CLAIM. HENCE, THE APPEAL ON THIS GROUND IS HEREBY DISMISSED. ITA NO.863/AHD/2011 -4- 9. WE FIND THAT, BEFORE THE LEARNED CIT(A), IT IS S UBMITTED BY THE ASSESSEE THAT IT HAD FILED AUDITED ACCOUNT BOOKS, HOWEVER, D UE TO PAUCITY OF TIME, THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT BEF ORE THE LD.AO. IT IS ALSO SUBMITTED BY THE ASSESSEE THAT THE HEAD OFFICE OF T HE COMPANY WAS IN KOLKATA AND THE DIRECTORS RESIDE THERE AND THIS BEING A TIM E BARRING ASSESSMENT, THE AO WAS IN A HURRY TO PASS THE ORDER. IT IS NOT COMIN G OUT OF THE ORDER OF THE CIT(A) THAT WHETHER THE ASSESSEE HAD PRODUCED BOOKS OF ACC OUNTS BEFORE THE LD. CIT(A), AND THE LD.CIT(A) HAS BASED ITS FINDINGS ON THE BAS IS OF THE BOOKS OF ACCOUNTS, OR ANY OTHER SUPPORTING EVIDENCES IN THE FORM OF BI LLS, VOUCHERS ETC. WERE CONSIDERED. THE AO HAS GIVEN A CATEGORICAL FINDIN G THAT DESPITE GIVING VARIOUS OPPORTUNITIES, THE ASSESSEE FAILED TO PRODUCE THE E VIDENCES IN SUPPORT OF THE EXPENDITURE SO CLAIMED. IT IS ALSO ADMITTED FACT T HAT THE BOOKS OF ACCOUNTS WERE NOT PRODUCED BEFORE THE AO. THE LD.CIT(A) HAS ALSO NOT GIVEN ANY FINDINGS WHETHER THE BOOKS OF ACCOUNTS WERE PLACED BEFORE HI M. IT IS A SETTLED POSITION OF LAW THAT THE ASSESSEE IS REQUIRED TO PROVE WITH SUP PORTING EVIDENCES, THE EXPENDITURE CLAIMED TO BE BUSINESS EXPENDITURE, FOR CLAIMING THE DEDUCTION. IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO SUG GEST THAT THE ASSESSEE HAS PRODUCED SUPPORTING EVIDENCES IN SUPPORT OF THE EXP ENDITURE SO CLAIMED, THEREFORE, EVEN, THE LD.CIT(A) HAS NOT GIVEN ANY FI NDINGS WHETHER THE BOOKS OF ACCOUNTS WERE PRODUCED BEFORE HIM, AND HE HAD VERIF IED THE GENUINENESS OF THE EXPENDITURE FROM THE BOOKS OF ACCOUNTS. UNDER THES E CIRCUMSTANCES, THE FINDINGS OF THE CIT(A) CANNOT BE CONFIRMED. FURTHE R, THE AO HAS DISALLOWED ONLY 10% OF THE TOTAL LAND DEVELOPMENT EXPENDITURE, BUT THE BASIS OF SUCH DISALLOWANCE IS NOT GIVEN. THEREFORE, THE ISSUE RE QUIRES FRESH ADJUDICATION AT THE END OF THE AO. THEREFORE, WE RESTORE THIS ISSUE BA CK TO THE FILE OF THE AO FOR DECISION AFRESH ON THIS ISSUE. NEEDLESS TO MENTION , THE AO SHALL PROVIDE REASONABLE OPPORTUNITY TO THE ASSESSEE TO PRODUCE R ELEVANT MATERIAL IN SUPPORT OF ITS CASE. THUS, THIS GROUND OF APPEAL OF THE REVEN UE IS ALLOWED FOR STATISTICAL PURPOSE. ITA NO.863/AHD/2011 -5- 10. THE GROUNDS NO.2 AND 3 BEING GENERAL IN NATURE, NEED NO ADJUDICATION. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( G.D. AGRAWAL) VICE-PRESIDENT (KUL BHARAT) JUDICIAL MEMBER