The ACIT, Central Circle-1(3), Ahmedabad V. The Sheetal Infrastructure Pvt.Ltd., Ahmedabad

ITSSA 647/AHD/2011

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3239 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-05-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 29-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 01-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: S N SOPERKAR WITH PARIN SHAH
• Keywords: Gift; Business expenditure; Income from undisclosed sources; Loose papers; Document seized; Corroborative evidences; Right to appeal; Documents seized
• Section: 40A(3); 143(3); 142(1); 133A; 153A; 37(1); 147; 37; 263; 132

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV , JM, AND SHRI MANISH BORAD, AM ./ ITA . NO . 647/AHD/2011 & CO. 33/AHD / 12 ( / ASS TT YEAR : 2009 - 10 ) ACIT, CENTRAL CIRCLE 1(3), ROOM NO. 304,3 RD FLOOR, AAYKAR BHAVAN ASHRAM ROAD, AHMEDABAD VS. THE SHEETAL INFRASTRUCTURE PVT. LTD. 25, 4 TH FLOOR, SHUKUN MALL, SHAHIBAUG, AHMEDABAD - 380004 PAN: AAICS9312A (APPELLANT) (RESPONDENT) / APPELLANT BY : SHRI JAGDISH , CIT, D.R. / RESPONDENT BY : SHRI S.N. SOPERKAR WITH PARIN SHAH, A.R. / DATE OF HEARING 2 9 - 0 3 - 2017 / DATE OF P RONOUNCEMENT 26 - 0 5 - 20 1 7 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE AND CROSS OBJECTION BY ASSESSEE FOR ASSESSMENT YEAR 200 9 - 10 ARE DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS) - III, AHMEDABAD DATED 27/09/2011 ARISING OUT OF THE ORDER U/S. 14 3 ( 3) R.W.S. 153A(1)(B) AND R.W.S. 153B(1)(B) OF THE ACT FRAMED ON 08.09.2010 BY DCIT, CENTRAL CIRCLE - 1(3), AHMEDABAD. ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 2 2 . BRIEFLY STATED FACT S AS C U LLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE IS A PRIVATE LTD. COMPANY ENGAGED IN THE BUSINESS AS BUILDER AND DEVELOPER. A SURVEY ACTION U/S. 13 3A OF THE ACT WAS CONDUCTED AT ASSESSEE S BUSINESS PREMISES ON 29.08.2008 . EXCESS CASH OF RS. 40, 23,300/ - WAS DETECTED. SUBSEQUENTLY SEARCH ACTION U/S. 132 OF THE ACT WAS CONDUCTED ON 29.09.20 08 WHICH RESULTED INTO SEIZE R OF C ASH AT RS. 40,00,000/ - AND OTHER INCRIMINATING DOCUMENTS. ON CONFRONTING WITH THE DOCUMENTS THE GROUP ADMITTED RS. 7.2 0 CRORE AS UNDISCLOSED RECEIPT . SUBSEQUENTLY ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2009 - 10 ON 29.09.2009 DECLARING INCOME OF RS. 2,10,23,030/ - . NOTICE U/S. 143(3) FOLLOWED BY 142(1) OF THE ACT WERE ISSUED AND DULY SERVED TO THE ASSESSEE . N ECESSARY DETAILS AS CALL ED FOR WERE DULY FURNISHED. ASSESSMENT ORDER WAS COMPLETED BY ASSESSING INCOME AT RS. 5,09,85,016/ - , A FTER MAKING FOLLOWING ADDITIONS TOTALING TO RS. 2 , 99 , 61 , 986/ - ON THE BASIS OF SEIZED MATERIAL: - (I) DISALLOWANCE OF EXPENSES CLAIMED BY THE ASSESSEE TOWARDS AMOUNT PAID FOR VACATING RIGHTS IN SCRAPPING ROYAL VEDICA SCHEME RS. 1,39,78,000/ - (II) DISALLOWANCE OF EXPENSES ON ACCOUNT OF ON MONEY PAYMENT FOR REPURCHASE OF VEDICA - I AND VEDICA - II PLOTS RS. 98,70,000/ - (III) DISALLOWANCE OF EXPENSES CLAIM IN THE SEIZED DOCUMENT FOR WANT OF EVIDENCE. RS. 61,13,986/ - TOTAL RS. 2,99,61,986/ - 3. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX(APPEALS) A ND PARTLY SUCCEEDED AS LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED ADDITIONS OF RS. 1,39,78,000/ - AND RS. 6 1,13,986/ - AS REGARDS THE ADDITIONS OF RS. 98,70,000/ - RELATING TO DISALLOWANCE OF PAYMENT OF ON MONEY PAID FOR PUR CHASE OF PLOTS IN VEDICA SCH EME, L EARNED ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 3 COMMISSIONE R OF INCOME TAX (APPEALS) DELETED RS. 16,10,000/ - AND SUSTAIN ED THE REMAINING AMOUNT OF RS. 82,60,000/ - . 4 . NOW WE WILL TAKE UP THE GROUND S RAISED BY THE REVENUE WHICH READS AS FOLLOWS: - 1) THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE EXPENDITURE OF RS. 1,39,70,000 / - - MADE ON ACCOUNT OF ON MONEY PAYMENT FOR VACATING THE RIGHT AS A RESULT OF SCRAPPING OF ROYAL VEDICA SCHEME. 2) THE LD.CLT(A) OUGHT TO HAVE ACCEPTED THAT THE EVIDENCES O F PAYMENT OF COMPENSATION WAS NOT PRODUCED BEFORE THE ASSESSING OFFICER IN SPITE OF ADEQUATE OPPORTUNITY HAVING BEEN GIVEN TO THE ASSESSEE AT THE ASSESSMENT STAGE. 3) THE LD.CLT(A) ERRED IN NOT ACCEPTING THAT IT IS A SETTLED PROPOSITION OF LAW THAT IN REGARD TO THE GENUINENESS OF AN EXPENDITURE CLAIMED AS DEDUCTION THE ONUS IS ENTIRELY UPON THE ASSESSEE TO ESTABLISH IT. THE ONUS IS NEVER UPON THE ASSESSING OFFICER TO DISPROVE IT. 4) WITHOUT PREJUDICE TO THE ABOVE HAVING HELD THAT THE AMOUNT OF COMPENS ATION PAID BEING ADMISSIBLE AS DEDUCTION UNDER SECTION 37(1) OF THE ACT THE LD.CIT(A) OUGHT TO HAVE EXAMINE THEIR ADMISSIBILITY IN TERMS OF SECTION 40A(3) OF THE ACT. 5.THE LD.CIT(A} HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING O FFICER TO DELE TE THE ADDITION OF RS.16,10,000/ - EXPENSES ON ACCOUNT OF ON MONEY PAYMENT FOR PURCHASE OF VEDICA - 1 AND VEDICA - 2 PLOTS. 6. THE LD.CLT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE ADDITION OF RS.61,13,986/ - ON ACCOUNT OF O THER EXPENSES SUCH AS COMMISSION, INTEREST, SALARY ETC. 7) WITHOUT PREJUDICE TO THE ABOVE, HAVING ACCEPTED THE CLAIM OF THE ASSESSEE THAT THE EXPENSES ARE ADMISSIBLE, THE LD.CIT(A) OUGHT TO HAVE EXAMINED THEIR ADMISSIBILITY IN TERMS OF SECTION 40A(3) AND SECTION '40 (A ) (IA) OF THE ACT. 8) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 9) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C1T (A) BE SET ASIDE AND THAT OF THE A.O . BE RESTORED TO THE ABOVE EXTENT. ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 4 GROUND NO. 1 TO 4 5 . THESE FOUR GROUNDS OF REVENUE RELATES TO EXPENDITURE OF RS. 1,39,78,000/ - MADE ON ACCOUNT OF AMOUNT PAID TO VACATE THE RIGHT AS A RESULT OF SCRAPING OF ROYAL VEDICA SCHEME. LD. ASSESSING OFFICER DISALLOWED THIS EXPENDITURE AS THE ASSESSEE FAIL ED TO FURNISH THE BASIC DETAILS I.E. ADDRESS, PAN IN ALL CASES EXCEPT ONE. LD. ASSESSING OFFICER ALSO DECLINED THE ASSESSEE S ALTERNATIVE PLEA CLAIMING THE AFORE SAID AMOUNT PAID FOR AS BUSINESS LOSS. LD. ASSE SSING OFFICER ALSO OBSERVED THAT EVEN THOUGH DETAILS WHICH ARE MENTIONED ON A LOOSE PAPER, THE ONUS IS ASSESSEE IS TO PROVE THAT THE SAID EXPENDITURE IS AN ALLOWABLE ITEM AND IT FALLS WITHIN THE DOCTRINE OF COST MATCHING WITH REVENUE. HOWEVER IN APPEAL BEF ORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE SUCCEEDED IN FULL. 6 . NOW ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7 . LD. AUTHORISED REPRESENTATIVE SUPPORTED THE FINDINGS OF LD. COMMISSIONER OF INCOME TAX (APPEALS) AND LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LD. ASSESSING OFFICER. 8 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US . I SSUE RAISED IN GROUND 1 TO 4 BY REVENUE REVOLV E S AROUND AMOUNT OF RS. 1,39,78,000/ - PAID BY ASSESSEE TO VARIOUS PARTIES FOR VACATING THE RIGHT AS A RESULT OF SCRAPING OF ROYAL VEDICA SCHEME. THESE DETAILS WERE FIGURED OUT FROM THE LOOSE PAPERS FOUND IN THE COURSE OF SURVEY U/S. 133A FOLLOWED BY SEARCH U/S. 132 ON 29.08.2008. ASSESSEE MAD E DISCLOSER OF RS. 7.2 CRORES AND ALSO CLAIMED EXPENDITURE UNDER VARIOUS HEADS FOR PURCHASED OF LAND, PROJECT EXPENDITURE, SHORT TERM LOANS ON THE BASIS OF SEIZED PAPER MATERIALS. WE FURTHER NOTICE THAT PREVIOUSLY THERE EXISTED A ROYAL VEDICA SCHEME MADE ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 5 B Y THE APPELLANT WHICH WAS DEMOLISHED. THEREAFTER ON THE SAME LAND A NEW SCHEME NAME VEDICA EXOTICA WAS LAUNCHED. BOOKING AMOUNT OF VARIOUS UNITS IN THIS NEW SCHEME OF VEDICA EXOTICA W AS RECEIVED WHICH DULY FORMS ITS PART OF THE DISCLOSURE OF 7.2 CRORES. AS SESSEE IN ORDER TO GET FREE POSSESSION OF THE LAND HAD TO PAY THE UNIT HOLDERS OF ROYAL VEDICA SCHEME WHICH WAS DEMOLISHED. ASSESSEE HAS FILED COPY OF LEDGER ACCOUNT SHOWING RECEIPT OF BOOKING AMOUNT AND REFUND OF THE SAME ALONG WITH COPY OF REC EIPT ISSUE. 9 . WE FURTHER OBSERVE THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE DISALLOWANCE AND ALLOWED THE ASSESSEE S CLAIM OF EXPENDITURE OF RS. 1,39,70,000/ - BY OBSERVING AS FOLLOWS: - 3. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT. I HAVE ALS O GONE THROUGH THE SEIZED MATERIAL. IN THE SEIZED PAGES. THERE ARE DEBIT AND CREDIT ENTRIES OF CASH AMOUNT AND CHEQUE AMOUNT ALONG WITH THE PARTICULARS AGAINST EACH AMOUNT. THE TOTAL OF CREDIT ENTRIES COMES TO RS.764,06,613. WHEN THE AO EXAMINED THE NATURE OF THE DEBIT AND CREDIT ENTRIES AS APPEARING IN THE SEIZED PAGES, HE CLASSIFIED THEM UNDER THREE CATEGORIES. A. EXPENSES OF RS.139,78,000 ON ACCOUNT OF ON MONEY PAYMENT FOR VACATING THE RIGHT AS A RESULT OF SCRAPPING OF ROYAL VEDICA SCHEME. B. EXPENSES O F RS.186,34,000 ON ACCOUNT OF ON MONEY PAYMENT FOR THE PURCHASE OF VEDICA - 1 AND VEDICA - 2 PLOTS. C. OTHER EXPENSES SUCH AS COMMISSION, INTEREST, SALARY ETC. AMOUNTING TO RS. L 16,63,986. 'IN THE FIRST CATEGORY THE EXPENSES ON ACCOUNT OF ON MON EY PAYMENT FOR VACATING THE RIGHT AS A RESULT OF SCRAPPING OF ROYAL VEDICA SCHEME ARE MENTIONED. IT WAS STATED BY THE AR SHRI TUSHAR SHAH C.A. OF THE APPELLANT COMPANY THAT EARLIER VEDICA - 1 SCHEME WAS LAUNCHED BY SHRI PARAS PANDIT (PRESENT DIRECTOR OF THE APPELLANT COMPANY) IN THE PROPRIETARY CONCERN NAMED AS SHEETAL DEVELOPERS IN 2004. THAT CONCERN HAD THE LAND NEAR GIFT CITY AT KODA ROAD. THIS PLOTTING SCHEME WAS SOLD TO. VARIOUS MEMBERS BY SHEETAL DEVELOPERS. SUBSEQUENTLY SHEETAL DEVELOPERS WAS CLOSED AN D A NEW COMPANY IN THE NAME OF SHEETAL INFRASTRUCTURE PRIVATE LIMITED WAS INCORPORATED AROUND 2006. THE' APPELLANT COMPANY SUBSEQUENTLY REALIZED THAT THE LAND OF VEDICA - 1 SOLD TO VARIOUS MEMBERS IS VIABLE FOR THE PROJECT OF BUNGLOW/FLAT SCHEME. THEREFORE, THE APPELLANT COMPANY RE - PURCHASED THE PLOTS SOLD BY VEDICA - 1 FROM THE MEMBERS CONCERNED. IN THIS LAND THE APPELLANT COMPANY HAS LAUNCHED THE SCHEME KNOWN AS ROYAL VEDICA. THE PLAN OF THE SCHEME WAS ALSO APPROVED AND THE APPELLANT HAS STARTED CONSTRUCTION AND GETTING THE BOOKING FOR THE SCHEME.. HOWEVER, SUBSEQUENTLY DUE TO CHANGE IN PLAN AT GANDHINAGAR LEVEL, THE APPELLANT WAS FORCED TO DEMOLISH THE CONSTRUCTION CARRIED OUT AND HANDOVER THE LAND FOR THE NEW TP ROAD. THE APPELLANT HAD TO SCRAP THE ENTIRE SCHEME AND IN THAT EVENT ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 6 HE HAD TO PAY EXTRA AMOUNT TO THE PERSONS WHO HAD BOOKED THEIR UNITS IN THE SCHEME DUE TO THE SUBSTANTIAL HIKE IN THE LAND PRICES. ON THIS VERY LAND, THE PRESENT SCHEME OF VEDICA. EXOTICA IS LAUNCHED BY THE APPELLANT. ACCORDING TO THE APPELLANT, THE DIFFERENTIAL PAYMENT IS NOTHING BUT A BUSINESS LOSS INCURRED BY THE APPELLANT. 4. IN 2005 ANOTHER PLOTTING SCHEME BY THE NAME OF V 69 WAS STARTED BY SHEETAL DEVELOPERS AND IT WAS SOLD OUT. THEREAFTER, THE APPELLANT COMPANY DECIDED TO BUY THE SAME LAND FROM THE CONCERNED MEMBERS. FOR BUYING THE PLOTS FROM THE CONCERNED MEMBERS THE APPELLANT HAD MADE PAYMENT IN CASH AS WELL AS BY CHEQUE. THE ENTRIES OF CASH AND SOME CHEQUES ARE APPEARING IN THE SEIZED DOCUMENTS. OUT OF THE ENTRIES OF EXP ENSES MENTIONED IN THE SEIZED PAPER, TOTAL AMOUNT OF RS. 103, 74, 000/ - IS PAID FOR VEDICA - 1 SCHEME IN WHICH LAND, THE PRESENT SCHEME OF VEDICA EXOTICA, IS RUN. IT, WAS ADMITTED BY THE AR BEFORE ME THAT AN AMOUNT OF RS.82,60,000 IS PAID FOR THE ACQUISITIO N OF LAND OF EARLIER V 69 SCHEME ON WHICH THE CONSTRUCTION WORK IS BEING CARRIED OUT UNDER DIFFERENT PROJECT (NOT VEDICA EXOTICA). 5. ONE OF THE CONTENTION OF THE AO IN THE ASSESSMENT ORDER IS THAT THE APPELLANT HIMSELF HAD DECLARED THE ADDITIONAL INCOME OF RS.7.20 CRORES WHICH IS THE TOTAL OF THE RECEIPTS APPEARING IN THE SEIZED PAPER. THIS DECLARATION WAS AGAIN CONFIRMED BY HIM AFTER THE DATE OF THE SEARCH. THEREFORE, THE APPELLANT CANNOT SUBSEQUENTLY RETRACT FROM THE DECLARATION AND THEREFORE, THE INCO ME OF THE .APPELLANT CANNOT BE LESS THAN RS.7.20 CRORE ON THE BASIS OF THE SEIZED PAPERS NUMBER 55 TO 59. I DO NOT AGREE WITH THIS ARGUMENT OF THE AO. THE APPELLANT HAS ADMITTED THE UNACCOUNTED INCOME OF RS. 7.20 CRORES ON THE BASIS OF THESE DOCUMENTS. AS PER THIS, THERE WAS TOTAL RECEIPT OF RS. 7.64 CRORES AND THE EXPENSES OF RS.4,42 CRORES. SUBSEQUENTLY, THE APPELLANT. REALISED THAT HIS INCOME IS NOT THE TOTAL RECEIPTS OF RS.7.20 CRORES BUT THE EXPENSES INCURRED FOR EARNING SUCH INCOME HAS TO BE DEDUCTED. HE ACCORDINGLY CLAIMED SUCH EXPENSES IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153A OF THE INCOME - TAX ACT. IN MY OPINION, IF THE DISCLOSURE OF RS.7.20 CRORES WAS MADE ONLY ON THE BASIS OF THE SEIZED PAPERS NUMBER 55 TO 59 OF ANNEXU RE A/6, THEN IT WAS NOT A DISCLOSURE OF THE TOTAL INCOME BUT OF THE TOTAL RECEIPTS. FOR ARRIVING AT THE CORRECT INCOME, THE ALLOWABLE EXPENSES' HAVE TO BE CONSIDERED BY THE AO. THEREFORE, THERE IS NOTHING WRONG IN CLAIMING THE EXPENSES AT THE TIME OF FILIN G THE RETURN OF INCOME UNDER SECTION 153 A .OF THE INCOME - TAX ACT. 6. THE MAIN CONTENTION OF THE AO IN THE ASSESSMENT ORDER IS THAT THE GENUINENESS OF THE EXPENSES AS APPEARING IN THE SEIZED PAPERS NUMBER 55 TP 59 HAS NOT BEEN PROVED BY THE APPELLANT, THE REFORE, WHEREVER THE APPELLANT HAS BEEN ABLE TO FILE THE CONFIRMATION, FROM THE CORRESPONDING PARTY, THE AO HAS ALLOWED SUCH EXPENDITURES AND DISALLOWED THE BALANCE. IN MY OPINION, THE BASIS OF THE AO FOR MAKING THE DISALLOWANCE OF EXPENSES AS APPEARING IN THE SEIZED PAPERS IS NOT PROPER. IF ON THE BASIS OF THE SAME SEIZED PAPER, THE AO HAS ACCEPTED THE GROSS RECEIPT OF RS.7.64 CRORES, THEN HE CANNOT DISBELIEVE THE EXPENSES APPEARING ON THE SAME PAPER. IF THE CONTENTS OF THE SEIZED PAPER ARE TO BE ACCEPTED AS CORRECT, THEN ALL THE ENTRIES THEREIN ARE ALSO TO BE ACCEPTED AS CORRECT. THE AO CANNOT SAY THAT THE RECEIPTS ARE CORRECT BUT THE EXPENSES ARE NOT GENUINE. IN SUCH CASES, WHERE EVER, THERE ARE ENTRIES OF RECEIPTS AND EXPENSES WRITTEN IN A SEIZED PAPER, IT IS TO BE PRESUMED THAT BOTH THE ENTRIES OF RECEIPTS AS WELL AS EXPENSES ARE CORRECT. THE ONUS IS ON THE AO TO PROVE OTHERWISE. IN MY OPINION, THE GENUINENESS OF THE EXPENSES MENTIONED IN THE SEIZED PAPER ON THE BASIS OF WHICH THE APPELLANT IS ACCEPTING THE RECEIPTS, CANNOT BE DOUBTED BY THE AO. FURTHER, ALL THE GENUINE EXPENSES NOT PERTAINING TO EARNING OF THE INCOME ARE NOT ALLOWABLE EXPENDITURE. FOR EXAMPLE, IF THE APPELLANT HAS PAID AN AMOUNT OF RS. X (SAY) TO A FOR THE PURCHASE OF LAND ON WHICH THE P ROJECT OF THE APPELLANT HAS NOT EVEN STARTED, THEN THIS EXPENDITURE OF RS. X CANNOT BE ALLOWED AGAINST THE INCOME OF ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 7 ANOTHER PROJECT EVEN THOUGH' THE GENUINENESS OF THE EXPENDITURE IS NOT DOUBTED. WHAT THE AO HAS TO SEE IS WHETHER THE EXPENSES MENTIONED IN THE SEIZED PAPER ARE RELATABLE TO THE INCOME MENTIONED IN THE SAME SEIZED PAPER. IF - THERE IS A NEXUS. BETWEEN THE EXPENDITURE AND THE RECEIPTS, THEN THE AO IS DUTY BOUND TO. ALLOW' SUCH EXPENDITURES PROVIDED SUCH EXPENSES ARE NOT PROHIBITED BY LAW AS MENT IONED IN SECTION 37 (1) PROVISO OF THE INCOME - TAX ACT. IF THE EXPENSES NOT PROHIBITED BY LAW, AND THERE IS A NEXUS BETWEEN THE EXPENDITURE AND EARNING OF THE INCOME, THEN ALL SUCH EXPENSES ARE ALLOWABLE EVEN THOUGH THE APPELLANT IS NOT ABLE TO PROVIDE THE CONFIRMATIONS FROM THE CORRESPONDING PARTIES. SINCE, ALL SUCH EXPENDITURES ARE INCURRED IN CASH,.IT IS NOT EXPECTED FROM THE APPELLANT TO PROVIDE CONFIRMATIONS FROM THE COUNTERPARTIES. THEREFORE, IN MY VIEW, IN SUCH CASES ONLY THING TO BE SEEN BY THE AO IS WHETHER THE EXPENDITURE IS NOT COVERED UNDER PROVISO TO SECTION 37 OF THE INCOME - TAX ACT AND WHETHER IT IS RELATABLE TO EARNING OF THE INCOME AS MENTIONED IN THAT SEIZED PAPER. IF BOTH THE CONDITIONS ARE SATISFIED, THEN THE EXPENSES ARE ALLOWABLE. IF, HOW EVER, ANY ONE OF THE CONDITIONS ARE NOT SATISFIED THEN ONLY SUCH EXPENSES CAN BE DISALLOWED. IN VIEW OF THIS PRINCIPLE, IT IS NECESSARY TO EXAMINE THE NATURE OF THE EXPENSES .MENTIONED IN THE SEIZED PAPER. 7. IN THE ASSESSMENT ORDER, THE AO HAD DIVIDED T HE EXPENSES IN THREE CATEGORIES AS UNDER. 7. 1 IN MY OPINION., SINCE THE PAYMENTS HAVE BEEN MADE TO THE UNIT HOLDERS OF ROYAL VEDICA SCHEME OF THE APPELLANT WHICH WAS DEMOLISHED AND ON THE SAME LAND THE PRESENT SCHEME OF VEDICA EXOTICA IS BEING LAUNCHED B Y THE APPELLANT AND THE RECEIPT IN THE SEIZED PAPER DENOTES THE CASH RECEIVED BY THE APPELLANT AGAINST THE BOOKING OF VARIOUS UNITS (FLATS/BUNGLOWS), THE PAYMENTS OF RS.139,78,000 IS EITHER AN ALLOWABLE EXPENDITURE OR ALTERNATIVELY, IS AN ALLOWABLE BUSINES S LOSS. IN FACT, THE PAYMENT HAS BEEN MADE BY THE APPELLANT TO THE PERSONS HAVING THE RIGHT, IN THE FLATS BOOKED BY THEM IN THE - SCHEME OF ROYAL VEDICA. HOWEVER, THE SCHEME COULD NOT BE COMPLETED AND HAD TO BE DEMOLISHED BECAUSE A TP ROAD WAS TO PASS THROUG H THIS SCHEME. AS MENTIONED EARLIER, THE GENUINENESS OF THE EXPENSES CANNOT BE DOUBTED IN THE PRESENT CASE IF THE GENUINENESS OF THE INCOME SHOWN IN THE SAME SEIZED PAPER HAS NOT BEEN DOUBTED BY THE AO. FURTHER, THE EXPENSES ARE NOT PROHIBITED BY LAW. THER E IS A NEXUS BETWEEN THE EXPENDITURE INCURRED BY THE APPELLANT AND RUNNING OF THE INCOME FROM BOOKING OF FLATS IN VEDICA EXOTICA SCHEME. THEREFORE, THE AO IS DIRECTED TO ALLOW THE EXPENDITURE OF RS.139,70,000 UNDER THIS CATEGORY. 10. FROM GOING THROUGH THE FINDINGS LD. COMMISSIONER OF INCOME TAX (APPEALS) AND ON PERUSAL OF OTHER DETAILS FILED BEFORE THE LOWER AUTHORITIES , WE OBSERVE THAT DISCLOSER WAS MADE ON THE BASIS OF SEIZED LOOSE PAPERS . IT IS NOT DISPUTED THAT ALL THESE DETAILS OF AMOUNT OF RS. 1,39,78,000/ - PAID FOR VACATING THE RIGHT DUE TO SCRAPING OF ROYAL VEDICA SCHEME , WERE ALSO ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 8 AVAILABLE IN THE SEIZED MATERIALS. IT IS WELL ESTABLISHED PRINCIPAL THAT IF AN INCOME HAS TO BE CALCULATED ON THE BASIS OF SEIZED MATERIALS , THEN E ACH AND EVERY SEIZED DOCUMENT HAS ITS RELEVANCE AND THE ASSESSING AUTHO RITY HAS TO COMPUTE THE INCOME A CCORDINGLY ON THE BASIS OF THIS SEIZED MATERIAL . I N THE PRESENT CASE ALSO WHEN THE G ROSS RECEIPT FROM VEDICA EXOTICA SCHEME HAS BEEN CONSIDERED THEN IN T HE GIVEN FACT THAT PREVIOUSLY THERE WAS A ROYAL VEDICA SCHEME WHICH WAS DE MOLISHED, THEN THE ASSESSEE CERTAINLY HAD TO PAY THE AMOUNT TO THE UNIT HOLDERS OF THE OLD SCHEME TO GET A FREE POSSESSION. SUCH EXPEND ITURE ARE HAVING A CLEAR NEXUS WITH THE REVENU E EARNED AND THEREFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY ALLOWED THE CLAIM OF EXPENDITURE OF RS. 1,39,78,000/ - AS AN ALLOWABLE EXPENDITURE AND ALSO ALTERNATIVELY AN ALLOWABLE BUSINESS LOSS. WE THEREFORE FIND NO INFIRMITY IN THE VIEW TAK EN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THESE GROUNDS OF THE REVENUE S ARE DISMISSED. 11. NOW WE WILL DEAL WITH GROUND 5 RAISED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) PARTLY DELETING THE ADDITION OF RS. 1 6,10,000/ - ON ACCOUNT OF ON MONEY PAYMENT FOR PURCHASE OF PLOT AT VEDICA - 1 AND VEDICA - 2. LD. COUNSEL REITERATED THE SUBMISSIONS MADE BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LOWER AUTHORITIES. 1 2 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US . T HE ISSUE IN THIS GROUND RELATES TO DELETION OF ADDITION OF RS. 16,10,000/ - ON ACCOUNT OF ON PAYMENT FOR PURCHASE OF PLOT IN VEDICA - 1 AND VEDICA - 2 . WE FIND THA T DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE PREPARED DETAILS ON THE BASIS OF SEIZED PAPERS RELATING TO AMOUNTS PAID TO ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 9 VARI OUS PERSONS FOR PAYMENT OF ON MONEY ON REPURCHASE OF PLOTS OF VEDICA - 1 SCHEME. 1 3 . FROM GOING THROUGH THIS CHART PLACED ON PAGE 20 AND 21 OF THE ASSESSMENT ORDER, WE FIND THAT THERE WERE NINE PARTIES TO WHOM TOTAL SUM OF RS. 1,86,3 4 , 00 0 / - WAS PAID. OUT OF THESE THE PAYMENTS MADE TO FOUR PERSONS TOTALING TO RS. 87,64,000/ - ASSESSEE FURNISHED THE DETAILS ALONG WITH PAN AND LD. ASSESSING OFFICER WAS SATISFIED WITH THE SAME. AS REGARDS REMAINING AMOUNT OF RS. 98,70,000/ - . LD. ASSESSING OFFICER WAS NOT CONVINCED AND HE MADE ADDITION OF RS. 98,70,000/ - . D URING THE APPELLATE PROCEEDINGS , LD. COMMISSIONER OF INCOME TAX (APPEAL S) ADOPTED THE SAME VIEW THAT EXPENSES INCURRED TOWARDS A PARTICULAR SCHEME APPEARING IN THE SEIZED MATERIAL SHOULD BE ALLOWED AS EXPENDITURE/ OUTFLOW AGAINST THE REVENUE OF SUCH PROJECT. GROSS RECEIPT OF RS. 7.20 CRORE IS FROM VEDICA - 1 & 2 SCHEME. ON PERUSAL OF DETAILS LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT RS. 82,60,000/ - PAID TO SIX PERSONS WAS RELATING TO ON MONEY PAID ON PURCHASE OF LAND OF SOME OTHER SCHEMES WHICH WERE NOT LAUNCHED DURING THE FINANCIAL YEAR 2008 - 09 AN D THIS LAND WAS SHOWN AS STOCK IN TRADE IN THE BOOKS. LD. COMMISSIONER OF INCOME TAX (APPEALS) THEREFORE DID NOT ALLOW THE CLAIM OF EXPENDITURE OF RS. 82,60,000/ - . FURTHER WITH REGARD TO THE REMAINING TWO PERSONS NAMELY SURESH RAWAL RS. 6,00,000/ - AND MAH AVIR SINGH SHEKHAVAT RS. 10,10,000/ - LD. COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED THESE AMOUNT AS AN EXPENDITURE AGAINST THE G ROSS RECEIPTS FROM THE SCHEME. LD. ASSESSING OFFICER DID NOT ALLOW THIS DURING THE ASSESSMENT PROCEEDINGS BECAUSE ASSESSEE HAD ONLY SUBMITTED NAME AND ADDRESS BUT NO PAN WAS MADE AVAILAB LE. ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 10 1 4 . WE FURTHER OBSERVED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THIS ADD ITION OF RS. 16,10,000/ - BY OBSERVING AS FOLLOWS: - 8. B. EXPENSES OF RS. 186,34,000 ON ACCOUN T OF ON MONEY PAYMENT FOR THE PURCHASE OF VEDICA - 1 AND VEDICA - 2 PLOTS. THE NATURE OF EXPENSES AND THE DETAILS REGARDING SUCH EXPENSES AS FURNISHED BY THE APPELLANT BEFORE THE AO WAS AS UNDER: 8.1 . AS HELD BY ME EARLIER THAT THE GENUINENESS OF THE EXPENSES CANNOT BE DOUBTED BY THE AO IN THE PRESENT CASE. WHAT THE AO HAS TO SEE WHETHER THE EXPENDITURES INCURRED FOR THE PURCHASE OF LAND IS RELATABLE TO EARNING OF THE INCOME OF THE PROJECT OF VEDICA EXO TICA. IF THE EXPENSES ARE RELATABLE TO EARNING OF THE INCOME OF THIS PROJECT, THEN THE EXPENDITURE IS ALLOWABLE. IF HOWEVER, THE EXPENDITURE INCURRED ON THE REPURCHASE OF LAND IS NOT PERTAINING TO THE VEDICA EXOTICA PROJECT, THEN SUCH EXPENDITURE IS NOT AN ALLOWABLE EXPENDITURE. THE AR WAS THEREFORE ASKED TO STATE AS TO FOR WHICH PROJECT THE LAND HAS BEEN ACQUIRED BY THE APPELLANT. THE APPELLANT VIDE ITS LETTER DATED 21/9/2011 STATED AS UNDER; 'PAYMENTS MADE FOR PURCHASE OF LAND AMOUNTING TO RS.1,86,34,000/ - AS EXPLAINED EARLIER, ASSESSEE HAS CLAIMED EXPENDITURE IN 3 PARTS AND ONE PART RELATES TO PAYMENT OF ON - MONEY TO PURCHASE THE LAND AMOUNTING TO RS.1,86,34,000/ - . IN OUR EARLIER SUBMISSION DATED 5.9.2011, WE HAVE ATTACHED CHART PROVIDING COMPLETE INFORMA TION ABOUT THE PERSONS TO WHOM THESE PAYMENTS ARE MADE AND NARRATION INCLUDES PAYMENTS RELATE TO WHICH LAND. FROM THE INFORMATION SUBMITTED EARLIER AND ONCE AGAIN ATTACHED HEREWITH, IT IS CLEAR THAT PAYMENT FOR LAND CAN FURTHER BE SUB - DIVIDED AS THESE PAYM ENTS ARE MADE FOR PURCHASE OF TWO DIFFERENT LANDS. AS CLEARLY EVIDENT FROM THE ATTACHED SHEETS, PAYMENT TO 3 PERSONS MENTIONED BELOW IS FOR PURCHASE OF PLOT (VEDICA - 1) ON WHICH ROYAL VEDICA SCHEME WAS LAUNCHED . ENTRY NO. NAME AMOUNT (RS.) NATURE OF PAYMENT 58/31 SURESH RAWAL 600000/ - AMOUNT PAID TO FOR ON MONEY ON REPURCHASE OF PLOTS OF VEDOCA - 1 SCHEME 57/2 MAHAVIR SINGH SHEKHAVAT 1010000/ - AMOUNT PAID TO FOR ON MONEY ON REPURCHASE OF PLOTS OF VEDICA - 1 SCHEME 57/7 RAMESH JAJU 8764000 AMOUNT PAID T O FOR ON MONEY ON REPURCHASE OF PLOTS OF VEDICA - 1 SCHEME TOTAL 1,03,74,000/ - SUBSEQUENTLY, THIS ROYAL VEDICA SCHEME WAS SCRAPPED AND'ON THE SAME LAND, VEDICA EXOTICA AND - E - SERIES WERE LAUNCHED. IN NUTSHELL; PAYMENT OF RS.1,03,74,000/ - IS FOR THE PIECE OF LAND ON WHICH SCHEME IS IN OPERATION. OUT OF ABOVE, RS.87.64 LAKHS ARE ALREA DY ALLOWED BY THE AO - ON AGREEMENT BY THE RECIPIENT ABOUT RECEIPT OF MONEY AND .OFFER THE SAME AMOUNT FOR THE PURPOSE OF TAX. PAYMENT FOR THE SECOND LAND IS GIVEN TO 6 PERSONS ENUMERATED BELOW. ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 11 ENTRY NO. NAME AMOUNT (RS.) NATURE OF PAYMENT 56/23 RAJU PATEL V - 69 2830000 ON MONEY PAID ON REPURCHASE OF PLOTS 56/27 PRASHANT PANDYA V - 69 2310000 ON MONEY PAID ON REPURCHASE OF PLOTS 56/28 KALIDAS PATEL V - 69 1000000 ON MONEY PAID ON REPURCHASE OF PLOTS 56/29 RAJU PARASAVNATH V - 69 610000 ON MONEY PAID ON REPURCHASE OF PLOTS 56/30 ALKESH FATHER V - 69 500000 ON MONEY PAID ON REPURCHASE OF PLOTS 56/31 HIMANSU PATEL V - 69 1010000 ON MONEY PAID ON REPURCHASE OF PLOTS TOTAL 82,60,000/ - THESE PAYMENTS ARE FOR THE PURCHASE OF LAND ON WHICH NO SCHEME WAS LAUNCHED AT THE END OF THE FINANCIAL YEAR AND THIS LAND IS SHOWN AS STOCK IN TRADE IN THE BOOKS OF THE ASSESSEE. THUS, PAYMENT FOR THIS LAND AMOUNTING TO RS.82.60 LAKHS IS FOR LAND WHERE ACTUAL CONSTRUCTION ACTIVITY HAS NOT STARTED DURING THE RELEVANT PREV IOUS YEAR. IN ANY SITUATION, HOWEVER, WE ARE OF THE VIEW THAT PAYMENTS ARE MADE FOR THE PURPOSE OF BUSINESS AND HENCE SHOULD BE ALLOWED AGAINST UNDISCLOSED INCOME.' 8.1 I DO NOT ACCEPT THE CONTENTION OF THE APPELLANT THAT ALL THE EXPENSES APPEARING IN THE SEIZED DOCUMENTS ARE ALLOWABLE EXPENDITURE. THE APPELLANT HIMSELF HAS ADMITTED THAT AN AMOUNT OF RS.82,60,000 HAS BEEN SPENT BY HIM TOWARDS THE PURCHASE OF LAND FOR V 69 SCHEME. SINCE THE APPELLANT IS IN THE BUSINESS OF PURCHASE OF LAND, CONSTRUCTION OF FLATS, THE ON MONEY PAID ON PURCHASE OF PLOTS WILL GO TO INCREASE THE WORK IN PROGRESS OR THE CLOSING STOCK OF THE PROJECT CONSTRUCTED ON V 69 SCHEME. THIS CANNOT BE AL LOWED AS AN EXPENDITURE INCURRED FOR. EARNING THE INCOME FROM VEDICA EXOTICA SCHEME.'IN THE BOOKS OF ACCOUNTS, THE APPELLANT HAS INCLUDED ONLY THE CHEQUE PORTION PAID FOR - PURCHASE OF LAND IN V 69. SCHEME AND NOT THE CASH COMPONENT PAID BY THE APPELLANT AS ON MONEY. THEREFORE, THE AMOUNT OF RS.82,60,000 WILL 'BE INCLUDED IN THE COST OF THE LAND OF V 69 SCHEME AND SINCE, THE PROJECT HAS NOT BEEN STARTED DURING THE YEAR UNDER CONSIDERATION, THE SAME AMOUNT WILL BE INCLUDED IN THE CLOSING STOCK OF THE LAND. IN OTHER WORDS, IN THE YEAR UNDER CONSIDERATION, THE AMOUNT OF RS.82,60,000 IS NOT AN ALLOWABLE EXPENDITURE AGAINST THE INCOME OF VEDICA EXOTICA SCHEME, HOWEVER, THE SAME WILL HAVE TO BE INCLUDED IN THE CLOSING STOCK OF THE LAND OF V 69 SCHEME. THE APPELLA NT WOULD BE ENTITLED TO THE BENEFIT OF RS.82.60 LACS AS OPENING STOCK OF THE V 69 LAND IN THE AY 2010 - 11. IN SHORT, THE ADDITION OF RS.82,60,000 ONLY IS CONFIRMED AND THE BALANCE ADDITION IS DIRECTED TO BE DELETED. ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 12 15. IN VIEW OF THE ABOVE FINDINGS OF LD. COMMISSIONER OF INCOME TAX (APPEALS) AND OUR DISCUSSION IN PRECEDING PARAGRAPHS, W E ARE OF THE CONFIRM VIEW THAT ASSESSEE IS ELIGIBLE TO CLAIM EXPENSES OF A PARTICULAR SCHEME AGAINST THE REVENUE RECEIPT FROM THAT SCHEME WHICH ALL TOGETHER ARE APPEARING IN THE SEIZED MATERIAL. RS. 16,10,000/ - IS UNDOUBTEDLY PAID TOWARDS ON MONEY FOR PU RCHASE OF FLAT OF VEDICA - 1 SCHEME AND THEREFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY ALLOWED IT AS AN EXPENDITURE. WE THEREFORE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF LD. COMMISSIONER OF INCOME TAX (APPEALS) AND WE DISMISS THE REV ENUE S GROUND. 16. NOW WE WILL DEAL WITH GROUND NO. 6 RELATING TO EXPENSES OF RS. 61,13,986/ - WHICH WERE DISALLOWED BY THE ASSESSING OFFICER FOR WANT OF PROPER EVIDENCE BUT ALLOWED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) BY OBSERVING THEM AS A REV ENUE EXPENDITURE. LD. COUNSEL SUPPORTED THE FINDINGS OF LD. COMMISSIONER OF INCOME TAX (APPEALS) AND LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF ASSESSING AUTHORITY. 17. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFOR E US . I SSUE IN THIS APPEAL RELATES TO THE DETAILS OF EXPENSES OF RS. 1,16,63,986/ - INCURRED TOWARDS INTEREST, COMMISSION, SALARY, LABOUR CHARGES, BUILDING MATERIAL, TRAVELLING , STAMP DUTY ETC. WHICH WERE PREPARED BY THE ASSESSEE FROM SEIZED MATERIAL DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. ASSESSEE WAS ABLE TO SATISFY THE GENUINENESS OF EXPENDITURE OF RS. 55,50,000/ - AND FOR THE REMAINING AMOUNT ASSESSEE COULD NOT PRODUCE ANY EVIDENCE IN ORDER TO PROVE THE GENUINENESS OF THE EXPENDITURE. IN APPEAL BEF ORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) A GENERAL PERCEPTION WAS APPLIED TREATING THE TYPE OF EXPENDITURE MENTIONED IN THE DETAILS AS REVENUE IN NATURE AND LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 13 THE ASSESSING OFFICER TO ALLOW THE EXPEND ITURE OF RS. 61,13,986/ - / - OBSERVING AS FOLLOWS: - 9.1 UNDER THIS CATEGORY THE APPELLANT WAS ABLE TO PRODUCE THE CONFIRMATIONS IN RESPECT OF THE EXPENDITURE OF RS.38 LACS (FROM TEJASBHAI), RS.15 LAKH FROM APOORVABHAI AND RS.2.5 LACS FROM TUSHARBHAI. THE AO THEREFORE ALLOWED THE EXPENDITURE OF RS.55.5 LACS AND MADE THE ADDITION OF THE BALANCE AMOUNT OF RS 61,13,986. FROM THE DETAILS AS APPEARING IN THE ASSESSMENT ORDER, IT - IS CLEAR THAT THE EXPENSES INCURRED BY THE APPELLANT ARE IN THE NATURE OF SALARY, COMMISSION, INTEREST, ADVOCATE FEES ETC. WHICH ARE REVENU E EXPENDITURE IN NATURE AND THEREFORE THE SAME .ARE ALLOWABLE. FURTHER, THESE EXPENSES DO NOT APPEAR TO BE PROHIBITED BY LAW AS PER THE PROVISO TO SECTION 37(1) OF THE INCOME - TAX ACT. FURTHER SINCE, DURING THE YEAR UNDER CONSIDERATION ONLY THE SCHEME OF VE DICA EXOTICA WAS IN OPERATION AND THE OTHER PROJECT HAD NOT STARTED, THE EXPENSES APPEARING ON THE SEIZED PAPERS ARE RELATABLE TO EARNING OF THE INCOME FROM THE VEDICA EXOTICA SCHEME. THE AO IS THEREFORE DIRECTED TO ALLOW THE BALANCE AM OUNT OF RS.61,13,986. 18. WE FURTHER NOTICE FROM THE DETAILS OF EXPENDITURE PLACED ON PAGE 18 - 22 OF THE ORDER OF COMM ISSIONER OF INCOME TAX(APPEALS), THAT THEY ARE IN THE NATURE OF NORMAL BUSINESS EXPENDITURE EXCEPT FEW FOR EXAMPLE STAMP DUTY OF RS. 10 ,04,500/ - BUILDING MATERIAL EXPENDITURE FOR PURCHASE OF BRICK S WHICH ARE NOT CLEARLY EVIDENT THAT THEY WILL FORM PART OF STOCK IN TRADE IN THE VALUE OF PROJECT OR ALLOWED IN THE VERY SAME YEAR . FURTHER WE NOTICE THAT SEARCH WAS CONDUCTED ON 29.08.2008 WHI CH WAS JUST BEFORE T HE DUE DATE OF FILING THE INCOME TAX RETURN BY THE ASSESSEE. ASSESSEE HAS PLACED COPY OF AUDITED FINANCIAL STATEMENTS FROM PAGE 8 TO 25 OF THE PAPER BOOK WHICH INCLUDES DETAILS OF ASSETS LIABILITY REVENUE AND EXPENDITURE . I N THE COMPUTA TION OF INCOME ASSESSEE HAS SHOWN A N ET UNDISCLOSED INCOME, A S A RESULT OF SEARCH AT RS. 2,68,35,000/ - WHICH IS THE NET FIGURE OF G ROSS REVENUE LESS EXPENDITURE CLAIMED AS PER THE SEIZED MATERIAL. 19. FROM GOING THROUGH THE PROCEEDINGS AT BOTH THE LOWE R AUTHORITIES, WE FIND THAT THERE ARE NO DETAILS ON RECORD TO SHOW THAT THE EXPENSES SHOWN IN WORKING SHEET OF TOTAL EXPENSES OF RS. 61,13,986/ - WHICH HAVE BEEN DISALLOWED BY THE LD. ASSESSING OFFICER , A S TO WHETHER ALL THESE EXPENSES ARE ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 14 OUT OF BOOKS OR FEW OF THEM ARE FORMING OF THE REGULAR BOOKS OF ACCOUNTS. THE REASON FOR THIS IS THAT THE NATURE OF EXPENSES SHOWN IN THE WORKING SHEET BEFORE THE ASSESSING OFFICER INCLU DES EXPENSES INCURRED ON SALARY, ADVERTISEMENT, BRICKS PURCHASE ARCHITECT FEES , G ENERAL CONSTRUCTION EXPENSES, TRAVELLING EXPENSES ET C . IT IS QUITE POSSIBLE THAT SOME OF THESE EXPENSES HAVE BEEN CLAIMED IN THE REGULAR BOOKS OF ACCOUNTS AND SOME MAY NOT HAVE BEEN CLAIMED. IF THE ASSESSEE HAS ALREADY CLAIMED SOME OF THESE EXPENSES IN HIS REGULAR BOOKS OF ACCOUNTS THEN IT WILL TANTAMOUNT TO DOUBLE CLAIM OF EXPENDITURE. 20. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE ARE OF THE CONSIDERED OPINION THAT FOR LIMITED PURPOSE ISSUE NEEDS TO BE RESTORED TO THE FILE OF ASSESS ING OFFICER AND DIRECT THE ASSESSEE TO PROVIDE ALL NECESSARY INFORMATION TO PROVE THAT EXPENDITURE OF RS. 61,13,986/ - HAS NOT BEEN CLAIMED IN THE REGULAR BOOKS OF ACCOUNTS. THOSE EXPENSES WHICH HAVE NOT BEEN CLAIMED IN THE BOOKS OF ACCOUNT THEN THE ASSESSE E WOULD BE ELIGIBLE TO CLAIM THEM AS EXPENDITURE AGAINST THE G ROSS REVENUE DISCLOSED DURING THE COURSE OF SEARCH AND THE REMAINING WILL BE DISALLOWED. W E ACCORDINGLY ALLOW THE REVENUES GROUND FOR STATISTICAL PURPOSES. 21 . NOW WE WILL DEAL WITH GROUND NO. 7 RAISED BY THE REVENUE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) MENTIONING THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE EXAMINED THE ADMISSIBILITY OF THE EXPENSES IN TERMS OF SECTION 40A (3) AND SECTION 40 (A) (IA) OF THE ACT. LD COUNSEL FOR THE ASSESSEE SUBMITTE D THAT THIS ISSUE WAS NEVER TAKEN BY THE LD. ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS AND NEITHER LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED TO THE APPLICATION OF P ROVISION OF SECTION 40A(3) & 40 (A) (IA) ON VARIOUS EXPENSES OF ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 15 RS. 61,13,986/ - EMANATING OUT OF THE SEIZED MATERIAL. LD. COUNSEL RAISED OBJECTION AGAINST THE ADMISSIBILITY OF THIS NEW GROUND BY THE REVENUE. 2 2 . ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT REVENUE CAN RAISE A LEGAL GROUND AT ANY STAGE. THE EXPENSES REFERRED IN THE SHEET PRODUCED BEFORE THE ASSESSING OFFICER INCLUDED EXPENSES OF REVENUE NATURE AND IF THE ASSESSEE WANTS TO GET DEDUCTION OF THIS EXPENDITURE THEN TH ESE EXPENSES WILL HAVE TO PASS THROUGH THE PROVISION OF SECTION 40A(3) OF THE ACT AND 40 (A) (IA) OF THE ACT WITH REGARD TO THE PAYMENT IN CASH EXCEEDING RS. 20,000/ - AS WELL AS NON DEDUCTION OF TDS ON VARIOUS PAYMENTS RESPECTIVELY. HOWEVER BOTH THE LOWER AU THORITIES HAVE FAIL ED TO ADJUDICATE THE ISSUES RAISED IN THIS GROUND WITH THIS ASPECT. IN SUPPORT OF THESE CONTENTIONS. LD. DEPARTMENTAL REPRESENTATIVE REFERRED TO FOLLOWING JUDGEMENT: - (I) CIT VS. HYNOUP FOOD & OIL IND. (P) LTD. 150 TAXMAN 194(2007)(GUJ. ) ( I I) CI T VS. SAI METAL WORKS 2011 TAXMAN.COM 61(2011) PUNJAB & HARYANA (III) M.G. PICTURE (MADRAS) LTD. VS. ACIT 57 TAXMAN.COM 66(2015)(SC). 2 3 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND GONE THROUGH THE DECISIONS RELIED UPON BY REVENUE . REVENUE HAS RAISED THIS ADDITIONAL GROUND ALLEGING THAT LD. CIT (A) OUGHT TO HAVE EXAMINED THE APPLICABILITY OF THE PROVISION OF SECTION 40A(3) OF THE ACT FOR PAYMENT OF EXCEEDING RS. 20,000/ - IN CAS H OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE/DRAFT AND THE PROVISION OF SECTION 40(A) (IA) OF THE ACT FOR THOSE ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 16 EXPENSES ON WHICH TAX AT SOURCE WAS REQUIRED TO BE DEDUCTED HAS EITHER NOT BEEN DEDUCTED OR DEDUCTED BUT NOT PAID WITH IN THE STATUTORY TIME LIMIT. 2 4 . FROM THE PERUSAL OF THE ASSESSMENT ORDER WE NOTICE THAT WITH REGARD TO THE CLAIM OF EXPENDITURE OF RS. 61,13,986/ - LD. AO HAS DENIED THE CLAIM OF EXPENDITURE BECAUSE THE ASSESSEE FAIL ED TO DISCHARGE THE VERY BASIC ONUS OF ESTABLISHING THE IDENTITY OF TH E PAYEE FOR CLAIM OF EXPENDITURE AND ALSO IT WAS NOT CLEAR ABOUT THE PURPOSE OF PAYMENT AS TO WHETHER THEY ARE REVENUE OR CAPITAL IN NATURE. AT ANY STAGE DURING THE COURSE OF ASSESSMENT PROCEEDINGS LD. A.O HAS NOT SHOWN ANY INTENTION TO INV OKE PROVISION OF SECTION 40A(3) AND 40 (A) (IA) OF THE ACT. EVEN BEFORE LD. CIT(A) THIS ISSUE NEVER CAME UP. IT CERTAINLY MEANS THAT NO OPPORTUNITY WAS AVAILABLE WITH THE ASSESSEE TO FURNISH THE NECESSARY SUPPORTING EVIDENCE ON THE NON - ADMISSIBILITY OF EXPENDITURE OF RS. 61,31,986/ - DUE TO PROVISION OF S ECTION 40A(3) OF THE ACT AND 40(A) (IA) OF THE ACT. REVENUE HAS RAISED THIS GROUND AFRESH AND IT IS ALSO NOT DISPUTED ON THEIR PART THAT THIS ISSUE OF APPLICABILITY OF 40A(3) AND 40A(IA) HAS N EVER BEEN TAKEN UP BY BOTH THE LOWER AUTHORITIES. 2 5 . DURING THE COURSE OF HEARING LD. D.R HAS REFERRED AND RELIED ON THREE JUDGMENTS BUT GOING THROUGH THE SAME WE FIND THAT AS FACTS ARE DIFFERENT AND THEY ARE NOT APPLICABLE ON THIS ISSUE RAISED IN THIS GROUND. WE OBSERVE THAT IN THE CASE OF CIT VS. HYNOUP FOOD & OIL IND. (P) LTD. (SUPRA) PROVISION U/S. 40A(3) OF THE ACT WERE INVOKED AT THE ASSESSMENT PROCEEDINGS LEVEL ITSELF. SIMILARLY IN THE CASE OF CIT VS. SAI METAL WORKS (SUPRA) ALSO DISALLOWANCE U/S. 40A(3) OF THE ACT WAS M A DE BY THE LD. A.O WHEREAS IN THE CASE OF M.G. PICTURE (MADRAS) LTD. VS. ACIT (SUPRA) ALSO LD. A.O DISALLOWED THE EXPENDITURE WHERE THE PAYMENTS WERE MADE IN CASH OF RS. 10,000/ - RELATING O N 40A(3) AS IT STOOD PRIOR TO 19 96.I N ALL THESE THRE E JUDGMENTS RELIED BY THE ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 17 REVENUE THE ISSUE OF SECTION 40A(3) WELL EXISTED AT THE ASSESSMENT PROCEEDINGS LEVEL ITSELF WHICH IS NOT THE CASE IN THE APPEAL BEFORE US. BECAUSE LD. A.O HAS NOT MADE ANY MENTION/ DISALLOWANCE U/S. 40A(3) AND 40 (A) (IA). THEREFORE ADMITTING THIS NEW GROUND OF THE REVENUE WILL TENTAMOUNT TO NOT PROVIDING ANY OPPORTUNITY OF HEARING TO THE ASSESSEE AGAINST THE APPLICATION OF TH IS PROVISION U/S. 40A(3) AND 40(A) (IA) OF THE ACT. 2 6 . FURTHER AS REGARDS WHETHER THE TRIBUNAL CAN ADMIT SUCH NEW GROUND AT THE REQUEST OF REVENUE, WHICH HAS NOT BEEN RAISED BEFORE BOTH THE LOWER AUTHORITIES , W E FIND IT PERTINENT TO REPRODUCE THE RELEVANT FINDINGS OF ITAT IN THE CASE OF SLOCUM INVESTMENT (P.) LTD. V. DY. CIT (D ELHI), 10 6 ITR 05 ADJUDICATING SIMILAR TYPE OF ISSUE , MADE FOLLOWING OBSERVATIONS : - 180. THE UNIFORM VIEW OF COURTS ON THIS ISSUE HAS BEEN THAT FACTS .:ESSARY FOR ADJUDICATION OF A NEW PLEA SHOULD ALREADY BE AVAILABLE ON RECORD. THE ONLY OTHER DECISION RELIED UPON BY THE LEARNED COUNSEL FOR THE REVENUE IS THE DECISION OF THE FULL BENCH OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF AHMEDABAD ELECTRI CITY CO. (SUPRA). THE COURT AFTER REFERRING TO SEVERAL JUDICIAL PRONOUNCEMENTS ON THE SUBJECT HELD THAT TH E APPELLATE TRIBUNAL HAS JURISDICTION TO PERMIT ADDITIONAL GROUNDS TO BE RAISED BEFORE IT EVEN THOUGH THESE MAY NOT ARISE FROM THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER, SO LONG AS THESE GROUNDS ARE IN RESPECT OF THE SUBJECT - MATTER OF THE ENTIRE TA X PROCEEDINGS. THE HIGH COURT HAS NOT SAID ANYTHING ABOUT THE EXISTENCE OF THE FACTS NECESSARY FOR ADJUDICATION OF THE ADDITIONAL OR A NEW GROUND. THE PREPONDERANCE OF JUDICIAL OPINION IS THAT THE FACTS NECESSARY FOR ADJUDICATION OF A NEW GROUND SHOULD AL READY BE ALREADY BE AVAILABLE ON RECORD. IN THE PRESENT CASE FACTS WITH REGARD TO APPLICABILITY OF SECTION 93 ARE NOT AVAILABLE ON RECORD. AN ORDER OF REMAND FOR FINDING FACTS WITH REGARD TO APPLICABILITY OF THE PROVISIONS OF SECTION 93 CANNOT ALSO BE PERMITTED AS THE SAME WOULD BE A MERE FISHING INQUIRY HOPING TO SUSTAIN THE ACTION OF THE REVENUE AUTHORITIES FOR BRINGING TO TAX INCOME IN THE HANDS OF THE ASSESSEE. THE SAME CANNOT BE PERMITTED, AS ADOPTING SUCH A COURSE WOULD CAUSE CONSIDERABLE HARASSM ENT, HARDSHIP AND EXPENDITURE TO THE ASSESSEE AND THE SAME CANNOT BE PERMITTED ON THE MERE POSSIBILITY OR HOPE THAT SOME FACTS MAY EMERGE THE ACTION OF THE REVENUE AUTHORITIES CAN BE SUSTAINED. MOREOVER, WE SHOULD NOT FORGET THE FACT THAT WE ARE DEALING A SSESSMENT UNDER ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 18 CHAPTER XIV - B OF THE ACT, UNDER WHICH DETERMINATION OF UNDISCLOSED INCOME SHOULD BE MADE ON THE BASIS OF MATERIAL FOUND IN THE COURSE OF SEARCH. 181. WE ARE ALSO OF THE VIEW WHERE AN ASSESSEE SEEKS TO PUT FORTH A NEW PLEA BEFORE TRIBUNAL WITHOUT FACTS NECESSARY FOR ADJUDICATION OF APPEAL BEING AVAILABLE ON RECORD IN ALLOWING SUCH PLEA, THE APPROACH OF THE TRIBUNAL SHOULD BE DIFFERENT FOR THE FOLLOWING REASONS: (A) AN ASSESSEE HAS NO OTHER AVENUE AND IF ON THE FACTS AND IN LAW IF ULTIMATELY IT IS FOUND THAT THE ASSESSEE IS NOT LIABLE TO TAX THE REVENUE CANNOT HAVE GRIEVANCE. AFTER ALL, ARTICLE 265 OF THE CONSTITUTION OF INDIA PROVIDES THAT NO TAX SHALL BE LEVIED AND COLLECTED EXCEPT BY AUTHORITY OF LAW. IF ULTIMATELY THE ASSESSEE IS FOUND TO BE LIABLE TO TAX, HE COMPENSATES THE REVENUE IN THE FORM OF INTEREST. THEREFORE, THE TRIBUNAL CAN EVEN THINK OF A REMAND OF THE CASE FOR A FINDING ON FACTS OR CAN ADJUDICATE ON FACTS ITSELF. (B) ON THE OTHER HAND THE REVENUE HAS OTHER OPTIONS OPEN TO IT U NDER THE ACT. IF THE ORDER OF AN ASSESSING ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE THE SAME CAN BE REVISED BY THE CIT UNDER SECTION 263 OF THE ACT. IF INCOME CHARGEABLE TO TAX ESCAPES ASSESSMENT, PROCEEDINGS UNDER SECTION 147 CAN BE INITI ATED TO BRING TO TAX SUCH ESCAPED INCOME. IN AN APPEAL BY AN ASSESSEE AGAINST THE ORDER OF THE ASSESSING OFFICER, THE COMMISSIONER OF INCOME TAX (A) HAS POWER OF ENHANCEMENT UNDER SECTION 251(1) OF THE ACT. (C) THE REVENUE DOES NOT HAVE A RIGHT OF APPEAL A GAINST THE ORDER OF THE ASSESSING OFFICER. THEREFORE, IF ASSESSING OFFICER DOES NOT INVOKE SECTION 93, AND IF THE SAME WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, THE SAME COULD BE REVISED BY THE CIT UNDER SECTION 263. (D) THE ASSESSING OFFI CER CANNOT PLEAD BEFORE CIT(A) IN AN APPEAL BY THE ASSESSEE TO INVOKE SECTION 93. IN A CASE IN WHICH SECTION 93 IS NOT INVOKED BY COMMISSIONER OF INCOME - TAX (APPEALS) ALSO, THE REVENUE CANNOT SEEK TO SUSTAIN THE ORDER OF THE ASSESSING OFFICER BY INVOKING SECTION 93. THE REVENUE'S RIGHT OF APPEAL BEFORE THE TRIBUNAL SHOULD THEREFORE, BE HELD TO BE LIMITED ONLY TO RESTORING THE ASSESSMENT AS DONE BY THE ASSESSING OFFICER AND ON THE SAME BASIS. (E) AN ASSESSEE AGGRIEVED BY AN ASSESSMENT OF INCOME IN HIS HANDS HAS THE RIGHT TO APPEAL TO CIT(A) AND THEREAFTER TO THE TRIBUNAL. BY SEEKING TO RAISE AN ISSUE BEFORE THE TRIBUNAL FOR THE FIRST TIME, THE RIGHT OF APPEAL BEFORE C1T(A) ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 19 PROVIDED TO AN ASSESSEE B ECOMES REDUNDANT AND DEPRIVES THE ASSESSEE THE BENEFIT OF ADJUDICATION BY ONE OF THE APPELLATE AUTHORITY. 182. IN THE LIGHT OF THE VIEW, WHICH WE HAVE TAKEN ABOVE, WE DO NOT THINK IT APPROPRIATE TO DEAL WITH THE APPLICABILITY OF SECTION 93 TO THE TRANSACT IONS IN QUESTION. BUT WE ARE OF THE VIEW THAT THE VERY BASIS OF THE ARGUMENTS PUT FORTH BY ID. DR ON THE BASIS OF THE SEIZED DOCUMENTS CANNOT ALSO BE SUSTAINED. ADMITTEDLY ALL THE SEIZED DOCUMENTS WITH REFERENCE TO THE TRANSACTION OF SALE OF SHARES TO VSIP L(M) DO NOT SPEAK FOR THEMSELVES. THE COMPLAINT OF THE ASSESSING OFFICER WAS THAT THE ASSESSEE DID NOT CO - OPERATE IN FURNISHING THE REQUIRED INFORMATION CALLED FOR BY HIM. THE ASSESSING OFFICER THEREAFTER DREW INFERENCES FROM THESE SEIZED DOCUMENTS WITHOUT ANY BASIS. THE ID. DR SUBMITTED BEFORE US THAT IN VIEW OF THE NON - CO - OPERATION OF THE ASSESSEE ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. WE ARE OF THE VIEW THAT SUCH AN ARGUMENT CANNOT BE ACCEPTED. THE ASSESSING OFFICER IS EMPOWERED UNDER THE V ARIOUS PROVISIONS OF THE ACT TO ISSUE SUMMONS FOR EXAMINATION OF A PERSON. HE HAS THE POWERS OF A CIVIL COURT AS ARE VESTED UNDER THE CODE OF CIVIL PROCEDURE WHEN TRYING A SUIT REGARDING DISCOVERY AND INSPECTION, COMPELLING PRODUCTION OF BOOKS, ISSUING COM MISSIONS AND ENFORCING ATTEN DANCE OF ANY PERSON. THESE POWERS ARE MEANT TO ENSURE INVESTI - GATION REGARDING EXISTENCE OR NON - EXISTENCE OF A FACT. WITHOUT EXHAUSTING THOSE REMEDIES THE REVENUE CANNOT BE HEARD TO SAY THAT THERE WAS A LACK OF CO - OPERATION ON THE PART OF THE ASSESSEE. IN THIS CONNECTION, WE ALSO WISH TO ADD THAT THE DOCUMENTS FOUND AT THE TIME OF SEARCH ITSELF DID NOT THROW ANY LIGHT ON THE CONCLUSIONS ARRIVED AT BY THE ASSESSING OFFICER. APART FROM THE ABOVE, THE BASIC PREMISE OF THE ASSESSING OFFICER WAS THAT FUNDS FOR PURCHASE OF SHARES BY VSIPL(M) HAD BEEN ARRANGED FROM INDIA AND IN THIS CONNECTION THE ASSESSING OFFICER HAD PLACED RELIANCE ON DOCUMENTS A 1 P.6 PAGE 23 AND AL P6 P.30. THE FIRST DOCUMENT IS DATED 25 - 9 - 1998 AND THE SECOND DOCUM ENT IS TAKEN 10 - 10 - 1998. THE TRANSACTION OF SALE OF SHARES HAVE HOWEVER TAKEN PLACE IN THE MONTH OF SEPTEMBER, 1998. IN THE SEIZED DOCUMENT DATED 25 - 9 - 1998 THERE IS NOTHING TO INDICATE THE INVOLVEMENT OF THE ASSESSEE OR THE TWO OTHER COMPANIES IN ARRANGIN G FOR FUNDS TO M/S. VSIPL (M). THE SECOND DOCUMENT ALSO REFERS TO DISBURSE MENT OF FUNDS BY AND NOT TO ANY FLOW OF FUNDS TO VSIPL(M). THEREFORE, THE BASIC ASSUMPTION OF THE ID. DR THAT THERE WAS AN OUTFLOW OF FUNDS FROM INDIA FROM THE ASSESSEE AND THE TWO OTHER COMPANIES OF VSIPL(M) WHICH WAS USED FOR PURCHASING OF SHARE IS FOUND TO BE NOT CORRECT. IN THE CIRCUMSTANCES, WE ARE DOUBTFUL AS TO HOW THE PROVISIONS OF SECTION 93 COULD BE INVOKED BY REVENUE. WE DO NOT WISH TO DELVE FURTHER ON THIS ISSUE FOR THE REASON THAT WE HAVE ALREADY HELD THAT THIS NEW PLEA SHOULD NOT BE PERMITTED TO BE RAISED BY THE REVENUE FOR THE FIRST TIME BEFORE THE TRIBUNAL. FOR THE REASONS STATED ABOVE, WE ARE OF THE VIEW THAT THE CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION M ADE BY ASSESSING OFFICER AND CONSEQUENTLY HIS ORDER IS CONFIRMED AND THIS GROUND OF APPEAL BY THE REVENUE IS DISMISSED. ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 20 2 7 . FROM GOING THROUGH THE FINDINGS OF HON BLE DELHI HIGH COURT AND IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE CONSIDERED O PINION THAT THIS NEW PLEA OF THE REVENUE FOR EXAMINING THE IMPLICATION OF THE PROVISIONS OF SECTION 40A (3) OF T H E ACT AND 40 (A) (IA) OF THE ACT , ON EXPENDITURE OF RS. 61,13,986/ - CANNOT BE ADMITTED BY THE TRIBUNAL FOR THE FIRST TIME. WE THEREF ORE REJECT THE ADMISSIBILITY OF THIS GROUND BY THE REVENUE. 28 . GROUND NO. 8 AND 9 ARE GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 29. NOW WE WILL TAKE UP ASSESSEE S CROSS OBJECTION NO. 33/A/2012 RAISING FOLLOWING GROUNDS: - 1. THE LD: CIT(A) - III, AHMEDABAD HAS ERRED IN LAW AND FACTS BY CONFI RMING THE ADDITIONAL RS.82,60,000 / - PAID FOR PURCHASE OF LAND FOR VEDICA 69 SCHEME BY HOLDING THAT FOR THEI UNDER CONSIDERATION, EXPENDITURE IS NOT ALLOWABLE AGAINST THE INCOME OF OTHER SCHEME NAMELY VEDICA EXOTI CA. 2. RESPONDENT HAS DEC LARED TOTAL RS.3,52,85,000 / - AS NET UNDISCLOSED INCOME WHILE FILING THE RETURN. KEEPING IN MIND THE GROSS PROFIT RATIO OF CONSTRUCTION INDUSTRY, RESPONDENT IS OF THE VIEW THAT THE SAME SHOULD BE ACCEPTED WITHOUT GOING INTO THE DETAILS OF ALLOWABFLILV OF EXPENDITURE. 3. RESPONDENT HAS IGNORED THE REGULAR ACCOUNTING POLICY OF RECOGNISATION OF REVENUE WHICH IS PERCENTAGE OF COMPLETION METHOD AND OFFERED NET UNDISCLOSED INCOME WHICH SHOULD BE ACCEPTED IN TOTAL, 4. THE ASSESSEE CRAVES THE LIBERTY TO ADD OR DELETE ANY GROUNDS OF CROSS OBJECTIONS. 30 . AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE HAS REQUESTED FOR NOT PRESSING THE GROUNDS RAISED IN THE CROSS OBJECTION. WE THEREFORE DISMISS THE GROUNDS RAISED IN CROSS OBJECTI ON FILED BY THE ASSESSEE BEING NOT PRESSED. ITA.NO. 647 /AHD/2011 ASSESSMENT YEAR 2009 - 10 - 21 31 . IN THE RESULT APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE COURT ON 26 TH MAY , 201 7 AT AHMEDABAD. SD/ - SD/ - ( RAJPAL YADAV ) JUDICIAL MEMBER AHMEDABAD ( MANISH BOARD ) ACCOUNTANT MEMBER DATED , 26 / 0 5 /20 1 7 MUKUL / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - 5. , , /DR,ITAT, AHMEDABAD. 6. / GUARD FILE. / BY ORDER, (ASSTT.REGISTRAR) ITAT, AHMEDABAD