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2013 (12) TMI 444 - AT - Income Tax


Issues Involved:
1. Validity of assessment proceedings due to the timing of notice issuance under Section 143(2).
2. Addition of Rs.25,10,787 related to the sale of agricultural land.
3. Disallowance of various expenses claimed by the assessee.
4. Addition of Rs.5,20,000 due to a discrepancy in the cash book.
5. Deletion of an amount of Rs.1,07,59,582 added by the AO towards profit from real estate business.
6. Addition of Rs.2,50,000 due to discrepancy in advances to landlords.
7. Disallowance of Rs.10 lakhs due to alleged unregistered transactions.
8. Addition of Rs.30 lakhs towards undisclosed investment.

Issue-wise Detailed Analysis:

1. Validity of Assessment Proceedings (Section 143(2) Notice Timing):
The assessee contended that the assessment proceedings were barred by limitation as the notice under Section 143(2) was issued beyond the prescribed time limit. The return was filed on 30-11-2007, and the notice was issued on 9-9-2009, beyond the one-year limit. The CIT (A) rejected the assessee's argument based on Section 292BB, which precludes objections if the assessee has participated in the proceedings. The Tribunal upheld this view, citing the Punjab & Haryana High Court's decision in Om Sons International vs. CIT, which held that Section 292BB applies to all pending proceedings as of 1-4-2008. The Tribunal dismissed the assessee's ground.

2. Addition of Rs.25,10,787 (Sale of Agricultural Land):
The AO added Rs.25,10,787 as income from other sources due to the lack of evidence supporting the claim that the land sold was agricultural. The CIT (A) upheld this addition. The Tribunal remanded the matter to the AO for fresh examination, directing the assessee to produce necessary evidence to prove the land's agricultural nature and the timing of the sale.

3. Disallowance of Various Expenses:
The AO disallowed Rs.17,60,000 out of land development expenses, Rs.2,70,800 out of salaries, Rs.74,000 out of survey expenses, and Rs.75,000 out of miscellaneous expenses due to lack of supporting evidence. The CIT (A) sustained these disallowances. The Tribunal found the disallowances to be excessive and restricted the total disallowance to Rs.10 lakhs, allowing the ground in part.

4. Addition of Rs.5,20,000 (Cash Book Discrepancy):
The AO added Rs.5,20,000 due to unexplained entries in the cash book. The CIT (A) upheld the addition. The Tribunal remanded the matter to the AO for cross-verification of the passbook entries mentioned against the cash book entries, directing a proper inquiry.

5. Deletion of Rs.1,07,59,582 (Profit from Real Estate Business):
The AO treated the gain from the sale of agricultural land as business income, adding Rs.1,07,59,582. The CIT (A) deleted the addition, finding the land to be agricultural based on revenue records and the assessee's historical agricultural income. The Tribunal remanded the issue to the AO for fresh examination, emphasizing the need to verify the actual use of the land and the proportionate agricultural income.

6. Addition of Rs.2,50,000 (Advances to Landlords Discrepancy):
The AO added Rs.2,50,000 due to discrepancies between the balance-sheet and ledger extracts. The CIT (A) deleted the addition, noting the lack of unexplained credits. The Tribunal upheld the CIT (A)'s decision, finding no basis for the addition.

7. Disallowance of Rs.10 Lakhs (Unregistered Transactions):
The AO disallowed Rs.10 lakhs from transactions with M/s Balaji Real Estates, suspecting unregistered transactions. The CIT (A) deleted the addition due to lack of evidence. The Tribunal upheld the CIT (A)'s decision, noting the AO's reliance on conjecture without factual support.

8. Addition of Rs.30 Lakhs (Undisclosed Investment):
The AO added Rs.30 lakhs for unexplained investments. The CIT (A) deleted the addition, finding the investments accounted for in the books. The Tribunal upheld the CIT (A)'s decision, noting the investments were made through account payee cheques and were properly accounted for.

Conclusion:
The Tribunal allowed the assessee's appeal in part and remanded several issues for further examination by the AO, emphasizing the need for proper verification and evidence. The Department's appeal was also partly allowed for statistical purposes. The order was pronounced on 07-09-2012.

 

 

 

 

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