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2013 (12) TMI 444 - AT - Income TaxValidity of proceedings u/s 143(3) - Held that - The notice u/s 143(2) was issued on 9-9-2009 i.e. beyond one year from the date of filing of the return - The assessee has participated in the assessment proceedings and fully cooperated for completion of the assessment without raising any objection with regard to belated issuance of notice u/s 143(2) - Section 292 BB of the Act was brought to the statute by the Finance Act, 2008 w.e.f. 1-4-2008 - It is precluded u/s 292BB to raise such an issue after completion of the assessment proceedings before the appellate forum - The provisions of section 292BB shall be applicable to all the pending proceedings as on 1-4-2008 Following M/s Navayuga Spatial Technologies Pvt. Ltd. Vs DCIT 2013 (12) TMI 445 - ITAT HYDERABAD - The mistake on account of belated service of notice is a curable mistake and the provision u/s 292BB is applicable to all the pending proceedings irrespective of the assessment years to which they relate Decided against assessee. Agricultural income Held that - The assessee has failed to produce any evidence in support of its claim that the land sold was agricultural land - There were no other details with regard to the extent and nature of land sold and whether any agricultural activity was carried on those lands by the assessee or not The case shall be decided in accordance with the guidelines laid down by the Supreme Court in Sarifabibi Mohamed Ibrahim vs. CIT 1993 (9) TMI 10 - SUPREME Court - The issue was restored for fresh adjudication. Disallowance of expenses Land development expenses, payment of salary, survey expenses, postage and telegram, staff welfare, office maintenance, printing and stationery etc. - Held that - The assessee has not produced any evidence such as vouchers and bills or any other material in support of the expenses claimed - The disallowance made by the AO under the aforesaid head appears to be on higher side All the claim of expenses cannot be accepted It is justified to disallow the aforesaid expenses to an aggregate amount of Rs.10 lakhs Partly allowed in favour of expenses. Difference in cash book and cash balance Held that - The AO has simply made the addition without making a proper enquiry to find out whether the entries indicated actual receipt of the amount or not - When pass book numbers have been mentioned against the entries, the AO should have called for pass books for cross verification. The CIT (A) has also not dealt with this issue in a proper manner - The issue was restored for fresh adjudication. Agricultural Income Held that - The assessee did not produce any evidences with regard to the agricultural income earned nor any bills or vouchers are produced with regard to the expenses incurred towards earning of agricultural income - The assessee has claimed land development expenses but no details are available on record as to for development of which land, these expenses have been incurred by the assessee - The land sold were scattered over different places - The CIT (A) has failed to examine whether the agricultural income shown by the assessee will be the expected income from cultivation of 67 acres of land or not - It has to be ascertained that as on the date of sale whether the lands in question were put to agricultural use or not - Whether an agriculturist would have purchased the land for agricultural purposes at the price at which the land was sold - Whether the assessee would have ever sold the land valuing it as a property yielding agricultural produce on the basis of its yield - These aspects have not at all been examined either by the AO or by the CIT (A) while coming to their respective conclusions - The issue was restored for fresh adjudication. Difference in sundry debtors Held that - Any discrepancy by itself cannot be a ground for addition without proving the fact that such discrepancy has resulted in an undisclosed income - As observed by the CIT (A), the AO has not alleged that there are any unexplained credits on this account Decided against Revenue. Addition on adhoc basis Possibility of unregistered transactions Held that - The AO himself was not certain whether the assessee in fact has made unregistered transaction therefore he has used the word might have - When the AO is accepting almost 90% of the transaction It is not justified on his part to make a disallowance of Rs.10 lakhs on pure conjectures and surmises - Decided against Revenue. Undisclosed investment Held that - The investment was made from available source as per the books of accounts and nothing was from outside the books - The assessee has also demonstrated that the payment was made to M/s Kinnera Constructions through account payee cheque - Since the investment has been made out of accounted for money, addition made by the AO was without any basis Decided against Revenue.
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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