2017 (9) TMI 1397 - AT - Income Tax

Suppression of income or inflation of expenses - Taxability of income - additional evidence acceptance - Held that - It is found that in letter dtd.19/11/2007 (Pg.9) of the PB the Director of the assesseecompany had stated that there was no suppression of income or inflation of expenses,that all the income/expenses were genuinely recorded in the books of account and were verifiable, that in that statement it was also explained that the declaration was to cover any error or to cover any future income toward loading of TDR or selling of balance FSI/TDR. At pg.11 of the PB similar assertion has been made in the computation of income. In our opinion,both these papers have to be considered while deciding the issue in right perspective. It is a fact that amounts were due to SC and documentary evidence were made available to FAA. We hold that without considering the same the taxable income of the assessee cannot be determined. The assessee was following a particular method of accounting for the project. Income earned from the project and expenditure incurred for the project for various years have to be taken into consideration before arriving at the final conclusion. The assessee had claimed that it had suffered a loss in the project. It is found that the AO has not offered any comment with regard to the claim of loss. Thus, there are many an aspects of the assessment that have not been dealt with or have not been adjudicated properly. Therefore, we are of the opinion that matter needs further investigation and verification. Before us, representatives of both the sides also agreed that matter could be sent back to the AO. So, we are remitting back the issue to the file of the AO for fresh adjudication. He is directed to consider the additional evidence filed before us before deciding the taxability of the assessee. He would afford a reasonable opportunity of hearing to the assessee Taxability of the amount arising out of the sale of TDR - year of assessment - Held that - As stated earlier, the assessee had made the disclosure about future sale of TDR/FSI. The AO and the FAA has not given a clear cut finding about taxability of the amount arising out of the sale of TDR etc. It appears that the statements made during survey and the submissions made later on were not considered together. We direct the AO to deliberate upon the issue again and decide the year of taxability after affording a reasonable opportunity of hearing to the assessee. Disallowance u/s.40(a)(ia) - Held that - It is found that the assessee had made the disclosure to cover the errors and omission in the project completed by it. In the earlier paragraphs,we have restored back entire issue of disclosure to the file of the assessee. We feel that this issue should also be adjudicated afresh by the AO,as it is also connected with the main issue.

Issues Involved:
1. Admission of additional evidences and grounds.
2. Disallowance of expenses under Section 40(a)(ia) of the Income Tax Act.
3. Declaration of income from the sale of TDR/FSI.
4. Adjustments against disclosed income.
5. Year of taxability of the disclosed income.

Issue-wise Detailed Analysis:

1. Admission of Additional Evidences and Grounds:
The assessee filed additional grounds and evidences for AY 2009-10, arguing that these would go to the root of the matter and were necessary for a fair adjudication. The Tribunal admitted the additional evidences under Rule 29 of the ITAT Rules, 1963, as they were deemed to help in adjudicating the issue. The additional grounds were also admitted as they were legal in nature and crucial to the case.

2. Disallowance of Expenses under Section 40(a)(ia):
The AO disallowed expenses amounting to ?94.69 lakhs and ?1.89 crores for AYs 2007-08 and 2008-09, respectively, on the grounds that the project was completed in AY 2006-07 and no further expenses were necessary. The FAA, however, found that the project was completed in AY 2008-09 and that the expenses were genuine and should be adjusted against the profit declared. The FAA also noted that the AO did not bring any evidence to prove the expenses were bogus and that the disallowance should be made under Section 69, not Section 37.

3. Declaration of Income from the Sale of TDR/FSI:
The assessee argued that the income declared during the survey for the sale of TDR/FSI should be considered for AY 2009-10. The FAA and AO had not provided a clear finding on the taxability of this income. The Tribunal directed the AO to reconsider the issue and determine the correct year of taxability after providing a reasonable opportunity for the assessee to be heard.

4. Adjustments Against Disclosed Income:
The FAA held that the disclosed income of ?2 crores was in addition to the disallowance of ?53 lakhs under Section 40(a)(ia). The Tribunal found that the disclosure was made to cover errors and omissions in the project and directed the AO to reconsider this issue along with the main issue of disclosure, ensuring a fair hearing for the assessee.

5. Year of Taxability of the Disclosed Income:
The Tribunal noted that the AO and FAA had not considered the statements made during the survey and subsequent submissions together. It directed the AO to re-evaluate the year of taxability for the disclosed income from the sale of TDR/FSI, ensuring that the assessee is given a reasonable opportunity to present their case.

Conclusion:
The Tribunal partly allowed the appeals filed by both the AO and the assessee, remitting the issues back to the AO for fresh adjudication. The AO was directed to consider the additional evidences and provide a fair opportunity for the assessee to be heard before making a final determination on the taxability and adjustments of the disclosed income. The order was pronounced in the open court on 26th July 2017.

← Previous Next →