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2018 (12) TMI 283 - AT - Income TaxUndisclosed cash expenses - addition based on incriminating evidence in the form of seized document - Held that - CIT(A) with reference to the seized materials coectly concluded that there is no evidence on record nor any investigation was carried to establish the contentions of the Assessing Officer that these payments were made to authorities for registration of the land and it is only a presumption drawn by the Assessing Officer that these payments were made to the registration authorities. He also held that even if the presumption of the Assessing Officer is considered to be true, the assessee is entitled to set off the above expenses totaling to ₹.57,22,000/- as against the admission of undisclosed income of ₹.1,43,00,000/-. Undisclosed brokerage expenses in cash based on incriminating evidence in the form of seized document - Held that - CIT(A) in the present assessee s case correctly concluded that the explanation of the assessee shows that ₹.10 lakhs was received by the assessee from Shri Ravi Bhushan and since the entire sum was offered to tax for the Assessment year 2009-10 as per the Assessment Order at Para. 6.2, 6.3 and 6.4, the Ld. CIT(A) concluded that the addition should not be made. Besides the above explanation even if it is presumed that the sum of ₹ 10 lacs is the undisclosed payment by the appellant company to Shri Ravi Bhushan, the same is required to be set off against the undisclosed income of ₹ 1,43,00,000/- offered by the appellant vide para no. 6.4 of the assessment order. The appellant also offered ₹ 7,00,000/- to cover up various discrepancies and totally offered a sum of ₹ 1,50,00,000/-as referred in para no. 1 of the assessment order. In view of the above, the addition of ₹ 10 lacs is not sustained - decided in favour of assessee Addition made on account of sundry expenses - Held that - We find that the Assessing Officer observed that almost all the expenses were incurred towards government bodies. However, the Assessing Officer has not given a finding that the entire expenses incurred were only towards government bodies. Therefore, in the absence of specific finding that entire expenses were incurred only for the government bodies entire expenditure cannot be disallowed. Therefore, keeping in view the totality of the facts and circumstances, we direct the Assessing Officer to restrict the disallowance to 75% of the expenses and allow only 25% of the said expenses as deduction. Advance payments during this assessment year and therefore not allowable as expenses - Held that - This expenditure should be taken in the Financial Year 2010-11 relevant to the Assessment Year 2011-12 as the work was commenced, completed and final bill was made during the A.Y.2011-12. Thus, the Assessing Officer shall consider these expenses for allowing in the assessment year 2011-12. Unproved purchases - AO made 100% disallowance as the supplier did not respond to the notice issued u/s.133(6) - Held that - The sales were accepted and the assessee produced copies of invoices, bank statements, copies of delivery challans etc., entire purchases cannot be treated as bogus. Keeping in view the nature of business conducted by the assessee we direct the Assessing Officer to restrict the disallowance to 8% of the expenses. This ground is partly allowed. Disallowance of expenses being regularization fee paid Slum Rehabilitation Authority - allowable deduction u/s 37 - Held that - We find that the issue as to whether regulation fee paid to Slum Rehabilitation Authority is in the nature of penalty for violation or prohibition of any law under Explanation to 37(1) of the Act has been considered by the Tribunal in assessee s own case for the Assessment year 2011-12 and it has been held that such payment is not in the nature of penalty.
Issues Involved:
1. Deletion of additions on account of undisclosed cash expenses and brokerage expenses. 2. Disallowance of sundry expenses. 3. Disallowance of expenses paid to M/s. Western Outdoor Structures (P.) Ltd. 4. Disallowance of unproved purchases. 5. Disallowance of regularization fee paid to Slum Rehabilitation Authority (SRA). Issue-wise Detailed Analysis: 1. Deletion of Additions on Account of Undisclosed Cash Expenses and Brokerage Expenses: The Revenue challenged the deletion of additions made by the Assessing Officer (AO) for undisclosed cash expenses of ?35,00,000/- and ?24,22,000/- based on seized documents. The AO presumed these amounts were payments made to authorities for registration of land. However, the CIT(A) found no evidence to support this presumption and allowed the set-off against the undisclosed income of ?1,43,00,000/- admitted by the assessee. The Tribunal upheld the CIT(A)'s decision, noting no contrary evidence was presented by the Revenue. Regarding the addition of ?10,00,000/- for undisclosed brokerage expenses, the AO added this amount based on a notation in seized documents indicating a commission payment. The CIT(A) found that this amount was actually received by the assessee from a property sale to Shri Ravi Bhushan and included in the total undisclosed income offered for tax. The Tribunal upheld the CIT(A)'s decision, finding no rebuttal evidence from the Revenue. 2. Disallowance of Sundry Expenses: For the Assessment Year (AY) 2010-11, the AO disallowed sundry expenses incurred in cash due to lack of supporting bills and vouchers. The CIT(A) sustained this disallowance. The Tribunal found that the AO did not conclusively prove that all expenses were incurred towards government bodies and directed the AO to restrict the disallowance to 75% of the expenses, allowing 25% as deduction. For AY 2011-12, the Tribunal applied the same reasoning and directed a similar restriction on the disallowance of sundry expenses. 3. Disallowance of Expenses Paid to M/s. Western Outdoor Structures (P.) Ltd.: The AO disallowed an advance payment of ?6,56,625/- made to M/s. Western Outdoor Structures (P.) Ltd., as the work was completed and billed in the subsequent year. The CIT(A) sustained this disallowance. The Tribunal directed the AO to allow this expense in the AY 2011-12, when the work was completed and billed. 4. Disallowance of Unproved Purchases: For AY 2011-12, the AO disallowed 100% of purchases amounting to ?2,00,651/- as the supplier did not respond to notice u/s 133(6). The CIT(A) sustained this disallowance. The Tribunal, noting that the sales were accepted and the assessee provided supporting documents, directed the AO to restrict the disallowance to 8% of the expenses. 5. Disallowance of Regularization Fee Paid to Slum Rehabilitation Authority (SRA): The Revenue appealed against the deletion of disallowance of regularization fees paid to SRA for AY 2011-12. The CIT(A) allowed this deduction, and the Tribunal upheld this decision, referencing a previous ruling that such fees are not penal in nature but are for regularization within permissible limits. The Tribunal found no error in the CIT(A)'s decision and dismissed the Revenue's appeal. Conclusion: The appeals of the Revenue were dismissed, and the appeals of the assessee were partly allowed as indicated. The Tribunal's decisions were based on the lack of contrary evidence from the Revenue and the proper substantiation of claims by the assessee.
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