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2014 (8) TMI 60 - AT - Income TaxLand development charges and related expenses u/s 37(1) Failure to produce books of accounts and documentary evidences Held that - CIT(A) has given a very cryptic finding by stating that during the year GP margin has been shown at 0.95% as against 0.20% in the immediate preceding year - The addition of the whole expenditure claimed, shows that the AO has acted in arbitrary manner without applying his mind - This assessment cannot be termed as best judgement assessment u/s.144 and the addition deserved to be deleted the finding of CIT(A) is not correct - CIT(A) has not given finding as to how the expenditure claimed in the P&L account can be allowed without any supporting evidence thus, the matter is remitted back to the CIT(A) for fresh adjudication Decided in favour of Assessee. Unexplained investment u/s 69 Failure to explain the source of investment Held that - CIT(A) has simply stated that the investment has been fully explained by the assessee - CIT(A) has not sought any remand report from the AO - this ground is also restored back to the CIT(A) for fresh adjudication Decided in favour of Revenue. Unexplained cash credits u/s 68 Failure to produce documentary evidences Held that - The AO has observed that there is an increase in unsecured loans and the assessee was asked to explain the increase in secured loans and to furnish the details - CIT(A) has given a finding on fact that the amount does not represent cash credit but this is in fact loan/advance given thus, the matter is remitted back to the CIT(A) for fresh adjudication Decided in favour of Revenue.
Issues:
1. Disallowance of land development charges and related expenses. 2. Unexplained investment under section 69. 3. Unexplained cash credits under section 68. Issue 1: Disallowance of Land Development Charges and Related Expenses The appeal concerned the deletion of additions made by the Assessing Officer (AO) on account of disallowance of land development charges and other related expenses. The Revenue argued that the assessee failed to produce evidence supporting the claimed expenditure. The AO noted the absence of necessary details despite multiple requests. The Commissioner of Income Tax (Appeals) (CIT(A)) deleted the additions, citing a significant increase in the gross profit margin. However, the Appellate Tribunal found the CIT(A)'s reasoning insufficient and remanded the issue back to the CIT(A) for a fresh decision. The Tribunal directed the CIT(A) to obtain a remand report from the AO and allow the assessee an opportunity to present supporting evidence. Issue 2: Unexplained Investment under Section 69 The second issue involved the deletion of an addition made by the AO regarding an unexplained investment under section 69 of the Income Tax Act. The AO highlighted an investment made by the assessee in a company without adequate explanation. The AR of the assessee failed to provide satisfactory details, leading to a partial acceptance of the explanation. The CIT(A) simply stated that the investment was fully explained without seeking a remand report from the AO. The Tribunal found this approach lacking and remanded the issue back to the CIT(A for a fresh decision. The Tribunal directed the CIT(A) to seek comments from the AO and provide the assessee with a hearing opportunity. Issue 3: Unexplained Cash Credits under Section 68 The final issue pertained to the deletion of an addition made under section 68 for unexplained cash credits. The AO noted an increase in unsecured loans but found the assessee's explanations lacking. The CIT(A) opined that the amount in question did not represent a cash credit but a loan or advance. However, no remand report was sought, prompting the Tribunal to remand the issue back to the CIT(A for a fresh decision. The Tribunal directed the CIT(A) to seek comments from the AO before making a decision. In conclusion, the Tribunal allowed the Revenue's appeal for statistical purposes, remanding all three issues back to the CIT(A) for a fresh decision after obtaining necessary inputs from the AO and providing the assessee with a fair hearing opportunity.
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