2021 (2) TMI 637 - AT - Income Tax

Disallowance of development expenses - expenses paid to JDA for internal development charges, site plan charges, land cost under bsup, urban assessment and other charges levied by JDA - HELD THAT - We find that the revenue has failed to pin-point specifically regarding the missing bills with regard to development expenses. In the absence of specific details or objections, no disallowance can be made out of the expenditures incurred by the assessee. The revenue has simply mentioned that some kachhi slips were maintained where name and complete address of payee is not mentioned has been placed on record. But at the same time, the AO and ld. CIT(A) has failed to point out as to which documents do not contain complete address of the payee. The AO has not issued any summon to the respective parties to whom the documents belonged. Even the AO has not recorded the statements of the persons who have issued the bills. In the absence of contrary details filed by the revenue, the ad hoc disallowance of expenses is not justified. Therefore, we delete the addition. Appeal of the assessee is allowed.

Summary

Issues:
1. Disallowance of development expenses
2. Charging of interest under section 234 of the Act

Issue 1: Disallowance of Development Expenses:

The appeal concerned an individual engaged in the business of Builder and Property Developer for the assessment year 2013-14. The Assessing Officer (AO) made an addition of ?9,00,000 out of total expenses claimed of ?45,92,528 to prevent possible revenue leakage. On appeal, the ld. CIT(A) sustained the addition at ?5,00,000, citing lack of verifiable evidence for the development expenses. The appellant contended that the disallowance was unjust and sought deletion of the entire amount. The appellant had incurred expenses with three parties, supported by invoices and TDS deductions. The AO raised concerns about incomplete details and lack of verification, but the appellant provided supporting documents, including challans and ledger accounts. The Tribunal found the expenses to be adequately supported, noting the absence of specific objections or evidence of revenue leakage. Consequently, the Tribunal deleted the addition, ruling in favor of the appellant.

Issue 2: Charging of Interest under Section 234 of the Act:

The appellant also challenged the charging of interest under section 234 of the Act. The appellant denied liability for the interest, arguing it was contrary to the law and facts of the case. However, the judgment did not provide detailed analysis or discussion regarding this issue. The Tribunal's decision focused primarily on the disallowance of development expenses, leading to the allowance of the appeal. Therefore, the specific grounds and arguments related to the charging of interest were not extensively addressed in the judgment.

In conclusion, the Tribunal allowed the appeal of the assessee concerning the disallowance of development expenses, emphasizing the importance of supporting documentation and lack of specific objections from the revenue authorities. The judgment did not delve deeply into the issue of charging interest under section 234 of the Act, as the decision primarily centered on the development expenses dispute.