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TMI Blog2014 (2) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance - considering the nature of business of the assessee and the details of expenditure incurred on various site development and construction activities, including labour payments and the difficulty in maintaining proper vouchers , it would be fair to restrict the disallowance to 15% of the cash payments so made out of the items of expenditure considered by the assessing officer – Decided partly in favour of Assessee. Amount disallowed to be added in the income returned or not – Held that:- The assessee has fairly admitted that the assessee firm could not bifurcate the expenditure - part of the opening work-in-progress could have resulted in sale of flats, whereas part of the expenditure claimed in this year under various head could have gone into the construction work-in-progress - In the absence of clear cut demarcation given by the assessee, it may be presumed that 50% of the expenditure claimed in this year would have gone into the closing work-in-progress, being mainly construction of houses, (as there was no sale of open plots of land as in earlier years) – thus, out of the disallowance sustained by the CIT(A), 50% should be added to the income of the year and the bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 25% of the expenditure in assessment years 2004-05, 2005-06, 2006-07 and to 10% in 2008-09. However, the CIT(A) dismissed the appeal of the assessee for assessment year 2007-08, on the ground that the assessee has not paid the admitted taxes by the date of filing of the appeal. ITA No.1420/Hyd/2012 : Assessment year 2007-08 4. With reference to the appeal for assessment year 2007-08, i.e. ITA No.1420/Hyd/2012, it was the submission of the learned counsel that the assessee has paid the taxes by the time the CIT(A) has taken up the appeal for hearing and placed letter dated 9.7.2012 in that behalf filed before the CIT(A), intimating that the balance tax of Rs.2,98,008 on the admitted income was paid within 31 days from the date of filing of the appeal along with a notarized affidavit explaining the delay in paying the taxes and seeking condonation of delay. The CIT(A), however, relying on the judgment of the Hon ble Madras High Court in the case of S.Alagarswamy V/s. ITO(296 ITR 43) held that it is mandatory for payment of taxes on the income returned and therefore, in terms of proviso to S.249(4), the appeal cannot be maintained and accordingly dismissed the appeal in limine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first occasion when the appellate authority took up the matter for consideration satisfactory proof of the payment, within the period of limitation for filing the appeal, of the admitted tax, is given, then the proviso to the said section 9 was held satisfied (Lakshmiratan Engineering Works Ltd. V/s. Asstt Commissioner(1968) 21 STC 154(SC), Also see, Hindusthan Commercial Bank Ltd. V/s. Punnu Sahu AIR 1970 SC 1384, 1386. In Lalta Prasad Khinni Lal V/s. Asstt,. Commissioner (1972) 29 STC 201(SC), the payment of admitted tax was made after the expiry of the period of limitation for filing the appeal, although the memorandum of appeal was filed within the period of limitation. It was held that an application for condonation of delay under the specific provisions of section 9(6) of the U.P. Sales Tax Act, 1948, was maintainable. Also see. State of Tamil Nadu V/s. E.P.Nawab Marakkadai, (1996) 100 STC 1, 9, 10(Mad-FB). In the context of the Madhya Pradesh General Sales Tax Act, 1958(2 of 1959), the appeal was held to be within the period of limitation if it was field within thirty days but the entire amount of the assessed tax or such smaller amount being not less than one-third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) should have considered the appeal, having been filed belatedly and condoned the delay. 8. The coordinate Bench of this Tribunal in the case of Managing Partner of the assessee-firm, Alapati Venkateswara Rao, in ITA No.628- 629/Hyd/2011 has considered similar issue, and restored the appeals to the file of the CIT(A) holding as under- 3. We heard the parties. The learned counsel for the assessee has field before us a copy of the letter dated 2.3.2010 addressed by the assessee to the CIT(A), whereby it was submitted that the assessee has paid the admitted taxes of Rs.2,20,666 for assessment year 2006-07 and of Rs.6,95,358 for assessment year 2007-08, by making the requisite balance amounts due on 1.3.2010, and hence the delay in the payment of admitted taxes, which was on account of collapse of real estate market, may be condoned, and accordingly prayed the CIT(A) to admit the appeals before him. We find that the CIT(A) by his impugned order dated 10.2.2011, has disposed of, the appeals of the assessee before him, without considering the letter of the assessee dated 2.3.2010, and observing that there was violation of provisions of S.249(4)(a) of the Act, on account of non-p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. 14. In reply, the learned counsel for the assessee submitted that the disallowance sustained by the CIT(A) for assessment year 2004-05 was a small amount, which did not warrant preferring an appeal paying an amount of Rs.10,000 as appeal fee, and therefore, the assessee has not preferred appeal for that year. As against this, the disallowance for the years under appeal is on higher side, warranting the present appeals being filed. 15. We have considered the issue. Even though the learned Assessing Officer has listed out various expenditures for disallowance, he has not examined whether the entire expenditure was paid in cash or by cheque. We also notice that the disallowance is not invoking the provisions of S.40A(3) but disallowance is under S.37(1), being unverifiable nature of expenditure. As submitted by the learned counsel for the assessee, there are cheque payments also involved in the expenditure considered by the assessing officer, which could have been subjected to verification. Since these details are not furnished before the authorities earlier, we direct the assessing officer to examine these aspects and exclude the cheque payments out of the disallowance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer. The learned counsel reiterated the same arguments. However, it was fairly admitted that the assessee is not in a position to bifurcate the expenditure so claimed in the Profit Loss Account to identify as to what extent it relates to the closing work-in-progress. 19. The Learned Departmental Representative however, supported the order of the CIT(A) and invited our special attention to para 5.2 thereof, whereat the CIT(A) has rejected the contention of the assessee on the issue. 20. We have considered the issue. This issue was considered by the CIT(A) in para 5.2 of his order as under- 5.2 The appellant also argued that in the asst. year 2008-09, the entire expenditure incurred on construction of house has been taken into work in progress ; therefore adjustment of work in progress will be sufficient instead of disallowance and adding to the total income. I have verified the return of income filed by the assessee for the AY 2008-09 and found that the assessee had declared substantial amount of gross receipts from sale of flats which is around Rs.1,59,47,250/-. In view of such sale of flats it is difficult to accede to the request of the appellant to confine the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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