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TMI Blog2019 (9) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... d out thereon. As requested during the assessment proceedings by the assessee to the Ld AO to depute inspector for site visit so that the issue relating to genuineness of development expenses can be resolved but the request was declined by the Ld. AO. No summons was issued to the alleged suppliers of the Ld. AO directly and only report of Commercial Tax Department was taken as the basis. AO failed to consider the fact that all the payments were made through account payee cheques. After receiving respective bills issued by the parties as well as a contractor it was incumbent on the AO to carry out the investigation by summoning the suppliers. In the body of the assessment order AO observed that the alleged suppliers are small retail suppliers hardly having the capacity to store the building materials. We find such remarks to be very general and casual with no homework. As far as the claim of the assessee is concerned, apart from placing the copy of invoices, ledger account, bank statement and few photographs, the assessee could not file any confirmation from the alleged suppliers. In the sale deed also there is no mention about the Boundary Wall, land leveling work carried out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 2012-13 was filed with supporting documents which included bills for purchase of cement, sand, bricks and labour charges. The Ld. AO further observed that the various bills were issued between January, 2011 to June, 2011 were settled in the month of June, 2012 which created doubts in his mind regarding genuineness of the expenses. Information was called from the Commercial Tax Department about the alleged supplier of goods. The assessee submitted before the Ld. AO that all the bills are genuine and the parties are regular suppliers of building material. Request was also made to the Ld. AO to send the inspector to verify the claim of the assessee of having constructed Boundary wall and land leveling work. Ld. AO however, was not convinced and disallowed the claim of expenses paid to five suppliers totaling to ₹ 51,12,040/- holding them to be bogus observing as follows: 1. Generally in case of such type of work, the first stage is digging; thereafter the work of construction of wall and finally the work of plaster is being carried out. In the present case r lam assessee has first of all purchased 1020 bags of cement on 03.01.20l1 and 620 bags on 04.02.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived ₹ 60 lacs out of sale consideration on 26.06.2013. There was no need to raise loan. It also give support to the conclusion that assessee had issued cheques only to reduce tax liability. 5. It is pertinent to note that even the entire labour payment have made after a laps of one and half year, the assessee has not paid even a single penny to any of the labour which is quite surprising. It is a well known fact that the labour class is a poor community and they are hand to mouth. Whatever they earn during a day, their family survives on that earning. They do not have past savings with them to meet out their expenses for a long period so they cannot wait for such a long period. The contention of the assessee that the work of construction of boundary wall and land filling/leveling was assigned to Mr. Rajubhai Desai, a labour contractor with understanding to carry out all the work with requisite materials like bricks, sand, cement etc. and also labour work related with the said job, in turn he had provided all the bills of materials as well as labour with the instruction to make direct payment to the respective parties also does not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessee preferred an appeal before the Ld. CIT(A) but failed to succeed, as the view taken by the Ld. AO was confirmed by the Ld. CIT(A) observing as follows: 3.3. The AO has noticed that the assessee has declared income of ₹ 20,07,255/- under the head short term capital gain. Further, by verification of details filed by the assessee the AO has noticed that the assessee had claimed huge expenses in the form of expenses incurred on cement purchase, sand purchase, bricks purchases and mati puran expenses. The AO has further noticed that all the bills were is used between January, 2011 to June, 2011 whereas payments to all the parties have been made in the months of June, 2012. The AO has made further inquiries to verify these expenses and letters were written to officers of commercial (trade) tax department. From the replies received in response to letter issued u/s 133(6) of the Act, The AO has observed that all the concerns from whom the assessee had obtain bills in respect of alleged purchases were engaged in the activity of issuing bogus bills and the commercial authorities after making detailed inquiries have cancelled their TIN num ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nses in the form of cement purchases, sand purchases, bricks purchases and mati puran expenses which are genuine expenses. However from the details filed by the assessee during the course of assessment proceedings the AO has doubted genuineness of these expenses and made inquiries from the Officers of Commercial Trade Tax Department. The replies of these officers are part of the assessment order. From the replies it is clearly established that these parties from whom the assessee has shown purchases were engaged in the activity of issuing bogus bills. During the assessment proceedings, the AO has brought all these facts to the knowledge of the assessee and asked to justify these expenses. In response to that the assessee has simply stated that full details in this regard have been furnished with necessary supporting and these expenses are genuine one. It is important to mention here that on the basis of these details only the AO has doubted the genuineness of these expenses and made inquiries u/s. 133(6) of the Act. After getting the communication regarding the inquiries and the results thereof the assessee has not furnished anything further to prove the genuinen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect land from encroachment. Appellant also explained that normally type of work discussed above pertaining to land is carried out through reliable local labor contractors for proper and timely execution and avoiding loss of materials. He assigned land leveling and Boundary Work to local contractors with intension that issues of encroachment pertaining to land in question by owners of adjoining land, if any, can be set right without trouble. Hence said work was assigned to local contractor and he was shouldered responsibility of arranging materials at sight upon condition that purchases and. payment will be in the name of appellant and direct payment by appellant. Appellant stated that expenses are genuine Land Improvement expenses requested to allow while determining chargeable STCG. AO without pointing out any defect with reference to afore said evidences filed for Land Improvement expenses, which proves that above expenses as non- genuine except presumption based on information received from jurisdictional commercial tax officer, disallowed out of land improvement expense. The disallowance out of land improvement expenses of ₹ 51,12,040/- for computing chargeable STCG based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im that all the expenses claimed and paid to the above parties are genuine has filed ledger account of construction material for all the three years, copy of invoices of all the parties, bank statement through which the payments has been made and the details about the contractor who carried out the work. 12.In respect of the parties which have shown Tax Identification No.(TIN) in their bills. Ld. AO called information from the Commercial Tax Department. As far as the identity of the alleged suppliers is concerned their was on assessee favouring report from the Commercial Tax Department but with regard to the sales turnover it was not matching with the sales shown by these suppliers. This was the main reason which created doubts in the mind of the assessing authority. However, the assessee placed all the documentary evidences before the Ld. AO along with photographs of the land and the work carried out thereon. It was specifically requested during the assessment proceedings by the assessee to the Ld AO to depute inspector for site visit so that the issue relating to genuineness of development expenses can be resolved but the request was declined by the Ld. AO. No su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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