9911796707
TMI Blog2019 (9) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... efore final hearing." 3. Briefly stated facts as culled out from the records are that the assessee is an individual earning income from salary and capital gain. Return of income for A.Y. 2013-14 was e-filed on 30.01.2014, declaring income of Rs. 21,75,220/-. Case selected for scrutiny followed by serving of notices u/s 143(2) & 142(1) of the Act. Ld. Assessing Officer during the course of assessment proceedings on observing that the assessee had shown income under the head of short term capital gain from sale of land claiming certain expenses relating to Boundry wall construction, land leveling etc. called for the details. The Land purchase account for F.Ys 2010-11, 2011-12 & 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 partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in this account the assessee has opened a new bank account with State Bank of India on 21.06.2012 and too after getting Rs. 10,000/- transferred from the account of Shri Jigness S. Shah. Thereafter, Rs. 3.24 crores out of sale consideration of Rs. 3.46 crores has been transferred in the account of Shri Jignesh S. Shah Within the month of June 2012. This also creates a doubt about the genuineness of these expenses. The assessee had made payment after a period of almost one and half year, he should have waited for another fifteen days as he had received Rs. 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 lon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lared income of Rs. 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 number ab-initio. The AO has not accepted the reply of the assessee on the grounds stated in para-5 of the assessment order. The AO has disallowed an amount of Rs. 51,12,0407- treating these expenses as bogus. 3.4. During the appellate proceedings, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 genuineness of these expenses. During the appellate proceedings the only contention made by the appellant is that the AO has not made any independent inquiries before disallowing the said disallowances. Once the AO has prima-facie found that certain expenses are not genuine and made further inquiries to verify the genuineness of those expenses an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joining 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 Rs. 51,12,040/- for computing chargeable STCG based merely on surmises and conjectures is not justified and deserves to be deleted." 8. Further the Ld. counsel for the assessee took us through the ledger account for construction of material, copy of invoices, copy of purchase deed, sale deed, bank statement from where the payments were made, photographs of the work done on the alleged land in support of his contention that expense claim wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nspector 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. 13. We further observe that Ld. 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 Ld. AO to carry out the investigation by summoning the suppliers. In the body of the assessment order Ld. 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. 14. 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 which could have justify the assesee's claim. No valuation r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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