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TMI Blog2019 (10) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... e are some irregularities in the bills and vouchers produced by the assessee in not giving the break-up of the items, the claim of the assessee cannot be disallowed. Only in case if it is found that the assessee either made a bogus claim or inflated the expenditure then to the extent of such bogus or inflated claim can be disallowed. Once the claim of expenditure is not found to be excessive or inflated then having regard to the fact that the actual work has been carried out at the site, the claim cannot be disallowed on minor irregularities or defects in the bills/invoices produced by the assessee. Hence the disallowance made by the authorities below is deleted. X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the claim of development expenditure to the tune of ₹ 71,20,843/- while passing the assessment order under section 144 of the IT Act. The assessee challenged the action of the AO before the ld. CIT (A) and filed various documents including lay out map of scheme being developed by the assessee, photographs of the site of project/scheme, copy of Work Completion Certificate issued by the Chartered Engineer, copy of 90B order with WCC, copy of 90A order with WCC and NOC of electric work by JVVNL etc. The ld. CIT (A) accepted the additional evidences filed by the assessee and called for a remand report from the AO. However, after remand report, the ld. CIT (A) has confirmed the disallowance/addition made by the AO on this account. 3. Before us, the ld. A/R of the assessee has submitted that the assessee submitted invoices/bills in respect of the material purchased from these parties which contain complete particulars of the suppliers. All these parties have accepted the fact of carrying out the business of supply of construction material. The assessee demanded the cross examination of these parties whose statements were recorded by the AO in the absence of assessee. However, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r verification. 5. We have considered the rival submissions as well as the relevant material on record. The AO has doubted the claim of the assessee and taken for verification on the fact that the development expenditure to the extent of ₹ 71,20,843/- was due but paid in next year. Thus the AO has accepted this fact that the payment was made by the assessee in the subsequent year. Even otherwise, before the assessment order was passed, the payment was already made by the assessee. The AO conducted the enquiry from these parties by calling the information under section 133(6) of the Act. Some of the parties have not responded to the notice issued under section 133(6), however, the others denied to have supplied any material to the assessee. Consequently the AO has disallowed the claim by passing an ex parte order. The details of the parties in respect of which the AO has disallowed the expenditure are as under :- S.No. Party Name Invoice No. Date Amount Name of materials 1 Tofiq Ali Building material suppliers 58 12.03.2013 7,95,000 Cement 2 Tofiq Ali Building material suppliers 59 13.03.2013 12,38,800 Greet, Bricks & stone 3 Shri Vishawkar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved to be false being not issued by the suppliers, then the mere denial of the suppliers due to their own vested interest to cover up the misdeed of not disclosing the transactions in their own books of account cannot be a ground for disallowance of expenditure. Even otherwise, when the assessee has demanded the cross examination of the parties whose statements were recorded by the AO in the absence of the assessee, then not affording the opportunity to cross examine during the remand proceedings is a clear violation of principles of natural justice and consequently the addition made by the AO based on such statements recorded at the back of the assessee and without giving the opportunity of cross examination despite the demand of the assessee is not sustainable in law. Accordingly, in view of the facts and circumstances of the case, where the actual work of development carried out by the assessee at the site is not disputed by the A.O., then the disallowance of claim in toto is not justified. Hence when the assessee has produced all the documentary evidences to establish the carrying out the development work and the claim of expenditure is not found to be excessive in consonance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the fact, then the adhoc disallowance of 50% of expenses is not justified. 8. On the other hand, the ld. D/R has submitted that the assessee produced the bills and vouchers as well as undated quotations without giving any break up of various items, therefore, these documents are not verifiable regarding the genuineness of the claim. There was no agreement for getting this work done from these two concerns. Accordingly, the AO is justified in restricting the claim to 50%. 9. We have considered the rival submissions as well as the relevant material on record. The ld. CIT (A) has accepted the fact that the assessee produced the quotations from M/s. Silvertech Engineer as well as estimation of electricity work to be done in the residential project "Khushi Sansar". The said documentary evidence was not accepted by the ld. CIT (A) on the ground that break up of various items is not given in these quotations and estimations. Further, the ld. CIT (A) has accepted that the JVVNL has certified the completion of electrification work of the project. However, despite all these facts, 50% of the claim is disallowed due to some irregularities in the documents produced by the assessee. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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