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TMI Blog2016 (11) TMI 1650X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered opinion, that the assessee was able to establish the incurring of expenditure by way of notings in the seized material and furnishing of the details of the expenses item wise and this is not the case of the revenue that such details are not as per the notings in the seized material. Hence, we delete this disallowance. Accordingly, ground no.2 to 4 are allowed. - ITA No. 15/Bang/2014 And ITA No.1766/Bang/2013 - - - Dated:- 3-11-2016 - SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER For the Appellant : Shri A. Shankar, Advocate For the Respondent : Shri T.N.Prakash, Addl.CIT ORDER PER SHRI A.K. GARODIA, AM These are cross appeals filed by the assessee and the revenue and these are directed against the order of the ld. CIT(A)-I, Bangalore dated 17-09-2013 for the assessment years: 1996-97. First we take-up appeal of the revenue i.e. ITA No.1766(B)/2013. 2. The grounds raised by the revenue are as under; 1. The order of the Learned CIT (A) is opposed to law and the facts and circumstances of the case. 2.The CIT(A) erred in directing the AO to allow the unaccounted expenditure against the unaccounted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the revenue is more than ₹ 10.00 lakhs. 5. As per the recent Board s instruction, if the tax effect in an appeal filed by the revenue before the Tribunal is below ₹ 10.00 lakhs, such appeal is not maintainable. Accordingly, we dismiss the appeal of the revenue for low tax effect. 6. In the result, the appeal of the revenue is dismissed. 7. Now we take up the appeal of the assessee in ITA No.15(B)/2014. 8. The grounds raised by the assessee in its appeal i.e. ITA No.15(B)/14 are as under; 1. The order of the ld. CIT (Appeals), passed under section 250 of the Act in so far as it is against the Appellant is opposed to law, equity, weight of evidence, probabilities and the facts and circumstances in the Appellant's case. 2. The learned Commissioner of Income Tax (Appeals) is not justified in upholding the disallowance of expenditure ₹ 35,00,0001 - under the facts and circumstances of the case. 3. The learned Commissioner of Income-tax (Appeals) failed to appreciate that when the income is taxed out information arising out of seized material, then correspondingly details about the expenditure incurred arising out of same seized material ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to question no.6 on page-22 and its reply on page-22 23 of the paper book as per which it was explained that he is disclosing ₹ 259.00 lakhs as unaccounted income for the assessment year 1995-96 and 1996-97 in the hands of the M/s Gem Granite (Karnataka) and Gem Superstructures Pvt.Ltd. and as per the details of this amount of ₹ 259.00 lakhs as available on page-23 of the paper book, it includes ₹ 35.00 lakhs being unaccounted expenditure in the assessee s case. He further submitted that as per the judgment of the Hon ble Karnataka High Court, the matter was restored back to the file of the AO for fresh decision with the direction that the AO should examine the claim of the assessee on merit and the assessee is at liberty to place evidence in support of its claim for seeking deduction of ₹ 35.00 lakhs as expenditure. He pointed out that in para-3.2 of the order of ld. CIT(A), it is noted by the ld. CIT(A) that the findings of the AO are that the assessee in its letter dated 19-07-2010 has given a chart with regard to his claim of unaccounted expenditure for the present year and as per this chart, there are 14 items claimed by the assessee being recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,05,00,000 Net contract receipts for offered taxation 1,37,89,400 1,21,12,856 2,59,02,256 3.1 In so far as the claim of the cash expenses of ₹ 35.00 lakhs is concerned, it is claimed to have been incurred for extra work buildings and no evidence was produced by the appellant to substantiate its claim; consequently, it was disallowed by the AO. i) As per. the assessment order) the findings of the AO are that the appellant) in its letter dated 19/7/2B1B) has given a chart in regard to its claim of unaccounted expenditure of ₹ 35)BB)BBB/- for the assessment year 1996-97. The chart filed shows 14 items ,as claimed by the appellant being recorded expenditure in the seized and that relates to (Gem Wellington) project. However) no other details or supporting documents have been produced during the reassessment proceedings. ii) All these items of expenses have been claimed to be by way of cash ,payments and identities of the payees have not been furnished even in respect of 12 names in the list. The exact dates of these items of expenses and their further break-up were not made availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out certain extra works required by the purchaser at the cost of the appellant and therefore, the appellant had to incur such expenditure to meet the commitment in terms of the agreement. viii. Even after the project had been completed, it remained an admitted fact that the appellant is not in position to furnish party-wise extra work done at the cost of the appellant. No evidence has been led by the appellant to the circumstances under which the appellant had to carry out extra work for the purchaser of the flat though the Hon ble High Court had extended the liberty to the appellant to place such evidence in support of its claim. Despite this fact the appellant failed during the reassessment proceedings to produce any supporting evidence for verification. ix. Working out the expenditure on estimated basis by converting the coded form into the correct form is not correct unless it is established and proved that the payments received have been actually incurred. 3.2 During the course of appeal, the appellant submitted in writing dated 18/4/2013, 10/5/2013 and 26/7/2013, the gist of which is as under; (a) The Hon ble High Court in its order date 15/2/2010 has held that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court of Delhi in CIT v. Indeo Airways Pvt. Ltd. (2012) 349 ITR 85 (Delhi) and contends that the appellant's case is totally covered by this judgment and thus the expenditure has necessarily to be allowed in the interest of justice and equity. (i) There are payments on several occasions and are well within' the limits of payment under the Act. No provisions have been contravened. 3.3 As already mentioned above, in the original assessment, the AO has disallowed the appellant s claim of unaccounted ash expenses of ₹ 35.00 lakhs. My predecessor allowed the appellant s claim and, in further appeal, the Hon'ble ITAT, upheld my predecessor's decision by observing thus: 4.4 We have carefully considered the relevant facts and the argument advanced. Just like the unaccounted income is taxed on the basis of seized material, the unaccounted expenses are al so required to be allowed as recorded in the same seized material. The details were filed during the course of search proceedings itself. The seized material reveals the project expenses and no other expenses. It is al so an established fact that for the extra work carried out, the assessee has received huge sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een considered and allowed, if found genuine. The rejection of the claim in toto is erroneous. The Appellate Authority has proceeded to allow the expenditure claimed by the assessee in toto without considering as to whether the said expenditure has in fact been incurred or not by examining the genuineness of the claim either by itself or by remanding the matter to the Assessing officer. In this regard, the submission of learned counsel Shri Sheshachala which is to the effect that no' evidence had been pl aced by the assessee either before the Assessing Authority or before the Appellate Authority to substantiate its claim that in fact an amount of ₹ 35 lakhs had been expended towards extra work undertaken by the assessee and is a matter of evidence is required to be accepted and accordingly, we answer the question of law No.3 formulated herein above in the negative and remand the matter to the Assessing officer to examine . the claim of the assessee on merits and the assessee is at 1iberty to place such evidence in support of its claim for seeking deduction of ₹ 35 lakhs as expenditure. 3.5 During the course of reassessment proceedings) the AO had issued al noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ind of expenses are normally incurred at the beginning of the project or before the commencement of construction of flats/apartments. As per information available on record, the appellant commenced its project during the previous year relevant to the assessment year 1993-94 on a total area of 70640 sq.ft. and at the end of the accounting period 54462 sq.ft had been constructed and handed over to the prospective buyers. Thus, a major Part of the project has already been completed upto year ending 31/3/1995. It is obvious that the aforesaid expenses were incurred prior to the previous relevant to the assessment year under consideration. 3.8 As per the above para3.8 As per the directions of the Hon ble High Court amount of ₹ 35.00 lakhs had been expended towards the extra work undertaken by the appellant is a matter of evidence is required to be accepted . In view of this, the appellant should have produced such evidence in support of its claim; however, evidence in regard to unaccounted expenditure was not produced either before the AO or during the appellate proceedings. The appellant vehemently argued that, if unaccounted receipts are considered as gross income on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is being taxed of ₹ 156.00 lakhs and the claim of such expenses is not excessive and unreasonable and no specific defect has been pointed out by the authorities below in the claim except asking for supporting evidence, we are of the considered opinion, that the assessee was able to establish the incurring of expenditure by way of notings in the seized material and furnishing of the details of the expenses item wise and this is not the case of the revenue that such details are not as per the notings in the seized material. Hence, we delete this disallowance. Accordingly, ground no.2 to 4 are allowed. 14. Regarding ground no.5, various arguments were made by both sides but this issue is consequential and we hold accordingly. 15. The assessee has also raised an additional ground as per which, the assessee says that instead of ₹ 13.34 lacs allowed by CIT (A), he should have allowed the full amount of claim of ₹ 52 lacs. In this regard, we heard both sides but we find that this is the finding of CIT (A) that this claim does not arise from the assessment order. Learned AR of the assessee could not controvert this finding of CIT (A) and hence, we find no merit in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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