2022 (1) TMI 407 - AT - Income Tax

Tribunal grants relief on repair expenses, rejects development claims; remands undisclosed income issue for further review.

The Tribunal partly allowed the assessee's appeal for A.Y. 2008-09 by providing 50% relief on repair and maintenance expenditure. The appeal for A.Y. ... Disallowance of Repair and maintenance expenditure claim to the extent of 20% - addition due to lack of sufficient cogent evidence - HELD THAT:- The very factual position has continued before the tribunal as well wherein neither this taxpayer has filed all necessary evidence are the repair & maintenance heads nor there is any justification in the impugned estimated disallowance at much higher rate of 20%. We thus conclude that a lumpsum estimation of 10% of the impugned claim would be just and proper with a rider that the same shall not be treated as a precedent. The assessee gets 50% relief. Necessary computation shall follow as per law. Appeal partly allowed in forgoing terms. Capital gain computation - Disallowing its development expenditure - HELD THAT:- Learned Counsel vehemently reiterated the assessee's pleadings that it had executed the corresponding development/improvement work regarding its land held as a capital asset and therefore, both the lower authorities ought to have allowed the same. We find no merit in the assessee's instant sole substantive ground as it is noticed that there is hardly any supportive evidence apart from self serving expenditure vouchers which are in the nature of payee's outstanding adjustments only. There is not even a photograph of the works executed attached along with the necessary details as to what was the alleged improvement carried out in the corresponding capital asset so as to be eligible for deduction u/s. 48 r.w.s. 49 of the Act. We thus hold that the assessee's instant arguments do not deserve to be accepted since supported by self-serving vouchers turning out be adjustment entries only. Undisclosed income - survey operation conducted u/s. 133A - HELD THAT:- CIT(A) has gone by the Assessing Officer's remand report which indicates that the DCIT, Circle 16(2) had clarified before the CIT(A) that its office was not having the corresponding documents impounded during the course of survey. The CIT(A) termed the said alleged remand report to have supported the assessee's case which totally appears perverse conclusion therefore. We next notice from assessee's as well as department's detailed paper books respectively that not only the former had entered into various MOUs/agreement with M/s. Radha Reality Corp. India (P) Ltd.; as per the impounded documents forming subject matter of addition, but also there were civil suit proceedings before the learned Civil Court at LB Nagar between the vendor and the vendee parties. The said pleadings finally culminated in a compromise petition prima facie revealing that the assessee had indeed received the impugned undisclosed income amount from the vendee party by way of multiple development agreements. And also that the corresponding impounded documents onwards prima facie contain not only the assessee's seal but also signature of the authorized person which the Revenue claims to be covered u/s. 292C(1)(iii) of the Act having presumption of correctness. Be that as it may, the fact remains that the CIT(A) has brushed aside allay of the foregoing materials forming part of the case file merely on the basis of a non-existent supportive remand report in above terms. Faced with this factual situation, we deem it appropriate to restore the Revenue's instant grievance back to the CIT(A) for afresh adjudication Issues involved:1. Validity of section 148/147 proceedings in A.Y. 2008-09.2. Disallowance of repair and maintenance expenditure claim in A.Y. 2008-09.3. Disallowance of development expenditure in A.Y. 2010-11.4. Addition of undisclosed income in A.Y. 2010-11.Analysis:Issue 1: Validity of section 148/147 proceedings in A.Y. 2008-09:The appellant did not press for the ground challenging the validity of section 148/147 proceedings. The Tribunal rejected the challenge accordingly.Issue 2: Disallowance of repair and maintenance expenditure claim in A.Y. 2008-09:The Tribunal found that the lower authorities disallowed the repair and maintenance expenditure claim of the assessee due to lack of sufficient cogent evidence. The Tribunal concluded that a lumpsum estimation of 10% of the claim would be just and proper, providing 50% relief to the assessee. The appeal for A.Y. 2008-09 was partly allowed in favor of the assessee.Issue 3: Disallowance of development expenditure in A.Y. 2010-11:The Tribunal upheld the disallowance of development expenditure as the appellant failed to provide substantial evidence to support the claim. The Tribunal noted that there was a lack of supportive evidence besides self-serving expenditure vouchers, leading to the affirmation of the disallowance of Rs. 3.6 crores. The appeal for A.Y. 2010-11 was rejected.Issue 4: Addition of undisclosed income in A.Y. 2010-11:The Tribunal considered the addition of undisclosed income amounting to Rs. 12.34 crores. The CIT(A) had deleted this addition based on the lack of signed copies of the MOU and supporting evidence. However, the Tribunal found discrepancies in the handling of impounded documents and remand reports. Consequently, the Tribunal decided to remand the case back to the CIT(A) for fresh adjudication. The Revenue's cross-appeal was allowed for statistical purposes.In conclusion, the Tribunal partly allowed the assessee's appeal for A.Y. 2008-09, rejected the appeal for A.Y. 2010-11, and allowed the Revenue's cross-appeal for statistical purposes. The case was remanded back to the CIT(A) for further examination of the addition of undisclosed income.