2022 (11) TMI 722 - AT - Income Tax

Tribunal overturns disallowance of expenses, emphasizing consistency and equality in tax treatment.

Paresh Iswarbhai Desai Versus Income Tax Officer, Ward-2 (2) (4), Ahmedabad.

The Tribunal allowed the assessee's appeal, holding that the disallowance of Mattipuran & Leveling Expenses amounting to Rs. 8,92,000 was not ... Disallowances of Mattipuran & land leveling expenses - short term capital computation - AO, computed the amount of short term capital gain by disallowing mattipuran expenses or the land filing expenses only for the reason that the alleged payee denied to have carried land filling work - HELD THAT:- No ambiguity to the fact that the genuineness of the land filling expenses has been accepted by the learned CIT(A) in the case of co-owner. Therefore, in my considered view when, the short term capital gain and expenses claimed by the co-owner has been accepted, then the assessee cannot be treated indifferently. See M. Ambalal Desai [2021 (2) TMI 345 - ITAT SURAT] Thus we accept the contention of ld. AR for the assessee that once, the similar STCG offered by the co-owner has been accepted by the Revenue, then the assessee is also entitled for similar relief. We find convincing force in the submissions of the learned AR for the assessee - Appeal of the assessee is hereby allowed. Issues Involved:1. Disallowance of Mattipuran & Leveling Expenses amounting to Rs. 8,92,000.2. Alleged procedural errors by the CIT(A) in issuing the order.3. Alleged failure of CIT(A) to consider submissions and evidence.4. Legality and validity of the CIT(A)'s order.Detailed Analysis:1. Disallowance of Mattipuran & Leveling Expenses:The primary issue raised by the assessee pertains to the disallowance of Rs. 8,92,000 claimed as Mattipuran & Leveling Expenses. The assessee, a partner in GDP Associates and GDP Infra World, declared short-term capital gains after deducting these expenses. The AO disallowed the claim based on the statement of Shri Natubhai, who denied performing any land leveling work and claimed that the bill was forged. Despite the assessee providing a copy of the bill and bank statement evidencing payment, the AO held that the expenses were not genuine.2. Alleged Procedural Errors by CIT(A):The assessee contended that the CIT(A) erred by passing the order on a date when an adjournment was granted and subsequent submissions were not considered. The CIT(A) confirmed the AO's disallowance, relying on the statement of Shri Natubhai, who denied issuing the bill for land leveling work.3. Alleged Failure of CIT(A) to Consider Submissions and Evidence:The assessee argued that the CIT(A) did not properly appreciate the facts, submissions, explanations, and information provided. The CIT(A) upheld the AO's findings, noting that the bill was forged and the payment was part of a pre-planned exercise to evade TDS compliance.4. Legality and Validity of the CIT(A)'s Order:The assessee challenged the legality and validity of the CIT(A)'s order, claiming it was illegal, invalid, and bad in law. The CIT(A) dismissed the appeal, supporting the AO's view that the expenses were not genuine and were part of a scheme to defraud the revenue.Tribunal's Findings:The Tribunal noted that the co-owner of the property had also claimed similar expenses, which were initially disallowed by the AO based on Shri Natubhai's statement. However, during the appellate proceedings for the co-owner, Shri Natubhai admitted to performing the Mattipuran work, leading to the deletion of the disallowance by the CIT(A) in the co-owner's case.The Tribunal emphasized that the genuineness of the expenses was accepted in the co-owner's case, and thus, the assessee should not be treated differently. The Tribunal cited precedents where similar treatment was granted to co-owners in identical circumstances, reinforcing the principle of equality under Article 14 of the Constitution.Conclusion:The Tribunal allowed the assessee's appeal, holding that the disallowance of Mattipuran & Leveling Expenses was not justified, given the acceptance of similar expenses in the co-owner's case. The Tribunal's decision was based on the principle of consistency and equality in tax treatment for co-owners of the same property.Order:The appeal of the assessee was allowed, and the disallowance of Rs. 8,92,000 was deleted. The order was pronounced on 11/11/2022 at Ahmedabad.