2014 (12) TMI 147

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....law:- "Whether on facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in deleting the disallowances made by the Assessing Officer of Rs. 13,00,800/- on pro-rata basis in respect of costs of sales of land made by the assessee by invoking proviso to Section 69C of the Act; especially when ITAT had accepted the case of the A.O. that lands were purchased from unexplained sources? 2. We would for the purpose of disposal of all these Appeals take the facts in Income Tax Appeal No.1555 of 2013. 3. This Appeal arises out of the order passed on 31 October 2012 by the Income Tax Appellate Tribunal 'B' Bench, Pune. The Assessee is in the business of construction. His premises was searched on 9-10-....

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.... by the Tribunal and the Commissioner in so far as the Revenue's Appeals. 4. It was argued before us by Mr.Vimal Gupta, learned Sr.Counsel appearing for the Revenue, that the Tribunal's order raises an important question, particularly about the applicability of the proviso. He submits that the Tribunal should not have deleted the pro-rata disallowance by invoking the proviso to section 69C, to the stock of plot of lands sold during the Assessment Year 2002-03. In the submission of Mr.Gupta, the Tribunal noted that the stock of lands declared by the Assessee as on 1-4-1997 was never offered for taxation nor was source of the amount explained. Therefore, it was an unexplained income. However, the Tribunal lost sight of the fact tha....

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.... about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year; Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income." 7. A perusal thereof would reveal that it is dealing with unexplained expenditure etc. It was inserted from with effect 1 April 1976. The requirement thereof is where in any financial year an Assessee has inc....

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....d of six assessment years immediately preceding the Assessment Year, relevant to the previous year in which the search was conducted. The Tribunal was dealing with the Assessment Year 1998-99, 1999-00 and 2000-01. Mr.Gupta would submit before us that the proviso which has been inserted to section 69C is brought in from with effect 1-4-1999. Therefore, that could have been invoked. 9. In our opinion, the Tribunal has understood the factual matrix and concluded that when the extent of five transactions are prior to 1-4-1997, and three transactions have not been interfered with and sent back to the file of the Assessing Officer for verification, then what would be the governing factor is the year in which the expenditure, which is unexplain....