TaxTMI 
TaxTMI 
2021 (3) TMI 518
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....on 27.02.2006 u/s 143(1) at Rs. 2,71,770/- ought to have been accepted. 2. That without prejudice, the order passed by the Assessing Officer, and confirmed by CIT(A), is bad on facts and in law in as much as it suffers from the vice of violation of the principles of natural justice and denial of opportunity of being heard, rendering the assessment void ab initio. 3. That without prejudice on the facts and circumstances of the case and in law the CIT(A) erred in confirming the addition of Rs. 30,00,000/- as income from undisclosed sources. 4. That the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXX, New Delhi are bad in law and void ab initio." I.T.A. No.1351/Del/2015 (A.Y. 2006-07) "1. That the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXX, New Delhi are bad in law and void ab-initio. 2. That the CIT(A) erred in utilizing the material seized in the course of search on BPTP group of cases (excluding appellant) on 15.11.2007 which did not belong to the appellant. 2.1 That on the facts and circumstances of the case and in law the CIT(A) has erred ....
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.... 23/1/2012 declaring the total income at Rs. 2,71,770/-. The Assessing Officer issued a show cause notice dated 1/3/2013 in which the Assessing Officer raised a query related to the statement of Shri Suresh Kumar Gupta wherein certain accommodation entry to the assessee company was depicted. The Assessing Officer observed that the sum of Rs. 30,00,000/- was received as accommodation entries and asked the assessee to establish the identity and creditworthiness of these creditor and genuineness of transaction u/s 68. The assessee filed its submission and details before the Assessing Officer. After taking cognizance of the same, the Assessing Officer made additions of Rs. 30,00,000/- which was credited by the assessee in its books of accounts in the form of sale of investment to M/s Namrata Marketing Pvt. Ltd. during Financial Year 2004-05 and treated the same as the deemed/undisclosed income of the assessee u/s 68 of the Income Tax Act, 1961. 4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A) . The CIT(A) dismissed the appeal of the assessee. 5. The Ld. AR submitted that a sum of Rs. 30,00,000/- was received by way of sale of shares of M/s A....
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.... of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other postsearch material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assess....
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..... 4 and 4.1 (Assessee's Appeal) against the disallowance u/s 40A(3) - Rs. 4,08,490/-, the assessee had purchased land and made part payment of Rs. 4,08,490/- in cash. The development rights in land purchased were assigned in favour of M/s Countrywide Promoters Pvt. Ltd pursuant to Collaboration Agreement entered into with them. The assessee has received reimbursement of all amounts paid related to transaction of purchase of land. Stamp Duty. Registration charges etc., as per clause 3(b) of Collaboration Agreement. An agreement was entered into on 15.09.2004 between assessee and M/s Countrywide Promoters Pvt. Ltd (hereinafter CWPP). Based on the agreements, the Assessee showed the income by way of fees @ Rs. 35000/- per acre in the year in which license on said land was received. The Ld. AR submitted that the CIT(A) is totally incorrect in stating that it is difficult to accept the AR's contention that the cost of land is reimbursed by CWPPL. In stating so the CIT(A) totally ignored the fact that para 3(b) of the collaboration agreement clearly shows that CWPP shall reimburse all costs and expenses incurred by the aseessee with respect to the acquisition of said land. In the boo....
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....h them. More recently Hon'ble Bombay High Court in DI(international Taxation) i/s. Krupp Udhe GMBH 354 ITR 173 (Bombay) following Delhi High Court judgment in Industrial Engineering projects (P) Ltd (supra), have held that reimbursement of expenses would not be liable to be included in income. To conclude a reimbursement can never be a trading receipt. The Ld. AR submitted that the CIT(A) is equally wrong in holding that the cost of land is expenditure in appellant's hand. Here again the CIT(A) ignored the settled position as to what constitutes " expenditure." The Ld. AR relied upon the decision of Hon'ble Supreme Court in case of General Insurance Company of India Ltd vs. CIT 2401TR 139(SC) the court explained the term expenditure. In the present case, the cost of land is not incurred out of assessee's pocket, and more importantly is not something which has gone irretrievably. After it is incurred it is reimbursed to the assessee. Hence, the same does not have the attributes of "expenditure". Further in Attar Singh Gurmukh Singh 191 ITR 667 (SC), expenditure was held to mean which have been taken into account while determining the profit u/s 28, and purchase of stock-in-trade....
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....ments relied upon considering the relevant provision of the Act namely Section 40A(3), we hold for the detailed reasons given hereinabove that Section 40A(3) of the Act has been wrongly invoked as admittedly no expenses relatable to the addition has been claimed and the assessee has successfully demonstrated that the payment were reimbursement made by CWPPL. Accordingly Ground No-4 is allowed' The disallowance made by the Assessing Officer, confirmed by the CIT(A) was deleted by accepting the plea of assessee since assessee has neither debited the amount of cost of land in Profit and Loss account nor claimed any deduction in respect of cost of land through computation. In view of above facts that as amount was not claimed, the issue of disallowance u/s 40A (3) does not arise. The order in Westland Developers Pvt. Ltd (supra) is followed by various coordinate Benches of the Tribunal, Delhi Benches. It is important to mention that disallowance u/s 40A(3) was made by the Assessing Officer relying on order of the CIT(A)-XXX, New Delhi in case of M/s Business Park Promoters Pvt. Ltd in Appeal No.521/2009-10/309 dated 24.12.2012. Appeal filed against the said order in Appeal No.52....
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....y ignored para 3.3 (b) of the Collaboration Agreement which clearly shows that Countrywide Promoters Pvt. Ltd. shall reimbursement of cost and expenses incurred by the assessee with respect to acquisition of land. The assessee has maintained proper books of accounts and all these transactions along with expenses were thoroughly shows in the books of accounts specially that of reimbursement as well. The Assessing Officer at no point of time rejected the books of accounts of the assessee. Though the finding of the Assessing Officer as well as CIT(A) is that the assessee was carrying business of development of real estate. From the perusal of record, it can be seen that these facts are not correct. The assessee is only carrying out acquisition of land and he expenses incurred on transactions of purchase of lands. In case of M/s West Land Developers Pvt. Ltd., the Tribunal has dealt this issue and allowed the similar issue relating to reimbursement made by the Country Wide Promoters Pvt. Ltd. The Ld. DR could not point out the distinguishing facts. Thus, the facts of the present case are also identical. Therefore, Ground No. 4 & 4.1 are allowed. 14. As regards to Grounds No.3, 3.1 a....
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....g on order of CIT(A)- XXX, New Delhi in case of M/s Business Park Promoters Pvt. Ltd in Appeal No.521/2009-10/309 dated 24.12.2012. Appeal filed against the said order in Appeal No.521/09-10/309 dated 24.12.2012 is allowed by the Tribunal, New Delhi Bench 'A' vide in ITA No.1732/De/2013 for the AY 2006-07 order dated 20.04.2015. As the very basis of making disallowance does not sustain, the disallowance need to be deleted. It is important to mention here that in one of the group company in case of M/s Vasundra Promoters Pvt. Ltd, Department had filed appeal before Hon'ble Delhi High Court on the issue of addition made on account of disallowance of Additional Payment deleted by Tribunal on the said account. Thus, the Ld. AR further submitted that the facts in the case of M/s Westland Developers Pvt. Ltd and M/s Business Park Promoters Pvt. Ltd (supra) and assessee are identical. Order of M/s Westland Developers Pvt. Ltd and M/s Business Park Promoters Pvt. Ltd (supra) has been accepted by the Department and no appeal has been filed by the Department. Even Otherwise, Hon'ble Delhi High Court has not admitted appeal of Revenue on the issue of disallowance of Additional Payment by ....
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....e material available on record. In case of M/s West Land Developers Pvt. Ltd. the issue was contested and was decided in favour of the assessee therein. Besides these facts, in one of the group company in case of M/s Vasundhara Promoters Pvt. Ltd. (ITA No.211/2018 vide order dated 14.05.2018) the Hon'ble Delhi High Court decided this issue and deleted the said additions while dismissing the appeal of the Revenue. The Hon'ble Delhi High Court has not admitted the appeal of Department on the issue of disallowance of Additional payment by holding thus:- "The second question of law urged is with respect to the payment of Rs. 1,05,86,958/- made by the assessee to the farmer/owners of the agricultural land from whom the land was purchased. It is contended by the Revenue that the ITAT ought not to have gone by the fact that the amount was routed from the books of account and included in the principle loss or that separate amount was used for that purpose. It was submitted that the amounts in fact constituted flagrant violation of law in as much as the provisions of the Stamp Act and other connected laws were sought to be evaded by the sale deed. This Court is of the opin....