TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 1277
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.... and circumstances of the case and in law, the Ld. CIT(A) has erred in not upholding the disallowance made by the AO of Rs.16,27,148/- on account of Loan Processing Charges without appreciating the fact that the assessee had failed to establish the genuineness of such expenses? 3. On the facts and circumstances of the case and Law, the Ld. CIT(A) ought to have upheld the order of the A.O. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the A.O may be restored." 2. Brief facts of the case are that assessee is a partnership firm engaged in the business of construction of residential units / flats under the project name "Om Regency". For the assessment year 2014-15, the assessee filed its return of income declaring "Nil" income. The case was selected for limited scrutiny. During the assessment, Assessing Officer noted that assessee has shown credit against the thirty different persons on account of purchase of materials or labourers etc. The Assessing Officer also noted that assessee has not paid any amount during the relevant financial year. The assessee was asked to furnish the name of the persons, PAN and details thereof. The Assessing Offi....
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....urn of income, the Assessing Officer noted that there is no secured loan reflected therein. The assessee was asked to explain the fact. The Assessing Officer noted that assessee has not provided any details of such loan processing charges. Accordingly, entire expenses / loan processing charges of Rs.16,27,148/- was disallowed and added to the income of assessee. 4. Aggrieved by the addition in the assessment order, the assessee filed an appeal before the Ld. CIT(A). Before Ld. CIT(A), the assessee filed detailed written submission. The submission of assessee is recorded in para-4 of the order of Ld. CIT(A). The assessee in its submission stated that assessee is a partnership firm engaged in the business of construction of residential units / flats, which was started from 20.12.2013. The assessee is developing project "Om Regency" by executing a partnership deed dated 01.03.2013. This was the first of its business activities. The assessee has incurred direct expenditure to complete the construction work of residential unit / flats. The assessee-firm has developed aforesaid residential flats but there was no sale of said residential flats in the year under consideration and advanced....
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....ur charges, cutting expenses, material purchase expenses, labour with material expenses and other indirect expenses shown in the audited balance-sheet. All the details were provided to Assessing Officer and Assessing Officer made addition under section 68 and not under section 69C of the Act thereby found genuine real and direct expenses though the books of assessee were not rejected. The Assessing Officer accepted the liability as a trading result because some of the parties have not responded to the notice under section 133(6) of the Act. The Assessing Officer presumed that the trading liability as ingenuine cash credit. The assessee submitted that they have furnished complete names, addresses, PAN, opening balance, total purchases/ contractual, total payments and outstanding as on 31.03.2014. Thus, it was not a case of non-furnishing details of information of sundry creditors out of total sundry creditors of Rs.3.80 crores the Assessing Officer drawn inference of bogus / in-genuine cash credit for thirteen creditors only. The assessee further submitted that assessee made payment against such creditors in subsequent financial year, substantially through account payee cheque, whic....
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.... services of labour contractors were taken in the last quarter of financial year payments. All these contractors were made through account payee cheque. The Assessing Officer passed the assessment order under section 143(3) and accepted these payments as genuine though book result of assessee was not disturbed by disturbing work-in-progress. The TDS made on the payment made to labour contractors is deposited in the Govt. account in due time. The Assessing Officer has not made any inquiry from the creditors despite having complete addresses and PAN. On the basis such findings of Assessing Officer, Ld. CIT(A) deleted the entire addition of Rs.2.74 crores. 8. On the addition of Rs.16,27,148/- made on account of disallowance of loan processing charges, the Ld. CIT(A) noted that Assessing Officer noted this expenditure is not genuine. The assessee claimed that loan processing charges were borne by assessee on behalf of customers who booked their flats in assessees project. For obtaining bank loan facilitated all those people (buyers) and to attract buyers has assessee borne this expense. Therefore, it is a revenue expenditure and allowable under section 37(1) of the Act. The expense wa....
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.... accepted in subsequent year, the same cannot be doubted in the year under consideration. The Ld. AR of the assessee fully supported the order of Ld. CIT(A). 11. We have heard the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that Assessing Officer during the assessment proceedings, noticed that assessee has shown 21 creditors though the Assessing Officer made the addition against 13 creditors only by taking view that either they have no response or the notices under section 133(6) were not complied. We find that the Assessing Officer has not segregated the parties who have not complied with or the notice of which parties were returned back with the remarks of Postal Authorities "incomplete addresses, or not found". The Assessing Officer made addition by taking view that assessee has not furnished complete details. We find that the Assessing Officer added the addition of sundry creditors under section 68 instead of section 69C of the Act. As noted above, before the Ld. CIT(A) assessee filed detailed written submission. The submission of assessee also consider by Ld. CIT(A) that assessee have shown WIP of Rs. 9.31 Cro....