TaxTMI 
TaxTMI 
2025 (12) TMI 779
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....f Income Tax (Appeals) failed to appreciate that these payments were made to Agents engaged for purchase of Land and Sale of Plots in the course of business activity of the Appellant and made through banking channels. 1.c. That on the facts and in the circumstances of the case, the Lr. Commissioner of Income Tax (Appeals), NFAC, New Delhi confirmed the addition of commission of Lr. Assessing Officer (AO) resorted without rejecting books of Accounts. Whereas these payments were genuinely incurred, and the Appellant's activities were undertaken in remote places and faraway from Hyderabad. 2.a. On the facts and in the circumstances of the case, the Lr. Commissioner of Income Tax (Appeals), NFAC, New Delhi erred in not deleting 10% of the disallowance of Land Conversion Expenses on the ground that the appellant had not produced necessary proof though was produced. 2.b. That on the facts and in the circumstances of the case, the Lr. Commissioner of Income Tax (Appeals) failed to appreciate these Land Development Expenses were paid to The Development Authority of the state Government i.e. Yadadri Temple Development Authority, HMDA fees, Registration Departm....
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....chasing land, development of land and plotting of the area and sale of plots. The assessee firm filed its return of income for the A.Y. 2020-21 on 15-02-2021 admitting total income of Rs. 46,54,250/-. The case was selected for scrutiny for the reason to verify the genuineness of large commission expenses debited in the profit and loss account. The assessment was completed under Section 143(3) of the Act on 22-09-2022 and determined the total income at Rs. 1,11,81,549/-, by inter alia making an addition of Rs. 21,32,643/- towards 10% ad hoc disallowance of commission expenses and further, made addition of Rs. 43,94,659/- towards 10% ad hoc disallowance of land development expenses. 4. On appeal, the Ld. CIT(A), for the reasons stated in the appellate order dated 16.08.2024, rejected the explanation furnished by the assessee and upheld the additions made by the A.O. towards ad hoc disallowance of commission expenses and land development expenses. 5. Aggrieved by the order of the Ld. CIT(A), the assessee is now in appeal before the Tribunal. 6. The first issue that came up for our consideration from Ground Nos. 1(a) to 1(c) of the assessee's appeal is the ad hoc disallowance ....
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.... have not pointed out any discrepancies in the books of account maintained by the assessee. Therefore, he submitted that the addition made by the A.O. and sustained by the Ld. CIT(A) should be deleted. 9. The Learned Senior A.R. for the Revenue Shri Gurpreet Singh, on the other hand, supporting the order of Ld. CIT(A) submitted that, going by the extent of the commission paid by the assessee and sales income realized for the year under consideration, commission paid for the year under consideration is unreasonable, which is evident from the profit and loss account furnished by the assessee. Further, the assessee could not reconcile payment of commission with reference to sales invoices and also failed to explain the basis for such payment. In the absence of relevant details, the A.O. has rightly made an ad hoc disallowance of 10% commission expenses. Therefore, he submitted that, the additions made by the A.O. should be upheld. 10. We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. There is no dispute with regard to the fact that, the assessee is into the business of real estate development. The asses....
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....enses with supporting documents. The assessee submitted the list of expenses along with supporting evidences and claimed that, the expenditure grouped under land development expenses consists of purchase of various materials for development of land, charges paid to various regulatory authorities, and also registration charges paid to a document writer for registration of the sale deeds in favour of the buyers. The A.O. after considering the relevant submissions of the assessee and also taking note of the huge amount of land development expenses, observed that, the assessee could not satisfactorily explain the land development expenses with corresponding evidences. Although the assessee claims that the expenditure has been incurred for purchase of material, carpentry work, electrical expenses, JCB hire charges, the tractor hire charges etc., but the said expenses have not been supported with relevant evidences. In respect of land conversion charges, although the assessee has claimed to have been paid certain amount to Bhongir Municipality, but corresponding evidences have not been furnished. Therefore, observed that, the assessee could not substantiate the relevant expenditure with ....
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....ng relevant evidences, has rightly sustained the addition made by the A.O. and the order of the Ld. CIT(A) should be upheld. 15. We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. There is no dispute with regard to the fact that, the assessee partnership firm is in the business of real estate development has purchased land, plotted into various residential sites and sold. In the process, the assessee has incurred various expenditures towards land development, including purchase of bricks, cement, granite, pipes, sand, steel, and wood, etc. The assessee has also incurred expenditure for carpentry work, electrical work, hire charges for the tractor, JCB, etc. The major portion of land development expenses consisting of charges paid to various regulatory authorities for conversion of land and development charges. The assessee has paid a sum of Rs. 1,84,24,722/- to Yadadri Temple Development Authority through demand drafts, for which the assessee has furnished relevant bank account statements and also demand note raised by the Yadadri Temple Development Authority. The assessee has also paid a sum of Rs. 7,20....