TaxTMI 
TaxTMI 
2013 (3) TMI 899
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....r 2006-07, the only issue involved is with regard to disallowance of land development expenditure, estimated at 30% of the total expenditure claimed by the assessee. 3. The assessee, engaged in the real estate business as a builder and developer, claimed land development expenditure at Rs. 42.54,861 during the year. The Assessing Officer, observing that the expenditure is not properly vouched and most of the expenditure is evidenced only by self made vouchers, and also doubting the genuineness of the expenditure, concluded that the expenditure claimed by the assessee is excessive and unreasonable. He accordingly allowed only an amount of Rs. 4,60,800, and thus disallowed the balance amount of Rs. 37,94,061. On appeal, the CIT(A), restricted the disallowance made by the Assessing Officer to 30% of the total expenditure claimed of Rs. 42,54,861, i.e. Rs. 12,76,458. Still aggrieved, assessee is in appeal before us on this issue. 4. We heard both sides. In this case, the assessee purchased the land at Rs. 80 per sq. yard and sold the same at Rs. 1265 per sq. yard. It means, after purchasing the land, the assessee has spent some money for develop....
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....he seized cash was to be adjusted only towards the taxes due for the assessment year 2008-09. 8. On the other hand, the learned Departmental Representative submitted that there is no letter from the assessee, requesting the department to adjust the seized cash towards the taxes payable for assessment year 2008- 09. Being so, the assessee's appeal was not admitted by the CIT (A) as per the provisions of S.249(4) of the Act. 9. We have heard both sides and perused the material on record. It has been brought to our notice that the assessee has filed a letter dated 20.8.2009, requesting the Department to adjust the seized cash towards admitted tax for assessment year 2008-09. A copy of the said letter is placed at page 310 of the assessee's paper-book. He also made a remark to the effect in the return of income itself, requesting to adjust the seized cash towards the taxes payable, and consequently, worked out the refund due at Rs. 15,38,997, duly reflecting the same against the appropriate column in the return, for the assessment year 2008-09. This is evident from page 6 of the assessee's paper-book, whereat copy of the return is furnished. Considering these aspects, in our....
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....ount on 29.3.2010. Later, there was a supplementary audit report at the request of the Assessing Officer, submitted by the Special Auditor. Assessment was completed under S.143(3) read with S.153A of the Act by the Assessing Officer on 26.5.2010, determining the total income of the assessee at Rs. 30,50,06,400, in the following manner- Income returned Rs. 92,82,922 Add: Estimation of profit on suppressed sales Rs. 8,96,700 Disallowance of depreciation Rs. 4,94,283 Disallowance u/s. 40(a)(ia) - Advertisement Rs. 3,00,240 Disallowance u/s. 40A(3) Rs. 8,72,230 Disallowance us/. 40(a)(a) -Marketing exp. Rs. 4,79,240 Disallowance us/. 40A(2) -Travelling exp. Rs. 1,46,609 Disallowance of development exp. Rs. 5,28,08,623 Unexplained cash credit-Shri K. Gopal(Protective) Rs. 2,59,44,719 Unexplained cash credit- P.M. Reddy Rs. 38,00,000 Unexplained opening balance Rs. 57,40,000 Unexplained expenditure Rs. 3,42,40,846 Total undisclosed income determined Rs. 13,50,06,403 Rounded off to Rs. 13,50,06,400 13. Against the assessment ma....
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....Apex Court in the case of K.P. Verghese V/s. CIT(131 ITR 597), we delete this addition of Rs. 8,96,700 made by the Assessing Officer and sustained by the CIT(A), allowing the ground of the assessee on this issue. 18. The next ground of the assessee in its appeal is with regard to disallowance of Rs. 3,00,240 made by virtue of the provisions of S.40(a)(ia) of the Act, with reference to the advertisement expenditure paid to following parties- (a) Pragathi Off Set Pvt. Ltd. Rs. 1,00,000 (b) Optimal Media Solutions Rs. 58,000 (c) Associated Enterprises Pvt. Ltd. Rs. 1,12,240 (d) Aamoda Publications Rs. 30,000 According to the Revenue authorities, provisions of S.194C are applicable to these payments made by the assessee, and as the same have been made without effecting deduction of tax at source, the same are liable for disallowance in terms of S.40(a)(ia) of the Act. 19. We heard both the parties and perused the material available on record. Though the issue relating to applicability of provisions of S.40(a)(ia) to the payments in question is covered by the Special Bench decision of the Tribunal (Visakhapatnam Bench) in th....
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....of registration of land in favour of the assessee, in the presence of Sub-Registrar, who is the registering authority. He submitted that the payment is a genuine one and made towards the purchase of land, and the payment has been made after the banking hours. The two persons to whom the payments in question have been made, namely A. Tandava Krishna and K. Subba Rao, hail from Proddatur village of Kadapa District, and they do not have any banking facility at Hyderabad, where they had to do the registration of the land sold by them in favour of the assessee in the office of the concerned sub-registrar, and the payment had to be made by the assessee at the time of such registration. It is submitted that the payment of the amounts in question could not have been postponed by the assessee, as observed by the CIT(A). Accordingly, it is submitted that there is no scope for invoking the provisions of S.40A(3) to these two payments in question. 23. The Learned Departmental Representative on the other hand, strongly relied on the orders of the lower authorities. 24. We have heard both sides and perused the material on record. It is an admitted fact that the payment of Rs. 40 lakhs....
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.... expenditure represented by cash payment made to M/s. Musika Solutions P. Ltd. It is in the absence of any explanation from the assessee that the disallowance in question has been made by the Assessing Officer and sustained by the CIT(A). In the absence of any explanation offered by the assessee, we find no justification to interfere with the orders of the lower authorities in relation to the disallowance made with regard to this item of expenditure. We accordingly uphold the orders of the lower authorities in relation to this item of expenditure of Rs. 26,875, rejecting the grounds of the assessee in this behalf. 27, The next grievance of the assessee in this appeal is with regard to the addition of Rs. 1,79,000 out of Rs. 4,79,240 made by the Assessing Officer, under S.40(a)(ia) of the Act. 28. According to the Revenue authorities, provisions of S.194C are applicable to these payments made by the assessee, and as the same have been made without effecting deduction of tax at source, the same are liable for disallowance in terms of S.40(a)(ia) of the Act. 29. We heard both the parties and perused the material available on record. This issue similar to the on....
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....rman's wife, relates to the business of the assessee. Hence, we direct the Assessing Officer to disallow only that part of the expenditure out of Rs. 1,46,600, which relates to the wife of the Chairman, on the business trips undertaken by the Chairman. To this extent, ground of the assessee on this issue is partly allowed. 33. The next ground of the assessee in this appeal relates to disallowance of 30% of land development expenditure of Rs. 5,28,08,623. The issue involved in this ground is similar to the one which we considered while considering the corresponding ground in the appeal of the assessee for assessment year 2006-07. Hence, for the detailed reasons discussed in that context, in para 4 hereinabove, we restrict the disallowance made to 10% of the expenditure. This ground of the assessee is accordingly allowed in part. 34. Next ground of the assessee relates to disallowance of the payments of Rs. 10,68,021 and Rs. 2,77,855, invoking the provisions of S.40(a)(ia) of the Act. This issue was decided by the CIT (A) while dealing with the issue relating to disallowance out of land development expenditure. While considering disallowance of 30% of the de....
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....of on-money pertaining to the said sale transaction. It was the submission of the assessee before the Assessing Officer that the said amount represents an advance for acquisition of properties in Hyderabad and the said amounts were paid by the assessee to one M/s. Fima Properties Pvt. Ltd., etc. 37. On appeal before the CIT(A), assessee also argued before the CIT (A) that there is no dispute about the receipt of money from Gopal, who is in USA and who wants the assessee company to invest in suitable properties through the assessee. It was argued that some properties were acquired in the name of Gopal and the entire amount has been transferred to M/s. Fima Properties Ltd. to facilitate such acquisition of properties in the name of Gopal. Hence, it was pleaded that the addition of Rs. 2,59,44,719 in the hands of the assessee was not justified. In the course of appellate proceedings, assessee was asked to produce the details of properties purchased in the name of the said Gopal and the transfer of money to M/s. Fima Properties Ltd. In response, the assessee produced copies of sale deeds in favour of K. Gopal, vide document No. 13/2010, 14/2010 and 15/2010 for acquisition ....
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....s the issue, and hence, no addition could be made under S.68 of the Act. 40. The Learned Departmental Representative, on the contrary, opposed the above contentions of the assessee and submitted that the CIT (A) was not justified in granting any relief to the assessee, since the very genuineness of the transactions is doubtful. 41. We heard both the parties and perused the material on record. It is an admitted fact that the assessee received the money from K. Gopal through banking channels. The receipts by the assessee is stated to be for the purpose of purchase of properties in the name of K. Gopal. The assessee entered into an MOU with M/s. Fima Properties, to carry out the project 'Fima Hill Top', at Banjara Hills, Hyderabad and the assessee, whenever received the money from K. Gopal, transferred the same to M/s. Fima Properties, and there are actual purchases in the name of K. Gopal, vide document Nos. 13, 14 and 15/10 for a consideration of Rs. 37,13,000, 41,87,000 and 37,19,000 respectively towards the above properties. It shows that K. Gopal was having a running account with the assessee. The CIT (A) accepted an amount of Rs. 1,16,19,000 as genuine credi....
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....are made to some other person who was duly authorized by the authorised signatory. Before proceeding to frame the assessment, the Assessing Officer has given opportunity to the Director, S.V. Reddy, and his sworn statement was also recorded under S.131 of the Act, wherein he was specifically asked to explain the documents so seized and to produce evidences to the effect that these expenses were duly recorded in the books of account. In the absence of proper explanation from him, and proper evidence furnished by the assessee company, the said amount of Rs. 3,42,40,846 has been added as unexplained expenditure of the assessee under S.69C of the Act. The said addition has been confirmed by the CIT (A) on appeal. Hence, assessee is in second appeal on this issue. 43. The learned Authorised Representative submitted that vouchers found at the premises of Shri Mallikarjuna Reddy are those, which were to be paid by the assessee. These are prepared by the said Mallikardjan Reddy, for the purpose of getting the signatures of the Chairman of the assessee. There is no payment against these vouchers. As such these are not recorded in the books of account of the assessee, since unless ap....
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.... through a remand report, before deciding the appeal based on such additional evidence. 49. We heard both sides and perused the orders of the lowr authorities. The learned Departmental Representative, could not specifically point out as to what is the additional evidence furnished by the assessee for the first time before the CIT(A), and in what context the learned CIT (A) has violated the principles of natural justice by considering such fresh evidence. In the circumstances, we find no merit in this ground of the Revenue, which is accordingly rejected. 50. The next grievance of the Revenue in grounds two and three of its appeal, relates to the addition made under S.68 of the Act, representing the amounts received by the assessee form one K. Gopal. We have already adjudicated on this issue, while dealing with the corresponding grounds of the assessee on this very issue in its appeal, ITA No. 14/Hyd/2012 hereinabove, and for the detailed reasons discussed in para 41 above, we deleted the entire addition of Rs. 2,59,44,719 made by the Assessing Officer, accepting the contentions of the assessee in that behalf. Consequently, these grounds of the Revenue are liable to b....