TaxTMI 
TaxTMI 
2026 (5) TMI 951
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....ssing Officer for so called unexplained advances made for purchase of land. 4. At the outset, ld. AR of the assessee submitted that assessee disclosed income of Rs. 1.50 crores in Profit & Loss Account as misc. deposits which is the amount of peak balance in the material found and seized during Survey (named as Annexure A - 7). He further referred to pages 5 to 7 of Ld. CIT(A) Order. 5. He submitted that similar issues were also involved in assessee's own cases in AYs 2006-07 and 2007-08 in which the ITAT dismissed the Department appeal by accepting the peak theory. He further submitted that discussion of the same is in ld. CIT (A) Order for AY 2009-10 also and referred to Page 31 Para 5.11 of Ld. CIT(A) Order of AY 2009-10. 6. Further he submitted that for kind consideration, from Page 43 from middle page of CIT(A) Order to Page 44, it is further submitted that there is no material on record to support Ld. CIT (A) finding that peak credit balance would be logical to take at Rs. 2,00,00,000/- as against declared by the assessee by working the peak credit balance at Rs. 1.50 Cr. 7. He submitted that finding of the Ld. CIT (A) is at Page 53 Para 5.11.6. He further submitt....
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....ause it shall be deemed that the assessee has deducted and paid tax on such some on the date of furnishing of return of income and hence no addition is called for u/s 40(a)(ia). 13. On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities. 14. Considered the rival submissions and material available on record. We observed that the issue under consideration is non deduction of TDS on the interest expenses claimed by the assessee. We also noticed that the lender had deducted the interest portion at the time of lending the loan. The same was declared in their books of account and declared for Tax. The provisions of section 40(a)(ia) had amended several times to address the grievances of the assessee and the provisions of section 200(1) was also amended to accommodate the issue under consideration. The courts have held that once the income is already declared in the return of income and relevant tax dues are already paid, then there is no requirement on the part of the assessee to deduct tax, subject to the proceedings to find out whether the assessee is in default. In absence of any findings that the assessee is in default and there are several dec....
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....he overall income declared by the assessee across the projects. Now the assessee is in appeal against the above estimation with the submission that the assessee had done only the jobwork on the development without there being any land development. We cannot agree with the above submissions and what is relevant is that the expected margin in the work carried on by the assessee. After considering the detailed findings of Ld CIT(A), we do not see any reason to disturb the same. In the result, the ground raised by the assessee is dismissed. 19. Ground No.4 is against challenging the validity of reopening and the initiation of proceedings u/s 147 of the Act, since the above ground was not pressed, the same are dismissed as such. 20. In the result, appeal filed by the assessee is partly allowed. 21. Now we take up Revenue's appeal being ITA No.265/AGR/2014 for AY 2008-09. 22. With regard to Ground No.1& 2, restricting the addition of Rs. 2,00,00,000/- made by the AO to Rs. 50,00,000/-. We have already decided this issue in Ground No.1 in assessee's own appeal for AY 2008-09 above in favour of the assessee. Hence, the above grounds of Revenue are dismissed. 23. Ground No.3 ....
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....rchase of land. Since the JCIT,range- 4, Agra has not given any findings about purchase of land during the year under consideration out of payment of advances shown during the year under consideration, no disallowance u/s 40A(3) can be made out of advance payment made in cash during the year under consideration, specially keeping in view the fact that all payments of advances is not finalized in purchase of lands because advances paid may be subsequently returned because of non finalization of land deal. Such payment of advances in cash in excess of Rs. 20,000/- can be disallowed u/s 40A(3) in the year under which purchase of land is finalized and such land purchase becomes part of work in progress, Therefore, second proposal of the Ld. JCIT, Range-4, Agra recommending to make addition of Rs. 1,60,01,601/- under section 40A(3) is also rejected." 25. At the time of hearing, ld. DR of the Revenue brought to our notice the detailed findings of Ld CIT(A) at page 37 of the impugned order and he objected to relief granted by the Ld CIT(A) with the submission that even though the AO had brought on record the payments made by the assessee in excess of Rs. 20000/-. He relied on the detai....
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...., he observed that payment of interest of an amount of Rs. 56,14,317 has been made on loan taken. Accordingly, AO show caused the assessee as to why proportionate interest may not be disallowed. The assessee filed its reply dated 08.03.2013. After going through the reply of the assessee, AO held that interest bearing borrowed fund given to 10 persons, details of persons at page 10 of the assessment order, are for non-business purposes and therefore the interest attributable to this amount of Rs. 4,41,557/- is not deductible u/s 36(1)(iii) of the Act. 30. In appeal, ld. CIT (A) after going through the submissions of the ld. AR and the material available on record partly allowed this issue of the assessee restricting the disallowance to Rs. 60,080/- and held as under :- "7.5 I have considered the entire facts relating to addition of Rs. 4,41,557/- as discussed by the AO in the assessment order and also written reply submitted by the Id. AR in his written submission. As regard the submission of the Ld AR about considering the advances given to H.T. Media Ltd., Lunar Diag Pvt. Ltd., ManojGoyal and RakeshBohra being related to business of the assessee as held by me in AY 200....
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....uch cases is not the source of the funds but the purpose for which the advances were extended. It is also held in this decision that commercial expediency would include such purpose as is expected by the assessee to advance its business interest and may include measures taken for preservation, protection or advancement of its business interests. The business interest of the assessee has to be distinguished from the personal interest of its directors or partners, as the case may be. There has to be a nexus between the advancing of funds and business interest of the assessee. Since in case of advances given to M/s Nikhil Indus Infra Pvt. Ltd. and Smt. NeelamKhirwar, the Ld. AR has failed to show that there is any nexus between advancing of funds and business interest of the assessee, no interest paid on account of these two advances should be allowed u/s 36(1)(iii). In view of my above decision, interest paid in respect of advances shown in the name of Manoj Goyal, Lunar Diag Pvt. Ltd., Shiva Awas Pvt. Ltd., RakeshBohra, MIs Umar Glass, H.T. Media Ltd., Neeraj Stone and Sree Cement Ltd. and land advances of Rs. 1,60,13,601/- is to be allowed u/s 36(1)(iii) and interest paid in respec....
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....Awas Pvt. Ltd., which was reproduced by him at page 10 and 11 of the assessment order. After going through the same, AO required the assessee to show cause as to why the entire debit balance of Rs. 1,75,98,808/- may not be treated as work done by the assessee for M/s. Shiva Awas and commensurate income may not be credited to its account. In reply, the assessee submitted that it had done development work for M/s. Shiva Awas for a sum of Rs. 1,00,00,000/- and TDS has been deducted thereon. However, AO observed that no TDS has been claimed by the assessee in its return of income as having been deducted by M/s. Shiva Awas. Accordingly, the assessee was queried as to why the entire debit balance of Rs. 1.75 crores was not taken to be income accrued for the AY under consideration. In response, the assessee filed its reply however, AO did not accept the reply of the assessee. AO further observed that even if it is presumed that the contention of the assessee is correct that it had done development work/job work for M/s Shiva Awas on which TDS had been deducted by M/s Shiva Awas, it cannot be accepted that the assessee should have incorporated this project as its work in progress and by st....
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....ng made to the income of the assessee. 36. Ld. CIT (A) partly allowed the appeal vide para 8.4 which is reproduced below :- "8.4 The Ld. AR explained that the profit rate of 12% is being applied in which profit on land and construction both are concerned but in case of M/s. Shiva Avas Pvt. Ltd., the appellant did only development work on the land of M/s. Shiva Avas Pvt. Ltd. and the profit was booked at the rate of 10% which is more than the rate prescribed u/s 44AD of the Act. However, nothing has been explained as to why profit has not been booked on Rs. 20 lakh received for Haridwar project of M/s Shiva Avas Pvt. Ltd. Therefore, it has been decided to apply 12% of profit rate on the receipt of Rs. 1.20 crore which comes to Rs. 14,40,000/-. Since, the assessee has already declared a profit at Rs. 10 lakh for Farah Project, balance amount of Rs. 4,40,000/- would be added in the income of the assessee for doing job work for Shiva Avas Pvt. Ltd. Rs. 74,208/- earned by the assessee as commission would also be added separately. Therefore, the total addition to be made in the income of the assessee on account of job work done for Shiva Avas Pvt. Ltd. would come to be Rs. 5,....
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....und in valuation of Work-in-Progress. Further vide order sheet entry dated 26.2.2013, the assessee was required to furnish the item wise detail of the Work-in-Progress in terms of quantity and value and was also required to justify the valuation by furnishing the necessary evidences. In compliance thereto, the assessee has furnished the requisite details which are reproduced by the AO at pages 13 and 14 of the assessment order. From the details, AO observed that complete bills or vouchers were not furnished by the assessee to justify the valuation of Work-in-Progress. He further observed that in the absence of any documentary evidence to justify the amount of work-inprogress, it cannot be believed that the assessee has made the valuation correctly. Assessee further filed reply dated 08.03.2013 but the AO did not accept the same. AO observed that in view of the complete bills and vouchers for the expenses made not being produced for verification, and by the assessee's own submission during the course of the survey, an addition of Rs. 1,00,00,000/- is being made to the total income of the assessee, not having maintained proper bills and vouchers for expenses. 42. In appeal, ld....
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.... has not discussed any corroborative evidence showing that expenditure on housing project incurred during the year under consideration to the extent of Rs. 1 crore has not been included in the valuation of work in progress declared at Rs. 8,31,34,318/- in the balance sheet filed along with return of income. On asking the AO at remand stage to justify the addition of Rs. 1 crore made in the work in progress, no further details could be provided by the AO except relying on the assessment order. From these facts as discussed by me above, it is clear that the AO has made addition of Rs. 1 crore only on the basis of surrender made by the director of the company recorded during the survey but she does not have any corroborative evidence to show that investment made in the work in progress is more than Rs. 8,31,34,318/- as disclosed by the assessee(appellant) in the balance sheet till the end of the year under consideration. The AO has basically doubted supporting bills and vouchers for expenditure incurred on the items included in the work in progress but by disallowing such expenses to the extent of Rs. 1 crore due to being supported by only self made vouchers, investment shown in the w....
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....books of assessee(appellant) company is rejected as per the provisions of section 145(3) but no such finding has been given by the AG. Instead of given such finding in the assessment order, the AO has mentioned in the assessment order that the required details and books of accounts etc. have been furnished /produced and the details furnished by the assessee have been examined with reference to the books of accounts as mentioned in para no.3 of the assessment order. Such discussion made by the AO, clearly shows that he accepted the books of account because no defects have been pointed out by him in the books of account and hence, it is wrong to say now that books of account were not reliable. Once, the amount of work in progress declared by the assessee is reflected in the balance sheet, no part of such work in progress can be stated to be unaccounted and any addition made on estimate basis just relying on the statement given during survey without any corroborative "evidence cannot be sustained unless the AO during post survey enquiry has collected necessary evidence to show quantum of unaccounted expenditure incurred during the year under consideration on housing project being carr....
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....vouchers. Hence, in absence of any proper submission by the assessee, the AO made the addition. After careful consideration, in our view, the additional income offered by the assessee may be proper for the year under consideration and paid the relevant tax. Based on the above facts on record, the Ld CIT(A) deleted the addition on the above addition with the observation that the AO did not have any corroborative evidence against the above addition nor he rejected the books of account. 46. After careful consideration, we observed that no doubt the assessee had declared the additional income on the basis of survey and on the basis of declaration by the director of the assessee, the additional income was declared by increasing the WIP, which is in fact known fact that it is adjustment entry without there being any voucher, the AO made the addition on the basis of the above fact that there was no supporting documents to increase the WIP. In our considered view, voluntary declaration by the assessee to declare the additional income, they should have declared by other means not by increasing the WIP, in our view, the assessee will take the additional benefit in the subsequent year with....