Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (2) TMI 596 - AT - Income TaxDisallowance of expenditure - Search u/s 132 of the Act made - Application for condonation of delay not considered – Held that:- The CIT(A) has disposed of the appeals of the assessee before him, without considering the letter of the assessee and observing that there was violation of provisions of S.249(4)(a) of the Act, on account of non-payment of admitted taxes - Revenue could not controvert the submissions of the assessee – Relying upon CIT V/s. Filmistan Ltd. [1961 (2) TMI 2 - SUPREME Court] - The order of the CIT(A) set aside and the matter remitted back to the CIT(A) for adjudication after considering the request of the assessee for condonation of delay in filing the appeal, in accordance with facts and law – Decided in favour of Assessee. Quantum of disallowance – Held that:- The disallowance is not invoking the provisions of Section 40A(3) but disallowance is u/s 37(1) being unverifiable nature of expenditure - Since the details are not furnished before the authorities earlier, the AO is directed to examine the aspects and exclude the cheque payments out of the disallowance - considering the nature of business of the assessee and the details of expenditure incurred on various site development and construction activities, including labour payments and the difficulty in maintaining proper vouchers , it would be fair to restrict the disallowance to 15% of the cash payments so made out of the items of expenditure considered by the assessing officer – Decided partly in favour of Assessee. Amount disallowed to be added in the income returned or not – Held that:- The assessee has fairly admitted that the assessee firm could not bifurcate the expenditure - part of the opening work-in-progress could have resulted in sale of flats, whereas part of the expenditure claimed in this year under various head could have gone into the construction work-in-progress - In the absence of clear cut demarcation given by the assessee, it may be presumed that 50% of the expenditure claimed in this year would have gone into the closing work-in-progress, being mainly construction of houses, (as there was no sale of open plots of land as in earlier years) – thus, out of the disallowance sustained by the CIT(A), 50% should be added to the income of the year and the balance amount should be adjusted in the closing work-in progress – Decided partly in favour of Assessee.
|