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2014 (3) TMI 1055 - AT - Income TaxReopening of assessment - Held that:- There was no failure on the part of the assessee in furnishing all the necessary information and material and in view of proviso to s. 147 of IT Act, the reassessment proceedings cannot be initiated by issue of notice under s. 148 of IT Act. The reopening under s. 147 of the Act by the AO on the basis of change of opinion was not justified. The revision of the assessment order cannot be permitted by the AO himself under the guise of reassessment. - Decided in favour of assessee Addition made under s. 40A(3) - expenses was not found to be covered under r. 6DD © of IT Rules - Held that:- The nature and circumstances of the business of the assessee are same as they were in the asst. yr. 2006-07 and asst. yr. 2007-08. Therefore the findings of Tribunal are applicable for the asst. yr. 2008-09 also. Therefore, in view of the above decision of Tribunal in the case of assessee itself, we hold that the learned CIT(A) was not justified in confirming the addition of ₹ 19,05,000 made by the AO by disallowing the cash payment under s. 40A(3) of IT Act. Accordingly, the addition of ₹ 19,05,000 is deleted.- Decided in favour of assessee Disallowance of provision for development expenses - provision claimed by the assessee as future liability of development expenses against the sales of the plot booked by it in these years - assessee is a colonizer who purchases agricultural land from the farmers and get it converted from JDA - Held that:- The main problem which the assessee is facing that most of the lands were in joint names. Some of the original Khatedar sold the land to the assessee but some of them have not sold to the assessee. Since the Khasaras are in joint names therefore without Takasana it was not possible to carry out development work on the land, which the assessee sold. This is also a reason that the assessee invested huge amount in gold bullion to keep the money in reserve separately for the purpose of development work. However, liability towards development expenses to be incurred in future on the plots sold did not extinguish merely because the assessee has incurred small part of expenses in next few years. The AO held that the funds of provision made for development of land are being used for expansion of the business. The assessee used the funds for expansion of business as the development work could not be carried out at full swing due to certain reasons. The surplus funds were not used otherwise than for business purpose. The above explanation cannot be rejected merely on surmises and conjectures rather it appears to be bona fide.The learned AO was not justified in making the additions by disallowing the provision for development expenses claimed by the assessee as future liability of development expenses against the sales of the plot booked by it in these years. - Decided in favour of assessee
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