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2022 (11) TMI 938 - ITAT MUMBAIDisallowance of work in progress in respect of Kirti Chambers - genuineness of the amount of work in progress - Lower authorities rejected the genuineness of the expenditure incurred against payment to tenanted authorized/unauthorized dwellers (i.e. which has been acclaimed as work-in-progress) mainly on the ground that in the registered deed of transfer, purchase value was recorded at nil as compared to the value recorded in unregistered agreements and declaration of seller parties - HELD THAT:- The registered or unregistered sale agreement are in the nature of the agreement between the parties and in law those agreements can we challenged by the parties and it is not within the powers or authority of the Income-tax Authority to challenge or dispute the terms and condition mentioned in those agreements. Income-tax authorities are authorized to examine the expenditure incurred from the angle of section 37(1) so as to verify whether the expenditure has been incurred wholly and exclusively for the purpose of the business of the assessee. The onus was on the assessee to establish that expenditure was incurred wholly and exclusively for the purpose of the business of the assessee. In the case, the Assessing Officer was required to verify two things. Firstly, whether the payments has been made by the assessee or on behalf of the assessee to the seller parties. Secondly, the payment has been made for the purpose of the business of the assessee. Since in the case it is claimed by the assessee that payments have been made for purchase of legal or illegal tenanted premises, therefore the assessee was required to substantiate with documentary evidence to the effect that the payment have made to the seller parties and that too for the purpose of purchase of relevant properties. The assessee attempted to substantiate with the help of non-registered agreement and declaration of the seller parties. But in the facts of the case, the assessee was required to produce those parties before the AO for confirmation of the facts stated in their affidavits and to show deposit of said payment in the bank accounts. The seller parties were also required to show from Income-tax Returns filed that payments have been shown as income from sale/transfer/vocation of tenanted premises. In view of additional evidence filed before us, which goes to the root of matter, we feel appropriate to restore the issue in dispute to the file of the Assessing Officer for adjudicating afresh after taking into consideration the evidences, which would be filed by the assessee. It will the responsibility of the assessee to produce the seller parties before the AO and cooperate in disposal of the matter. The AO is at liberty to carry out enquiries as deemed fit for disposal of the issue in dispute. The ground of appeal is accordingly allowed for statistical purposes.
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