TMI Blog2015 (7) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... asonable opportunity of hearing to Assessee to explain its case. AO must verify the documents submitted by assessee and thereafter take a decision in the matter. - Decided in favour of revenue for statistical purposes. Disallowance made u/s 40A(3) - CIT(A) deleted the addition - Held that:- Though, assessee claimed before ld. CIT(A) that payments were made to persons at places where banking facility is not available, but, in our view, assessee’s claim has to be proved through either certain process of enquiry or evidence brought on record. As it appears from the order of ld. CIT(A), he has accepted assessee’s claim on the face value without making any enquiry or referring the matter to AO. Therefore, we set aside the impugned order of ld. CIT(A) on this issue and remit the matter back to the file of AO to verify assessee’s claim that banking facility is not available at places where payments were made to concerned persons, hence it comes within the purview of rule 6DD. AO must afford reasonable opportunity of being heard to assessee before deciding the issue.- Decided in favour of revenue for statistical purposes. Disallowance made u/s 40(a)(ia) - CIT(A) deleted the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature, hence, do not require any specific adjudication. 3. In Ground No. 2 to 6, department has challenged the decision of ld. CIT(A) in deleting the addition of ₹ 1,29,28,500 on considering additional evidence. 4. Briefly the facts of this issue are, assessee is a company engaged in the real estate business. For the AY under consideration, assessee filed its return of income on 31/10/2007 declaring total income of ₹ 28,66,090. During the assessment proceeding, AO found from the material on record that survey was conducted in case of assessee on 30/10/2006, during which, certain material was impounded . As stated by AO, in course of assessment proceeding, though, assessee was granted repeated opportunities to produce its books of account, but, it did not produce them on some pretext or other. AO, therefore, proceeded to complete the assessment to the best of his judgment u/s 144 of the Act on the basis of the information found during the course of survey. It was noticed by AO that the loose sheets impounded during the survey contained details of sale of different plots like plot nos., name of customer, cell no., consideration received in white and black. As per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt is more than the amount mentioned in the impounded documents. He observed that though assessee has bifurcated the total consideration received under two different heads, towards sale of land and development charges, however, both were considered by assessee as income, hence, AO was not justified in making addition and accordingly he deleted the same. 7. Ld. DR contesting the finding of ld. CIT(A) submitted before us, at the assessment stage, assessee neither submitted the books of account nor any other material explaining the discrepancies found in the impounded material. Ld. DR referring to the letter of DCIT, Circle 2(1), Hyderabad dated 16/02/15 submitted before us, though in course of proceeding before ld. CIT(A), AO has specifically requested for providing him with written submissions and supporting documents filed by assessee before ld. CIT(A), but, no such documents were supplied to him. In this context, ld. DR brought to our notice letters dated 12/07/12 of AO to Ld. CIT(A) as well as assessee. Thus, ld. DR submitted, when assessee submitted statements/books of account before ld. CIT(A) for the first time for reconciling/explaining discrepancies/omissions found as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporated in the assessment order, it is seen that assessee has sold land admeasuring 500 sq.yd. and 200 sq.yd to 60 persons and as per the said impounded documents received an amount of ₹ 54,31,500 in white and ₹ 1,29,28,500 in black. However, it is the claim of assessee amounts purportedly received in white actually represent the cost of land as per the registered documents whereas the amount received in black is the development charges received by assessee from purchasers. However, both the amounts have been recorded in the books of account. In this context, assessee has referred to list of purchasers, copies of which are at pages 42 to 47 of the paper book. On going through the said list, it is seen that assessee has received an amount of ₹ 3,93,03,683 towards development charges from the customers which as claimed by assessee have been shown as advances received from the customers in the final accounts of assessee. Further, on analysis of the said list with the impounded material, it is seen that in few cases, the amounts received by assessee from customers more or less tally with the amounts shown in white and black as in the impounded material. For example, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces where banking facility is not available, but, in our view, assessee s claim has to be proved through either certain process of enquiry or evidence brought on record. As it appears from the order of ld. CIT(A), he has accepted assessee s claim on the face value without making any enquiry or referring the matter to AO. Therefore, we set aside the impugned order of ld. CIT(A) on this issue and remit the matter back to the file of AO to verify assessee s claim that banking facility is not available at places where payments were made to concerned persons, hence it comes within the purview of rule 6DD. AO must afford reasonable opportunity of being heard to assessee before deciding the issue. 13. The next issue as raised in ground No. 8 relates to disallowance made u/s 40(a)(ia) of the Act but deleted by ld. CIT(A). 14. Briefly the facts are, during the assessment proceeding, on verifying the P L account, AO found that assessee has made some payments without deducting tax at source. Such expenditure quantified by AO are as under: Sl.No. Particulars Amount 1. Agent Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified by AO. Accordingly, this ground is partly allowed for statistical purposes. 17. The last issue raised by department is with regard to the decision of ld. CIT(A) in restricting the disallowance of expenditure made by AO to ₹ 6,47,993. 18. Briefly the facts are, during the assessment proceeding, AO noticed that assessee has claimed various expenditure and debited the same to its P L A/c. Alleging that assessee failed to produce bills, vouchers etc. in support of the expenditure claimed, AO disallowed 10% out of the expenditure claimed under various heads, which resulted in disallowance of an amount of ₹ 52,88,539. Assessee challenged the decision before ld. CIT(A). Ld. CIT(A) after considering the submissions of assessee was of the view 10% disallowance should be limited to development expenses, site visit expenses, survey charges and preliminary expenses aggregating to ₹ 64,79,929. 19. We have considered the submissions of the parties and perused the materials on record. As can be seen while AO has disallowed 10% expenditure out of the expenditure claimed by assessee under various heads, ld. CIT(A) has restricted the disallowance to the expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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