2015 (8) TMI 18

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..... 04-05, 2005-06 and 2006-07. The question considered by the ITAT was whether the Commissioner of Income Tax (Appeals) [CIT (A)] had erred in law and on facts in deleting the disallowance by the Assessing Officer ('AO') of the amount claimed by the Assessee as land development expenditure? 2. The Respondent is engaged in the business of development of agricultural land and sale thereof. The land purchased by it is developed and sold as plots. The Assessee claimed to have engaged contractors for carrying out the development work. Whenever the land was sold, the development expenses corresponding to that land were debited to the Profit and Loss Account under the head 'land cost' which included the cost price of the respective l .....

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..... y the Assessee. 4. When the Assessee was confronted with the above information, it was contended by it that all the contractors were in fact genuine; each of them had PAN numbers; payments had been made through an account payee cheques after deducting TDS and the assessments of some of the contractors had also been completed. The AO , however, did not accept the explanation of the Assessee and added back to the amounts claimed. 5. The appeal filed by the Assessee was allowed by the CIT (A) by the order dated 17th May, 2010 on the ground that during the two searches conducted at the premises of the Assessee on 22nd September, 2005 and 25th August, 2006, no incriminating documents, books of accounts etc. were found or seized to indicate tha .....

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..... were made could not override the evidence filed by the Assessee and, therefore, the CIT(A) was justified in deleting the additions "which have been made only on the basis of a doubt created or suspicion in the mind of the AO". Significantly, the ITAT observed that nothing had been found during the search operation with regard to the land development expenses and the AO had also not taken the post search inquiries to the logical end. 7. Learned counsel for the Appellant urged that the statement made by one of the contractors, Mr Jindal, that bogus entries were made in the books of accounts was not considered either by the CIT (A) and the ITAT. 8. However, the Court finds that both the CIT (A) and the ITAT have in fact discussed the materia .....

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