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2015 (8) TMI 18 - DELHI HIGH COURT

2015 (8) TMI 18 - DELHI HIGH COURT - TMI - Disallowance of Land development expenditure - CIT(A) allowed claim confirmed by ITAT - Held that:- ITAT in the impugned order noted that the contractors named by the Assessee had in fact been assessed by the Department and in many cases refund had been ordered. It was noticed that the AO had made no effort to verify the details filed by the Assessee and proceeded to inquire into the identity of the contractors through an inspector. These inquiries were .....

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xpenses and the AO had also not taken the post search inquiries to the logical end.

Both the CIT (A) and the ITAT have in fact discussed the materials on record including the statements of four of the contractors and the report of the Inspector. As rightly pointed out by the ITAT, the evidence submitted by the Assessee including photographs and DVDs demonstrating the land development was not properly verified or inquired onto by the AO. - Decided against revenue. - ITA No. 313/2014, I .....

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os.2638, 2639 and 3693/DEL/2010 for the Assessment Years 2004-05, 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 sol .....

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uch contractors. It also furnished DVD and photographs to show how barren agricultural land was first purchased and then developed and sold. 3. The case of the Revenue as reflected in the order of the AO dated 31st December, 2008 was that in response to the inquires made one Pradeep Kumar Jindal, the 'kingpin of the group' of contractors purportedly admitted in his statement before the Income Tax Officer ('ITO') on 13th December, 2008 that no work in fact had been done by the con .....

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on oath that no work had actually been done by them. Reference was also made to one other contractor Mr Bharat Ram who gave a statement denying execution of any contract awarded to him by the Respondent Assessee. Further, more than 100 of the alleged contractors were not available at the addressees given by 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 .....

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s of accounts etc. were found or seized to indicate that the Assessee had claimed any bogus expenditure to reduce the burden of tax liability. The CIT (A) observed that the only ground on which the AO disallowed the land development expenditure was that the parties were not found at the given addresses thereby creating suspicion as to the genuineness of the expenditure. It was held that suspicion, however great, could not substitute for evidence. It was a matter of record that two searches were .....

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