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Realty Value India P. Ltd. Versus The Income Tax Officer, Ward 3 (2) Hyderabad

2015 (10) TMI 1486 - ITAT HYDERABAD

Addition made under section 144 - penalty under section 271(1)(c) - Held that:- Even though A.O. has given many opportunities and also issued show cause notices proposing additions under section 144, just because assessee Managing Director could not appear on the given date, in our view, the additions could not be made without analyzing the business activity of assessee. A.O. can enquire expenditure claims made in the P & L account. However, the outstanding sundry creditors or liabilities are no .....

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sessee is justifying that Managing Director could not appear before the A.O. on the given date due to ill-health. If Ld. CIT(A) has any doubt about the claims made, then it is for the Ld. CIT(A) to ask assessee to furnish necessary evidences. Without doing so the contention cannot be rejected on the reason that necessary evidence was not furnished. Even otherwise, the additions per se cannot be justified without examining the contentions. In view of this, we have no hesitation in setting aside t .....

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peals are for the A.Y. 2008-2009 by assessee against the Orders of the Ld. CIT(A)-IV, Hyderabad dated 13.12.2013 and 17.01.2014 confirming the addition made under section 144 as well as penalty under section 271(1)(c) of the I.T. Act, 1961. 2. Briefly stated, assessee company is engaged in the real estate business and filed return of income declaring loss of ₹ 7,82,380. During the course of assessment proceedings many notices were issued by the A.O. but there was no compliance from assesse .....

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n real estate business sought time for production of books. The case was again adjourned to 16.12.2010 and assessee seems to have not appeared and accordingly, A.O. completed the assessment as proposed in the show cause notice determining the income at ₹ 90,34,580 under section 144 of the I.T. Act. He also initiated penalty proceedings under section 271(1)(c) and levied penal. 2.1. Before the Ld. CIT(A), it was contended that Managing Director could not appear due to malaria fever and file .....

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nd also disallowance of expenditure at 25%. Assessee is aggrieved and raised various grounds before us. 1. "The order of the Ld. CIT(A) is erroneous both on facts and in law. 2. The Ld. CIT(A) erred in confirming the action of the A.O. in completing the assessment u/s.144 of the I.T. Act without providing proper opportunity to the appellant herein. 3. The Ld. CIT(A) erred in confirming the action of the A.O. in treating the amount of ₹ 81,15,738/- as the income of the appellant inspit .....

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f the A.O. in disallowing 25% of the expenditure of ₹ 37,74,218/- under various heads on adhoc basis without appreciating the fact that the expenditure is genuine and was wholly laid out for the purpose of business of the appellant. 6. The Ld. CIT(A) erred in confirming the action of the A.O. in not allowing unabsorbed depreciation of ₹ 1,14,789/-. 7. Any other ground that may be urged at the time of hearing." 3. Ld. Counsel at the outset submitted that assessee being a company .....

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r the credits have occurred in this year or not, the source of various funds. Ld. Counsel also referred to the order of the Ld. CIT(A) to submit that additional evidence filed before the Ld. CIT(A) was not admitted and therefore, there is no option than to raise an additional ground before the ITAT contesting the action of the Ld. CIT(A). It was submitted that assessee can justify the claims in the P & L account and balance sheet before the A.O. if another opportunity was given. 4. Learned D .....

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ty of assessee. A.O. can enquire expenditure claims made in the P & L account. However, the outstanding sundry creditors or liabilities are not from the P & L account but are Balance Sheet amounts. The outstanding amount cannot become income, unless it is established that the credits were received during the year and further they are unexplained. Nothing was brought on record by the A.O. and only the outstanding amount was brought to tax without examining the nature of the amounts. Moreo .....

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