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2016 (12) TMI 234 - ITAT PUNE

2016 (12) TMI 234 - ITAT PUNE - TMI - Allowability of development expenses incurred in respect of land sold by the assessee - Held that:- In respect of first person, Shri Namdeo Vishwanath Karale, to whom the assessee claimed to have paid ₹ 1 lakh, the said person has categorically stated that he had not done any work in 2002-03. He states that he had received an amount of ₹ 1,50,000/- with the work completed in 2009-10. First of all, there is difference in the amount claimed and rec .....

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erty against which, the said charges for removal of encroachments have been paid in cash. In the absence of any proof of residence of said person on the said property, there is no merit in the claim of assessee and the same is dismissed. - Coming to the last claim of assessee of ₹ 1 lakh, which is claimed to be incurred on construction of compound wall. The recipient has admitted to have carried on the said work and also admitted to have received the amount. However, he did not remembe .....

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nditure of ₹ 12,90,000/- and only balance of ₹ 7,50,000/- has been disallowed for want of source of making the said payment and whether the expenditure was incurred by the assessee and was allowable in the hands of assessee is a secondary factor. The first fact it has to be proved by the assessee in the present set of facts is whether the assessee had requisite cash available with her to undertake the development work. In the absence of assessee proving the same, there is no merit in .....

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ction 143(3) of the Income-tax Act, 1961 (in short the Act ). 2. Both the appeals relating to related assessee on identical issue were heard together and are being disposed of by this consolidated order for the sake of convenience. However, reference is being made to the facts in ITA No.1428/PN/2016 to adjudicate the issue. 3. The assessee in ITA No.1 428/PN/2016 has filed the 1428/revised grounds of appeal, which read as under:- 1. On facts & circumstances prevailing in the case & as pe .....

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llant be granted just & proper relief in this respect. 2. The Receptions had CONFIRMED to have received the Money for Vacating Encroachment, Development Work, Commission and other related works. They had confirmed on OATH before the Assessing Officer while recording their Statements" to have received the said amounts for their respective Deed/Works". They also had executed AFFIDAVITS confirming to have executed the respective works and received the amounts. Their Confirmations be c .....

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as Vitiated and be set aside. 4. The issue arising in the present appeal is with regard to allowability of development expenses incurred in respect of land sold by the assessee. 5. Briefly, in the facts of the case, the assessee had furnished the return of income declaring total income of ₹ 11,41,292/- and agricultural income of ₹ 88,200/-. The assessee was engaged in the profession of Advocate and had also declared income from capital gains, agricultural activity and other sources. .....

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on sale of immovable property. The assessee out of four persons, produced three parties but was unable to produce Shri Vishal Ashok Gaikwad to whom ₹ 1 lakh was paid for removing encroachments. The assessee was asked to produce atleast one of the persons to whom money was given for removing encroachments. On the next date of hearing, the said Shri Vishal Ashok Gaikwad was produced. On scrutinizing the statements, the Assessing Officer was of the view that the claim of assessee was not cor .....

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submissions which are incorporated at pages 2 to 5 of the appellate order. The CIT(A) noted that the issue arising in the appeal was with regard to disallowance of ₹ 7,50,000/- claimed on account of development and other expenses and aggregate addition of ₹ 7,84,033/-. The CIT(A) upheld the order of Assessing Officer in respect of addition of ₹ 7,84,033/- i.e. denied claim of exemption under section 54B of the Act. Further, the assessee had claimed development expenses which we .....

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s in appeal against the order of CIT(A). 8. The learned Authorized Representative for the assessee pointed out that the limited issue arising in the facts of Subhash Jagannath Kakade is the addition to the extent of ₹ 2 lakhs and ₹ 1 lakh in the properties sold by him, whereas in the facts of Smt. Vijaya Subhash Kakade, development expenses agitated are to the extent of ₹ 7,50,000/-. The learned Authorized Representative for the assessee pointed out that the assessee had furnis .....

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al Representative for the Revenue placed reliance on the orders of authorities below. 10. On perusal of record and after hearing both the learned Authorized Representatives, the limited issue arising in the present appeal is against the disallowance of development expenses incurred by the assessee. The assessee had sold one land at Chahurana Budruk and had claimed development expenses to the extent of ₹ 2 lakhs which were indexed to ₹ 3,18,120/-. In respect of second property at Nale .....

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r had not allowed the claim of assessee since complete explanation could not be given by the recipients. The assessee claims that it had purchased the agricultural land and incurred development expenses of ₹ 1 lakh for laying Muram and connected works and further ₹ 1 lakh was paid for fixing the compound wall on the land. The work of Muram was got done from Shri Namdeo Vishwanath Karale and payment was made in cash. The stamped receipts were filed before the Assessing Officer and the .....

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tioned the work as 2009-10. The claim was disallowed by the Assessing Officer. Before the CIT(A), the assessee stressed that when the expenditure was actually made, it should be allowed. It was also pointed out that due to typographical error, the recipient wrongly stated the Chahurana Budruk instead of Nalegaon property and the same should be allowed as deduction from short term capital gains. The CIT(A) further noted that sum of ₹ 1 was claimed to have been paid to Shri Vishal Ashok Gaik .....

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ted to have carried out the said work and received the said payment, against which receipt was also issued. However, he was unable to give certain details vis-à-vis proof of poles erected by him. The plea of assessee before the Tribunal was that since the development work and other activities were carried out many years ago and the persons being uneducated could not give complete details. Each case of the persons is dealt hereinafter. In respect of first person, Shri Namdeo Vishwanath Kar .....

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s failed to establish its case and hence, the disallowance of ₹ 1 lakh is warranted. In respect of second disallowance of ₹ 1 lakh, amount being paid to Shri Vishal Ashok Gaikwad for removal of encroachments. The assessee has failed to establish that the said person was residing at the said property against which, the said charges for removal of encroachments have been paid in cash. In the absence of any proof of residence of said person on the said property, there is no merit in the .....

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lakh. Accordingly, the order of CIT(A) is modified in restricting the disallowance to ₹ 2 lakhs and allowing the claim of assessee to the extent of ₹ 1 lakh. The grounds of appeal raised by the assessee are thus, partly allowed. 12. Now, coming to the factual aspects in ITA No.1429/PN/2016 , which is the case of wife of assessee. Though the issue is same, but there is difference in facts. The assessee had sold her immovable properties situated at S.No.83/2B/2 and 105/1 jointly with t .....

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e Assessing Officer noticed certain discrepancies in the vouchers and the bank statements filed by the assessee which are summarized by the CIT(A) under para 4.2, which reads as under:- 4.2 During the scrutiny proceedings, on going through the vouchers and bank statements, the AO noticed following discrepancies: (i) The appellant claimed development expenses at ₹ 2,50,000/- in respect of the property situated at survey no.83/2B/2. In support of the same, she filed 3 vouchers amounting to & .....

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d wall of both properties and charged ₹ 1,50,000- and ₹ 70,000/- for the same, was confronted. However in his statement recorded on 17/10/2013, he was not even able to state the area of plot, number of poles & binding wire used for the compound. (iii) The appellant claimed expenses on account of removing encroachment at ₹ 3,00,000/- and furnished 3 vouchers in the name of Sh.Chemate Sahebrao Ananda, Sh. Kulat Asaram Bhagwanta & Sh. Chavan Laxman Ganpat. The appellant wa .....

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ad claimed total expenses of ₹ 16,05,650/- during the year on account of investment and development of said properties, out of which ₹ 12,90,000/- was paid in cash and no supporting evidence could be filed by the assessee during the course of assessment proceedings. Considering the same, the Assessing Officer disallowed development expenses amounting to ₹ 7,50,000/-. The CIT(A) upheld the order of Assessing Officer since the assessee had allegedly made the said payments in cash .....

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ts, the assessee could not substantiate the claim that there was any house on the said land and even the documents were found to be silent over the said fact. In view thereof, the CIT(A) held that the assessee had made false claim of expenses on account of development and removal of encroachments with the intention to reduce the income from short term capital gains. In view of the investigations carried out by the Assessing Officer, disallowance of ₹ 7,50,000/- was upheld. 14. The case of .....

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