9911796707
TMI Blog2016 (11) TMI 1650X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in ITA 0 510 of 2004 and the matter was remanded to the AO by allowing the appeal of the revenue. 3.The CIT(A) erred in accepting the assessee's contention that the issue had to be decided with in the stipulated time as per provisions of Section 153(2A) without appreciating the fact that the provisions of \53(2A) are not applicable to the facts of the case as the ITA T had given a specific finding and direction in Para 6.1 of its order that the expenses recorded in the seized materials are to be allowed and the AO shall not insist on the proof of the expenditure and it would be sufficient if there is a recording in the seized material and as -such the-provisions-of - Section- 153(3) are applicable and therefore the reassessment or re-computation may be completed at any time. 4.The CIT(A) erred in observing that the IT A T order setting aside the issue of unaccounted expenditure was not given effect by the AO without appreciating the fact that the present assessment order was passed consequent to the High Court order wherein the issue of unaccounted expenditure was also raised as mentioned in Ground No 2 above. 5.The CIT(A) erred in holding that the issue of allowance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deo Airways Pvt Ltd. reported in 349 ITR 85 (Delhi) applies to the Appellant's case and consequently passed a perverse order. 5. Without prejudice to the right to seek waiver with the Learned Chief Commissioner of Income Tax/Director General of Income Tax under the provisions of the Act and as confirmed by the CBDT Circular No. 400/234/95-IT (B) dated 23/05/1996, the Appellant Company denies itself liable to be charged to interest under section 234B and 234C of the Act which under the facts and circumstances of the case deserves to be cancelled. The calculation of interest under section 234B and 234C is not in accordance with law as the rate, amount and method for calculating interest is not discernible from the order of assessment. 6. Without prejudice, the learned Commissioner of Incometax (Appeals) erred in holding that there is nothing wrong with the computation of interest under section 234B of the Act in the facts and circumstances of the case and consequently the same needs to be reduced substantially. 7. The Appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 8. In the view of the above and other grounds that may be urged a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o raise objection that no other evidence was brought on record because, when the expenses in found noted in the seized material, no other evidence should be expected for unaccounted expenditure. 10. He further submitted that the next objection of the AO is that all these expenses have been claimed to have incurred by way of cash payment and identity of the payees are not being furnished. In this regard, the explanation of the assessee as per ld. AR of the assessee is that when the expenses is as per the details noted in the seized material itself and on the basis of same seized material, receipts are taxed as income, then for the expenses incurred as per the said material should also be accepted unless there is some specific objection and it cannot be said that for such unaccounted expenditure also, evidence should be available with the assessee. He submitted that under these facts, deduction should be allowed for these expenses. 11. The ld. DR of the revenue supported the orders of the authorities below. 12. We have considered the rival submissions. First of all we reproduce Para 3 to 3.12 of the order of the ld. CIT (A) for ready reference. "3. The material information avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) According to the AO) the, expenditure claimed for extra work in respect of purchaser is not linked to the project undertaken. For instance, a sum of Rs. 3,50,000/-has been .incurred on earth work) which is usually undertaken for the project at the commencement of the project and it would not have any link to extra work, if any, to be carried out in respect of purchase of flats. Similarly, a sum of Rs. 6,00,000/- has been claimed as (hut clearance compensation and waste removable expenses of Rs. 50~000/- and these items of expenses are normally incurred at the beginning of 'the project before the commencement of construction of apartments/ residential flats. v. The statement of the Managing Director was recorded on 21/4/1995, 13/6/1995 and 29/6/2995. The MD of the appellant company failed to explain the entries relating to the unaccounted expenses. However, in his statement dated 21/4/1995 he had deposed that the total unaccounted expenditure of (Gem Plaza' and (Gem Wellington~ put together was at about, Rs. 50 lakhs only out subsequently the MD has increased it to Rs .105 'lakhs on an approximate basis and bifurcated the figure between the two projects i. e. (Gem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information as regards the expenditure which too forms part of the seized material. If unaccounted receipts are considered as gross income on the basis of the seized materials} corresponding expenditure noted in the same seized material is not allowed. - c) As regards the expenditure to the tune of Rs. 1.05 Crores, one -third which pertains to "Gem Wellington' project of the appellant was made contemporaneously during the recording of statement u/s 132(4) of the Act and thus was not an afterthought or a contrived substance. d) The provisions of sec.132(4A) of the Act casts a presumptive fiction on the seized material. The AO also failed to appreciate the provisions of section of 292C of the Act, which extends the presumptive fiction in the section 132(4A) of the Act. The AO, therefore, did not follow the statutory dictum in respect of the material emanating from the seized material and disclosure u/s 132(4A) of the Act. e) The detailed break-up of the expenditure of Rs. 35.00 lakhs were extracted from the seized material submitted during the assessment proceedings and the same was explained in detail to the AO. However, it was further submitted that disallowance was excessiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble ITAT the Department assailed the matter before the Hon'ble High Court of Karnataka and vide order dated 15/2/2010 remanded the matter to the AD to examine the claim of the appellant on merits with the following directions: "Re - Question Nos.3 & 4: These two questions being interlinked both are taken up for consideration. The assessee had claimed unaccounted cash expenses of Rs. 35, 00, 000/ - as amount spent in respect of the construction of flats and accordingly, sought for allowing the same as expenses. It was disallowed by the Assessing Officer on the ground that it was only an attempt to reduce the taxable unaccounted incomes. The Appellate Authorities reversed this finding on the ground that when the Assessing officer treated the unaccounted receipts as gross income on the basis of seized materials, then the expenditure noted in the same diary cannot be ignored as irrelevant and accordingly, allowed the deduction claimed by the "assessee. This order of the Assessing Officer was confirmed by the Tribunal. During the course of search proceedings, statement of Shri Nagarajan was recorded wherein lit was stated that in respect of Gem wellington project"Rs. 35 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement 3,00,000 3,00,000 8 Electrical contract 30,000 30,000 9 -do- 50,000 50,000 10 Steel 4,00,000 4,00,000 11 Hut clearance compensation 6,00,000 6,00,000 12 Aluminium fabrication 2,00,000 2,00,000 13 Granites & Tiles 3,00,000 3,00,000 14 Wood purchases 5,14,500 5,14,500 Total 35,04,000 35,04,000 3.6 No further break-up, party-wise and date-wise, of unaccounted payment was furnished during the course of assessment proceedings or during appeal proceedings. 3.7 I find merit in the AO's observation that Rs. 3,50,000/- has been incurred for earth work, sum of Rs. 6,00,000/- for hut clearance compensation and Rs. 50,000/- for waste removal and that these kind of expenses are normally incurred at the beginning of the project or before the commencement of construction of flats/apartments. As per information available on record, the appellant commenced its project during the previous year relevant to the assessment year 1993-94 on a total area of 70640 sq.ft. and at the end of the accounting period 54462 sq.ft had been constructed and handed over to the prospective buyers. Thus, a major Part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails were furnished regarding expenses of Rs. 35.00 lakhs before the AO and the ld. CIT(A) also. The claim of expenses of Rs. 35.00 lakhs is against unaccounted receipts as per the same seized material of Rs. 156.12 lakhs as noted by the ld. CIT (A) in para-3 reproduced above. This is not the case of AO that this claim of the assessee regarding expenses of Rs. 35.00 lakhs against unaccounted receipt of Rs. 156.00 lakhs is excessive or unreasonable. The objection is regarding supporting evidence. In our considered opinion, for such un-accounted expenditure, supporting evidences may not be available in most of the cases but since the expenses are noted in the same seized material as per which the receipt is being taxed of Rs. 156.00 lakhs and the claim of such expenses is not excessive and unreasonable and no specific defect has been pointed out by the authorities below in the claim except asking for supporting evidence, we are of the considered opinion, that the assessee was able to establish the incurring of expenditure by way of notings in the seized material and furnishing of the details of the expenses item wise and this is not the case of the revenue that such details are not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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