TMI Blog2020 (10) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. The assessee failed to substantiate the basis of such payments. The assessee also failed to prove through the return of income reflecting the above payments. Therefore, the disallowance of ₹ 14 lakhs i.e., payment to tenants is hereby upheld. Un-substantiated expenses AR prayed that this amount as the WIP - Since the CIT (Appeals) mentions that this amount assessee might have incurred the same for running his project. However, nothing was placed on record by the learned Authorised Representative before us, as regards any running project of the assessee during the relevant year. Considering the prayer of the assessee and the fact that CIT (Appeals) in his order mentions of WIP, this issue is restored to the file of AO for factual verification whether the said amount could qualify as WIP. AO shall decide this issue of balance expenditure whether WIP or not while complying with the principles of natural justice. Therefore these grounds partly allowed for statistical purposes. - ITA No.1207/PUN/2016 - - - Dated:- 22-9-2020 - Shri P.M. Jagtap, Vice President (KZ) And Shri Partha Sarathi Chaudhury, Judicial Member For the Assessee : Shri Hari Krishan For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, ground No.1 is dismissed as not pressed. 3. Ground No.2 pertains to disallowance with regard to the commission paid to one Mrs. Farzana Khan. The facts on this issue are that during the course of assessment proceedings, it was noticed that Mrs. Farzana Khan to whom commission of ₹ 6,30,000/- claimed to have been paid against sale of plot of land, found to be a relative / wife of Mr. Ikbal Khan, one of the partners of the assessee firm. In view of these facts, learned Authorised Representative was requested by the learned Assessing Officer to furnish necessary credible documents including nature of services rendered to materialize the above deal. Basically, the learned Assessing Officer wanted the learned Authorised Representative to file evidences in order to justify such payment of commission and for what work such commission was paid and whether that was genuine or not. The learned Authorised Representative submitted written submissions before the learned Assessing Officer which is on record. The thrust in the argument of the learned Authorised Representative was that the said amount was paid by account payee cheque, TDS was deducted and Mrs. Farzana Khan has shown th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. We also take guidance from the decisions of the Higher Forum as on record in the learned Commissioner of Income Tax (Appeals) s order i.e., (1) CIT Vs. Precision Finance Pvt. Ltd., reported at 208 ITR 465 (Cal), (2) M/s. Kanchwala Gems Vs. JCIT reported at 288 ITR 10 (SC), (3) Lachminarayan Madan Lal Vs. CIT reported at (1972) 86 ITR 439 (SC). In all these cases, merely payment through banking channels is not sufficient to establish the genuineness of the particular transaction. There has to be some specific material on record, 3rd party confirmation and most important that the facts should convey the basic need for why the commission was paid. In the present case of the assessee, these aspects are not at all proved. Considering the totality of the facts and circumstances, we uphold the findings of learned Commissioner of Income Tax (Appeals). Ground No.2 of the assessee is dismissed. 7. The ground Nos. 3 to 6 pertains to disallowance on account of various expenses regarding the leveling of land, expenses towards compound wall, land development expenses and evacuation payment. The learned Commissioner of Income Tax (Appeals) has confirmed the disallowance of ₹ 1 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copies of bills in respect of purchase of cement, steel rods, murum, labour charges, transport etc., and also filed copy of bank statement, reflecting the clearing of cheques in respect of above expenditures. 8.6. The Ld AR, however, failed to produce either of the above parties, which could certify the above contention of the appellant. In-spite of giving several opportunities of being heard, the Ld AR could not produce the tenants namely Maruti Narayan Patil (paid an amount of ₹ 13,00,000/-) and Shri Sudhakar Patil (₹ 1,00,000/-), to whom the amount of ₹ 14,00,000/- was paid for removing the encroachment and also failed to substantiate the basis of such payments. The Ld AR, also failed to produce the proof of return of income, reflecting the above payments, as their income. It is pertinent to mention here that the appellant issued as cheque of ₹ 17,00,000/- dated 27.09.2011 in favour of Mr. Maruti Narayan Patil, out of which it had claimed that ₹ 14,00,000/- had been paid for sale of above plots of land. That the appellant had paid the above amount, much after the sale date of 28.04.2011. On the other hand, the sale deed states that the plots we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nomaan Khan 2138469.00 10692345.00 . 88841057.24 88841057.24 8.8 From the above details, it is seen that the appellant, in addition to sale of plots of land, it had also shown work in progress amounting to ₹ 5,79,66,0571- and cost incurred against the said project has been shown at ₹ 5,64,25,524/-, which is less by ₹ 15,40,533/- (5,79,66,057/- Less 5,64,25,524/-), in the P L Ale. As per accounting principle, the cost incurred in the construction of project, should have been shown as WIP. Since the cost of project has been shown less by ₹ 15,40,533/-, clearly indicate that the appellant has diverted its above expenditure, from the project cost to the cost against sale of plots of land, therefore, tried to reduce the profit against sale of land. 8.9. In addition to above, it is further noticed that the appellant has taken the value of sale consideration of plots at ₹ 3,08,75,000/-- as against actual sale consideration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of ₹ 13 lakh was paid and Shri Sudhakar Patil to whom ₹ 1 lakh was paid, totaling to ₹ 14 lakhs, for removing the encroachment. The assessee failed to substantiate the basis of such payments. The assessee also failed to prove through the return of income reflecting the above payments. Therefore, the disallowance of ₹ 14 lakhs i.e., payment to tenants is hereby upheld. 10. With regard to the other un-substantiated expenses of ₹ 13,01,649/-, the learned Authorised Representative prayed that this amount as the WIP. Since the learned Commissioner of Income Tax (Appeals) in his order at Para 8.11 mentions that this amount of ₹ 13,01,649/-, the assessee might have incurred the same for running his project. However, nothing was placed on record by the learned Authorised Representative before us, as regards any running project of the assessee during the relevant year. However, considering the prayer of the assessee and the fact that learned Commissioner of Income Tax (Appeals) in his order mentions of WIP, this issue is restored to the file of learned Assessing Officer for factual verification whether the said amount could qualify as WIP. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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