9911796707
TMI Blog2025 (4) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. On the facts and circumstances and in law, the Ld. CIT(A) has erred in admitting the additional evidences under Rule 46A of the Income-tax Rules, 1962 without verification of additional evidences by the AO even though the assessee has belatedly filed its ITR and Audit report on 26.05.2014 i.e. after a delay of eight months and no evidences were filed that audit had been conducted on or before 30.09.2013. 3. On the facts and circumstances and in law, the Ld. CIT(A) has erred in deleting the addition made by the AO on account of purchases and development expenses claimed by the assessee in profit and loss account amounting of Rs. 2,90,20,819/-in spite of the fact that the assessee has failed to submit the books of accounts, bills or vouchers etc. to substantial its claim during the assessment proceedings. 3. Succinctly, the fact as culled out from the record is that return declaring total income of Rs.39, 10,260/- was filed on 26.05.2014 through e- filing which was processed u/s 143(1) at the same income. The case was selected for scrutiny and hence a notice u/s 143(2) was issued on 7-9-2015 which was duly served through registered post A/D on 15.09.2015. In response to the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls and vouchers verification of expenses was not possible. To enquire about the genuineness of expenses, summons u/s 131 for personal presence were issued on 04.03.2016 to Shri Mohd. Hamid and Smt Shagufta Parveen of Jaipur to whom such expenses were allegedly paid. On the same day a letter was issued to the assessee to produce books of a/c, bills and vouchers on 11.03.2016. A show cause notice for imposing penalty u/s 271(1)(b) was also issued on that day as the assessee had failed to produce books of a/c on 04.03.2016. Both the payees i.e. Shri Mohd. Hamid and Smt. Shagufta Parveen did not attend on 08.03.2016 and hence fresh summons u/s 131 were issued to them requiring their personal presence on 10.03.2016. However, both of them did not attend in person and sent return reply through post enclosing therewith copy of ITR, computation of income and PAN card only. The parties avoided personal presence and production of books of a/c just to escape interrogation by the Department. On 09.03.2016 summons u/s 131 were also issued to five outstation parties to whom purchase, and internal development expenses were stated to have been paid. The payees were required to produce their books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses for improvement of land. We have already submitted details of work done on land as landscaping, levelling of land, fencing etc. for amounting to Rs. 2,50,60,966/- Difference of Rs. 39,53,853/- is on account of purchases of Mitti, Khambi, wire for fencing etc. from open market. Further, the land which was transferred to M/s M.M.Realty during the year was immeasurable condition having lot of pitfall on it and open without fencing lot of expenses were incurred for its improvement to make it in saleable condition which are quite genuine." The assessee Id. A/R has not submitted any item wise, date wise details, any books of account, bills or voucher etc., its claim of its claim of incurring purchase and development expenses. The assessee has also not controverted the adverse finding of inquiry conducted by the Department. The facts being so the purchase and development expense debited by the assessee were held to be bogus and thereby an addition of Rs. 2,90,20,819/- was made to the income of assessee. 4. Aggrieved from the order of the assessment the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided on the submissions made by him and the material on record. In order to meet the ends of justice, the additional evidence submitted by the appellant under Rule 46A of the IT Rules is hereby admitted. From the assessment order of the Ld. AO and the submissions made by the appellant, it is seen that the appellant has submitted all the necessary details in respect of the expenses incurred by him. All the ledger accounts, bills and vouchers have been produced. The TDS has been paid u/s 194C, the copy of ITR acknowledgments have been provided, all the transaction have been carried out through the banking channels. Hence, the said expenses cannot be help to be bogus in nature. The appellant cannot be forced/compelled to produce its parties to prove genuineness of the transactions. By submitting the necessary documents, the appellant had discharged the onus cast upon him to prove the genuineness of the transactions quite sufficiently. Further, since all the details were available with the Ld. AO necessary inquiries could have been conducted by the Ld. AO to determine the genuineness of the expenses. Also, in respect of the report of the Patwari that no agricultural activity has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious land parcels. Despite the Assessing Officer's (AO) due diligence and provision of multiple opportunities, the assessee's responses were either incomplete or non- responsive, displaying a consistent pattern of evasiveness, which ultimately resulted in the disallowance of the development expenses. 2. Assessee's Business and Initial Information Submission 2.1.BusinessOverview: The assessee, engaged in the real estate business, declared sales of Rs. 6,23,30,330 with a net profit of Rs. 51,98,803. The Profit & Loss account includes a debit of Rs. 2,90,20,819 as internal development expenses. 3. Non-Cooperation in Verification of Development Expenses 3.1 Failure to Produce Books and Supporting Evidence: Despite the AO's specific requests on 26.02.2016 for books of account, bills, and vouchers, the assessee provided only partial details through dak. Essential documentation, such as itemized expenses and invoices, was withheld. Although the assessee reported payments of Rs. 2,50,60,966 to seven contractors, it failed to submit primary records substantiating these payments. 3.1.2 Evasion of Summons by Key Contractors: The AO issued summons under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1 In addition to procedural non-compliance, the Ld.CIT(A) failed to document any specific reasons for admitting the additional evidence submitted by the assessee. Rule 46A mandates that, in cases where new evidence is accepted, the appellate authority must provide documented reasons justifying this decision. The absence of such reasoning in the Ld. CIT(A)'s order not only violates procedural requirements but also weakens the credibility of the order. 5. Prejudice to the Revenue 5.1 By admitting additional evidence without sharing it with the AO, the Ld. CIT(A) effectively deprived the Revenue of a fair opportunity to address or counter the evidence submitted by the assessee, resulting in substantial prejudice to the Revenue. 6. Relief Sought 6.1 In view of the above, it is respectfully submitted that the appeal order passed by the Ld. CIT(A) suffers from procedural irregularities, violating principles of natural justice and Rule 46A. Therefore, it is requested that the Hon'ble ITAT set aside the order of the Ld. CIT(A). 7. Conclusion 7.1 Based on the facts presented, it is respectfully requested that the Hon'ble Tribunal confirm the order of the AO and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt is not received Even without providing the AO with these documents, which are essential for preparing a remand report. 3.Rule 46A of Income Tax Rules 1961 3.1 Under Rule 46A of the Income Tax Rules, 1962, "additional evidence" refers to any oral or documentary evidence that an appellant seeks to present before the Commissioner of Income Tax (Appeals) [CIT(A)] which was not produced during the original assessment proceedings before the Assessing Officer (AO). The rule outlines specific circumstances under which such evidence may be admitted: i. Refusal by the AO: If the AO refused to admit evidence that should have been accepted. ii. Prevention by sufficient cause: If the appellant was prevented by sufficient cause from producing the evidence when called upon by the AO. iii. Relevance to grounds of appeal: If the appellant was prevented by sufficient cause from producing before the AO any evidence which is relevant to any ground of appeal. iv. Lack of opportunity: If the AO made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal. 3.2 For the CIT(A) to admit additional evidence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitting additional evidence and ensure that the AO is provided with a reasonable opportunity to examine and rebut the same. Non-compliance with Rule 46A was deemed a violation of natural justice. 3. Smt. Prabhavati S. Shah v. CIT (1998) 231 ITR 1 (Bom) * The Bombay High Court emphasized that the conditions under Rule 46A must be fulfilled before additional evidence can be admitted. 4. DCIT v. Keshav Cement & Infra Ltd. (2015) 371 ITR 225 (Kar) * The Karnataka High Court held that failure to comply with Rule 46A vitiates the appellate order as it deprives the AO of the opportunity to contest the additional evidence. 2.5. Principles of Natural Justice and Mandatory Opportunity for AO's Examination The case reflects a fundamental breach of the principles of natural justice, specifically that additional evidence cannot be accepted without allowing the AO a reasonable opportunity to examine and rebut the said evidence. Rule 46A mandates that if new evidence is presented at the appellate level, the AO must be provided with it and given an opportunity to scrutinize its authenticity. The Ld. CIT(A) is not permitted to proceed with additional evidence independently withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nes and supported by judicial precedents. 6.2 Therefore, it is respectfully submitted that the order of the Ld. CIT(A) be set aside, and the AO's order be confirmed. The additional evidence submitted was part of the audited books of accounts, and the assessee deliberately failed to present it during the assessment proceedings. The documents submitted before the Ld. CIT(A) were not produced during the course of the assessment hearing, and this is not a case where the AO ignored such evidence or where the assessee had a valid reason preventing its submission before the AO. The assessee, being a company with a team of accountants, can reasonably be presumed to have had all relevant documents at its disposal before the audit. Hence, the non-submission of such evidence during the assessment cannot be justified Ground 2: Delay in Filing ITR and Audit Report, and Lack of Verification Ground:" On the facts and circumstances and in law, the Ld. CIT(A) has erred in admitting the additional evidences under Rule 46A of the Income-tax Rules, 1962 without verification of additional evidences by the AO even though the assessee has belatedly filed its ITR and Audit report on 26.05.2014 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tical facts and has taken a contrary view, stating: "From the assessment order of the Ld. AO and the submissions made by the appellant, it is seen that the appellant has submitted all the necessary details in respect of the expenses incurred by him. All the ledger accounts, bills, and vouchers have been produced. The TDS has been paid u/s 194C, the copy of ITR acknowledgments has been provided, and all the transactions have been carried out through banking channels. Hence, the said expenses cannot be considered bogus in nature." 2. The Ld. CIT(A) findings does not address the fact that the AO disallowed Rs. 2,90,20,819 claimed by the assessee as development expenses in the profit and loss account due to lack of non-submission of supporting documentation. Despite multiple opportunities provided, the assessee did not produce essential documents like books of accounts, bills, and vouchers necessary to validate the claimed expenses Despite multiple opportunities provided by the AO, the assessee did not produce essential documents such as books of accounts, bills, and vouchers necessary to validate the claimed expenses. The Ld. CIT(A) deleted this addition without considering the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith partial details, submitted through post. Although the appellant attached details of internal development expenses amounting to Rs. 2,50,60,966/- and listed 7 parties/contractors involved, they failed to present the necessary books of accounts, bills, and vouchers, which were essential for a comprehensive verification process. The LD.CIT(A) has failed to appreciate that books were not produced and submission and verification are different it terms. Submitting documents are not production and verification of books. In the appeal order the Ld. CIT(A) has not discussed this issue. 3.2 TDS and ITR Acknowledgments Alone Are Insufficient for Verification i. While the appellant submitted details of TDS payments under section 194C and ITR acknowledgments along with income computations for 6 of the 7 parties, these documents alone do not substantiate the actual occurrence and accuracy of the expenses. In the absence of primary supporting documents like books of accounts and vouchers, the TDS and ITR acknowledgments do not serve as conclusive evidence. The AO, therefore, had justifiable grounds to question the authenticity of the expenses due to insufficient documentation. 3.3 Case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laimed to have been done. Supporting Case Laws: 1. Principal Commissioner of Income Tax vs NRA Iron & Steel Pvt. Ltd. * Citation: AIRONLINE 2019 SC 1729 * Key Finding: The Supreme Court held that in cases involving substantial sums of money, the assessee has the onus to establish the identity and creditworthiness of the parties involved as well as the genuineness of the transaction. Merely producing documents such as PAN, bank statements, or IT returns is insufficient if the assessee fails to substantiate the genuineness of the transaction. The AO was justified in questioning the transaction due to a lack of adequate proof beyond these written records. 2. CIT vs Durga Prasad More * Citation: (1971) 82 ITR 540 (SC) * Key Finding: The Supreme Court held that the taxing authority is entitled to go beyond the apparent and investigate the reality behind the transaction. In this case, the Court emphasized that evidence on paper alone is not conclusive if the underlying reality is questionable. The genuineness of transactions must be established through reliable evidence, not just documents. 3. Sumati Dayal vs Commissioner of Income Tax * Citation: (1995) 214 ITR 801 (SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of accounts, bills, and vouchers. * In this case, while payments were processed through banking channels, no corroborating documentation has been provided to independently establish the actual performance of work. Banking records alone, therefore, fail to satisfy the onus on the appellant to prove the genuineness of these transactions in terms of work performed. 3. Illustration: Payment Due Does Not Equate to Non-Performance of Work * For illustration, if a payment is delayed or due, it does not imply that the work was not performed. Conversely, merely making a payment does not prove that the work has been performed either. The genuineness of a transaction in the context of tax assessments requires a thorough examination of the underlying facts and evidence. * In the case of payments due, documentation and independent verification of completed work would be required to establish its genuineness, despite nonpayment. Therefore, when payment is made, it similarly requires independent verification to confirm that work was actually conducted as claimed. 4. Judicial Precedents Emphasizing the Requirement of Verifying Genuineness Beyond Banking Transactions i. Principal Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any documentation to substantiate how and why these service providers were selected. 3. Non-Traceability and Non-Compliance of Service Providers * The Department has confronted the appellant with the fact that the service providers are either untraceable or did not respond to the summons issued under section 131 for verification. This failure of service providers to attend proceedings significantly impacts the credibility of the transactions. 4. Requirement for AO to Conduct a Comprehensive Inquiry * The appellant has argued that they should not be compelled to produce additional evidence for verification. However, as per the Income Tax Act, the onus lies with the taxpayer to substantiate any expenses claimed as genuine. It is the AO's duty to question and verify submissions, especially when critical evidence, like books of accounts, is not provided. * Relevant Case Law * CIT vs. Smt. P.K. Noorjahan (1999) 237 ITR 570 (SC) * Background and Key Points: * In this case, the Supreme Court of India discussed the nature of scrutiny assessment and emphasized the role of the AO in examining the evidence presented by the assessee. * The AO's duty in scrutiny ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... records would be maintained and readily available for inspection. However, the appellant has not provided any explanation as to why these books of accounts and vouchers were not produced, despite requests by the AO. * 6. Lack of Discussion by Ld. CIT(A) on Critical Issues * The Ld. CIT(A) has not addressed the appellant's failure to produce the necessary documentation or the unavailability of service providers in the order. This oversight has resulted in an incomplete examination of the case and a failure to critically assess the validity of the appellant's claims. 4. Opportunity for Further Inquiry by the AO * The Assessing Officer (AO) had access to all details and could have conducted further inquiries but chose not to pursue them. This reply addresses the Ld. CIT(A)'s observation that the Assessing Officer (AO) had the opportunity to conduct further inquiries but failed to do so. It is respectfully submitted that this finding is factually incorrect and misinterprets the role of the AO in the assessment process. The AO not only conducted thorough inquiries, including a field inquiry, but also appropriately shifted the onus onto the assessee, who subsequent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licenses. Further, movement of heavy equipment such as earthmovers and other machinery would leave a trail of verifiable evidence in terms of labor charges, fuel consumption, and transportation records. However, the contractors remained non attendee and thus hold AO to not conduct the enquiries during the assessment proceedings. Written submission is not cross verifiable, the statement or personal hearing is having on spot observation with documents that leads to verify the genuines of work performance. iv. Summary of Contractors' Compliance: S. No. Contractor Name Compliance Outcome 1 Shri Mohd. Hamid Failed to attend hearings, sent limited response by post; avoided personal attendance and did not provide full records. 2 Smt. Shagufta Parveen Failed to attend hearings, sent limited response by post; avoided personal attendance and did not provide full records. 3 M/s Flexible Machine Tools Summons returned unserved; non- compliant and did not provide any supporting documentation. 4 Shri Arun Sharma (Faridabad) Summons returned unserved; did not provide any documentation or attend for verification. 5 Other Outstation Contractors Provided minimal responses; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contractors prevented the AO from conducting an effective inquiry into the genuineness of expenses, thereby necessitating the disallowance of the claimed deductions. 2. Importance of Section 131 Powers Section 131 empowers the AO with several quasi-judicial powers crucial for ensuring transparency, accuracy, and accountability during assessment proceedings. The provision serves the following key purposes: 1. Verification of Genuineness of Transactions Summons are crucial for directly verifying the authenticity of claims, such as expenses, credits, or income. Personal inquiry allows the AO to assess the credibility of the evidence provided by the assessee or third parties. 2. Cross-Examination of Summoned Parties: The AO can question summoned individuals to clarify discrepancies, resolve doubts, and ensure the accuracy of financial or commercial transactions. 3. Assessing Technical and Operational Capacity: In cases involving contracts, services, or development activities, Section 131 allows verification of technical expertise, knowledge, and financial capacity of contractors or third parties. 4. Preventing Evasion and Ensuring Cooperation: Summons compel account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. * Significance: Section 131 powers are vital for confirming genuineness when parties fail to cooperate. 5. Role of Section 131 in the Present Case In this case: 1. The AO judiciously exercised Section 131 powers to summon the contractors and the assessee for a personal inquiry. 2. Both the assessee and contractors deliberately avoided personal attendance, submitting only limited documents by post. 3. This non-compliance deprived the AO of the opportunity to verify: * The genuineness of development work. * Operational capacity, licensing, and resource movement necessary 4. The AO's reliance on Section 131 was essential to reveal the truth and conduct a fair assessment. The lack of personal presence and failure to provide corroborative evidence justified the AO's adverse inference and disallowance of expenses under scrutiny. 5. Clarification on Agricultural Activity * In response to the Patwari's report stating no agricultural activity, the appellant clarified that they never claimed to have engaged in agriculture; land-filling and landscaping were conducted to prepare the rugged land for sale. * This is also not factually correct. The AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs, thereby violating Rule 46A and principles of natural justice. 2. The Ld. CIT(A) erred in admitting additional evidence without allowing the AO to verify the documents, especially considering the belated filing of ITR and audit report, and the absence of evidence that the audit was conducted on or before 30.09.2013. 3. The Ld. CIT(A) unjustifiably deleted the addition of Rs. 2,90,20,819 made by the AO towards development expenses, despite the assessee's failure to produce supporting documentation like books of accounts, bills, or vouchers, which are essential for substantiating the expenses. Prayer In view of the above submissions, it is respectfully prayed that the Hon'ble Tribunal: 1. Set aside the order of the Ld. CIT(A) due to procedural lapses and lack of proper verification of evidence. 2. Uphold the AO's addition of Rs. 2,90,20,819 towards development expenses, as the assessee failed to substantiate its claim with credible evidence and did not comply with procedural requirements." 6. In addition to the above, ld. DR countered the written submission filed by the assessee by filling the following additional written submission which reads as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Rs. 5,22,86,102/ -. However, for AY 2013-14, the assessee declared opening stock as raw material worth Rs. 5,22,86,102/- despite having no raw material in the preceding year. This inconsistency highlights deliberate manipulation. iii. Bogus Claims for Levelling and Fencing: The reclassification of opening stock in AY 2013-14 as raw material enabled the assessee to claim illegitimate expenses of Rs. 2,90,20,819/- for levelling, fencing, and related activities. This claim is devoid of any factual basis. iv. Unchanged Stock Classification: For AY 2013-14 to AY 2017-18, the assessee consistently declared stock as raw material, despite claiming substantial levelling and fencing expenses. It is illogical and untenable that stock classified as raw material remains unchanged over multiple years without any conversion into finished goods. 5. The foregoing analysis conclusively establishes that the assessee manipulated stock declarations and expense claims to evade tax liabilities. II. Reliance on Judicial Precedent The Hon'ble Supreme Court in Principal Commissioner of Income Tax (Central)-1 v. NRA Iron & Steel Pvt. Ltd., [(2019) 3 SCC 184], held that the burden of proof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following major documents as required by the department * PAN Card * ITR Ack. and Computation of A.Y.2013-14 * Audited Balance sheet and Profit & Loss of the A.Y.2013-14 * Sales ledger in the book of Ascent Buildhome Developers Limited * Transfer deeds * Bank account statement of following bank of the F.Y.2012-13 1) Punjab National Bank, Jaipur 2) Kotak Mahinda Bank, Raja Park, Jaipur 3) Kotak Mahindra Bank, Raja Park, Bhiwadi * Further, in respect to the payments made to the seven contractors, the assessee had provided the following details in its reply dated 02.03.2016 * Details of internal development expenses * Copy of ITR & Computation of those contractors * Form 26AS of those contractors (Pg No. 01-29 of paperbook) * The copy of ledgers and bills were also duly submitted at the time of appeal proceeding. 2. Response of summons by Key Contractors in respect of internal development expense of Rs. 2,50,60,966/- incurred by them * The Ld. DR in its submission dated 23.12.2024 has mentioned "point no. 3.1.2 Evasions of Summons by Key Contractors" and "point no. 3.2.3 Noncompliance by Outstation Contractors" that the AO had issued summons U/s 131 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which reads as under : S. No Particulars FACTS 1. Brief facts of the case * The assessee is a limited company engaged in the business of development, sale and purchase of land and other properties. * For the year under consideration, the assessee had filed its return on income as on 26.05.2014 declaring a total income of Rs. 39,10,260/ -. * As per the audited financial statement, the assessee has debited purchase and internal development expense of Rs. 2,90,20,819/-. The Ld. A.O asked the assessee to submit the documentary evidences in support of this claim. * The assessee submitted all the necessary documents in respect of the expenditure claimed but still the Ld. A.O made the addition of Rs. 2,90,20819/- and raised a demand of Rs. 1,41,30,510/-. 2. Documents submitted during the assessment proceeding * The assessee had provided the following documents before the Ld. A.O to verify the claim of internal development expense" * Complete details of expense including: * Name of parties * Respective amount of parties * Tax deducted on payment * ITR & Computations of the parties (Page No. 10 to 28 of the Paper book) * Thereafter, the Ld. A.O had issued summons to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the Pr. CCIT NFAC and CCsTT of Central charges and International Taxation on the basis of recommendations of jurisdictional Pr.CIT/ Pr.CIT(Central)/ CIT (IT), in the following situations- ADVERTISEMENT i) Cases having Demand above Rs. 1 Cr, ii) Cases where refunds, as originally claimed in ITR, are in excess of 1,00,000/-, iii) Cases where directions to this effect have been issued by Courts, iv) Cases where request is made by senior citizens and/ or super senior citizens, v) Any other case or genuine hardship." * Since the disputed demand of the assessee was Rs. 1,41,30,510/- i.e., more than Rs. 1 crore, this case clearly falls under the ambit of this circular and hence the CIT(A) has to dispose off the appeal on priority basis. 9. The Ld. AR of the assessee to support the order of the ld. CIT(A) and the contention so raised also filed a detailed paper book the index of the paper book filed reads as under : S. No. Documents furnished before the Ld. A.O at the time of assessment proceedings. Page No. of Paper Book Remarks 1. Reply dated 02.03.2016 01-29 * The department issued notice U/s 142(1) on 26.02.2016 as per which the department required the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhome Developers Limited * Ledger of Closing stock as on 31.03.2013 in the book of Ascent Buildhome Developers Limited S. No. Documents furnished before the Hon'ble CIT(A) at the time of appeal proceedings. Page No. of Paper Book Remarks 9. Reply on dated 15.06.2023 65-192 * The assessee had submitted his first submission during the appeal proceeding in physical form and had provided the copy of ledgers and invoices of the parties to whom payments were made in respect of purchase and development (Pg. No.65-130) * The Assessee submitted an application for submitting additional evidences under rule 46(A) as on 15.06.2023 and had provided the bill of the following parties in respect of purchase and development expenses: * Bills copy of Arun Sharma HUF * Bills copy of Madhu Bala * Bills copy of Munjal Enterprises * Bills copy of Shagufta parveen * Bills copy of Flexible Machine Tools * Bills copy of Rajesh Kumar * Bills copy of Mohammad Ahmed * The assessee also submitted its written submission on 15.06.2023 * The Ld. A.O was requested to issue to remand report on 15.12.2023, 29.12.2023 and 25.01.2024. The Ld. PCIT was also requested to expedite the reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Sales Tax Act, 1956 which defines the definition of goods in this Act which is as under (Page no. 05 of this submission): "(d) "goods" includes all materials, articles, commodities and all other kinds of movable property, but does not include actionable claims, stocks, shares and securities." From the act, it is clear that for the purpose of Central Sales Tax, the definition of goods only includes only materials, articles, commodities and all other kinds of movable property. The immovable goods are not included in the definition of goods as the Central Sales Tax. Hence, since the assessee company was only engaged in selling plots/lands i.e., immovable property, it was not liable to be registered under this Act. Furthermore, the assessees who were liable to file the tax audit report were required to specify that whether they were liable to pay any kind of indirect taxes such as excise duty, service tax, sales tax, customs duty, etc. And the assessee who were liable to pay such indirect taxes were also required to mention their registration no. under the relevant act in their tax audit reports. In the present case, the assessee had filed the tax audit report for the rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-operative at the time of the assessment proceedings. The assessee has not complied with the notice issued u/s. 142(1) of the Act and books of accounts were not produced. At the fag end the assessee submitted few vouchers based on that notices were issued u/s. 131 of the Act requesting those parties to remain present but they submitted the details in DAK to that fact ld. DR draw our attention to chart at page 20 of her submission stating that Shri Mohd. Hamid did not appeared and submitted the details in part. Smt. Shagufta Parveen also not appeared and details were not given as requested. Summons issued to M/s. Flexible Machine Tools and Shri Arun Sharma were returned unserved. In the case of other contractor the reply were evasive and critical evidence / reply relevant to the issue were not given. The inspector was deputed by the ld. AO and after consulting he filed the reply on site. The assessee paid majority of the payment in cash. Ld. AO has not violated any the principles of natural justice in the assessment proceedings. The appeal filed by the assessee was not getting time barred and the ld. CIT(A) should have awaited the reply of the ld. AO and thus, the order of the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . to substantial its claim during the assessment proceedings. Since all the grounds are related to the claim of expenditure on the property that developed, we deal with all the grounds together. 14. The assessee is a limited company engaged in the business of development, sale and purchase of land property. Return of income was filed by the assessee declaring income of Rs. 39,10,260/ -. The bench noted that while issuing notice u/s. 142(1) of the Act dated 26.02.2016 the assessee was asked to submit the details of the valuation of closing and opening stock and details of internal development expenses claimed by the assessee. The assessee submitted all the details of the internal development expenses so claimed for an amount of Rs. 2,90,20,819/ -. As is evident that while making the payment to those seven contractor the assessee has deducted as the compliance requirement under the law and thereby further supported the claim with submission of ITR and computation of those contractors, Form no. 26AS of those contractor wherein the contract details and TDS were reflected. Based on these details ld. AO issued summons and out of seven parties five have even filed the reply to the summon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowance merely on account of not submitting the bills. Ld. CIT(A) the bills were not submitted. Ld. CIT(A) having co-terminus power has entertained that evidence ld. AO choose to remain silent and has not provided the remand report even after so many reminders the Ld. CIT(A) passed the order as on 12.04.2024, based on facts and records available. As is evident that the assessee had filed the appeal before the Ld. CIT(A) on 28.08.2018 and the appeal order was passed on 12.04.2024 which means the appeal was pending before the Ld. CIT(A) for approximately six years and sufficient opportunity was granted to the ld. AO. Without prejudice to that rule 46A(4) provide that "Nothing contained in this rule shall affect the power of CIT(A) to direct the production of any document, or the examination of any witness, to enable him to dispose of the appeal, or for any other substantial cause including the enhancement of the assessment or penalty". As regards the filling of the audit report belatedly, the ld. AO has already considered the audited accounts and made the addition there from and there being no further grievance on that delayed filling of audit report and therefore, they conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s specific request on 26.02.2016 for books of accounts, bill and vouchers, the assessee only provided partial reply through dak and also the assessee has failed to submit primary records substantiating the payment of Rs. 2,50,60,966/- to seven contractors. In this matter we note that in the assessment proceeding in the very first reply of the assessee submitted on 13.07.20215, he had provided the following major documents as required by the ld. AO i.e.PAN Card, ITR Ack. and Computation of A.Y.2013-14, Audited Balance sheet and Profit & Loss of the A.Y.2013-14, Sales ledger in the book of Ascent Buildhome Developers Limited, Transfer deeds, Bank account statement of Punjab National Bank, Jaipur, Kotak Mahinda Bank, Raja Park, Jaipur and Kotak Mahindra Bank, Raja Park, Bhiwadi. The assessee also submitted the details of the payments made to the seven contractors, the assessee had provided the details in its reply dated 02.03.2016 showing details of internal development expenses, Copy of ITR & Computation of those contractors and Form 26AS of those contractors. The assessee also submitted the copy of ledgers and bills were also duly submitted at the time of appeal proceeding but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a prudent businessman. As already stated above, we have to see the transfer of the borrowed funds to a sister concern from the point of view of commercial expediency and not from the point of view whether the amount was advanced for earning profits." The bench noted that the ld. CIT(A) while dealing with the appeal of the assessee has dealt with all the aspect of the matter and categorically held that the assessee submitted all the necessary details in respect of the expenses incurred by them. All the ledger accounts, bills and vouchers have been produced. The TDS has been paid u/s 194C, the copy of ITR acknowledgments have been provided, all the transaction have been carried out through the banking channels. Hence, the said expenses cannot be held to be bogus in nature. The appellant cannot be forced/compelled to produce its parties to prove genuineness of the transactions. By submitting the necessary documents, the appellant had discharged the onus cast upon him to prove the genuineness of the transactions quite sufficiently. Further, since all the details were available with the Ld. AO necessary inquiries could have been conducted by the Ld. AO to determine the genuineness of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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