Income Tax Appellate Tribunal - Ahmedabad
Shri Upendra N.Patel,, Baroda vs The Acit., Circle-2(2),, Baroda on 30 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "C" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
ITA No. 1775/Ahd/2015
(Assessment Year: 2006-07)
Upendra N. Patel
3, Utkanth Society, Behind
Alkapuri Club Road, Baroda - 390007 Appellant
Vs.
Asstt. Commissioner of Income Tax,
Circle-2(2), Baroda Respondent
PAN: ACWPP0823G
आवेदक क ओर से/By Assessee : Arti N. Shah, A.R.
राज व क ओर से/By Revenue : Shri Roopchand, Addl. CIT D.R.
सन
ु वाई क तार ख/Date of Hearing : 29.08.2017
घोषणा क तार ख/Date of
Pronouncement : 30.08.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
This assessee's appeal for assessment year 2006-07 arises from the CIT(A)-5, Vadodara's order dated 04.02.2015, in case no. CAB/II-400/13-14, upholding Assessing Officer's action imposing penalty of Rs.12,66,788/- in ITA No. 1775/Ahd/15 (Upendra N. Patel vs. ACIT) A.Y. 2006-07 -2- his order dated 31.01.2014, in proceedings u/s. 271(1)(c) of the Income Tax Act, 1961; in short "the Act".
Heard both sides. Case file perused.
2. We notice at the outset that both the lower authorities levy the impugned penalty of Rs.12,66,788/- pertaining to two quantum disallowances/additions of bad debts of Rs.20,40,451/- and the one pertaining to land levelling expenses of Rs.17,23,034/- made in the course of a regular assessment framed on 26.12.2008 as upheld in CIT(A)'s quantum lower appellate order dated 04.03.2010. Learned Authorized Representative informs us that the assessee had preferred his quantum appeal ITA No.1564/Ahd/2010. A co-ordinate bench therein deleted the above former disallowance of bad debts in its order dated 11.03.2016. Copy of the said order forms part of the case file. We accordingly observe that the corresponding impugned penalty therefore has no legs to stand. The same is therefore directed to be deleted.
3. We now advert to the latter issue of land development expenses. The above co-ordinate bench adjudicates assessee's quantum plea as follows:
"5. This leaves us with assessee's second substantive ground challenging disallowance of Rs. 24,95,442/- of land development expenses. He had debited various sums of leveling expenses, land wire fencing expenses and land development expenses of Rs. 8,54.440/-, Rs. 4,49,100/- and Rs. 42,81,434/- as per assessment order. He would submit the relevant ledger account. The Assessing Officer sought for relevant details thereof like bills, vouchers and registers after noticing that whole of the expenses were incurred in cash. He took cognizance of the fact that land development expenses of Rs. 9,90,400/- was incurred in assessment year 2003-04 and Rs. 7,32,634/- in the next assessment year. The Assessing Officer treated the same as prior period expenses debited to P & L account of the impugned assessment year. The Assessing Officer accordingly disallowed the impugned sum forming gross total of the above two figures coming to Rs. 17,23,034/-.ITA No. 1775/Ahd/15 (Upendra N. Patel vs. ACIT)
A.Y. 2006-07 -3- It emerges from the case file that the Assessing Officer thereafter disallowed 20% of Rs. 38,61,940/- {(854,440/- +449100+2558400-(42,81,434/- less 17,23,034/-)}by holding the same to have been incurred towards non-business purposes coming to Rs. 7,72,388/-. This disallowance is accordingly aggregating to Rs. 24,95,422/- i.e. Rs. 17,23,034/- + Rs. 7,72,388/-.
6. The CIT(A) rejects assessee's arguments as follows:-
"5.2 I have carefully considered the submission of the Ld. Counsel and the facts of the case. As far as the expenses incurred in the earlier years are concerned, the liability of expenses was not related to the year under consideration. The Ld. Counsel could not prove that the liability was materialised during the year under condideration. Since, the expenses were incurred in the A.Y. 2003- 04 and A.Y. 2004-05, the same cannot be allowed. In view thereof, have no alternative except to confirm the finding of the Assessing Officer. The disallowances of expenses of Rs. 17,23,034/- (Rs. 9,90,400/- + Rs. 7,32,634/-) are accordingly sustained. I have also gone through the details of other expenses. The leveling expenses were paid to eight-nine persons in cash on self made vouchers on the basis of Rs. 8,000/- to 9,400/- per day. The Ld. Counsel could not explain as to what was the basis of Rs. 8,000/- to 9,400/- per day per person. The land wire fencing expenses of Rs. 4,49,100/- were paid to one Shri Bharatbhai Prajapati on the basis of Rs. 18,500/- Rs. 19,000/- and Rs. 19,500/- per day for twenty four days and the same were paid in cash. The Ld. Counsel could not explain as to what was the basis of Rs. 18,500/- to 19,500/- per day. Likewise, the land development expenses of Rs. 25,58,400/- were paid to six- seven persons on the basis of Rs. 12,000/- to 18,800/- per day per person and the same were paid in cash. There was no basis to expenses of Rs. 1,50,000/-, Rs. 2,50,000/-, Rs. 1,00,000/- Rs. 1,25,000/-, Rs. 1,25,000/- and Rs. 1,00,000/- paid respectively to Shri Vinod Patel, Shri Rohit Patel, Shri Bharat Patel, Shri Sudhir Patel, Shri Sanjay Patel (HUF) and Shri N.B. Patel (HUF). No vouchers were seen to be maintained for these expenses. The Ld. Counsel could not explain the basis and the purpose of these expenses. Though, copies of vouchers of some of the expenses were furnished, the same were not furnished before the Assessing Officer. These expenses were incurred in cash and on self made vouchers where the addresses of the payees are absent. The expenses are thus not subject to verification. Since, the appellant had not furnished the vouchers before the Assessing Officer and could not explain the basis ' of daily payments even during appellate proceedings, the Assessing Officer was justified in j disallowing 20% of the expenses of Rs. 38,61,940/-. The finding of the Assessing Officer is in order and the same is sustained. The disallowances so made are confirmed. The additions of Rs. 24,95,422/- ( Rs. 9,90,400/- + Rs. 7,32,634/- + Rs. 7,72,388/-) are confirmed. The fourth ground of appeal is accordingly dismissed."
7. We have heard both the parties who reiterate their respective pleadings for and against the substantive ground raised in the instant appeal. There is no dispute that the assessee has carried forward the land development expenses as ITA No. 1775/Ahd/15 (Upendra N. Patel vs. ACIT) A.Y. 2006-07 -4- incurred in assessment year 2003-04 and 2004-05 to the impugned assessment year under the head fixed assets. He files before us copy of the relevant books of accounts, assessment order of these two assessment years. His case is that he never claimed the same in the said two assessment years and also that the Assessing Officer framed assessment therein without raising any question. The assessee's case accordingly is that he has only claimed the impugned expenditure in the relevant previous year. We confronted ld. departmental representative who could not rebut this factual. It further found that the assessee had incurred all these expanses in cash.
8. We now come to the latter component of the disallowance (supra) on the ground that the same had not been incurred for the purpose of developing the land in question. It eminates during the course of hearing that neither the Revenue has been able to support the impugned disallowance @ 20% hereinabove after pointing out specific material rebutting contents of the relevant evidence on record nor the assessee leads us to any cogent evidence for having incurred whole of the expenditure for developing its akota land stated hereinabove. We observe in these facts that both the parties have failed to discharge their respective onuses in support of and against the land development claim. We feel appropriate in the larger interest of justice in these facts and circumstances that a lump sum disallowance of Rs. 2,50,000/- instead of Rs. 24,95,422/- in question would be just and proper. The assessee accordingly gets part relief on this issue."
4. We proceed in this backdrop to observe that there is hardly any dispute about the fact that the assessee had claimed the total land levelling expenses out of which only a lump sum disallowance on estimation basis amounting to Rs.2,50,000/- out of Rs.24,95,422/- only survives. And that too does not reject assessee's case altogether. It is evident that the Assessing Officer as well as the CIT(A) conclude the assessee to have concealed as well as furnished inaccurate particulars of income whereas the fact remains that he had placed on record all the relevant details culminating into quantum disallowance of prior period expenses. All these facts indicate that the assessee's case of having raised his expenditure claim neither amounts to concealment nor that of furnishing of inaccurate particulars as it is a question of admissibility of expenses rather in the impugned assessment year. We reiterate that more than 90% of the quantum disallowance amount stands deleted. We therefore conclude that the remaining quantum disallowance of Rs.2,50,000/- as affirmed in tribunal's order dated 11.03.2016 cannot be held ITA No. 1775/Ahd/15 (Upendra N. Patel vs. ACIT) A.Y. 2006-07 -5- to be covered under the two limbs hereinabove u/s. 271(1)(c) of the Act. We therefore delete the corresponding remaining penalty as well.
5. This assessee's appeal is allowed.
[Pronounced in the open Court on this the 30th day of August, 2017.] Sd/- Sd/-
(AMARJIT SINGH) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 30/08/2017
True Copy
S.K.SINHA
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आयु!त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।