ACIT Vs Pushparaj Corporation (ITAT Ahmedabad)
ITAT Ahmedabad held that merely because some parties didn’t respond to the notice of AO, entire expenditure cannot be held as non-genuine. Accordingly, deletion of addition by CIT(A) upheld.
Facts- In the course of assessment, AO noticed that the assessee had claimed expenditure of Rs.5.96 Crores under the head “purchase” and Rs.3.46 Crores under the head “direct expense” in Schedule-14 of the Profit & Loss account, the details of which was called for and examined. On verification of the details of the expenses, the AO found that these expenses were incurred in contravention to the terms and conditions of the Memorandum of Understanding for development of land executed on 27.12.2008 between the assessee and the RNTC. Therefore, the material expense of Rs.1,52,90,000/- and plot development expenses of Rs.2.60 Crores was disallowed by the AO and added to income. AO also disallowed the commission and brokerage expense of Rs.30.30 Lakhs.
CIT(A) allowed the appeal. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that merely because some of the parties did not respond to the notice of the AO, the entire expenditure cannot be held as non-genuine. It is found that the Ld. CIT(A) had correctly appreciated the facts of the case and thereafter had rightly allowed the relief to the assessee. We do not find anything wrong with the findings as given by the Ld. CIT(A) in respect of these two additions. Accordingly, the deletion of additions made by the AO in respect of material expense of Rs.1,52,90,000/- and development expense of Rs.2.60 Crores, by the Ld. CIT(A), is upheld.
