Intact Developers Pvt. Ltd. Vs DCIT (ITAT Bangalore)
Intact Developers Pvt. Ltd. appealed against consolidated orders of the CIT(A)-11, Bengaluru, for the assessment years (AY) 2015-16, 2016-17, and 2017-18, which had dismissed its claims regarding various disallowances and procedural irregularities. The appeals challenged the assessments completed under sections 144 r.w.s. 147 of the Income Tax Act, 1961 (“the Act”), alleging that the Assessing Officer (AO) acted on conjectures, failed to provide proper opportunities of being heard, violated principles of natural justice, incorrectly framed assessments, disallowed legitimate business expenditures, and levied interest wrongly.
The assessee, incorporated in 2011, is engaged in the construction of residential apartments and filed its return for AY 2015-16 declaring nil income. A survey under section 133A conducted in February 2018 revealed that books of accounts were not maintained at the business premises. The Managing Director (MD) provided statements indicating that accounts were maintained offsite and promised submission by 28/02/2018. When the books were produced on 08/03/2018, they were impounded under section 131 for further investigation.
During the survey, the assessee claimed revenue recognition using the percentage completion method but could not adequately substantiate this. The AO scrutinized the expenses, particularly contract payments totaling approximately Rs. 1.98 crore for AY 2015-16, including payments to Abdul Rasheed, Chota Hari, Narashimha, and Abdul Mustafa, finding that some parties were merely “name lenders” and had no actual engagement. Consequently, the AO disallowed the alleged bogus expenses, which were confirmed by the CIT(A) due to the lack of credible evidence from the assessee.
