Case Law Details

Case Name : Assistant Commissioner of Income Tax Vs M/s. Tirupati Enterprises (ITAT KOLKATA)
Appeal Number : I.T.A. No. 28/KOL/2013
Date of Judgement/Order : 20/11/2015
Related Assessment Year :
Courts : All ITAT (4418) ITAT Kolkata (280)

Brief facts of the case are that the assessee-company is engaged in the business of property development. The assessee filed its return of income through E-filing for the year under consideration showing total income of Rs.10,39,624/- on 31.10.2007. The case was selected for scrutiny under CASS and notices under sections 143(2) and 142(1) were issued and duly served on the assessee.

During the course of assessment proceedings, the assessee filed a statement for cost of construction, wherein it has been shown that the assessee has paid Rs.60,00,000/- to M/s. Sunrise Projects Pvt. Ltd. The assessee was requested to explain the nature of payment made to M/s. Sunrise Projects Pvt. Ltd. In reply, assessee explained that the payment was made for cancellation of contract as compensation. The assessee was requested to furnish documentary evidence in support of its claim but no evidence was filed by the assessee to the Assessing Officer. It was found from the copy of agreement between the assessee and Shri Ganesh Jew Thakur Trust filed in course of assessment proceedings that there was no clause regarding payment of compensation to M/s. Sunrise Projects Pvt. Ltd. to the tune of 60 lakhs as claimed for cancellation of contract. As the assessee could not furnish any documentary evidence in support of its claim, the Assessing Officer added the same to the total income of the assessee as undisclosed income. Aggrieved against the order of Assessing Officer, the assessee went in appeal before the ld. CIT(Appeals).

On appeal, ld. CIT(Appeals) deleted the addition made by the Assessing Officer by observing as under:-

“I have perused the assessment order, remand report of the AO and considered the submission of the appellant. I find from the assessment order that the AO disallowed the payment of compensation claimed to have made to M/s. Sunrise Projects Pvt. Ltd. to the tune of Rs.60,00,000/-as the appellant failed to furnish any documentary evidence in support of its claim at the time of assessment proceeding. In the course of remand proceedings, the appellant submitted before the AO a copy of agreement held between the appellant and M/s. Sunrise Projects Pvt. Ltd. (executed on 30.01.2004) and also a copy of deed for cancellation surrender and release of contract/share in property (executed on 01.04.2006). The AO stated in his remand report that the above payment has already been reflected in the Books of Accounts of the appellant as well as of M/s. Sunrise Projects Pvt. Ltd. The AO’s report is based on Inspector’s report who was deputed by the AO in the course of remand proceedings to verify the genuineness of the payment of Rs.60,00,000/- as compensation made by the appellant to M/s. Sunrise Projects Pvt. Ltd. and who also verified the Bank Account of the said party and has seen that the same amount has been credited in their Account. At the appellate proceedings also the appellant filed the documentary evidences in support of its claim and the same was forwarded to the AO for his comment. The appellant also produced original copy of agreement for verification. After taking into account all the relevant facts including the AO’s report, I am of the view that there is no doubt about genuineness of the above transaction as it was based on agreement and the payment was routed through banking channel. Therefore, the expenditure is attributable wholly and exclusively for the purpose of business of the appellant. In these facts and circumstances of the case as discussed above, the ground raised by the appellant is allowed”.

We have heard the ld. D.R. and perused the material available on record. From the record we find that the ld. CIT(Appeals) was right in upholding the order of Assessing Officer as the assessee in the course of remand proceedings submitted before the AO a copy of agreement held between the assessee and M/s. Sunrise Projects Pvt. Ltd. (executed on 30.01.2004) and also a copy of deed for cancellation surrender and release of contract/share in property (executed on 01.04.2006). From the record, we find that the AO stated in his remand report that the above payment has already been reflected in the Books of Accounts of the assessee as well as of M/s. Sunrise Projects Pvt. Ltd. We find from the record that the transaction was based on agreement and the payment was routed through banking channel. We hold that merely for non-prosecution of original document before the Assessing Officer during the remand proceedings, the transaction per se cannot be doubted with when the Xerox copies with supporting documents were duly furnished before the Assessing Officer. Moreover, the Assessing Officer had not given any adverse remarks on the veracity of said document, except stating that original documents were not submitted before him. We therefore, find no infirmity in the order of ld. CIT(Appeals) and uphold the order of ld. CIT(Appeals). Thus this ground of appeal raised by the Revenue is dismissed.

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