SRI. S. CHANDRASHEKAR,BANGALORE vs. PR. CIT - 7, BANGALORE

This is an appeal by the assessee against the order dated 23.03.2016 of the Pr. CIT (CIT), Bengaluru-7, Bengaluru, passed under section 263 of the Income Tax Act, 1961 (hereinafter called ‘the Act’), inrelation to Assessment Year 2009-10.

The assessee is an individual and is engaged in the business of carrying on real estate transactions. He was also a partner in M/s. Mookambika Associates, Mookambika Promoters and Mookambika Developers carrying on business in purchase of lands and developing same into sites for residential purpose. There was a search and seizure operation carried out under section 132 of the Act on 06.01.2010. The Order of Assessment dated 30.12.2010 was passed under section 153A of the Act determining the total income of the assessee at Rs.75,87,965/-.

The Pr.CIT in exercise of his powers under section 263 of the Act was of the view that the aforesaid order of the AO dated 30.12.2010 was erroneous and prejudicial to the interest of the Revenue in as much as the AO disallowed only a sum of Rs.8 lakhs under section 40(a)(ia) of the Act in respect of interest payable to “nipmo”, ignoring the fact that the interest payable to “nipmo” was Rs.29,18,000/- and therefore the disallowance under section 40(a)(ia) of the Act should have been Rs.29,18,000/-. Besides the above, the CIT was also of the view that the AO failed to examine the genuineness of property development expenses amounting to Rs.27 lakhs, commission expenses of Rs.9,28,000/- and salary expense of Rs.4,92,600/- which were claimed to have been incurred in cash. The AO ought to have also examined the aforesaid payments made in cash under section 40A(3) of the Act. The CIT passed an order under section 263 of the Act dated 30.12.2013 directing addition of Rs.29,18,000/- and disallowance expenses of Rs.41,26,600/-.

The assessee filed an appeal before ITAT and by its order dated 29.05.2014, the ITAT was of the view that the assessee was not afforded proper opportunity to produce evidence in support of his claim and hence the ITAT set aside the aforesaid order of the CIT and directed the CIT to pass fresh order, after affording assessee opportunity of being heard and with specific direction that the assessee will cooperate and comply with the requirements in completing the proceedings before the CIT.

In the set aside proceedings before the CIT under section 263 of the Act, the assessee did not participate in the proceedings and in the impugned order of the CIT in paragraphs 8 to 15, these instances of non appearance and non co-operation on the part of the assessee have been set out. The CIT has elaborated on the various opportunities that were given to the assessee by him and as to how despite such opportunities, the assessee did not choose to avail any of the opportunities so afforded by the CIT. The CIT was of the view that in view of the failure of the assessee to produce any evidence or submissions in the set aside proceedings, he had no other option but to agree with the findings given in the first order passed under section 263 of the Act dated 20.03.2013.

Aggrieved by the aforesaid order of the CIT, the assessee has preferred the present appeal before the Tribunal.

Despite several opportunities afforded, neither the assessee nor any Authorized Representative appeared for the hearing. The notices sent to the assessee have all been returned with the postal endorsement “left”. In these circumstances, we proceed to decide the appeal of the assessee on the basis of the material available on record.

We find that the impugned order under section 263 of he Act which reiterates the earlier order passed under section 263 of the Act dated 20.03.2013, the CIT has clearly set out the circumstances under which the additions were suggested to the determination of total income by the Pr. CIT in exercise of his powers under section 263 of the Act. In the grounds of appeal, the assessee has not brought out any facts which would require reconsideration of the impugned order of the CIT. We, therefore, find no merits in this appeal and accordingly dismiss this appeal.

In the result, the appeal by the assessee is dismissed.