What did the Tribunal hold?

The Tribunal found that while the assessee had provided evidence, the cash payments made it difficult to rule out inflated expenses. Therefore, a lumpsum disallowance of Rs. 15 lakhs was deemed appropriate out of the total claim.

The Revenue appealed the CIT(A)'s order allowing the assessee's claim for improvements and additions. The assessee had provided construction agreements and payment details, but the payments were made in cash, raising concerns about inflated expenses.

What were the issues?

Whether the CIT(A) erred in allowing the full claim for improvements and additions when payments were made in cash, and if a partial disallowance is justified.

ITO vs Farzana Pattan, Chittoor | ITAT Hyderabad 2022

Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad

Before: Shri S.S. Godara & Shri Laxmi Prasad Sahu

For Appellant: Shri E. Phalguna Kumar

For Respondent: Shri Rohit Majumdar

Hearing: 13.01.2022Pronounced: 24.02.2022

Assessment Year: 2013-14 Income Tax Officer, Vs. Smt. Farzana Pattan, Ward – 2, Palamaner, Chittoor. Chittoor District. PAN : ANZPP3045N. (Appellant) (Respondent) Assessee by: Shri E. Phalguna Kumar. Revenue by: Shri Rohit Majumdar. Date of hearing: 13.01.2022 Date of pronouncement: 24.02.2022 O R D E R This Revenue’s appeal for A.Y. 2013-14 arises from the Commissioner of Income Tax (Appeals), Tirupati’s order dated 02.08.2018 in case No.10012/2016-17/CIT(A)/TPT involving proceedings u/s 143(3) of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

Coming to the Revenue’s sole substantive grievance that the CIT(A) has erred in law and on facts in allowing the assessee’s improvements and additions as claim of Rs.1,67,24,187/-, we note that the corresponding lower appellate discussion to this affect reads as under :

4.2…..

We have given our thoughtful consideration to vehement rival contentions against and in support of the correctness of the CIT(A)’s impugned lower appellate action and find no reason to accept either party’s submissions in entirety. This is primarily for the reason that although the assessee had successfully declared in the preceding financial years to have made the part of constructions of the sheds in issue along with all the necessary evidence of the corresponding construction agreements, contractor names and addresses as well as the payments made in issue, the fact also remains that she has made all the payments in cash wherein possibility of inflation of expenses cannot be per se ruled out. Faced with this situation, we deem it appropriate that a lumpsum disallowance of Rs.15 lakhs out of Rs.1,67,24,187/- will be just and proper with a rider that the same shall not be treated 4 as precedent in any other case. Necessary computation shall fallow as per law. The CIT(A)’s directions deleting the impugned disallowance are upheld to the extent of Rs.1,52,24,187/- in other words.

No other ground has been pressed before us.

This Revenue’s appeal is partly allowed in above terms.

Order pronounced in the Open Court on 24th February, 2022.

INCOME TAX OFFICER, WARD-2, CHITTOOR vs. FARZANA PATTAN, CHITTOOR

What did the Tribunal hold?

What were the facts?

What were the issues?

Which sections of the Income-tax Act were involved?

Recent GST High Court judgments