DCIT 2(1)(1), MUMBAI vs. CHITRA REALTY LTD, MUMBAI

आदेश / O R D E R PER R.C.SHARMA (A.M):

This is an appeal filed by the Revenue against the order of CIT(A)- 4, Mumbai dated 16/12/2015 for A.Y.2010-11 in the matter of order passed u/s.143(3) of the IT Act. 2. Following grounds have been taken by the Revenue:-

1. The order of the CIT(A) is opposed to law and facts of the ease.

2. On the facts and in the circumstances of the case and in the law, the CIT(A) has erred in directing The disallowance of Rs. 13,75,16,759/- by admitting additional evidences, in contravention of provisions of Rule 46A & without calling for remand report.

M/s. Chitra Realty Ltd., 3. We have heard rival contentions and carefully gone through the orders of the authorities below and found from record that AO has disallowed expenditure of Rs.13,75,16,759/- by observing as under:- 3. During the year under consideration, the assessee company was engaged in the business of property developers. 4.1 It is seen from the Profit & Loss Account, the assessee has debited an amount of Rs.34,44,13,707/- towards construction cost incurred during the year. During the course of assessment proceedings, the Authorized Representative of the Assessee was asked to submit the details of the expenses and also submit the bank statement in respect of these payments. \ The Authorized Representative of the Assessee vide letter dated 07.12.2002 submitted the details in respect of expenses incurred amounting to Rs.20.68,96,948/- and expressed their inability to produce remaining details stating that due to a major fire at the companies premises substantial original challans and receipts have been destroyed. During the course of hearing on 25.02.2013, the Authorized Representative of the Assessee was specifically asked to produce bank statements showing expenses. However, in spite of sufficient time and opportunity given, the assessee has failed to remaining details of expenses amounting to Rs.13,75,16,759/-. The contention of the assessee that they were unable to produce remaining details due to fire is not acceptable because during the course of hearing on 25.02.2013, the Authorized Representative of the Assessee was asked to submit the copies of the bank accounts. Since all the expenses are incurred by the assessee through bank, the assessee can very well show their expenses in bank accounts. The assessee even failed to submit the bank statement. 4.2 In view of the above, the expenses made towards cost of construction as bogus and unexplained expenditure and the same is hereby held to be not liable for any sort of deduction. As these expenses are included by the, Stock, the closing stock for F.Y. 2009-10 is re- worked out as under: Opening Inventory 29,19,28,018 Add: Cost of construction claimed by 53,51,24,450 the assessee Less: Expenses disallowed as discussed 13,75,16,759 39,76,07,691 above Revised closing inventory 68,95,35,709 4.3 Having arrived at the revised closing inventory in respect of the assessee's project at Rs. 68,95,35,709/-, the same shall be carried forward to subsequent year and the income in the year of completion of the said project shall be calculated based on this revised closing inventory.