D.C.I.T CIR - 12,KOLKATA, KOLKATA vs. M/S JKM INVESTMENT PVT LTD., KOLKATA

A perusal of the record would reveal that this is the second round of litigation before the Tribunal.

Brief facts of the case are that the assessee has filed its return of income on 30.09.2009 declaring total income at Rs.10,42,91,660/-. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) as well as 142(1) were issued and served upon the assessee. The assessee at the relevant time was engaged in purchase and sale of land. It has claimed a deduction of Rs.82,66,742/- towards leveling and fencing expenses. The ld. Assessing Officer has recorded the following finding on this issue:-

“Disallowance oat of leveling and fencing expenses etc.: It was submitted by the assessee vide letter dated 12.121.2011 that direct expenses of Rs.82,66,742/- were incurred for making the land to saleable condition at Indore during the year under consideration Assessee was asked to produce the supporting documents in respect of the above expenses claimed. The assessee company submitted the ledger account of fencing and leveling expenses at Indore and submitted bills for Rs.25,39,184/-. As the assessee did not furnish the supporting documents in respect of the remaining expenses of Rs.57,27,558/- in spite of several opportunities given, the same is disallowed and added to the total income of the assessee company. Penalty proceedings u/s. 271(l)(c) read with explanation 1 and section 274 are initiated separately for furnishing inaccurate particulars of income. Total disallowance : Rs. 57,27,558/-“.

Dissatisfied with the order of ld. Assessing Officer, assessee carried the matter in appeal before the ld. CIT(Appeals). The ld. 1st Appellate Authority has considered the issue and recorded the (A.Y. 2009-2010) M/s. JKM Investment Pvt. Ltd. finding in paragraph no. 8 of the impugned order. Since this is also a very brief finding, therefore, we deem it appropriate to reproduce it, which reads as under:-

Dissatisfied with the order of ld. CIT(Appeals), the present appeal was directed at the instance of Revenue before the Tribunal. The Tribunal vide its order dated 19.01.2018 allowed this ground. The Tribunal has recorded a very brief finding. The Tribunal was of the view that assessee has not produced any evidence in support of its claim, therefore, ld. CIT(Appeals) was not justified to delete the addition of Rs.55,27,558/-.

This order of the Hon’ble High Court dated 09.04.2019 was not brought to the notice of ITAT either by the parties i.e. assessee or Revenue or by the Registry of the Hon’ble High Court. An application dated 04.09.2023 was filed by the assessee without annexing the Certified Copy of the Hon’ble High Court’s decision. The Tribunal took cognizance on such application and directed the parties to file complete details and also sought

This appeal was listed for hearing on 7th February, 2024, ld. Counsel for the assessee sought an adjournment but we apprise him about the time bound directions given by the Hon’ble High Court for disposal of this appeal and only granted one day adjournment. In this way, this appeal has been heard on 8th February, 2024.

The only issue, which is required to be adjudicated by us, is whether expenditure of Rs.55,27,558/- incurred by the assessee on land leveling and fencing deserves to be allowed to it or not. The case of the assessee is that it is engaged in the purchase and sale of land and, therefore, it has incurred the above expenditure. During the course of assessment proceeding, ld. Assessing Officer has confronted the assessee as to show the genuineness of this expenditure. The total expenditure was of Rs.82,66,742/-. The ld. Assessing Officer found that the assessee has submitted the bills to the extent of Rs.25,39,184/- and he allowed the expenditure to that extent. The balance amount is only depicted in a ledger vide a journal entry. The assessee could not file any bill or voucher. It could not demonstrate on which item this expenditure was incurred. It is pertinent to observe that for claiming expenditure for the purpose of business, then, the assessee is required to demonstrate that such expenditure was incurred wholly and exclusively for the purpose of the business. In order to prove that aspect, the assessee should have filed confirmation from the (A.Y. 2009-2010) M/s. JKM Investment Pvt. Ltd. recipient of such expenditure. It should file the banking details vide which such payment is made through account payee cheque and if not made through account payee cheque, then, justify as to how these payments were made. There should be some demonstrative evidence of carrying out the activity on which the expenditure was incurred. The assessee could produce a report from a valuation authority depicting the nature of land when it was purchased by the assessee and when it was sold. This type of report could be collected from a Registered Valuer or under directions of the ld. Assessing Officer, but no such step was taken by the assessee at the time of assessment proceedings. Before us also, ld. Counsel for the assessee could not take us any other supporting evidence, which was filed before the revenue authorities. The assessee has filed Photostat copies of certain bills as placed vide Annexures B-1 to H-11. A perusal of the Hon’ble High Court’s direction would reveal that Tribunal is not required to entertain the fresh material, which called for comments of the ld. Assessing Officer and the ld. Assessing Officer would only comment if he has cross verified the alleged bills. There is no application under Rule 29 of Income Tax Appellate Tribunal Rules for permission to place on record additional evidence. As per the direction of the Hon’ble High Court, this Tribunal is required to re-appreciate the material already available on the record, which might have not brought to its notice in the first round of litigation, but we record a categorical finding that there is no such material which assessee has filed in the original round of litigation except copy of a ledger showing these expenditures. Such ledger is available on page no.