Due to nature of additional evidence adduced, matter remanded back to AO. ITAT
Due to nature of additional evidence adduced, matter remanded back to AO. ITAT
Search & seizure undertaken at premises of Shri Ajay Bafna. Incriminating documents were found. In return, assessee claimed legal expenses. AO disalloowed same. On appeal CIT(A) made disallowance of travelling expenses. On appeal ITAT held, additional evidence filed by assessee may be admitted & sent back to AO to adjudicate issue after considering the nature of additional evidence filed by assessee & to decide issue in accordance with law.-500521
Facts in Brief:
1. Search and seizure was undertaken at the premises of Shri Ajay Bafna.
2. Incriminating documents belonging to the assessee were found and seized.
3. Notice was issued for recording satisfaction.
4. In response assessee furnished return of income declaring total income at Rs.Nil.
5. Assessing Officer held, it is seen that the assessee has claimed legal expenses of Rs.1,81,180/- consisting of Rs.1,25,000/- paid to Advocate towards legal & professional fees. Since the expenditure related to formation of the company, the same was disallowed and an addition of Rs.1,25,000/- was made. Another addition was made on account of interest paid and disallowed and capitalized to work in progress at Rs.98,13,699/-.
6. On appeal, CIT(A) upheld the disallowance of travelling expenses of Rs.14,80,366/-.
On appeal ITAT held,
7. The explanation of the assessee before the CIT(A) was that the expenses were incurred in connection with business activity carried on by the assessee. However, the assessee had failed to establish the business exigency for incurring the said expenses.
8. In the absence of the evidence having been filed before the authorities below, the addition was made in the hands of assessee.
9. However, now before us, the assessee had made a request for submissions of additional evidence in order to prove the business exigency of the expenditure incurred by it along with copies of bills and vouchers maintained in the regular course of carrying on the business.
10. In view of the provisions of Rule 29 of ITAT Rules, we are of the view that the additional evidence filed by the assessee may be admitted and sent back to the file of Assessing Officer to adjudicate the issue after considering the nature of additional evidence filed by the assessee and to decide the issue in accordance with law.
11. Reasonable opportunity of being heard to the assessee shall be provided before adjudicating the issue. Consequently, the issue on merits is set-aside to the file of Assessing Officer. The grounds of appeal on merits are thus, allowed for statistical purposes.
12. During the course of hearing, the assessee furnished an application for admission of additional evidence as in assessment year 2008-09 and following the same parity of reasoning, we remit this issue also back to the file of Assessing Officer to decide the same in line with our directions.
13. The learned Authorized Representative for the assessee pointed out that though no additional grounds of appeal in respect of non-abatement of the assessment proceedings, has been filed, but the ground of appeal No.1 raised by the assessee may be treated for the said purpose. We find no merit in the stand of assessee in this regard, where the return of income for the year under appeal was e-filed on 15.06.2009 and the search proceedings took place on 06.02.2010. Thus, the ground of appeal No.1 raised by the assessee is dismissed.
14. In the result, all the appeals of the assessee are partly allowed.
Case Reference- Income Tax Appellate Tribunal - Pune M/S. Kranti Realtors Private ... vs Assessee
