Compensation cannot be allowed to land owners merely based on bank statement
Facts and Issue of the case
The assessee is partnership firm engaged in the business of builder, promoter and developer. The assessee filed the return declaring total income at Rs.37, 55,870/-. The Assessing Officer (AO) during the course of assessment proceedings observed that the assessee has showed sales in respect of its project “Parijat” at Survey No.1249, Shukrawar Peth and claimed cost of Rs.36, 09,000/- against the sale proceeds of the said project. The assessee entered into the Development Agreement. On perusal of the agreement, it was observed that the assessee paid Rs.36, 09,000/- to seven parties. The AO invoked section 37 of the Act and made the addition of Rs.36, 09,000/-. He also made addition of Rs.11.00 lakh on account of cessation of liability.
Observations by the Court
The Court has heard the DR for the Revenue and perused the material available on record. Before the Tribunal, the assessee contested only the addition of Rs.36, 09,000/- made by the AO and sustained by the CIT(A), hence, we confine ourselves to the sole issue assailed before us. Ongoing through the finding of the CIT(A), we find that the CIT(A) has rightly appreciated that the Development Agreement, do not indicate any consideration. The assessee could not justify the payments made by filing confirmations of the parties. Mere statement that the transactions routed through banking channel does not absolve the assessee to claim deduction. In view of the aforesaid circumstances, we do not find any reason to deviate from the order of the CIT (A). Accordingly, we uphold the order of the CIT(A).
The compensation given to land owners should not be given merely on the basis of bank statement.Home-Developers-Vs-DCIT-ITAT-Pune