No Deduction Towards Exp. If Assessee Failed to Provide Any Proof in Support of Exp. Claimed | ITAT

Case Details: Uday Jawahar Kotnis vs. Income-tax Officer - [2024] 166 taxmann.com 104 (Pune - Trib.)

Judiciary and Counsel Details

• R.K. Panda, Vice President & Vinay Bhamore, Judicial Member
• V.L. Jain for the Appellant.
• Sourabh Nayak for the Respondent.

Facts of the Case

During the relevant assessment year, the assessee acted as a consenting party to the sale transaction of land. A partial amount was received by the assessee subsequent to the completion of such transaction. However, after a certain period, an order was passed by the District Superintendent of Land Records restoring the names of earlier owners. Accordingly, the purchasers filed a civil suit against the assessee and the sellers.

With respect to the amount received as consentor, the assessee claimed that no income was accrued to the assessee but to have a proper disclosure of the transaction, the assessee disclosed the amount under the head income from other sources and claimed deduction under section 57 of the equal amount.

During the assessment proceedings, the Assessing Officer (AO) disallowed the deduction under section 57 in the absence of evidence in support of such a claim.

On appeal, CIT(A) upheld the order of AO, and the matter reached before the Pune Tribunal.

ITAT Held

The Tribunal held that the claim of the assessee, that the AO made the addition, was not correct because he himself declared the income and, during the assessment proceedings, could not substantiate the deduction claimed by him. It was also observed that the case of the assessee was selected under CASS for the reason of claiming a deduction under the head ‘income from other sources’. Therefore, it was the duty of AO to verify the claim of deduction made by the assessee in his return of income.

In the instant case, the assessee failed to provide any proof in support of the expenses or deductions he claimed. The legislature has provided certain procedures under the Income Tax Act, and the assessee cannot choose to show income or expenses according to his own choice.

Therefore, the AO did not commit any error in disallowing the expenses claimed by the assessee in the name of coordination and settlement expenses in the absence of any supporting evidence.

Further, the assessee’s contention that due to the pending litigation, the income was not accrued to him, therefore, not real income & its declaration was only for the purpose of disclosure, it was held that the income was already appearing in Form 26AS in the shape of principal amount & its TDS.

The civil suit of forgery was filed by the purchasers only after 3 years of the sale of the property, till then the assessee was enjoying the amount without making payment of income tax. Even after the intimation of the civil suit against him the assessee did not bother to refund the amount to the purchaser & has also filed a complaint against the purchaser for recovery of the balance amount from the purchaser. It was obvious that till date the authority did not cancel the sale deed and the assessee was trying to avoid the payment of income tax in the name of the civil suit.

Therefore, it appeared that the assessee was working with mala fide intention and did not have clean hands. The assessee also tried to misguide the income tax department by claiming a deduction in the name of coordination and settlement expenses for which he does not have any supporting documents. Accordingly, the disallowance by the AO was upheld.

List of Cases Referred to

• CIT v. Balbir Singh Maini [2017] 86 taxmann.com 94/251 Taxman 202/398 ITR 531 (SC) (para 9 and 14),
• Rohan Projects v. Dy. CIT ITA No.306/PUN/2015. (para 9)
• CIT v. Shiv Prakash Janak Raj & Co. (P.) Ltd. [1996] 88 Taxman 536/222 ITR 583 (SC) (para 12).