आयकर अपीलीय अधिकरण, अहमदाबाद नयायपीी

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’ C’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And SHRI TR SENTHIL KUMAR, JUDICIAL MEMBER आयकर अपील स.ं /ITA No. 1686/AHD/2019 धििाधरण वरध/Asstt. Year: 2014-2015

(Applicant) (Respondent)

Assessee by : Shri Parin Shah, AR Revenue by : Shri Ashok Kumar Suthar, Sr. DR सुिवाई की तारीख/Date of Hearing : 25/01/2024 घोरणा की तारीख /Date of Pronouncement: 02/02/2024 आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:

The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-7, Ahmedabad, arising in the matter of assessment order passed under s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2014-2015.

2. The only effective issue raised by the assessee is that the Ld. CIT(A) erred in confirming the addition made by the AO for Rs. 1,74,00,000/- on account of bogus expenses.

3. The facts in brief are that the assessee in the present case is an individual and deriving his income from the business of construction and development of land. The AO in the instant case initiated the proceedings u/s 147 of the Act based on the report received from the Principal DIT(Investigation). As per the report there were certain parties engaged in providing bogus labour bills. The assessee has taken labour expense bills from these parties detailed as under:

3.1 Thus, the AO treated the same as bogus expenses and added to the total income of the assessee.

4. Aggrieved assessee preferred an appeal to the Ld. CIT(A), who also confirmed the order of the AO. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us.

5. The learned AR before us filed a paper book running from pages 71 to 202 and contended that the expenses in dispute were incurred in the earlier year but the payment to that effect was made in the year under consideration. The Ld. AR in support of his contention drew our attention on pages 55 to 59 of the paper book where the ledger copies of the parties were placed and the bank statement demonstrating payment to such parties which is place on pages 60 to 64. As per the Ld. AR, since the expenses were incurred in the earlier year and capitalized in the value of the land and no deduction of whatsoever was claimed in the P & L account, the question of making the disallowance does not arise. As per the Ld. AR, the value of the land was still shown in the books of accounts even as on date. Thus, the Ld. AR submitted that since no deduction has been claimed for the impugned expenses, the question of making disallowance does not arise.

Accordingly, the Ld. AR prayed to delete the addition made by him.

6. On the contrary, the Ld. DR submitted that the expenses incurred by the assessee were bogus in nature. As per the Ld. DR, the labour contractor will not wait for the payment till the year under consideration. It was also pointed out by the Ld. DR that surprisingly; the labour expenses were incurred by the assessee in the name of 5 parties and the payment to all of them were made in the year under consideration which is highly improbable. Accordingly, the Ld. DR vehemently supported the order of the authorities below.

7. We have heard the rival contentions of both the parties and perused the materials available on record. Admittedly, the impugned expenses incurred by the assessee were not claimed as deduction in the profit and loss account in the year in dispute. As such the expenses incurre