Top Stories AO made No Reference to any Incriminating Material while Making Addition on TDR Transactions: ITAT dismisses Revenue’s Appeal [Read Order] AO made No Reference to any Incriminating Material while Making Addition on TDR Transactions: ITAT dismisses Revenue’s Appeal By Aiswarya Krishnadas – On April 8, 2024 5:28 pm – 3 mins read

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) dismissed the Revenue’s appeal as the Assessing Officer ( AO ) made no reference to any incriminating material while adding on TDR transactions. Briefly stated the facts of the case are that a search and seizure operation under Section 132 of the Income Tax Act, 1961 was conducted on 21.07.2016 at the residential as well as office premises of M3M Group of cases. Among the documents seized contained information pertaining to assessee and after recording his satisfaction statutory notices were issued and served upon the assessee.  During the course of the scrutiny assessment proceedings referring to the trial balance as the incriminating material found at the time of search, the AO raised specific query in relation to the under valuation of the transfer of development rights.

After appreciating the submissions of the assessee the AO concluded that the difference between the DVO and as per the books of accounts of the assessee is the income of the assessee and made addition of Rs.2296343/- in A.Y. 2011-12 and Rs.1639995/- in A.Y. 2012-13. The AO noticed that the assessee has received reimbursements from the M3M Group which were not being routed through the P & L account. The assessee was asked to submit details of such reimbursement the assessee was asked to submit details of such reimbursement. The assessee was also asked to show cause why TDS was not deducted from the payment to HUDA. The assessee explained that it has given rights to M3M India Limited to develop land covered in the agreement on the condition that the transferee / developee has to bear and reimburse all expenses at actual basis. It was explained that the assessee has not claimed expenditure of EDC. The explanation of the assessee was dismissed by the AO who completed the assessment by making disallowance of Rs.1,47,21,000/- in A.Y.2011-12 and Rs.3,50,69,720/- in A.Y. 2012-13.

The Assessee agitated the matter before the CIT (A) strongly contending that both the additions are devoid of any incriminating material found at the time of search. It was convinced that transactions of TDR cannot be considered as incriminating as the same are part of regular books of accounts and income tax return.

Further observed that the AO has made examination of transactions recorded in the books of account. The bench observed that the addition on account of transfer of development rights is concerned the conclusion of the AO that “difference between the valuation of the property as per DVO and as per the books of account of the assessee being added to the income of the assessee” is self-explanatory in the sense while making the addition no reference is made to any incriminating material. The only basis is the difference between the valuation report and the value shown in the books of account. The Coram of Saktijit Dey ( Vice President ) and N.K Billaiya ( Accountant member ) observed that the addition on account of EDC to HUDA is concerned the same is made on examination of the entries in the books of account, therefore, this is also devoid of any incriminating material. ITAT does not find any reason to interfere with the findings of the CIT (A).  The appeals filed by the revenue were dismissed.