K.C.P.Shivaraman, CHENNAI V. DCIT, Trichy

CO 70/CHNY/2015

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2918 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 21 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 29-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S SANKARALINGAM
• Assessee Lawyers: S SRIDHAR
• Keywords: Unexplained cash credit; Business income; Earning of tax free income; Ignorance of law
• Section: 40A(3); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI (CAMP: MADURAI) . . . , ! . '#'$ , % !& ' [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I .T.A. NOS.1155 & 1156/MDS/2015 C.O.NOS. 69 & 70/ MDS/2015 (IN ITA NOS. 1155 & 115 6/MDS/2015) / ASSESSMENT YEAR : 2008-2009 & 2009-2010 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1) TRICHY VS. SHRI. K.C.P. SHIVARAMAN, NO.506, ARASEE LODGE, JAWAHAR BAZAAR, KARUR [PAN AAXPS 4844F] ( () / APPELLANT) (RESPONDENT/ CROSS OBJECTOR) DEPARTMENT BY : SHRI. S. SANKARALINGAM, CIT ASSESSEE BY : SHRI. S. SRIDHAR, ADVOCATE /DATE OF HEARING : 15-02-2017 /DATE OF PRONOUNCEMENT : 20-04-2017 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE ARE APPEALS AND CROSS OBJECTIONS FILED BY T HE REVENUE AND ASSESSEE RESPECTIVELY FOR ASSESSMENT YEARS 2008 -09 AND 2009- 2010. ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 2 -: 2. APPEAL AND CROSS OBJECTION FOR ASSESSMENT YEAR 2008 -09 ARE TAKEN UP FIRST FOR DISPOSAL. REVENUE IN ITS APPEAL HAS RAISED THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LEARNED CIT(APPEALS) IS CONTRARY T O THE LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2(I) CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AD U/S 40A(3) WITHOUT APPRECIATING THAT THE ASSESSEE FAILED TO PROVE ANY BUSINESS EXPEDIENCY OR OTHER FACTS FOR MAKING STAGGERED PAYMENTS IN CASH. (II) CIT(A) FAILED TO OBSERVE THE DECISION IN THE C ASE OF CIT VS. TIRUPATI TRADING CO, KOLKATA HIGH COURT IN WHICH CASE THE TRIBUNAL CONFI RMED THE ADDITION MADE BY THE ASSESSING OFFICER HOLDING THAT THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE GENUINESS OF CASH PAYMENT AND WAS ALSO UNABLE TO EXPLAIN WHETHER ANY UNAVOIDABLE EXCEPTIONAL CIRCUMSTANCES COVERED UNDER RULE 6DD OF THE IT RULE S. (III) CIT(A) FAILED TO OBSERVE THAT THE ASSESSEE WA S ALSO UNABLE TO EXPLAIN BEFORE THE AO WHETHER ANY UNAVOIDABLE/ EXCEPTIONAL CIRCUMSTANCES COVERED UNDER RULE 6DD OF THE I.T'RULES, 1961. (IV) THE CIT(A) ERRED IN DELETING THE ADDITION REFE RRING RULE 6DD(J) WHICH EXEMPTS THE PURVIEW OF SEC. 40A(3) WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSE, BUT THE ASSESSEE HAS NOT SOUGHT ANY EXEMPTION STATING THAT THE CASH PAYMENTS WERE MADE ON THE DAY ON WHICH BANKS ARE CLOSED. (V) CIT(A) ERRED IN ACCEPTING THE CONTENTION OF THE ASS ESSEE RELYING ON THEERSTWHILE EXEMPTION CLAUSE (J) OF RULE 6DD BY WHICH EXEMPTION FROM DISALLOWANCE ULS 40A(3) IS AVAILABLE TO TAX PAYER ONCE IT IS ESTABLISHED TH AT THE PAYMENT COULD NOT BE MADE BY CROSS CHEQUE OR DRAFT DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES, SINCE THE CLAUSE (J) OF RULE 6DD HAS BEEN OMITTED BY THE IT (FOURTEENTH AMENDMENT) RULES 1995 W.EF. 27.5.1995 A ND THEREFORE PROVISIONS OF THE SAID RULE IS NOT APPLICABLE IN THE ASSESSEE' S CASE IN THE YEAR UNDER CONSIDERATION. (VI) CIT(A) FAILED TO OBSERVE THE DECISION OF HON' BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF SMT. CH. MANGAYAMMA VS. UNION OF INDIA AND OTHERS (239 ITR 687), WHEREIN CONSIDERING THE CONSTITUTIONAL VALIDITY OF THE PROVISIONS OF S.40A(3) OF ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 3 -: THE ACT IN THE LIGHT OF THE ABOVE AMENDMENT MADE TO RULE 6DD OF THE IT RULES, THE HON'BLE HIGH COURT OBSERVED AND HELD AT PAGE 69 3 OF THE REPORTS (239 ITR) AS FOLLOWS: 'IN VIEW OF THE AFORESAID PRINCIPLES AS LAID DOWN AND THE OBJECT AS SOUGHT TO BE ACHIEVED U/S 40A(3) OF THE ACT, ANY CHANGES MADE IN THE SUBORDINATE LEGISLATION WOULD NOT IN ANY WAY AFFECT THE SUBSTANTIVE PROVISION. MOREOVER, BY DELETING THE CIRCUMSTANCES AS CONTEMPLATED EARLIER, VIZ., SUB CLAUSES (1) AND (2) OF RULE 6DD(J) THE OBJECTS OF CURBING THE CIRCULATION OF BLACK MONEY AND REGULATING THE BUSINESS TRANSACTIONS BECOME MORE STRENGTHENED AND IT AVOIDS ANY UNDUE ADVANTAGE BEING TAKEN BY UNSCRUPULOUS ASSESSEES OR LITIGATION BEING MULTIPLIED.' [VII] CIT(A) FAILED TO OBSERVE THAT IN THE ABOVE D ECISION THE COURT FURTHER OPINED THAT 'ONE CANNOT PLEAD IGNORANCE OF LAW AND MAKE C ASH PAYMENTS CONTRARY TO LAW. IT IS TOO LATE IN THE DAY TO ACCEPT ANY SUCH PROPOSIT ION AND THAT IN THE PRESENT DAY BANKING SCENARIO, THE MODE OF PAYMENT BY WAY OF CR OSSED CHEQUES OR DEMAND DRAFTS CANNOT BE SAID TO BE ONEROUS DUTY CAS E ON AN ASSESSEE WHICH CAN BE MADE A FOUNDATION FOR ATTACKING THE VALIDITY OF THE SAI D SECTION.' (VIII) CIT(A) FAILED IN ALLOWING THE APPEAL WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT MENTIONED IMPRACTICABILITY OR IMPO SSIBILITY OF PAYMENT BY CHEQUE AND OTHER COMPELLING REASONS WHICH ENABLE IT TO MAKE PAYMENT IN CASH. (IX) CIT(A) ERRED IN ALLOWING THE APPEAL WITHOUT APPREC IATING THE FACT THAT NONE OF THE CLAUSES UNDER RULE 6DD OF INCOME TAX RU LES APPLY IN THE ASSESSEE'S CASE . 3(I) CIT(A) ERRED IN PARTLY DELETING DISALLOWANCE OF EXEMPTION OF DIVIDEND INCOME ATTRIBUTABLE TO EXPENDITURE FOR EARNING OF D IVIDEND INCOME. (II) CIT(A) HAS FAILED TO NOTE THAT THE ASSES SEE HAS NOT PROVED HIS CONTENTION THAT THAT THE INVESTMENTS WERE MADE ON HIS OW N FETCHED THE DIVIDEND INCOME WITHOUT INVOLVING ANY INCURRING OF EXPENDITU RE. 4 (I) CIT(A) HAS FAILED TO NOTE THAT THE ASSESSEE HAS NOT SUBSTANTIATED WITH NECESSARY PROOF TO THE SATISFACTION OF THE AD TO PROVE HIS CLAIM THAT THE CREDITS IN THE CURRENT ACCOUNT ARE FIXED DEPOS ITS OF EARLIER YEARS. (II) CIT(A) FAILED TO APPRECIATE THAT THE ONUS OF P ROVING THE SOURCE OF CREDIT IN THE CURRENT ACCOUNT IN BANK L IES WITH THE ASSESSEE AND SAME HAS NOT BEEN DISCHARGED BY THE ASSESSEE AND HENCE TREATING THE ENTIRE AMOUNT IN THE BANK ACCOUNT WAS TREATED AS UNEXPLAINED IN THE HANDS OF THE ASSESSEE UNDER SECTION 68 OF THE ACT IS JUSTIFIED. ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 4 -: 2. BRIEF FACTS LEADING TO THIS APPEAL ARE THAT ASSESS EE RUNNING A LODGE AND REAL ESTATE BUSINESS HAD FILE HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DISCLOSING INCOME OF B87,0 5,011/- THE ASSESSMENT WAS COMPLETED ON 26.03.2013 U/S.143(3) R .W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ASSESS ING THE INCOME AT B1,81,40,652/- INTER-ALIA MAKING THE FOLLOWING DISA LLOWANCE. 1 LAND PURCHASE UNDER THE HEAD BUSINESS INCOME 42,94,062 2 CASH PAYMENT FOR LAND PURCHASE UNDER THE HEAD BUSINESS INCOME 21,75,000 3 TRAVELLING EXPENSES UNDER THE HEAD BUSINESS INCOME 17,46,034 4 EXPENSES IN RESPECT OF EXEMPT INCOME UNDER THE HEAD OTHER SOURCES 10,00,000 5 LOAN TAKEN FRO M KARUR KCP PACKAGING LTD UNDER THE HEAD OTHER SOURCES. 2,20,545 THE SAID ORDER WAS SET ASIDE BY THE LD. COMMISSION ER OF INCOME TAX- I, TRICHY INVOKING POWERS VESTED ON HIM U/S.263 OF THE ACT. LD. ASSESSING OFFICER WAS DIRECTED TO VERIFY THE CLAIM MADE BY THE ASSESSEE THAT IT HAD RECEIVED B18,74,70,100/- FROM ONE M/S. PACIFICA INFRASTRUCTURE (CHENNAI) PRIVATE LIMITED. DURING T HE COURSE OF THE FRESH PROCEEDINGS, LD. ASSESSING OFFICER VERIFIED B OOKS OF ACCOUNTS OF THE ASSESSEE WITH LEDGER COPY OF M/S. PACIFICA INFR ASTRUCTURE (CHENNAI) PRIVATE LIMITED AND FOUND THIS TO BE SATISFACTORY. HOWEVER, AS PER LD. ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 5 -: ASSESSING OFFICER ASSESSEE HAD ACQUIRED A LAND FOR B1,02,71,500/- ON 03.10.2007, OUT OF WHICH B36,500/- WAS PAID IN CASH . LD. ASSESSING OFFICER APPLIED SEC. 40A(3) OF THE ACT AND DISALLOW ED B36,500/-. FURTHER, AS PER LD. ASSESSING OFFICER THERE WAS A C REDIT OF B10,77,178/- IN ASSESSEES CURRENT ACCOUNT AND ASSESSEE COULD N OT PROVE THE SOURCE. SO, IN THE FRESH ASSESSMENT FRAMED U/S.14 3(3) R.W.S 263 OF THE ACT IN ADDITION TO THE ORIGINALLY ASSESSED INCO ME OF B1,81,40,652/-, TWO MORE ADDITIONS WERE MADE, ONE BEING B36,500/- FOR CASH PAYMENTS AGAINST LAND PURCHASES AND THE OTHER BEIN G B10,77,188/- FOR UNEXPLAINED DEPOSITS IN ASSESSEES CURRENT ACC OUNT WITH KARUR VYSA BANK, LTD. 3. AGGRIEVED, ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS). LD. CIT(A) W AS OF THE OPINION THAT ORIGINAL ASSESSMENT HAVING BEEN SET ASIDE BY THE LD. COMMISSIONER OF INCOME TAX U/S.263 OF THE ACT, LD. ASSESSING OFFICER WAS OBLIGED TO REDO THE ASSESSMENT IN TOTO. THEREF ORE, ACCORDING TO HIM, LD. ASSESSING OFFICER MADE A MISTAKE IN BEGINN ING HIS COMPUTATION CONSIDERING INCOME AS ORIGINALLY ASSESSED. AS PER THE LD. CIT(A), THE LD. ASSESSING OFFICER OUGHT TO HAVE STARTED FROM T HE INCOME OF B87,05,011/- ORIGINALLY RETURNED BY THE ASSESSEE A ND MADE REQUIRED ADDITIONS/DISALLOWANCES. FURTHER AS PER LD. COMMISS IONER OF INCOME ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 6 -: TAX (APPEALS) IT WAS NOT FEASIBLE TO ADJUDICATE ON THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER IN THE ORIGINAL ASSESS MENT SINCE IT WAS SET ASIDE BY THE LD. CIT U/S.263 OF THE ACT. NEVERTHEL ESS, ASSESSEE HAVING RAISED VARIOUS GROUNDS RELATING TO ADDITIONS MADE I N THE ORIGINAL ASSESSMENT, LD. COMMISSIONER OF INCOME TAX DEALT W ITH SUCH GROUNDS. LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED TH E ADDITIONS MADE BY THE LD. ASSESSING OFFICER U/S.40A(3) OF THE ACT AS WELL AS THE DISALLOWANCE OF EXPENDITURE ATTRIBUTABLE TO EXEMPT DIVIDEND INCOME CLAIMED BY THE ASSESSEE WHICH WERE MADE BY THE LD. ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT. HE ALSO DELETED THE FU RTHER DISALLOWANCE OF B36,500/- UNDER SECTION 40A(3) OF THE ACT AND ADDIT IONS FOR CREDITS IN THE CURRENT ACCOUNT MADE BY THE LD. ASSESSING OFFIC ER IN THE FRESH ASSESSMENT. 4. NOW BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE STR ONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT AGGREGATE CASH PAYMENT OF B22,11,500 /- (B21,75,000/- MADE IN THE ORIGINAL ASSESSMENT AND B 36,500/- MADE IN THE FRESH ASSESSMENT) FOR LAND PURCHASE DISALLOWED BY THE LD. ASSESSING OFFICER U/S.40A(3) OF THE ACT WAS DELETED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CITING A REASO N THAT THE PAYMENTS WERE GENUINE AND MADE DUE TO BUSINESS EXPE DIENCY. AS PER ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 7 -: LD. DEPARTMENTAL REPRESENTATIVE LD. COMMISSIONER O F INCOME TAX (APPEALS) HAD RELIED ON CLAUSE (J) OF 6DD OF INCOM E TAX RULES, WHICH WAS NOT APPLICABLE, SINCE ASSESSEE COULD NOT SHOW T HAT THE PAYMENTS WERE EFFECTED ON A BANK HOLIDAY. FURTHER, AS PER LD . DEPARTMENTAL REPRESENTATIVE LD. COMMISSIONER OF INCOME TAX (APP EALS) HAD ALSO DELETED DISALLOWANCE U/S.14A OF THE ACT IGNORING DI VIDEND INCOME OF B13,01,054/- CLAIMED BY THE ASSESSEE AS EXEMPT. IN SO FAR AS, CREDIT OF B10,77,188/- IN THE CURRENT ACCOUNT OF THE ASSE SSEE WAS CONCERNED, LD. DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD ALLOWED TH E CLAIM WITHOUT VERIFYING THE FACTS. FURTHER, ACCORDING TO HIM, WH ETHER CREDITS REPRESENTED MATURITY OF FIXED DEPOSITS MADE BY THE ASSESSEE IN THE FINANCIAL 2005-06 WAS NOT VERIFIED BY THE LD. COMM ISSIONER OF INCOME TAX (APPEALS), BEFORE GIVING RELIEF TO THE ASSESSEE . 5. CONTRA, LD. AUTHORISED REPRESENTATIVE SUBMITTED THA T THE ONLY ADDITIONS MADE BY THE LD. ASSESSING OFFICER DURING THE IMPUGNED ASSESSMENT WERE B36,500/- BEING CASH PAYMENT FOR LA ND PURCHASE AND B10,77,188/- FOR UNEXPLAINED CREDITS THE CURRENT A CCOUNT WITH KARUR VYSA BANK LIMITED. AS PER LD. AUTHORISED REPRESENT ATIVE LD. ASSESSING OFFICER HAD STARTED THE COMPUTATION FROM THE INCOM E ASSESSED U/S.143 (3) R.W.S. 147 ON 26.03.2013, WHICH ASSESSM ENT WAS SET ASIDE ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 8 -: BY THE LD. COMMISSIONER OF INCOME TAX IN A PROCEEDI NG U/S.263 OF THE ACT. AS PER LD. AUTHORISED REPRESENTATIVE LD. CIT HIMSELF HAD NOTED THAT COMPUTATION OF INCOME HAD TO START FROM THE I NCOME RETURNED BY THE ASSESSEE AND NOT FROM INCOME ASSESSED U/S.143(3 ) R.W.S. 147 OF THE ACT. IN SO FAR AS CASH PAYMENT MADE FOR LAND P URCHASE IS CONCERNED, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT PROVISO TO SEC.40A(3) OF THE ACT CLEARLY ALLOWED SUCH CASH PAY MENTS FOR BUSINESS EXPEDIENCY AND RULE 6DD WAS NOT EXHAUSTIV E. IN SO FAR AS CASH DEPOSITS MADE IN THE CURRENT ACCOUNT WAS CONCE RNED, SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT THESE WERE PROCEEDS OF THE FIXED DEPOSITS PLACED BY THE ASSESSEE IN THE V ERY SAME BANK IN AN EARLIER YEAR. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE ORDERS OF THE AUTHORITIES BELOW. IN THE ORDER DATE D 28.11.2014 WHICH HAS BEEN ASSAILED BEFORE US, LD. ASSESSING OFFICER COMPUTED INCOME OF THE ASSESSEE AS UNDER:- ASSESSED INCOME U/S.143(3) R.W.S147, DATED 26.03.2013 1,81,40,652 ADDITIONS MADE: 1. CASH PAYMENTS FOR LAND PURCHASE UNDER THE HEAD BUSINESS INCOME. 2. CASH DEPOSITS MADE IN KVB LTD 36,500 10,77,188 1,92,54,340/- ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 9 -: LD. ASSESSING OFFICER ALSO MENTIONS THAT ASSESSMENT WAS ORIGINALLY COMPLETED ON 26.03.2013 U/S.143(3) R.W.S.147 OF THE ACT WITH TOTAL ASSESSED INCOME OF B1,81,40,652/-. IT HAS ALSO BE EN NOTED BY THE LD. ASSESSING OFFICER THAT THE SAID ORDER WAS SET ASID E BY THE LD. COMMISSIONER OF INCOME TAX -1, TRICHY INVOKING POWE RS VESTED ON HIM U/S.263 OF THE ACT ON 08.08.2014. HOWEVER, LD. ASS ESSING OFFICER STARTED FROM THE INCOME OF B1,81,40,652/- AS ORIGI NALLY ASSESSED AND MADE TWO FURTHER ADDITIONS IN THE FRESH ASSESSMENT PURSUANT TO THE ORDER U/S.263 OF THE ACT. AS MENTIONED BY THE LD. A UTHORISED REPRESENTATIVE THE ORIGINAL ASSESSMENT ORDER WAS N O MORE THERE WHEN THE FRESH ASSESSMENT PURSUANT TO PROCEEDINGS U /S.263 OF THE ACT WAS TAKEN UP BY THE LD. ASSESSING OFFICER. THEREFO RE, THE LD. ASSESSING OFFICER COULD NOT HAVE STARTED FROM THE INCOME OF B1,81,40,652/- ORIGINALLY ASSESSED ON 26.03.2013. HE OUGHT HAVE ST ARTED FROM THE RETURNED INCOME OF B87,05,011/-. LD. COMMISSIONER OF INCOME TAX IN OUR OPINION HAVING GIVEN A CLEAR FINDING ON THESE L INES, OUGHT NOT HAVE ADJUDICATED ON THE ADDITIONS ASSAILED BY THE ASSESS EE, WHICH ADDITIONS EMANATED FROM THE ORIGINAL ASSESSMENT. HE SHOULD H AVE CONFINED HIMSELF TO THE ADDITIONS MADE BY THE LD. ASSESSING OFFICER IN HIS ORDER DATED 28.11.2014 WHICH WERE B36,500/- U/S.40A(3) O F THE ACT AND B10,77,188/- FOR DEPOSITS MADE IN KARUR VYSA BANK L TD. GROUNDS RAISED BY THE REVENUE IN ITS APPEAL BEFORE US ON I SSUES OTHER THAN ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 10 -: ABOVE TWO ADDITIONS DO NOT ARISE FROM THE ASSESSMEN T ORDER, AND HENCE STAND DISMISSED. 7. COMING TO THE ADDITION OF B36,500/- MADE UNDER SECT ION 40A(3) OF THE ACT FOR CASH PAYMENTS CLAIM OF THE AS SESSEE WAS THAT IT WAS ON ACCOUNT OF BUSINESS EXPEDIENCY THAT SUCH PAY MENTS WERE MADE. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD RELIED ON SUB RULE (J) OF 6DD OF THE INCOME TAX RULES FOR DELETI NG DISALLOWANCE. HOWEVER, WE FIND THAT THE SAID RULE APPLY FOR PAYME NTS MADE ON A DAY ON WHICH BANKS ARE CLOSED. NEVERTHELESS THERE IS MU CH STRENGTH IN THE CONTENTION OF THE LD. AUTHORISED REPRESENTATIVE THA T EXCEPTIONAL SITUATIONS MENTIONED IN RULE 6DD ARE NOT EXHAUSTIVE . HONBLE DELHI HIGH COURT IN THE CASE OF BASU DISTRIBUTOR VS. ITO 292 ITR 29 HAS HELD THAT THERE COULD BE EXCEPTIONAL AND UNAVOIDABLE CI RCUMSTANCES THAT MAY NOT FIND A PLACE IN RULE 6DD WHICH WOULD STILL BE A REASONABLE GROUND FOR NOT APPLYING THE RIGOURS OF SEC. 40A( 3) OF THE ACT. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD GIVEN A CL EAR FINDING THAT ASSESSEE COULD DEMONSTRATE BUSINESS EXPEDIENCY WHIC H JUSTIFIED THE PAYMENTS BEING MADE IN CASH. WE CANNOT FIND ANY LAC UNA IN THIS FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPE ALS). 8. COMING TO THE GROUND RELATING TO DEPOSITS OF 10, 77,188/- MADE IN KARUR VYSA BANK LTD, A CLEAR FINDING HAS B EEN GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (A) THAT IT WAS PROCEED S OF THE DEPOSITS ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 11 -: MADE BY THE ASSESSEE IN THE YEAR 2005-06. LD. COM MISSIONER OF INCOME TAX (APPEALS) HAS ALSO NOTED THAT ASSESSEE H AD ACCOUNTED ACCRUED INTEREST OF B77,188/-. REVENUE HAS ALSO NO T RAISED GROUND CITING VIOLATION OF RULE 6DD. WE ARE THEREFORE OF THE OPINION THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS JUSTIFIED IN DELETING BOTH THE ADDITIONS. 9. NOW, WE TAKE CROSS APPEAL OF THE ASSESSEE. ASSESSE E IN ITS CROSS APPEAL HAS RAISED SEVEN GROUNDS. ADVERTING T O ITS GROUNDS 2 & 3, LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ADJUDICATION BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THE ADD ITIONS MADE IN THE ORIGINAL ASSESSMENT WAS ONLY ACADEMIC AND HAD N O RELEVANCE. 10. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 11. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONT ENTIONS. WE HAD ALREADY HELD IN RELATION TO REVENUES APPEAL THAT ORIGINAL ASSESSMENT HAVING BEING SET ASIDE BY THE LD. CIT U/ S.263 OF THE ACT ADJUDICATION DONE BY THE LD. CIT(A) ON THE ADDITION S MADE BY THE LD. ASSESSING OFFICER IN THE ORIGINAL ASSESSMENT WERE IRRELEVANT. HENCE, WE ARE OF THE OPINION THAT ASSESSEE HAS TO SUCCEED IN ITS GROUND NO. 2 & 3 OF ITS CROSS APPEAL. ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 12 -: 12. LD. AUTHORISED REPRESENTATIVE DID NOT ADVANCE ANY A RGUMENT ON HIS GROUNDS 4 TO 7. GROUNDS 4 TO 7 OF THE CROSS APPEAL ARE DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE REVENUE FOR ASSE SSMENT YEAR 2008-2009 IS DISMISSED WHEREAS CROSS APPEAL O F THE ASSESSEE IS PARTLY ALLOWED. 14. NOW WE TAKE UP THE APPEAL AND CROSS OBJECTION FOR ASSESSMENT YEAR 2009-10. 15. FOR THIS ASSESSMENT YEAR ALSO, FACTS ARE VERY SIMIL AR TO THAT FOR THE PRECEDING ASSESSMENT YEAR 2008-09. ORIGINA L ASSESSMENT DONE BY THE LD. ASSESSING OFFICER ON 26.03.2013 WAS SET ASIDE BY THE LD. CIT INVOKING POWERS VESTED ON HIM U/S.263 OF THE ACT ON 08.08.2014. IN THE SUBSEQUENT ASSESSMENT DONE BY THE LD. ASSESSING OFFICER PURSUANT TO THE ORDER U/S.263 OF THE ACT, HE COMPUTED INCOME OF THE ASSESSEE STARTING FROM THE INCOME ASSESSED ORIGINALLY ON 26. 03.2013. THE ONLY FRESH ADDITIONS MADE BY THE LD. ASSESSING OFFICER W AS A SUM OF B76,32,000/- UNDER SECTION 40A(3) OF THE ACT BEING CASH PAYMENTS FOR LAND PURCHASE. LD. COMMISSIONER OF INCOME TAX (APPEALS) ON ASSESSEES APPEAL HELD THAT LD. ASSESSING OFFICER H AD MADE A SIMILAR MISTAKE AS DONE FOR ASSESSMENT YEAR 2008-09, IN COM PUTING INCOME OF ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 13 -: THE ASSESSEE STARTING FROM INCOME ASSESSED ORIGINA LLY U/S.143(3) OF THE ACT INSTEAD OF THE INCOME RETURNED BY THE ASSES SEE. AS PER LD. COMMISSIONER OF INCOME TAX (APPEALS) ORIGINAL ASSES SMENT HAVING BEING SET ASIDE THERE WAS NO QUESTION OF ADJUDICATI NG ON ANY OF THE GROUNDS RAISED BY THE ASSESSEE RELATING TO THE ORIG INAL ASSESSMENT. NEVERTHELESS HE PROCEEDED TO DEAL WITH SUCH GROUNDS . HE ALSO HELD THAT DISALLOWANCE OF B76,32,000/- U/S.40A(3) OF THE ACT MADE IN THE FRESH ASSESSMENT COULD NOT HAVE BEEN DONE SINCE THE RE WAS GENUINE PAYMENTS DONE DUE TO BUSINESS EXPEDIENCY. 16. THE FACTS AND CIRCUMSTANCES BEING THE SAME, FOR THE REASONS MENTIONED BY US AT 6 AND 7 ABOVE, WHILE DISMISSING THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2008-2009, WE DISMI SS THE APPEAL FOR THE IMPUGNED ASSESSMENT YEAR ALSO. 17. COMING TO THE CROSS OBJECTION OF THE ASSESSEE, IT H AS RAISED ONLY ONE EFFECTIVE GROUND WHICH ASSAILS THE ADJUD ICATION DONE BY LD. COMMISSIONER OF INCOME TAX (APPEALS) ON ISSUES ARIS ING OUT OF ADDITION MADE BY THE LD. ASSESSING OFFICER IN THE O RIGINAL ASSESSMENT. FOR THE SAME REASONS AS MENTIONED BY US AT PARA 11, WE ARE OF THE OPINION THAT ASSESSEE HAS TO SUCCEED IN THIS GROUND . ITA NOS.1155 & 1156/15 & CO NO.69 & 70/2015 :- 14 -: 18. IN THE RESULT, WE DISMISS THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2009-2010 AND ALLOW CROSS OBJECTION OF THE ASSESSEE. 19. TO SUMMARIZE THE RESULT, THE APPEALS OF THE REVENUE FOR BOTH THE YEARS ARE DISMISSED, CROSS OBJECTION OF TH E ASSESSEE FOR ASSESSMENT YEAR 2008-2009 IS PARTLY ALLOWED WHEREAS THAT FOR ASSESSMENT YEAR 2009-2010 IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 20TH DAY OF APRIL , 2017, AT CHENNAI. SD/- SD/- ( . . . ) ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( ! . '#'$ ) (ABRAHAM P. GEORGE) % / ACCOUNTANT MEMBER / CHENNAI ! / DATED: 20 TH APRIL,2017. KV !' # $% &% / COPY TO: 1 . '( / APPELLANT 3. ) () / CIT(A) 5. %+, # - / DR 2. #.'( / RESPONDENT 4. ) / CIT 6. ,/ 0 / GF