M/s Goyal Builders, Chandigarh V. ACIT, Chandigarh

ITA 1044/CHANDI/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81098 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 14-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 40A(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NOS. 1043 & 1044/CHD/2013 ASSESSMENT YEARS: 2004-05 & 2008-09 M/S GOYAL BUILDERS, VS THE ACIT, CENTRAL CIRCLE-I I, CHANDIGARH CHANDIGARH PAN NO.AAGFG7105E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 15/12/2014 DATE OF PRONOUNCEMENT : 23/12/2014 ORDER PER T.R.SOOD, A.M. THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAI NST THE SEPARATE ORDERS EACH DATED 30.09.2013 OF CIT(A) (CENTRAL), GURGAON. 2. SINCE THE ISSUES RELATED IN BOTH THE APPEALS ARE IDENTICAL, THEREFORE, THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. 3. FIRST WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E IN ITA NO. 1043/CHD/2013 FOR ASSESSMENT YEAR 2004-05. ITA NO. 1043/CHD/2013 4. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 3,60,000/- MAD E ON ACCOUNT OF ALLEGED CASH PAYMENTS FOR PURCHASE OF LA ND BY 2 INVOKING PROVISIONS OF SECTION 40A(3) WHICH IS ARBI TRARY AND UNJUSTIFIED. 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE PAYMENTS WERE MADE TO VILLAGERS STAYING IN REMOTE VILLAGES NOT KNOWN TO THE ASSESSEE AND AS SUCH THE PAYMENTS WERE MADE IN CASH FOR REASONS BEYOND THE CONTROL OF ASSESSEE. 3. THAT THE LD. CIT(A) HAS FURTHER ERRED IN UPHOLDI NG THE CHARGING OF THE INTEREST U/S 234-A. 234B AND 234C O F THE ACT WHICH IS NOT CHARGEABLE IN THE INSTANT CASE. 5. GROUND NOS. 1 & 2: AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS ASSESSING OFFICER NOTICED TH AT ASSESSEE MADE PAYMENTS AMOUNTING TO RS. 18,00,000/- TO M/S U.T. BUILDERS A ND PROMOTERS LTD IN CASH. IN RESPONSE TO THE QUERY NO EXPLANATION WAS FILED, THEREFORE, PROVISIONS OF SECTION 40A(3) WERE INITIATED AND 20% OF THE AMOUNT AMOUNTING TO RS. 3,60,000/- WAS DISALLOWED. 6. ON APPEAL, IT WAS MAINLY SUBMITTED THAT PROVISIO NS OF SECTION 40A(3) WERE INTRODUCED TO COUNTER TAX EVASION AND IN MITIGATING CASE RULE 6DD(J) FRAMED. THE IDEA WAS THAT IN THE CASE OF BOGUS TRANSACTIONS CASH PAYMENTS SHOULD BE ALLOWED. SINCE THE PAYMENT WAS GENUINE NO DISALLOWA NCE SHOULD BE MADE. IN THE PRESENT CASE PAYMENT WAS GENERALLY MADE FOR PURCHAS E OF LAND, THEREFORE, ADDITION IS NOT JUSTIFIED. THE LD. CIT(A) DID NOT F IND FORCE IN THESE SUBMISSIONS AND CONFIRMED THE ADDITION. 7. BEFORE US LD. COUNSEL FOR THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE CIT(A). HE FURTHER SUBMITTED THAT PROVISO T O SECTION 40A(3) CLEARLY PROVIDED THAT DISALLOWANCE SHOULD BE MADE ONLY AFTE R CONSIDERING THE CIRCUMSTANCES OF THE CASE. SINCE THE PAYMENT WAS MA DE FOR PURCHASE OF LAND, CASH PAYMENT WAS JUSTIFIED. 3 8. ON THE OTHER HAND LD. DR SUBMITTED THAT PAYMENT HAS BEEN MADE TO A LIMITED COMPANY, THEREFORE, THE SAME COULD HAVE BEE N EASILY MADE BY ACCOUNT PAYEE CHEQUES. SINCE THE PROVISION IS OF MANDATORY NATURE, THE SAME SHOULD BE APPLIED STRICTLY. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND FORCE IN THE SUBMISSIONS OF LD. DR. THE PAYMENT IN THE CASE HAS BEEN MADE T O A LIMITED COMPANY KNOWN AS M/S U.T. BUILDERS AND PROMOTERS LTD AND NO EXCEP TIONAL CIRCUMSTANCES HAVE BEEN SHOWN TO US AS TO WHY PAYMENT WAS MADE IN CASH . THEREFORE, IN OUR OPINION, LD. CIT(A) HAS CORRECTLY DISALLOWED THE CA SH PAYMENT BY INVOKING THE PROVISIONS OF SECTION 40A(3). ACCORDINGLY, WE CON FIRM HIS ORDER. 10. GROUND NO.3: THE ISSUE REGARDING LEVY OF INTERE ST U/S 234A, 234B AND 234C IS OF CONSEQUENTLY NATURE AND ASSESSING OFFICE R IS DIRECTED TO LEVY THE INTEREST AS PER THE PROVISIONS OF ACT. 11. IN THE RESULT, APPEAL IS DISMISSED. ITA NO. 1044/CHD/2014 ; 12. IN THIS CASE FOLLOWING GROUNDS HAVE BEEN RAISED :- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 7,63,400/- MAD E ON ACCOUNT OF ALLEGED CASH PAYMENTS FOR PURCHASE OF LA ND BY INVOKING PROVISIONS OF SECTION 40A(3) WHICH IS ARBI TRARY AND UNJUSTIFIED. 2. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACT THAT THE PAYMENTS WERE MADE TO VILLAGERS STAYING IN REMOTE VILLAGES NOT KNOWN TO THE ASSESSEE AND AS SUCH THE PAYMENTS WERE MADE IN CASH FOR REASONS BEYOND THE CONTROL OF ASSESSEE. 4 3. THAT THE LD. CIT(A) HAS FURTHER ERRED IN UPHOLDI NG THE CHARGING OF THE INTEREST U/S 234-A. 234B AND 234C O F THE ACT WHICH IS NOT CHARGEABLE IN THE INSTANT CASE. 13. AFTER HEARING BOTH THE PARTIES WE FIND THAT DUR ING ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT CASH PAYMENTS HAVE BEEN MADE TO THE FOLLOWING PARTIES IN EXCESS OF RS. 20,000/-. DATE OF PAYMENT AMT (IN RS.) NAME OF PAYEE 14.12.2007 5,85,000 JASWINDER SINGH 24.12.2007 11,67,000 TARSEM SINGH 26.12.2007 3,50,000 JASWINDER SINGH 26.12.2007 5,00,000 RAMSARAN 10.03.2008 3,15,000 MANJIT SINGH 18.03.2008 9,00,000 TARSEM SINGH TOTAL 38,17,000 14. ON AN ENQUIRY IT WAS MAINLY SUBMITTED THAT PAYMENTS WERE MADE DUE TO BUSINESS COMPULSION. HOWEVER, ASSESSING OFFICER DI D NOT AGREE WITH THE SAME AND ADDITION WAS MADE @ 20% OF THE TOTAL CASH PAYME NTS AMOUNTING TO RS. 7,63,400/-. 15. ON APPEAL, IT WAS MAINLY SUBMITTED THAT PROVISI ONS OF SECTION 40A(3) WERE INTRODUCED TO COUNTER TAX EVASION AND IN MITIGATING CASE RULE 6DD(J) FRAMED. THE IDEA WAS THAT IN THE CASE OF BOGUS TRANSACTIONS CASH PAYMENTS SHOULD BE ALLOWED. IN THE PRESENT CASE PAYMENT WAS GENERALLY MADE FOR PURCHASE OF LAND, THEREFORE, ADDITION IS NOT JUSTIFIED. THE LD. CIT(A ) DID NOT FIND FORCE IN THESE SUBMISSIONS AND CONFIRMED THE ADDITION. 16. BEFORE US LD. COUNSEL OF THE ASSESSEE REITERATE D THE SUBMISSIONS MADE BEFORE US. HE FURTHER SUBMITTED THAT SELLERS WERE F ARMERS WHO BELONG TO SMALL VILLAGE AND HAD INSISTED ON CASH PAYMENTS. HE FURTH ER SUBMITTED THAT CERTIFICATES 5 FROM VARIOUS FARMERS WERE ALSO FILED, COPIES OF WH ICH IS AVAILABLE AT PAGES 24 TO 31. THIS ALSO INCLUDES THE IDENTIFICATION PROOF . 17. ON THE OTHER HAND LD. DR SUBMITTED THAT THESE P EOPLE DO NOT BELONG TO REMOTE VILLAGES BUT THEY ARE BASICALLY BELONGING TO ZIRAKPUR AREA WHICH IS TOTALLY DEVELOPED AREA AND, THEREFORE, DISALLOWANC E WAS JUSTIFIED. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND ARE NOT AGREED TO THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. T HE CERTIFICATES FILED BEFORE ASSESSING OFFICER COPY OF WHICH HAS BEEN FILED BEFO RE US DO NOT TALLY WITH THE NAMES OF PERSONS TO WHOM THE ASSESSING OFFICER HAS ALLEGED THAT CASH PAYMENTS HAVE BEEN MADE. THIS BECOMES CLEAR FROM THE FOLLOWI NG TABLE:- NAME OF THE PERSON GIVEN BY ASSESSING OFFICER AMOUNT NAME (FACTUAL POSITION) AMOUNT REMARKS SHRI JASWINDER SINGH 5,85,000 SHRI JASWINDER SINGH 3,15,000 SHRI SUKHWINDER SINGH HIS NAME DOES NOT APPEAR IN THE LIST GIVEN BY ASSESSING OFFICER SHRI TARSEM SINGH 11,67,000 SHRI TARSEM SINGH 11,67,000 SHRI RAMSARAN 5,00,000/- SHRI RAM SARAN 5,00,000 SHRI JASWINDER SINGH 3,50,000 NO SERVICES ARE AVAILABLE. SHRI MANJIT SINGH 3,15,000/- -DO- SHRI TARSEM SINGH 9,00,000 -DO- THE ABOVE CLEARLY SHOWS THAT CERTIFICATE IN THE NAM E OF SHRI JASWINDER SINGH IS FOR A DIFFERENT AMOUNT AND CANNOT BE RELIED. THERE ARE NO CERTIFICATE IN THE NAME OF SHRI MANJIT SINGH AND SHRI TARSEM SINGH. ALL TH ESE FACTORS CLEARLY SHOW THAT 6 IT IS ONLY AN AFTER THOUGHT. MOREOVER SERVICES HAVE BEEN OBTAINED IN STANDARD FORM IN THE SAME HANDWRITING WHICH MEANS THE SAME W ERE PREPARED BY THE ASSESSEES END. ALL THE RECIPIENTS HAVE BEEN CLEAR LY SIGNED IN ENGLISH LANGUAGE WHICH MEANS THAT THEY ARE EDUCATED PEOPLE AND THERE ARE NO MITIGATING CIRCUMSTANCES WHY THE AMOUNT COULD NOT BE ACCEPTED THROUGH ACCOUNT PAYEE CHEQUES, THEREFORE, WE FIND NOTHING WRONG WITH THE RIDER OF LD. CIT(A) AND WE CONFIRM THE SAME. 19. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/12/2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :23 RD DECEMBER, 2014 RKK COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR