SHRI RAVINDER KUMAR SHARMA, JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, JAIPUR

ITA 1077/JPR/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3527 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 14-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund; Question of law; TDS
• Section: 40A(3); 133(6); 191; 208; 13; 22; 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1077/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2014-15 SHRI RAVINDER KUMAR SHARMA P. NO. 2, GANPATI NAGAR, MAIN BALAJI ROAD, PHULERA, JAIPUR CUKE VS. THE DCIT, CIRCLE-07, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: BAKPS6109R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI. MANISH AGARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. RUNI PAL (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 13/10/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 11/11/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-3, JAIPUR DATED 27.08.2018 WHEREIN THE ASSESSEE HAS TA KEN THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING ADDITION OF RS. 30,60,0 00/- MADE U/S 40A(3) OF THE INCOME TAX ACT, 1961 ARBITRARILY WITHOUT CONSID ERING THE SUBMISSIONS MADE AND EVIDENCES ADDUCED AND THE EXCEPTIONAL CIRC UMSTANCES AS PER RULE 6DD OF THE INCOME TAX RULES, 1962, HENCE THE A DDITION OF RS. 30,60,000/- SO MADE DESERVES TO BE DELETED. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNOR ING THE EVIDENCES ADDUCED IN THE SHAPE OF CERTIFICATE FROM SARPANCH A S WELL AS THE AFFIDAVIT OF THE SELLER WHO SOLD THE PROPERTY THAT THERE WERE NO BANKING FACILITY AVAILABLE AT THE PLACE WHERE THE SELLER WAS RESIDING AND MORE OVER BY IGNORING THAT ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 2 THE SELLER (SMT. TEJA DEVI) DID NOT HAVE ANY BANK A CCOUNT AND THEREBY THE PAYMENT SO MADE WAS FULLY COVERED WITHIN THE EXCEPT IONS PROVIDED IN RULE 6DD OF I T RULES. HENCE THE ADDITION SO MADE D ESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE UNSECURED LOANS OF R S. 9,00,000/- TAKEN FROM SMT. MANJU DEVI BAID, RASHMI BAID, SUBHADRA KUMARI MUNOT & VARSHA GOYAL AS UNEXPLAINED AND HAVE FURTHER ERRED IN IGNO RING THE EVIDENCES ADDUCED AND SUBMISSIONS MADE, THUS THE ADDITIONS AS MADE DESERVES TO BE DELETED IN TOTO. 2.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN IGNORI NG THE CONFIRMATION ALONG WITH PAN DETAILS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE FACT THAT SUMMONS U/S 131 AS IS SUED WERE DULY SERVED AND FURTHER THE PAYMENT WAS RECEIVED THROUGH BANKING CHANNELS. HENCE THE ADDITION SO CONFIRMED DESERVES TO BE DELE TED. 2. REGARDING GROUND NO. 1, BRIEFLY STATED, THE FACT S OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS PURCHASED A PIECE OF LAND FROM SMT. TEEJA DEVI SITUATED AT VILLAGE CHOSL A, TEHSIL NAVA, DISTRICT NAGORE FOR A TOTAL CONSIDERATION OF RS. 29,60,000/- WHICH WAS DISCHARGED IN CASH. SIMILARLY, THE ASSESSEE HAS PURCHASED ANOTHER IMMOVEABLE PROPERTY SITUATED AT PIPALI KA BAS, TEJA KA BAS, PHULERA, JA IPUR FROM SMT. NANA DEVI FOR TOTAL CONSIDERATION OF RS. 43,00,000/- OUT OF WHICH RS. 1,00,000/- WAS PAID IN CASH AND THE REMAINING RS 42,00,000/- WAS PAID THRO UGH THE ACCOUNT PAYEE CHEQUE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , A SHOW CAUSE WAS ISSUED BY THE ASSESSING OFFICER AS TO WHY THE SUM O F RS. 30,60,000/- PAID IN CASH IN RESPECT OF PURCHASE OF THE AFORESAID TWO IM MOVEABLE PROPERTIES SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE IN TERMS OF PROVISIONS OF SECTION 40A(3) OF THE ACT. IN RESPONSE, THE ASSESSEE FILED HIS SUBMISSIONS. AFTER ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 3 CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE AD DITION WAS MADE BY THE ASSESSING OFFICER WHICH ON APPEAL, HAS SINCE BEEN C ONFIRMED BY THE LD. CIT(A) AND AGAINST THE SAID FINDINGS, THE ASSESSEE IS IN A PPEAL BEFORE US. 3. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT IN THE CASE OF FIRST TRANSACTION OF PURCHASE OF LAND FROM SMT. TEE JA DEVI, THE SELLER WAS FROM A RURAL BACKGROUND AND WAS NOT HAVING ANY BANK ACCO UNT AND IN SUPPORT OF THE SAID FACT, AN AFFIDAVIT OF THE ASSESSEE WAS FILED D URING THE COURSE OF ASSESSMENT PROCEEDINGS STATING THAT IN VILLAGE-CHOSLA, WHERE S HE WAS RESIDING HAD NO BANKING FACILITIES. FURTHER, IN SUPPORT OF THE SAME , A CERTIFICATE OF THE SARPANCH DATED 23.12.2016 WAS ALSO FILED BEFORE ASSESSING OF FICER WHEREIN IT WAS CATEGORICALLY STATED THAT NO BANK BRANCH WAS AVAILA BLE IN THE ENTIRE GRAM PANCHAYAT OF CHOUSALA NOR IS AVAILABLE WITHIN 5 6 KMS SURROUNDINGS OF THE VILLAGE CHOUSALA. REFERRING TO THE PROVISIONS OF R ULE 6DD, THE LD A/R SUBMITTED THAT THE RULES CLEARLY PROVIDED FOR EXEMPTION FROM THE PROVISIONS OF SECTION 40A(3) OF THE ACT WHERE THE PAYMENT IS MADE TO A PE RSON WHO RESIDES IN A VILLAGE WHICH IS NOT SERVED BY ANY BANK. IT WAS SUB MITTED THAT THE SELLER ACTUALLY RESIDED IN CHOSLA-VILLAGE WHICH IS NOT DIS PUTED BY LOWER AUTHORITIES. IT WAS SUBMITTED THAT THE ASSESSEE HAD MADE PAYMENT OU T OF HIS DISCLOSED SOURCES OF FUNDS WHICH FACT IS AGAIN NOT DOUBTED BY BOTH THE LOWER AUTHORITIES. FURTHER, REFERENCE WAS DRAWN TO THE CBDT CIRCULAR N O. 220 DATED 31.05.1977 WHICH PROVIDES THAT ALL THE CIRCUMSTANCES IN WHICH THE CONDITIONS LAID DOWN IN RULE 6DD(J) WOULD BE APPLICABLE CANNOT BE SPELT OUT . HOWEVER, SOME OF THESE CIRCUMSTANCES AS SPELT OUT IN THE SAID CIRCULAR WHI CH WOULD SEEM TO MEET THE REQUIREMENTS OF THE SAID RULE INCLUDES THE TRANSACT IONS WHICH ARE MADE AT A PLACE WHERE EITHER THE PURCHASER OR THE SELLER DOES NT HAVE A BANK ACCOUNT. IT WAS ACCORDINGLY SUBMITTED THAT CASE OF THE ASSESSEE IS COVERED BY EXCEPTION PROVIDED UNDER RULE 6DD READ WITH CBDT CIRCULAR IN SO FAR AS THE SELLER DID NOT HAVE ANY BANK ACCOUNT AT ALL, SAY WHAT ABOUT THE PL ACE WHERE TRANSACTION WAS ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 4 EXECUTED AND THUS DISALLOWANCE MADE BY LD. AO IS NO T IN ACCORDANCE WITH LAW MORE PARTICULARLY WHEN GENUINENESS OF THE TRANSACTI ON AS WELL AS IDENTITY OF THE SELLER WAS ACCEPTED BEYOND DOUBT. IT WAS FURTHER SU BMITTED THAT IN CASE OF ITO VS. SHYAM APPARELS (P) LTD. (SUPRA) WHERE THE PAYME NT WAS MADE ON SUNDAY, THE COORDINATE BENCH HAS DELETED THE ADDITION AS TH E SAME WAS COVERED IN EXCEPTION AND IN THE INSTANT CASE AS WELL, THE PAYM ENT WAS MADE ON 18.08.2013 WHICH HAPPENS TO BE SUNDAY AND HENCE, CO VERED UNDER THE EXCEPTION WHICH HAS NOT BEEN APPRECIATED BY THE LOW ER AUTHORITIES. IN RESPECT OF SECOND TRANSACTION EXECUTED WITH SMT. NANA DEVI WHERE OUT OF TOTAL SALE CONSIDERATION OF RS. 43,00,000/- ONLY AN AMOUNT OF RS. 1,00,000/- WAS PAID INITIALLY AS ADVANCE MONEY THAT TOO ON BEING INSIST ED BY HER AS THE DEAL WAS TO BE CLOSED IMMEDIATELY AND HAD ASSESSEE NOT PAID THE AMOUNT IN CASH IMMEDIATELY, SHE WOULD HAVE SOLD PROPERTY TO SOMEON E ELSE. IT WAS SUBMITTED THAT IN RESPECT OF THESE TRANSACTIONS, SALE AGREEME NT HAS BEEN DULY REGISTERED WITH SUB- REGISTRAR AND THUS IDENTITY OF THE SELLER AS WELL AS GENUINENESS OF THE TRANSACTIONS WAS PROVED BEYOND ANY DOUBT. REFERRING TO THE DECISIONS OF THE HONBLE SUPREME COURT IN CASE OF ATTAR SINGH GURMUK H SINGH VS. ITO (1991) 191 ITR 667 (SC), IT WAS SUBMITTED BY THE LD A/R TH AT THE HONBLE SUPREME COURT HAS STATED IN THE SAID DECISION THAT CONSIDER ATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. GENUIN E AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSE SSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GEN UINE DIFFICULTY TO THE ASSESSEE. IT WAS ACCORDINGLY SUBMITTED THAT THE PRO VISIONS OF SECTION 40A(3) READ WITH RULE 6DD THAT THEY ARE INTENDED TO REGULA TE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY. HOWEVER, I N THE INSTANT CASE, IT IS NEITHER ESTABLISHED BY THE LOWER AUTHORITIES THAT T HERE WAS ANY MALA FIDE INTENTION BROUGHT ON RECORD TO PROVE THAT TRANSACTI ON WAS UNDERTAKEN WITH THE ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 5 INTENTION TO EVADE TAX. IN SUPPORT, RELIANCE WAS FU RTHER PLACED ON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF SMT. HAR SHILA CHORDIA VS ITO [2008] 298 ITR 349 AND THE CO-ORDINATE BENCH DECISIONS IN CASE OF ITO VS. SHYAM APPARELS (P) LTD. (ITA NO. 497/JP/2016) , SHREE SALASAR OVERSEAS (P) LTD 66 DTR 9, M/S DAGA ROYAL ARTS, JAIPUR VS. ITO, JAIPUR (ITA NO. 1065/JP/2016 DATED 15.05.2018) . IT WAS ACCORDINGLY SUBMITTED THAT THE ASSESSEE HA S FURNISHED SALE DEED/REGISTERED SALE DEED IN RESPECT OF ALL THE PAYMENTS MADE, IDENTITY AS WELL AS GENUINENESS OF TRANSACTION IS P ROVED BEYOND DOUBT. FURTHER, PAYMENTS HAVE BEEN MADE BY THE ASSESSEE OUT OF HIS DISCLOSED SOURCES OF INCOME, WHICH IS DULY REFLECTED IN HIS REGULAR BOOK S OF ACCOUNTS AND WERE NEVER DOUBTED. IT WAS ACCORDINGLY SUBMITTED THAT THE PAYM ENTS MADE BY THE ASSESSEE UNDER BUSINESS EXIGENCIES AND EXCEPTIONAL CIRCUMSTANCES AND THEREFORE ARE COVERED WITHIN RULE 6DD OF INCOME TAX RULES, AND THUS DISALLOWANCE OF RS. 30,60,000/- MADE BY ASSESSING O FFICER NEEDS TO BE DELETED. 4. PER CONTRA, THE LD. D/R SUBMITTED THAT AS REGARD S THE FIRST TRANSACTION OF PURCHASE OF LAND, PER THE SALE DEED, IT IS MENTIONE D THEREIN THAT THE ASSESSEE HAS PAID IN CASH A SUM OF RS. 29,60,000/- TO SMT. T EEJA DEVI ON THE DATE OF EXECUTION OF AGREEMENT DATED 18.08.2013 AND THE SAI D AGREEMENT HAS BEEN EXECUTED IN JAIPUR. THEREFORE, THE PLEA OF THE ASSE SSEE THAT RULE 6DD COMES TO THE RESCUE OF THE ASSESSEE CANNOT BE ACCEPTED AS TH E BANKING FACILITIES ARE AVAILABLE IN JAIPUR. FURTHER, THE LD. D/R SUBMITTED THE CASE LAW RELIED BY THE ASSESSEE IN CASE OF ITO VS. SHYAM APPARELS (P) LTD. (SUPRA) WHERE THE PAYMENT WAS MADE ON SUNDAY AND DISALLOWANCE WAS DEL ETED BY THE TRIBUNAL IS NOT APPLICABLE AS IN THIS CASE, THE PAYMENT WAS NOT MADE ON ANY HOLIDAY. FURTHER, THE RELIANCE PLACED BY THE LD. A/R ON DECI SION IN CASE OF M/S DAGA ROYAL ARTS, JAIPUR VS. ITO, JAIPUR (SUPRA) IS AGAIN ST DISTINGUISHABLE AS THERE WAS NO BUSINESS EXPEDIENCY AS THE TRANSACTION WAS MADE AFTER 4 MONTHS OF SIGNING OF THE AGREEMENT. THE LD. D/R SUPPORTED THE ORDER O F THE LOWER AUTHORITIES. ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 6 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE ARE TWO TRANSACTIONS FOR PURCHASE OF LAND WHICH HAVE BEEN EXECUTED BY THE ASSESSEE DURING THE YEAR UNDER CONS IDERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER OBSERVED THAT IN RESPECT OF FIRST TRANSACTION FOR PURCHASE OF LAND, ENTIRE CONSIDERATION HAS BEEN DISCHARGED IN CASH AND IN RESPECT OF SECOND TRANSAC TION, PART CONSIDERATION HAS BEEN DISCHARGED IN CASH AND PART IN CHEQUE AND ACCO RDINGLY, HE PROCEEDED TO INVOKE THE PROVISIONS OF SECTION 40A(3) AND HAS MAD E THE DISALLOWANCE HOLDING THAT THE MATTER DOESNT FALL IN EXCEPTIONS AS PROVI DED IN RULE 6DD WHICH ON APPEAL HAS BEEN CONFIRMED BY THE LD CIT(A). DURING THE COURSE OF HEARING, THE LD A/R HAS RAISED VARIOUS CONTENTIONS WHICH ARE CENTRED AROUND THE INTENTION OF THE LEGISLATURE BEHIND INTRODUCTION OF SECTION 40A( 3), GENUINE AND BONAFIDE TRANSACTIONS NOT COVERED WITHIN THE SWEEP OF SECTIO N 40A(3) AND EXCEPTIONS PROVIDED IN RULE 6DD ARE NOT EXHAUSTIVE AND VARIOUS AUTHORITIES QUOTED IN SUPPORT THEREOF, THE COORDINATE BENCH HAD AN OCCASI ON TO EXAMINE THE SAME AT LENGTH IN CASE OF M/S A ROYAL DAGA ARTS VS ITO WARD-2(2), JAIPUR (SUPRA) IN LIGHT OF DECISION OF THE HONBLE SUPREME COURT I N CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO AND THE DECISIONS OF VARIOUS HONBLE HIGH COURTS INCLUDING THE DECISIONS OF THE HONBLE JURISDICTION AL HIGH COURT AND THE RELEVANT FINDINGS READ AS UNDER: 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IT WOULD BE RELEVANT TO REFER TO THE PR OVISIONS OF SECTION 40A(3) OF THE ACT WHICH READS AS UNDER: (3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT EXCEEDS TWENTY THOUSAND RUPEES, NO DEDUCTION SHALL BE ALLOW ED IN RESPECT OF SUCH EXPENDITURE. ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 7 (3A) WHERE AN ALLOWANCE HAS BEEN MADE IN THE ASSESS MENT FOR ANY YEAR IN RESPECT OF ANY LIABILITY INCURRED BY THE ASSESSEE F OR ANY EXPENDITURE AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR (HEREINAFTER REFERRED TO AS SUBSEQUENT YEAR) THE ASSESSEE MAKES PAYMENT IN RESPECT THEREOF , OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT, THE PAYMENT SO MADE SHALL BE DEEMED TO BE THE PROFITS A ND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS INCOME OF THE SUBSEQUENT YEAR IF THE PAYMENT OR AGGREGATE OF PAYM ENTS MADE TO A PERSON IN A DAY, EXCEEDS TWENTY THOUSAND RUPEES: PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR P ROFESSION UNDER SUB-SECTION (3) AND THIS SUB-SECTION WHERE A PAYMENT OR AGGREGA TE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDS TWENTY THOUSAND RUPEES, IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED, HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE, CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS : PROVIDED FURTHER THAT IN THE CASE OF PAYMENT MADE FOR PLYING, HIRING OR LEASING GOODS CARRIAGES, THE PROVISIONS OF SUB-SECT IONS (3) AND (3A) SHALL HAVE EFFECT AS IF FOR THE WORDS 'TWENTY THOUSAND RUPEES' , THE WORDS 'THIRTY-FIVE THOUSAND RUPEES' HAD BEEN SUBSTITUTED. (4) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE OR IN ANY CONTRACT, WHERE ANY PAYMENT IN RESP ECT OF ANY EXPENDITURE HAS TO BE MADE BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BA NK OR ACCOUNT PAYEE BANK DRAFT IN ORDER THAT SUCH EXPENDITURE MAY NOT B E DISALLOWED AS A DEDUCTION UNDER SUB-SECTION (3), THEN THE PAYMENT MAY BE MADE BY SUCH CHEQUE OR DRAFT; AND WHERE THE PAYMENT IS SO MADE OR TENDERED , NO PERSON SHALL BE ALLOWED TO RAISE, IN ANY SUIT OR OTHER PROCEEDING, A PLEA BASED ON THE GROUND THAT THE PAYMENT WAS NOT MADE OR TENDERED IN CASH O R IN ANY OTHER MANNER. ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 8 19. THE AFORESAID PROVISIONS HAVE TO BE CONSIDERED AND INTERPRETED IN LIGHT OF VARIOUS AUTHORITIES WHICH HAVE BEEN QUOTED AT THE B AR AND RELIED UPON BY THE LD AR AND LD DR IN SUPPORT OF THEIR RESPECTIVE CONT ENTIONS. 20. IN CASE OF ATTAR SINGH GURMUKH SINGH V. ITO (SU PRA), THE MATTER WHICH CAME UP FOR CONSIDERATION BEFORE THE HONBLE SUPREM E COURT, THE FACTS OF THE CASE WERE THAT ASSESSEE HAD MADE PAYMENT IN CASH EX CEEDING A SUM OF RS. 2,500/- FOR PURCHASE OF CERTAIN STOCK-IN-TRADE. PAY MENTS WERE NOT ALLOWED AS DEDUCTIONS IN THE COMPUTATION OF INCOME UNDER THE H EAD PROFITS AND GAINS OF BUSINESS OR PROFESSIONS AS THE SAME WERE HELD TO B E IN CONTRAVENTION OF SECTION 40A(3) READ WITH THAT 6DD OF THE INCOME RUL ES. IN THAT FACTUAL BACKGROUND, THE QUESTION REGARDING VALIDITY OF SECT ION 40A(3) AND APPLICABILITY OF THE SAID PROVISIONS TO PAYMENT MADE FOR ACQUIRIN G STOCK-IN-TRADE CAME UP FOR CONSIDERATION BEFORE THE HONBLE SUPREME COURT. 21. THE HONBLE SUPREME COURT REFERRING TO THE PROV ISIONS OF SECTION 40A(3) AND RULE 6DD AND IN PARTICULAR, RULE 6DD(J), AS EXI STED AT RELEVANT POINT IN TIME, HAS HELD AS UNDER:- 6. AS TO THE VALIDITY OF SECTION 40A(3), IT WAS U RGED THAT IF THE PRICE OF THE PURCHASED MATERIAL IS NOT ALLOWED TO BE ADJUSTED AG AINST THE SALE PRICE OF THE MATERIAL SOLD FOR WANT OF PROOF OF PAYMENT BY A CRO SSED CHEQUE OR CROSSED BANK DRAFT, THEN THE INCOME-TAX LEVIED WILL NOT BE ON THE INCOME BUT IT WILL BE ON AN ASSUMED INCOME. IT IS SAID THAT THE PROVISION AUTHORIZING LEVY TAX ON AN ASSUMED INCOME WOULD BE A RESTRICTION ON THE RIGHT TO CARRY ON THE BUSINESS, BESIDES BEING ARBITRARY. 7. IN OUR OPINION, THERE IS LITTLE MERIT IN THIS CO NTENTION. SECTION 40A(3) MUST NOT BE READ IN ISOLATION OR TO THE EXCLUSION O F RULE 6DD. THE SECTION MUST ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 9 BE READ ALONG WITH THE RULE. IF READ TOGETHER, IT W ILL BE CLEAR THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT THE BUSINESS ACTIVITIE S. THERE IS NO RESTRICTION ON THE ASSESSEE IN HIS TRADING ACTIVITIES. SECTION 40A(3) ONLY EMPOWERS THE ASSESSING OFFICER TO DISALLOW THE DEDUCTION CLAIMED AS EXPEND ITURE IN RESPECT OF WHICH PAYMENT IS NOT MADE BY CROSSED CHEQUE OR CROSSED BA NK DRAFT. THE PAYMENT BY CROSSED CHEQUE OR CROSSED BANK DRAFT IS INSISTED ON TO ENABLE THE ASSESSING AUTHORITY TO ASCERTAIN WHETHER THE PAYMENT WAS GENU INE OR WHETHER IT WAS OUT OF THE INCOME FROM DISCLOSED SOURCES. THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE. CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. THE GENUINE AND BONA FIDE TRANSACTION S ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A(3) WAS NOT PRACTIC ABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYMENT. RULE 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PA YMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT IN THE CIRCUMSTANCES S PECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF SECTION 40A(3) AND RULE 6DD THAT THEY ARE INTENDED TO REGULATE THE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLAC K-MONEY FOR BUSINESS TRANSACTIONS. MUDIAM OIL CO. V. ITO [1973] 92 ITR 519 (AP). IF THE PAYMENT IS MADE BY A CROSSED CHEQUE ON A BANK OR A CROSSED BANK DRAFT, THEN IT WILL BE EASIER TO ASCERTAIN, WHEN DEDUCTION IS CLAIMED, WHE THER THE PAYMENT WAS GENUINE AND WHETHER IT WAS OUT OF THE INCOME FROM D ISCLOSED SOURCES. IN INTERPRETING A TAXING STATUTE THE COURT CANNOT BE O BLIVIOUS OF THE PROLIFERATION OF BLACK-MONEY WHICH IS UNDER CIRCULATION IN OUR CO UNTRY. ANY RESTRAINT INTENDED TO CURB THE CHANCES AND OPPORTUNITIES TO U SE OR CREATE BLACK-MONEY SHOULD NOT BE REGARDED AS CURTAILING THE FREEDOM OF TRADE OR BUSINESS. ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 10 22. FURTHER, THE HONBLE SUPREME COURT UPHELD THE APPLICABILITY OF SECTION 40A(3) TO PAYMENT MADE FOR ACQUIRING STOCK-IN-TRADE AND RAW MATERIALS AND ALSO AFFIRMED THE DECISION OF HONBLE RAJASTHAN HIG H COURT IN CASE OF FAKRI AUTOMOBILES V. CIT [1986] 160 ITR 504 (RAJ) TO THE EFFECT THAT THE PAYMENTS MADE FOR PURCHASING STOCK-IN-TRADE OR RAW MATERIAL SHOULD ALSO BE REGARDED AS EXPENDITURE FOR THE PURPOSES OF SECTION 40A(3) OF T HE ACT. 23. THE HONBLE SUPREME COURT HAS THEREFORE UPHELD THE CONSTITUTIONAL VALIDITY OF SECTION 40A(3) OF THE ACT AND HAS HELD THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT THE BUSINESS ACTIVITIES AND RESTRAINT S O PROVIDED ARE ONLY INTENDED TO CURB THE CHANCES AND OPPORTUNITIES TO USE OR CREATE BLACK MONEY AND THE SAME SHOULD NOT BE REGARDED AS CURTAILING THE FREEDOM OF TRADE OR BUSINESS. THE HONBLE SUPREME COURT HAS THUS LAID GREAT EMPHASIS ON THE INTENTION BEHIND INTRODUCTION OF THESE PROVISIONS AND IT WOULD THERE FORE BE RELEVANT TO EXAMINE WHETHER IN THE PRESENT CASE, THERE IS ANY VIOLATION OF SUCH INTENTION AND IF ULTIMATELY, IT IS DETERMINED THAT SUCH INTENTION HA S BEEN VIOLATED, THEN CERTAINLY, THE ASSESSEE DESERVES THE DISALLOWANCE O F THE EXPENDITURE SO CLAIMED. 24. THE HONBLE SUPREME COURT REFERRING TO THE PRO VISIONS OF SECTION 40A(3) AS EXISTED AT RELEVANT POINT IN TIME WHICH TALKS AB OUT CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS AND RULE 6DD( J) WHICH PROVIDES FOR THE EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES AND THE FA CT THAT THE PAYMENT IN THE MANNER AFORESAID WAS NOT PRACTICAL OR WOULD HAVE CA USED GENUINE DIFFICULTY TO THE PAYEE AND FURNISHING THE NECESSARY EVIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER AS TO THE GENUINENESS OF THE PAYM ENTS AND THE IDENTITY OF THE PAYEE HAS HELD THAT: ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 11 THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE. CONS IDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLU DED. THE GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GEN UINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYMENT. RULE 6DD PROVIDES THAT AN ASSESSE E CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSSED CHEQUE OR C ROSSED BANK DRAFT IN THE CIRCUMSTANCES SPECIFIED UNDER THE RULE. 25. HERE, IT IS RELEVANT TO NOTE THAT THERE HAS BE EN NO CHANGE IN THE PROVISIONS OF SECTION 40A(3) IN SO FAR AS CONSIDERA TIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE CONCERNED, AS EXISTE D AT RELEVANT POINT IN TIME AND AS CONSIDERED BY THE HONBLE SUPREME COURT AND THE PROVISIONS OF SECTION 40A(3) AS EXIST NOW AND RELEVANT FOR THE IMPUNGED A SSESSMENT YEAR I.E. AY 2013-14. HOWEVER, RULE 6DD(J) HAS BEEN AMENDED AND BY NOTIFICATION DATED 10.10.2008, IT NOW PROVIDES FOR AN EXCEPTION ONLY I N A SCENARIO WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH B ANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR STRIKE. A QUESTION WHICH A RISES FOR CONSIDERATION IS WHETHER THE LEGAL PROPOSITION SO LAID DOWN BY THE H ONBLE SUPREME COURT REGARDING CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS HAS BEEN DILUTED BY WAY OF DELEGATED LEGISLATION IN FOR M OF INCOME TAX RULES WHEN THE PARENT LEGISLATION IN FORM OF SECTION 40A(3) TO WHICH SUCH DELEGATED LEGISLATION IS SUBSERVIENT HAS BEEN RETAINED IN ITS ENTIRETY. ALTERNATIVELY, CAN IT BE SAID THAT WHAT HAS BEEN PRESCRIBED AS EXCEPTIONA L CIRCUMSTANCES IN RULE 6DD AS AMENDED ARE EXHAUSTIVE ENOUGH AND WHICH VISU ALIZES ALL KINDS AND NATURE OF BUSINESS EXPEDIENCY IN ALL POSSIBLE SITUA TIONS. ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 12 26. IF WE LOOK AT THE LEGISLATIVE HISTORY OF SECTIO N 40A(3) AND RULE 6DD, WE FIND THAT INITIALLY, SECTION 40A(3) PROVIDES FOR DI SALLOWANCE OF 100% OF THE EXPENDITURE UNLESS THE MATTER FALLS UNDER EXCEPTION AS PROVIDED IN RULE 6DD(J) LATER ON, SECTION 40A(3) HAS BEEN AMENDED TO PROVID E FOR DISALLOWANCE OF 20% OF THE EXPENDITURE INCURRED IN CASH AND RULE 6DD(J) WAS OMITTED. THEREAFTER, BY VIRTUE OF ANOTHER AMENDMENT, DISALLOWANCE UNDER SECTION 40A(3) WAS INCREASED FROM 20% TO 100%, HOWEVER, RULE 6DD(J) WA S NOT REINTRODUCED IN ORIGINAL FORM TO PROVIDE FOR EXCEPTIONAL AND UNAVOI DABLE CIRCUMSTANCES RATHER IT WAS RESTRICTED TO PAYMENT BY WAY OF SALARY TO EMPLO YEES AND THEREAFTER, BY VIRTUE OF LASTEST AMENDMENT IN YEAR 2008 TO PAYMENT S MADE ON A DAY ON WHICH THE BANKS WERE CLOSED ON ACCOUNT OF HOLIDAY OR STRI KE. 27. WE DO NOT BELIEVE THAT BY VIRTUE OF THESE AMEND MENTS, THE LEGAL PROPOSITION SO LAID DOWN BY THE HONBLE SUPREME COU RT REGARDING CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS H AS BEEN DILUTED IN ANY WAY. AT THE SAME TIME, WE ALSO BELIEVE THAT RULE 6DD AS AMENDED ARE NOT EXHAUSTIVE ENOUGH AND WHICH VISUALIZES ALL KINDS AN D NATURE OF BUSINESS EXPEDIENCY IN ALL POSSIBLE SITUATIONS AND IT IS FOR THE APPROPRIATE AUTHORITY TO EXAMINE AND PROVIDE FOR A MECHANISM AS ORIGINALLY E NVISAGED WHICH PROVIDES FOR EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES TO THE SATISFACTION OF THE ASSESSING OFFICER WHEREBY GENUINE BUSINESS EXPENDIT URE SHOULD NOT SUFFER DISALLOWANCE. 28. FURTHER, THE COURTS HAVE HELD FROM TIME TO TIME THAT THE RULES MUST BE INTERPRETED IN A MANNER SO AS TO ADVANCE AND NOT TO FRUSTRATE THE OBJECT OF THE LEGISLATURE. THE INTENTION OF THE LEGISLATURE IS MA NIFESTLY CLEAR AND WHICH IS TO CURB THE CHANCES AND OPPORTUNITIES TO USE OR CREATE BLACK MONEY AND TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHE R IT WAS OUT OF THE INCOME FROM DISCLOSED SOURCES. AND SECTION 40A(3) C ONTINUES TO PROVIDE THAT ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 13 NO DISALLOWANCE SHALL BE MADE IN SUCH CASES AND UND ER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED HAVING REGARD TO THE NATURE AND E XTENT OF THE BANKING FACILITIES AVAILABLE, CONSIDERATION OF BUSINESS EXP EDIENCY AND OTHER RELEVANT FACTORS. IN OUR VIEW, GIVEN THAT THERE HAS BEEN NO CHANGE IN THE PROVISIONS OF SECTION 40A(3) IN SO FAR AS CONSIDERATION OF BUSINE SS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE CONCERNED, THE SAME CONTINUES TO BE RELEVANT FACTORS WHICH NEEDS TO BE CONSIDERED AND TAKEN INTO ACCOUNT WHILE DETERMINING THE EXCEPTIONS TO THE DISALLOWANCE AS CONTEMPLATED UNDE R SECTION 40A(3) OF THE ACT SO LONG AS THE INTENTION OF THE LEGISLATURE IS NOT VIOLATED. WE FIND THAT OUR SAID VIEW FIND RESONANCE IN DECISIONS OF VARIOUS AUTHORI TIES, WHICH WE HAVE DISCUSSED BELOW AND THUS SEEMS FORTIFIED BY THE SAI D DECISIONS. 29. WE REFER TO THE DECISION OF THE HONBLE RAJASTH AN HIGH COURT IN CASE OF SMT. HARSHILA CHORDIA VS. ITO (SUPRA), WHERE THE FA CTS OF CASE WERE THAT THE ASSESSEE HAD MADE CERTAIN CASH PAYMENTS TOWARDS PUR CHASE OF SCOOTER/MOPEDS WHICH EXCEEDED RS. 10,000/- IN EACH CASE TO THE PRINCIPAL AGENT INSTEAD OF MAKING PAYMENT THROUGH THE CROSS C HEQUES OR BANK DRAFT. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 40A(3) AND HELD THAT THEY WERE NO EXCEPTIONAL CIRCUMSTANCES FALLING UNDER RUL E 6DD WHICH COULD AVOID CONSEQUENCES OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE LD. CIT(A) HELD THAT SUCH EXCEPTIONAL CIRCUMSTANCES DID EXIST. HOWEVER, THE FINDINGS OF THE LD. CIT(A) WERE REVERSED BY THE TRIBUNAL AND THE MA TTER CAME UP FOR CONSIDERATION BEFORE THE HONBLE HIGH COURT. 30. THE HONBLE HIGH COURT OBSERVED THAT THE PRINCI PAL REASON WHICH WEIGHED WITH THE TRIBUNAL IN DISCARDING THE EXPLANA TION FURNISHED BY THE ASSESSEE WAS THAT THE CASE OF THE ASSESSEE DID NOT FALL IN ANY OF THE CLAUSES ENUMERATED IN THE CIRCULAR ISSUED BY THE CBDT ABOUT THE EXPLANATORY NOTE APPENDED TO CLAUSE (J) WAS TO OPERATE AS IT WAS EXI STING AT THE RELEVANT TIME ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 14 AND ENUMERATED CIRCUMSTANCES IN THE CIRCULAR WAS EX HAUSTIVE OF EXCEPTIONAL CIRCUMSTANCES. THE HONBLE HIGH COURT OBSERVED THAT THE TRIBUNAL HAS ERRONEOUSLY ASSUMED THAT ENUMERATION OF INSTANCES I N THE CIRCULAR IN WHICH THE PROVISIONS OF CLAUSE (J) UNDER RULE 6DD WOULD OPERA TE TO BE EXHAUSTIVE OF SUCH CIRCUMSTANCES AND HAD NOT BEEN PROPERLY UNDERSTOOD ITS IMPLICATION. IT WAS FURTHER OBSERVED BY THE HONBLE HIGH COURT THAT PRI MARY OBJECT OF ENACTING SECTION 40A(3) IN ITS ORIGINAL INCARNATION WAS TWO- FOLD, FIRSTLY, PUTTING A CHECK ON TRADING TRANSACTIONS WITH A MIND TO EVADE THE LI ABILITY TO TAX ON INCOME EARNED OUT SUCH TRANSACTION AND, SECONDLY, TO INCUL CATE THE BANKING HABITS AMONGST THE BUSINESS COMMUNITY. THE CONSEQUENCE WHI CH WAS PROVIDED WAS TO DISALLOW OF DEDUCTION OF SUCH PAYMENTS/EXPENSES WHICH WERE NOT THROUGH BANK EITHER BY CROSSED CHEQUES OR BY DEMAND DRAFT O R BY PAY ORDER. IT WAS FURTHER HELD BY THE HONBLE HIGH COURT THAT: APPARENTLY, THIS PROVISION WAS DIRECTLY RELATED TO CURB THE EVASION OF TAX AND INCULCATING THE BANKING HABITS. THEREFORE, THE CONSEQUENCES, WHICH WERE TO BEFALL ON ACCOUNT OF NON-OBSERVATION OF SUB-SECT ION (3) OF SECTION 40A MUST HAVE NEXUS TO THE FAILURE OF SUCH OBJECT. THEREFORE THE GENUINENESS OF THE TRANSACTIONS AND IT BEING FREE FROM VICE OF ANY DEV ICE OF EVASION OF TAX IS RELEVANT CONSIDERATION WHICH HAS BEEN OVERLOOKED BY THE TRIBUNAL. 31. IT WAS ACCORDINGLY HELD BY THE HONBLE HIGH COU RT THAT IT IS THE RELEVANT CONSIDERATION FOR THE ASSESSING AUTHORITY UNDER THE INCOME TAX ACT THAT BEFORE INVOKING THE PROVISIONS OF SECTION 40A(3) IN LIGHT OF RULE 6DD AS CLARIFIED BY CIRCULAR OF THE CBDT THAT WHETHER THE FAILURE ON TH E PART OF THE ASSESSEE IN ADHERING TO REQUIREMENT OF PROVISIONS OF SECTION 40 A(3) HAS ANY SUCH NEXUS WHICH DEFEATS THE OBJECT OF PROVISION SO AS TO INVI TE SUCH A CONSEQUENCE. THIS IS PARTICULARLY SO, BECAUSE THE CONSEQUENCE PROVIDE D U/S 40A(3) FOR FAILURE TO MAKE PAYMENTS THROUGH BANK IS NOT ABSOLUTE IN TERMS NOR AUTOMATIC BUT ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 15 EXCEPTIONS HAVE BEEN PROVIDED AND LEVERAGE HAS BEEN LEFT FOR LITTLE FLEXING BY MAKING A GENERAL PROVISION IN THE FORM OF CLAUSE (J ) IN RULE 6DD. THEREAFTER, THE HONBLE HIGH COURT REFERS TO THE CLAUSE 6DD(J) AND THE CIRCULAR DATED 31 ST MAY, 1977 ISSUED BY THE BOARD IN THE CONTEXT OF WHAT SHA LL CONSTITUTE EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES WITHIN THE MEANING OF SECTION CLAUSE (J). THE HONBLE HIGH COURT OBSERVED THAT THE CIRCULAR IN PA RAGRAPH 5 GIVES A CLEAR INDICATION THAT RULE 6DD(J) HAS TO BE LIBERALLY CON STRUED AND ORDINARILY WHERE THE GENUINENESS OF THE TRANSACTION AND THE PAYMENT AND THE IDENTITY OF THE RECEIVER IS ESTABLISHED, THE REQUIREMENT OF RULE 6D D(J) MUST BE DEEMED TO HAVE BEEN SATISFIED. THE HONBLE HIGH COURT OBSERVED TH AT APPARENTLY SECTION 40A(3) WAS INTENDED TO PENALIZE THE TAX EVADER AND NOT THE HONEST TRANSACTIONS AND THAT IS WHY AFTER FRAMING OF RULE 6DD(J), THE BOARD STEPPED IN BY ISSUING THE AFORESAID CIRCULAR AND THIS CLARIFIC ATION, IN OUR OPINION, IS IN CONFORMITY WITH THE PRINCIPLE ENUNCIATED BY THE SUP REME COURT IN CTO VS. SWASTIK ROADWAYS REPORTED IN [2004] 2 RC 539; [2004 ] 3 SCC 640. 32. THE LEGAL PROPOSITION THAT ARISES FROM THE ABOV E DECISION OF THE HONBLE RAJASTHAN HIGH COURT IS THAT THE CONSEQUENCES, WHIC H WERE TO BEFALL ON ACCOUNT OF NON-OBSERVATION OF SUB-SECTION (3) OF SE CTION 40A MUST HAVE NEXUS TO THE FAILURE OF SUCH OBJECT. THEREFORE THE GENUIN ENESS OF THE TRANSACTIONS AND IT BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERATION AND WHICH SHOULD BE EXAMINED BEFORE INVOKING THE RI GOURS OF SECTION 40A(3) OF THE ACT. 33. IN CASE OF ANUPAM TELE SERVICES V. INCOME TAX O FFICER, THE MATTER WHICH CAME UP FOR CONSIDERATION BEFORE THE HONBLE GUJARA T HIGH COURT, THE FACTS OF THE CASE WERE THAT THE ASSESSEE WHO IS INVOLVED IN THE BUSINESS OF DISTRIBUTION MOBILE AND RECHARGE VOUCHERS OF TATA TELE SERVICES LTD HAD MADE PAYMENT OF RS. 33,10,194/- TO TATA TELE SERVICES LTD., BY CASH ON DIFFERENT DATES. THE ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 16 ASSESSEE HAD MADE SUCH PAYMENT THROUGH ACCOUNT PAYE E CHEQUES TILL 22 ND AUG, 2005, WHEN A CIRCULAR WAS ISSUED BY TATA TELE SERVICES LTD., REQUIRING THE APPELLANT TO DEPOSIT CASH AT THE COMPANYS OFFICE A T SURAT. IN THAT FACTUAL BACKGROUND , THE HONBLE HIGH COURT HELD AS UNDER:- 17. RULE 6DD OF THE IT RULES, 1962 PROVIDES FOR SITUATI ONS UNDER WHICH DISALLOWANCE UNDER S. 40A(3) SHALL NOT BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR P ROFESSION UNDER THE SAID SECTION. AMONGST THE VARIOUS CLAUSES, CL. (J) WHICH IS RELEVANT, READ AS UNDER: (J) WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR S TRIKE; 18. IT COULD BE APPRECIATED THAT S. 40A AND IN PART ICULAR SUB-CL. (3) THEREOF AIMS AT CURBING THE POSSIBILITY OF ON-MONEY TRANSAC TIONS BY INSISTING THAT ALL PAYMENTS WHERE EXPENDITURE IN EXCESS OF A CERTAIN S UM (IN THE PRESENT CASE TWENTY THOUSAND RUPEES) MUST BE MADE BY WAY OF ACCO UNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT. 19. AS HELD BY THE APEX COURT IN CASE OF ATTAR SING H GURMUKH SINGH (SUPRA). '..IN OUR OPINION, THERE IS LITTLE MERIT I N THIS CONTENTION. SEC. 40A(3) MUST NOT BE READ IN ISOLATION OR TO THE EXCLUSION O F R. 6DD. THE SECTION MUST BE READ ALONG WITH THE RULE. IF READ TOGETHER, IT W ILL BE CLEAR THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT THE BUSINES S ACTIVITIES. THERE IS NO RESTRICTION ON THE ASSESSEE IN HIS TRADING ACTIVITI ES. SEC. 40A(3) ONLY EMPOWERS THE A.O. TO DISALLOW THE DEDUCTION CLAIMED AS EXPENDITURE IN RESPECT OF WHICH PAYMENT IS NOT MADE BY CROSSED CHE QUE OR CROSSED BANK DRAFT. THE PAYMENT BY CROSSED CHEQUE OR CROSSED BAN K DRAFT IS INSISTED ON TO ENABLE THE ASSESSING AUTHORITY TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF THE INCOME FROM UNDISCLOSE D SOURCES, THE TERMS OF S. 40A(3) ARE NOT ABSOLUTE. CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 17 RELEVANT FACTORS ARE NOT EXCLUDED. GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN T O THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE A.O. THE CIRCUMSTANCES UNDE R WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN S. 40A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYMENT. RULE 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PA YMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT IN THE CIRCUMSTANCES S PECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF S. 40A(3) AND R. 6DD THAT THEY ARE INTENDED TO REGULATE BUSINESS TRANSACTIONS AND TO PREVENT TH E USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTIONS: 20. IT WAS BECAUSE OF THESE CONSIDERATIONS THAT THI S COURT IN CASE OF HYNOUP FOODS (P.) LTD. (SUPRA) OBSERVED THAT THE GE NUINENESS OF THE PAYMENT AND THE IDENTIFY OF THE PAYEE ARE THE FIRST AND FOREMOST REQUIREMENTS TO INVOKE THE EXCEPTIONS CARVED OUT IN R. 6DD(J) OF THE IT RULES,1962. 21. IN THE PRESENT CASE, NEITHER THE GENUINENESS OF THE PAYMENT NOR THE IDENTITY OF THE PAYEE WERE IN ANY CASE DOUBTED. THE SE WERE THE CONCLUSIONS ON FACTS DRAWN BY THE CIT(A). THE TRIBUNAL ALSO DID NOT DISTURB SUCH FACTS BUT RELIED SOLELY ON R. 6DD(J) OF THE RULES TO HOLD THA T SINCE THE CASE OF THE ASSESSEE DID NOT FALL UNDER THE SAID EXCLUSION CLAU SE NOR WAS COVERED UNDER ANY OF THE CLAUSES OF R. 6DD, CONSEQUENCES ENVISAGE D IN S. 40A(3) OF THE ACT MUST FOLLOW. 22. IN OUR OPINION, THE TRIBUNAL COMMITTED AN ERROR IN COMING TO SUCH A CONCLUSION. WE WOULD BASE OUR CONCLUSIONS ON THE FO LLOWING REASONS: (A) THE PARAMOUNT CONSIDERATION OF SECTION 40A(3) IS TO CURB AND REDUCE THE POSSIBILITIES OF BLACK MONEY TRANSACTIONS. AS H ELD BY THE SUPREME COURT ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 18 IN ATTAR SINGH GURMUKH SINGH (SUPRA), SECTION 40A(3 ) OF THE ACT DOES NOT ELIMINATE CONSIDERATIONS OF BUSINESS EXPEDIENCIES. (B) IN THE PRESENT CASE, THE APPELLANT ASSESSEE W AS COMPELLED TO MAKE CASH PAYMENTS ON ACCOUNT OF PECULIAR SITUATION. SUC H SITUATION WAS AS FOLLOW- (I) THE PRINCIPAL COMPANY, TO WHICH THE ASSESSEE WAS A DISTRIBUTOR, INSISTED THAT CHEQUE PAYMENT FROM A CO-OPERATIVE BANK WOULD NOT DO, SINCE THE REALIZATION TAKES A LONGER TIME; (II) THE ASSESSEE WAS, THEREFORE, REQUIRED TO MAKE CASH PAYMENTS ONLY; (III) TATA TELE SERVICES LTD. ASSURED THE ASSESSEE THAT SUCH AMOUNT SHALL BE DEPOSITED IN THEIR BANK ACCOUNT ON BEHALF OF THE ASSESSEE; (IV) IT IS NOT DISPUTED THAT THE TATA TELE SERVICES LTD. DID NOT ACT ON SUCH PROMISE; (V) IF THE ASSESSEE HAD NOT MADE CASH PAYMENT AND RELIED ON CHEQUE PAYMENTS ALONE, IT WOULD HAVE RECEIVED THE RECHARGE VOUCHERS DELAYED BY 4/5 DAYS AND THEREBY SEVERELY AFFECTING ITS BUSINESS OP ERATIONS. WE WOULD FIND THAT THE PAYMENTS BETWEEN THE ASSESSE E AND THE TATA TELE SERVICES LTD. WERE GENUINE. THE TATA TELE SERVICES LTD. HAD INSISTED THAT SUCH PAYMENTS BE MADE IN CASH, WHICH TATA TELE SERV ICES LTD. IN TURN ASSURED AND DEPOSITED THE AMOUNT IN A BANK ACCOUNT. IN THE FACTS OF THE PRESENT CASE, RIGORS OF S. 40A(3) OF THE ACT MUST B E LIFTED. 23. WE NOTICE THAT THE DIVISION BENCH OF THE RAJAS THAN HIGH COURT IN CASE OF SMT. HARSHILA CHORDIA VS. ITO (2007) 208 CTR (RA J) HAD OBSERVED THAT THE EXCEPTIONS CONTAINED IN R. 6DD ARE NOT EXHAUSTIVE A ND THAT THE SAID RULE MUST BE INTERPRETED LIBERALLY. ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 19 34. IN CASE OF M/S AJMER FOOD PRODUCTS PVT. LTD., A JMER VS. JCIT (SUPRA), A SIMILAR ISSUE HAS COME UP BEFORE THE CO-ORDINATE BE NCH AND SPEAKING THROUGH ONE OF US, IT WAS HELD AS UNDER: 4.5 THE GENUINENESS OF THE TRANSACTION AS WELL AS THE IDENTITY OF THE PAYEE ARE NOT DISPUTED. FURTHER, THE APPELLANT HAS EXPLAI NED THE BUSINESS EXPEDIENCY OF MAKING THE CASH PAYMENTS TO BOTH THE PARTIES WHI CH HAS NOT BEEN CONTROVERTED BY THE REVENUE. FOLLOWING THE DECISION OF GUJARAT HIGH COURT IN CASE OF ANUPAM TELE SERVICES (SUPRA) AND RAJASTHAN HIGH COURT IN CASE OF HARSHILA CHORDIA (SUPRA), THE ADDITION OF RS. 45,73 8/- UNDER SECTION 40A(3) IS DELETED. 35. IN CASE OF GURDAS GARG VS. CIT(A), BATHINDA (SU PRA), THE MATTER WHICH CAME UP FOR CONSIDERATION BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT, THE FACTS OF THE CASE ARE PARI MATERIA TO THE INSTA NT CASE AND THE RATIO OF THE SAID DECISION CLEARLY APPLIES IN THE INSTANT CASE. IN THAT CASE, THE FACTS OF THE CASE WERE THAT THE ASSESSEE WAS ENGAGED IN TRADING IN PROPERTIES AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERV ED THAT THERE ARE TRANSACTIONS WHERE THE PAYMENTS HAVE BEEN MADE IN E XCESS OF RS. 20,000/- IN CASH WHICH WERE DISALLOWED U/S 40A(3) OF THE ACT. T HE HONBLE HIGH COURT HELD THAT RULE 6DD(J) IS NOT EXHAUSTIVE OF THE CIRCUMSTA NCES IN WHICH THE PROVISO TO SECTION 40A(3) IS APPLICABLE AND IT ONLY ILLUSTRATI VE. THE HONBLE HIGH COURT REFERS TO THE DECISION OF THE HONBLE RAJASTHAN HIG H COURT IN CASE OF SMT. HARSHILA CHORDIA V. ITO (SUPRA) AND THE DECISION OF HONBLE SUPREME COURT IN CASE OF ATTAR SINGH GURMUKH SINGH V. ITO (SUPRA). T HE HIGH COURT FURTHER OBSERVED THAT THE LD. CIT(A) HAS GIVEN A FINDING TH AT THE IDENTITY OF THE PAYEE I.E. VENDORS IN RESPECT OF LAND PURCHASE BY THE APP ELLANT WAS ESTABLISHED, THE SALE DEEDS WERE PRODUCED, THE GENUINENESS THEREOF WAS ACCEPTED AND THE AMOUNT PAID IN RESPECT OF EACH OF THESE AGREEMENT W AS SATISFIED BEFORE THE ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 20 STAMP REGISTRATION AUTHORITY AND THE TRANSACTIONS W ERE HELD TO BE GENUINE AND THE BAR AGAINST THE GRANT OF DEDUCTIONS U/S 40A(3) OF THE ACT WAS NOT ATTRACTED. THE HONBLE HIGH COURT FURTHER OBSERVED THAT THE TR IBUNAL DID NOT UPSET THESE FINDINGS INCLUDING AS TO THE GENUINENESS AND THE CO RRECTNESS OF THE TRANSACTIONS AND IT IS ALSO IMPORTANT TO NOTE THAT THE TRIBUNAL NOTED THE CONTENTION ON BEHALF OF THE APPELLANT THAT THERE WAS A BOOM IN THE REAL ESTATE MARKET AND THEREFORE IT WAS NECESSARY, THEREFORE, TO CONCLUDE THE TRANSA CTIONS AT THE EARLIEST AND NOT TO POSTPONE THEM; THAT THE APPELLANT DID NOT KNOW T HE VENDORS AND OBVIOUSLY THEREFORE, INSISTED FOR PAYMENT IN CASH AND THAT AS A RESULT THEREOF, PAYMENTS HAD TO BE MADE IMMEDIATELY TO SETTLE THE DEALS. THE TRIBUNAL DID NOT DOUBT THIS CASE. THE TRIBUNAL, HOWEVER, HELD THAT THE CLAIM FO R DEDUCTION WAS NOT SUSTAINABLE. IN VIEW OF SECTION 40A(3) AS THE PAYM ENTS WHICH WERE OVER RS. 20,000/- WERE MADE IN CASH. THE HONBLE HIGH COURT ACCORDINGLY OBSERVED THAT THE TRIBUNAL HAS NOT DISBELIEVED THE TRANSACTIONS OR THE GENUINENESS THEREOF NOR HAS IT DISBELIEVED THE FACT THAT PAYMENTS HAVIN G BEEN MADE. MORE IMPORTANTLY, THE REASONS FURNISHED BY THE APPELLANT FOR HAVING MADE THE CASH PAYMENTS, WHICH WE HAVE ALREADY ADVERTED TO, HAVE N OT BEEN DISBELIEVED. IN OUR VIEW, ASSUMING THESE REASONS TO BE CORRECT, THE Y CLEARLY MAKE OUT A CASE OF BUSINESS EXPEDIENCY. 36. THE CO-ORDINATE BENCH IN CASE OF M/S DHURI WINE VS DCIT (ITA NO. 1155/CHD/2013 & OTHERS DATED 09.10.2015) HAS HELD T HAT THE PROPOSITION SO LAID DOWN BY THE HONBLE HIGH COURT IN CASE OF GURD AS GARG (SUPRA) IS QUITE UNAMBIGUOUS TO THE EFFECT THAT EVEN IF THE CASE OF THE ASSESSEE DOES NOT FALL IN ANY OF THE CLAUSES OF RULE 6DD OF THE INCOME TAX RU LES, INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT CAN BE DISP ENSED WITH IF THE ASSESSEE IS ABLE TO PROVE THE BUSINESS EXPEDIENCY BECAUSE OF WH ICH IT HAS TO MAKE THE CASH PAYMENTS, THE GENUINENESS OF THE TRANSACTIONS HAVE ALSO TO BE VERIFIED. ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 21 37. THE CO-ORDINATE BENCH IN CASE OF RAKESH KUMAR V S. ACIT (ITA NO. 102(ASR)/2014 DATED 09.03.2016) RELYING ON THE DECI SION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN CASE OF GURDAS GARG (SUPRA) H AS HELD THAT THE GENUINENESS OF THE PAYMENT HAS NOT BEEN DOUBTED AS THE ASSESSING OFFICER HIMSELF HAS HELD THAT SALE DEEDS OF PROPERTIES WERE REGISTERED WITH THE REVENUE DEPARTMENT OF THE GOVERNMENT. THEREFORE, FO LLOWING THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT, THE PAYMENT FOR PURCHASE OF LAND WAS ALLOWED. 38. WE FURTHER NOTE THAT IN CASE OF M/S ACE INDIA A BODES LIMITED (DB APPEAL NO. 45/2012 DATED 11.09.2017), A SIMILAR ISSUE HAS COME UP BEFORE THE HONBLE RAJASTHAN HIGH COURT REGARDING PAYMENT FOR PURCHASE OF LAND FROM VARIOUS AGRICULTURIST FOR WHICH THE ASSESSEE HAS PAID CONSI DERATION IN CASH AND SHOWN THE LAND AS ITS STOCK-IN-TRADE. THE HONBLE RAJASTH AN HIGH COURT REFERRING TO THE INTENT BEHIND INTRODUCTION OF SECTION 40A(3) AND CA TENA OF DECISIONS RIGHT FROM ATTAR SINGH GURMUKH SINGH, SMT. HARSHILA CHORDIA, G URDAS GARG, ANUPAM TELE SERVICES REFERRED SUPRA HAS DECIDED THE ISSUE IN FA VOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 39. THE ISSUE WHICH IS BEING DISPUTED BEFORE US HAS TO BE CONSIDERED AND DECIDED IN LIGHT OF FACTS ON RECORD AND THE LEGAL P OSITION WHICH EMERGES FROM THE ABOVE REFERRED DECISIONS. THE FACTS OF THE CAS E ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FIRM HAS PURCHASE D 26 PIECES OF PLOT OF LAND IN THE MONTH OF APRIL AND MAY, 2012 FROM VARIOUS PE RSONS FOR A TOTAL CONSIDERATION OF RS. 2,46,28,425/-, OUT OF WHICH PA YMENT AMOUNTING TO RS. 1,71,67,000/- WERE MADE IN CASH TO VARIOUS PERSONS, PAYMENT AMOUNTING TO RS. 59,48,920/- WERE MADE IN CHEQUE TO VARIOUS PERS ONS, AND RS. 8,15,700/- AND RS. 6,84,296/- WERE PAID IN CASH TOWARDS STAMP DUTY AND COURT FEE RESPECTIVELY. DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSEE ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 22 SUBMITTED COPIES OF THE SALE DEED, THE PARTICULARS OF WHICH FIND MENTION ON PAGE 7 AND 8 OF THE ASSESSMENT ORDER. ON PERUSAL O F THE SAID DETAILS, IT IS OBSERVED THAT THE SAID DETAILS CONTAINS THE NAME OF THE SELLER, DATE OF SALE DEED, PLOT NO., PURCHASE VALUE, STAMP DUTY, COURT F EE AND MODE OF PAYMENT CASH/CHEQUE. THEREFORE, AS FAR AS THE IDENTITY OF THE PERSONS FROM WHOM THE PURCHASES HAVE BEEN MADE AND GENUINENESS OF THE TRA NSACTIONS OF PURCHASE OF VARIOUS PLOTS OF LAND AND PAYMENT IN CASH IS CONCER NED, THE SAME IS EVIDENCED BY THE REGISTERED SALE DEEDS AND THERE IS NO DISPUT E WHICH HAS BEEN RAISED BY THE REVENUE EITHER DURING THE ASSESSMENT PROCEEDING S OR BEFORE US. THE IDENTITY OF THE SELLERS AND GENUINENESS OF THE TRAN SACTIONS IS THEREFORE FULLY ESTABLISHED IN THE INSTANT CASE. 40. FROM PERUSAL OF THE ASSESSMENT ORDER, IT IS FUR THER NOTED THAT THE AO, ON PERUSAL OF THE DETAILS OF THE PROPERTIES PURCHASED, AS PER COPIES OF THE SALE DEED FURNISHED, HELD THAT THE ASSESSEE HAD MADE CAS H PAYMENTS REGULARLY AND NO SPECIFIC CIRCUMSTANCES HAVE BEEN BROUGHT TO HIS KNOWLEDGE THAT THE CASH PAYMENTS WERE MADE DUE TO SOME UNAVOIDABLE CIRCUMST ANCES. IT WAS HELD BY THE AO THAT MAXIMUM CASH PAYMENTS WERE MADE TO PERS ONS RESIDING IN JAIPUR CITY AND IN SINGLE FAMILY, REPEATED CASH PAYMENTS W ERE MADE WHICH ITSELF SHOWS THAT THERE WERE NO UNAVOIDABLE CIRCUMSTANCES TO MAKE CASH PAYMENTS TO THE SELLERS. WHAT IS THEREFORE RELEVANT TO NOTE THAT THE AO HAS APPRECIATED THE NECESSITY OF DETERMINING THE UNAVOIDABLE CIRCUM STANCES WHICH COULD HAVE LED THE ASSESSEE TO MAKE CASH PAYMENTS. DURING THE COURSE OF ASSESSEMENT PROCEEDINGS, IT WAS SUBMITTED BY THE ASSESSEE THAT THE PAYMENT FOR PURCHASE OF LAND HAS BEEN MADE IN CASH BECAUSE THE SELLERS W ERE NEW TO THE ASSESSEE AND REFUSED TO ACCEPT THE CASH. IT WAS SUBMITTED TH AT THE DELAY IN MAKING THE CASH PAYMENT, IT COULD HAVE LOST THE LAND DEALS. IN THIS REGARD, THE LD AR SUBMITTED BEFORE US THAT THE ASSESSEE HAD PURCHASED THE LANDS BOTH THROUGH CASH AND CHEQUES. BASED ON THE REQUIREMENT OF THE S ELLER, ASSESSEE HAD SELECTED THE MODE OF PAYMENT. FOR THE SELLERS, WHO HAD INSISTED THE PAYMENTS ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 23 IN CASH, ASSESSEE HAD WITHDRAWN THE CASH FROM BANK ON THE SAME DATE OF REGISTRY AND MADE THE PAYMENTS TO SELLER ACCORDINGL Y. THE WITHDRAWALS FROM BANK AND PAYMENTS TO SELLER HAVE BEEN TABULATED BEL OW AS PER DATES BELOW:- DATE BANK GRAND TOTAL CUMULATIVE BALANCE UTILIZATION NET BALANCE ICICI BANK YES BANK DATE AMOUNT 18,00,000 5-APR-12 14,50,000 3,50,00 18,00,000 18,00,000 5, 07,00 9-APR-12 - 9,00,000 9,00,000 27,00,000 9-APR-12 21, 93,000 3,34,000 11-APR-12 - 2,00,000 2,00,000 29,00,000 11-APR-12 3 ,73,000 3,34,000 12-APR-12 - - - 29,00,000 - - 3,34,000 13-APR-12 - - - 29,00,000 - - 11,97,100 19-APR-12 - 30,00,000 30,00,000 59,00,000 23-APR-12 21,36,900 11,57,000 24-APR-12 30,00,000 25,00,000 55,00,000 1,14,00,000 24-APR-12 55,40,100 11,57,000 25-APR-12 - - - 1,14,00,000 - - 11,57,000 30-APR-12 - - - 1,14,00,000 - - 11,57,000 4-MAY-12 - - - 1,14,00,000 - - 11,57,000 7-MAY-12 - - - 1,14,00,000 - - 11,57,000 8-MAY-12 19,00,000 23,00,000 42,00,000 1,56,00,000 8-MAY-12 38,55,000 15,02,000 12-MAY-12 - - - 1,56,00,000 - - 15,02,000 14-MAY-12 - - - 1,56,00,000 - - 15,02,000 15-MAY-12 - - - 1,56,00,000 - - 15,02,000 16-MAY-12 - 15,00,000 15,00,000 1,71,00,000 - - 30, 02,000 17-MAY-12 - 15,00,000 15,00,000 1,86,00,000 17-MAY- 12 30,69,000 14,33,000 TOTAL 63,50,000 1,42,50,000 1,86,00,000 1,71,67,0 00 ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 24 41. IT WAS SUBMITTED BY THE LD AR THAT IN ORDER TO SECURE THE DEAL, ASSESSEE HAD NO OTHER OPTION BUT TO MAKE THE PAYMENT IN CASH . CASH PAYMENTS WERE MADE FROM THE DISCLOSED SOURCES BEING THE AMOUNT WI THDRAWN FROM BANK. IT WAS FOR SHEER INSISTENCE OF THE SELLER THAT THE PAY MENTS WERE MADE IN CASH. HAD THE ASSESSEE DENIED THE CASH PAYMENT LOOKING TO THE PROVISIONS OF SECTIONS 40A(3), THE DEAL COULD NOT HAVE BEEN FINALIZED. IN SUCH CIRCUMSTANCES, IN THE BUSINESS INTEREST AND TO COMPLETE THE DEAL, THE ASS ESSEE HAD CHOSEN TO MAKE THE PAYMENTS IN CASH FORTIFIED THROUGH REGISTERED S ALE DEED. THE PAYMENT HAS BEEN MADE OUT OF THE EXPLAINED SOURCES, THROUGH THE REGISTERED DOCUMENT AND AS A DISCLOSED TRANSACTION. 42. WE FIND FORCE IN THE CONTENTIONS SO RAISED BY T HE LD AR. THE TRANSACTIONS HAVE BEEN EXECUTED BY THE ASSESSEE WITHIN A SPAN OF ONE AND HALF MONTH AND THERE ARE TRANSACTIONS WHERE THE PAYMENT HAS BEEN M ADE THROUGH CHEQUE AND THERE ARE TRANSACTIONS WHERE THE PAYMENT HAS BEEN M ADE THROUGH CASH. THE SAID CONTENTIONS ARE SUPPORTED BY THE FACT THAT ON THE SAME DAY, THERE ARE CASH AND CHEQUE PAYMENTS AS EVIDENCED FROM THE DETA ILS OF THE TRANSACTIONS APPEARING AT PAGE 7 AND 8 OF THE ASSESSMENT ORDER. IT IS THEREFORE CLEAR THAT THE ASSESSEE WAS HAVING SUFFICIENT BANK BALANCE AND ONLY AT THE INSISTENCE OF THE SPECIFIC SELLERS, THE ASSESSEE HAS WITHDRAWN CA SH AND MADE PAYMENT TO THEM AND WHEREVER, THE SELLER HAS INSISTED ON CHEQU E PAYMENTS, THE PAYMENT HAS BEEN MADE BY CHEQUE. THIS MAKES OUT A CASE THA T THE ASSESSEE HAS BUSINESS EXPEDIENCY UNDER WHICH IT HAS TO MAKE PAYM ENT IN CASH AND IN ABSENCE OF WHICH, THE TRANSACTIONS COULD NOT BE COM PLETED. THE SECOND PROVISO TO SECTION 40A(3) REFERS TO THE NATURE AND EXTENT OF BANKING FACILITY, CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELE VANT FACTORS WHICH MEANS THAT THE OBJECT OF THE LEGISLATURE IS NOT TO MAKE D ISALLOWANCE OF CASH PAYMENTS WHICH HAVE TO BE COMPULSORY MADE BY THE ASSESSEE ON ACCOUNT OF BUSINESS EXPEDIENCY. FURTHER, THE SOURCE OF CASH PAYMENTS I S CLEARLY IDENTIFIABLE IN FORM OF THE WITHDRAWALS FROM THE ASSESSEES BANK ACCOUNT S AND THE SAID DETAILS WERE ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 25 SUBMITTED BEFORE THE LOWER AUTHORITIES AND HAVE NOT BEEN DISPUTED BY THEM. IT IS NOT THE CASE OF THE REVENUE EITHER THAT UNACCOUN TED OR UNDISCLOSED INCOME OF THE ASSESSEE HAS BEEN UTILISED IN MAKING THE CAS H PAYMENTS. 43. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF T HE CASE AND RESPECTFULLY FOLLOWING THE LEGAL PROPOSITION LAID DOWN BY THE VA RIOUS COURTS AND COORDINATE BENCHES REFERRED SUPRA, WE ARE OF THE VIEW THAT THE IDENTITY OF THE PERSONS FROM WHOM THE VARIOUS PLOTS OF LAND HAVE BEEN PURCH ASED AND SOURCE OF CASH PAYMENTS AS WITHDRAWALS FROM THE ASSESSEES BANK AC COUNT HAS BEEN ESTABLISHED. THE GENUINENESS OF THE TRANSACTION HAS BEEN ESTABLISHED AS EVIDENCED BY THE REGISTERED SALE DEEDS AND LASTLY, THE TEST OF BUSINESS EXPEDIENCY HAS BEEN MET IN THE INSTANT CASE. FURTHE R, AS HELD BY THE HONBLE RAJASTHAN HIGH COURT IN CASE OF HARSHILA CHORDIA (S UPRA), THE CONSEQUENCES, WHICH WERE TO BEFALL ON ACCOUNT OF NON-OBSERVATION OF SUB-SECTION (3) OF SECTION 40A MUST HAVE NEXUS TO THE FAILURE OF SUCH OBJECT. THEREFORE THE GENUINENESS OF THE TRANSACTIONS AND IT BEING FREE F ROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERATION. THE INTEN T AND THE PURPOSE FOR WHICH SECTION 40A(3) HAS BEEN BROUGHT ON THE STATUTE BOOK S HAS BEEN CLEARLY SATISFIED IN THE INSTANT CASE. THEREFORE, BEING A C ASE OF GENUINE BUSINESS TRANSACTION, NO DISALLOWANCE IS CALLED FOR BY INVOK ING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 6. IN THE INSTANT CASE, WE FIND THAT THE IDENTITY O F THE PERSONS NAMELY SMT TEJA DEVI AND SMT NANA DEVI FROM WHOM THE PURCHASE OF LAND HAVE BEEN MADE BY THE ASSESSEE HAS BEEN ESTABLISHED AND THE SOURCE OF CASH PAYMENTS IS DULY REFLECTED IN ASSESSEES REGULAR BOOKS OF ACCOUNTS A ND THE SAID DETAILS WERE SUBMITTED BEFORE THE LOWER AUTHORITIES AND HAVE NOT BEEN DISPUTED BY THEM. IT IS NOT THE CASE OF THE REVENUE THAT ANY UNACCOUNTED OR UNDISCLOSED INCOME OF THE ASSESSEE HAS BEEN UTILISED IN MAKING THE CASH P AYMENTS. THE GENUINENESS AND THE BONAFIDE OF BOTH THE TRANSACTIONS HAVE BEEN ESTABLISHED AS EVIDENCED ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 26 BY SALE DEEDS AND ASSESSEES BOOKS OF ACCOUNTS WHER EIN THE TRANSACTION PARTICULARS HAVE BEEN DULY REFLECTED. IN TERMS OF B USINESS EXPEDIENCY, THE ASSESSEE HAS EXPLAINED THAT THE SELLER SMT TEEJA DE VI IS A RESIDENT OF VILLAGE CHOSLA WHICH HAS NO BANKING FACILITY AND THEREFORE, SHE DOESNT HAD AN OCCASION TO OPEN ANY BANK ACCOUNT IN ABSENCE OF ANY BANK AND IN FACT, SHE DOESNT HAVE ANY BANK ACCOUNT OPENED AND MAINTAINED IN HER NAME AS ON THE DATE OF EXECUTION OF THE SALE DEED AND THEREFORE, IN SUCH C IRCUMSTANCES, THE ASSESSEE HAD NO OPTION BUT TO DISCHARGE THE SALE CONSIDERATI ON IN CASH. IN SUPPORT, THE LD A/R HAS SUBMITTED THE AFFIDAVIT OF THE ASSESSEE AS WELL AS A CONFIRMATION ISSUED BY THE SARPANCH WHICH REMAIN UNCONTROVERTED BEFORE US. WE THEREFORE FIND THAT WHERE THE SELLER RESIDES IN A VILLAGE WHI CH DOESNT HAVE A BANKING FACILITY AND THEREFORE, THE SELLER DOESNT HAVE A B ANK ACCOUNT IN HER NAME AND BOTH THE PARTIES AGREE TO EXECUTE A SALE DEED FOR S ALE AND PURCHASE OF LAND AND THE CONSIDERATION IS DISCHARGED IN CASH, IT IS CLEA RLY A CASE OF BUSINESS EXPEDIENCY WHICH HAS NECESSITATED THE ASSESSEE WHO WANTS TO ACQUIRE THE SAID PIECE OF LAND TO DISCHARGE THE SALE CONSIDERATION I N CASH DUE TO LACK OF FORMAL BANKING FACILITY AND IN ABSENCE OF ANY BANK ACCOUNT IN NAME OF THE SELLER. FURTHER, WE FIND THAT SALE DEED HAS BEEN EXECUTED O N 18.8.2013 AND THE PAYMENT HAS BEEN MADE ON THE SAID DATE WHICH HAPPEN S TO BE SUNDAY AND THUS A BANK HOLIDAY AGAIN NECESSITATING THE PAYMENT IN CASH COUPLED WITH THE FACT THAT THE SELLER DOESNT HAVE A BANK ACCOUNT. SIMILARLY, IN RESPECT OF SECOND SALE TRANSACTION, THE TEST OF BUSINESS EXPEDIENCY H AS BEEN MET AS THE INITIAL/ADVANCE PAYMENT OF RS 1 LAC AS INSISTED BY THE SELLER HAS ONLY BEEN MADE IN CASH TO SECURE THE TRANSACTION AND REST ALL PAYM ENTS HAVE BEEN MADE THROUGH CHEQUE. AS HELD BY THE HON'BLE RAJASTHAN H IGH COURT IN CASE OF SMT. HARSHILA CHORDIA (SUPRA), THE CONSEQUENCES, WHICH W ERE TO BEFALL ON ACCOUNT OF NON-OBSERVATION OF SUB-SECTION (3) OF SECTION 40A M UST HAVE NEXUS TO THE FAILURE OF SUCH OBJECT. THEREFORE THE GENUINENESS O F THE TRANSACTIONS AND IT BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TA X IS RELEVANT CONSIDERATION FOR WHICH SECTION 40A(3) HAS BEEN BROUGHT ON THE STATUT E BOOKS AND WHICH HAS ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 27 BEEN SATISFIED IN THE INSTANT CASE. SIMILAR VIEW HA S BEEN TAKEN BY THE HON'BLE RAJASTHAN HIGH COURT IN ITS SUBSEQUENT DECISION IN CASE OF CIT VS SOLUTIONS REPORTED IN 80 TAXMANN.COM 246 WHEREIN IT WAS HELD AS UNDER: 11. THE APPELLATE AUTHORITIES HAVE RELIED UPON THE JUDGMENT RENDERED IN THE CASE OF ATTAR SINGH GURMUKH SINGH V. ITO [1991] 191 ITR 667/59 TAXMAN 11 (SC), WHERE THE HON'BLE APEX COURT HAS OB SERVED AS UNDER (PAGE 673) : 'THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE. CONS IDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLU DED. GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OU T OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO T HE SATISFACTION OF THE ASSESSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A(3) WAS NOT PRACTIC ABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYME NT. RULE 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT I N THE CIRCUMSTANCES SPECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF SECTION 40A(3) AND RULE 6DD THAT THEY ARE INTENDED TO REGUL ATE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTION S.' 12. THE AFORESAID OBSERVATION DOES APPLY IN THE INS TANT CASE. THE ASSESSING OFFICER ON THE FACTS NOTICED HAS BEEN UNA BLE TO MAKE OUT A CASE OF INVOLVEMENT OF UNACCOUNTED MONEY. 13.IT IS ALSO A FINDING OF FACT RECORDED BY THE COM MISSIONER OF INCOME- TAX (APPEALS) THAT COPIES OF THE LEDGER ACCOUNTS WE RE PRODUCED BEFORE THE ASSESSING OFFICER WHO HAS NOT FOUND ANY DISCREP ANCY IN SUCH BOOKS OF ACCOUNT AND NO UNACCOUNTED TRANSACTION HAS BEEN REPORTED/NOTICED BY THE ASSESSING OFFICER. ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 28 7. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF TH E CASE AND RESPECTFULLY FOLLOWING THE LEGAL PROPOSITION LAID DOWN BY THE CO URTS INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT AND OF THE COORDINATE BEN CHES IN VARIOUS CASES REFERRED SUPRA, NO DISALLOWANCE IS CALLED FOR UNDER SECTION 40A(3) OF THE ACT AND THE SAME IS DIRECTED TO BE DELETED. IN THE RESU LT, THE GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 8. NOW COMING TO GROUND NO. 2 OF THE ASSESSEES AP PEAL RELATING TO ADDITION OF RS 9 LACS IN RESPECT OF UNSECURED LOANS TAKEN BY THE ASSESSEE. 9. IN THIS REGARD, THE LD. AR SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. AO HAD DIRECTED THE ASSESSEE TO FU RNISH DETAILS OF UNSECURED LOANS. IN RESPONSE TO WHICH, ASSESSEE FURNISHED CON FIRMATIONS OF ALL THE PARTIES ALONGWITH COMPLETE NAME, ADDRESSES, TAX DETAILS, ET C. THE LD.AO THEN FURTHER ISSUED SUMMONS U/S 133(6) FOR VERIFYING THE LOANS T AKEN BY THE ASSESSEE DURING THE YEAR. IN RESPONSE TO WHICH MOST OF THE P ARTIES FURNISHED NECESSARY DOCUMENTS AS DESIRED BY LD. AO. HOWEVER, ONLY FOUR PARTIES FAILED TO COMPLY WITH SUMMONS AND LD. AO THUS CONCLUDED THAT ASSESSE E HAS FAILED TO PROVE IDENTITY, GENUINENESS AND CREDITWORTHINESS OF SUCH LENDERS AND MADE THE ADDITION OF RS.9,00,000/- WHICH STOOD CONFIRMED BY LD. CIT(A) IN RESPECT OF FOLLOWING PARTIES. S. NO. NAME OF PARTY AMOUNT 1. MANJU DEVI BAID 2,50,000/- 2. RASHMI BAID 2,50,000/- 3. VARSHA GOYAL 3,00,000/- 4. SUBHADHRA KUMARI MUNOT 1,00,000/- 10. IT WAS SUBMITTED THAT DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, ASSESSEE HAS SUBMITTED NECESSARY DOCUMENTATION IN S UPPORT OF IDENTITY OF THE CREDITORS BY FILING THE CONFIRMATIONS OF ALL THE PA RTIES, WHEREIN PAN AS WELL AS COMPLETE ADDRESS OF THE PARTIES WAS MENTIONED, AND GENUINENESS AND ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 29 CREDITWORTHINESS OF THE TRANSACTIONS HAS ALSO BEEN PROVED SINCE SUMMONS WERE DULY SERVED UPON ALL THE PARTIES AND NONE OF THEM H AD DENIED THE FACT THAT THEY HAVE LENT MONEY TO THE ASSESSEE. ALSO ALL THE LOANS WERE RECEIVED THROUGH BANKING CHANNELS AND ALL THE CREDITORS WERE REGULAR TAXPAYERS. 11. AS REGARDS NON- APPEARANCE OF THE FOUR CREDITOR S STATED ABOVE, IT WAS SUBMITTED THAT COMMON MEN ALWAYS HESITATE IN APPEAR ING BEFORE INCOME TAX DEPARTMENT FOR THE FEAR OF GETTING INTO UNNECESSARY LITIGATION. IT IS ALSO A MATTER OF FACT THAT THE ASSESSEE BEING A BORROWER A LWAYS HAS THE SUBDUED POSITION AND COULD NOT COMPEL/PURSUE THE LENDER FOR PHYSICAL APPEARANCE OR GIVE ANY FURTHER DOCUMENTS AS ASKED FOR OR FILE THE NECESSARY DOCUMENTS AGAIN, MORE PARTICULARLY WHEN THEY HAD ALREADY FURNISHED C ONFIRMATION OF LOAN, THEIR PAN AND COMPLETE ADDRESS THROUGH AR OF ASSESSEE. IT IS FURTHER SUBMITTED THAT SINCE THEY ARE ASSESSED TO TAX, THEIR CREDITWORTHIN ESS COULD ALSO NOT BE DOUBTED MORE PARTICULARLY WHEN THE ASSESSEE HAD PAID INTERE ST AFTER DEDUCTION OF TAX AT SOURCE AND NECESSARY RETURNS OF TDS WERE ALSO FILED BEFORE LD. AO. IN THIS REGARD, RELIANCE WAS PLACED ON THE CO-ORDINATE BENC H DECISION IN THE CASE OF UMBRELLA PROJECTS PVT. LTD. VS. ITO (ITA NO. 5944/D EL/2014) IN SUPPORT OF THE PROPOSITION THAT NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE MERELY BECAUSE THE REPLY TO NOTICES ISSUED U/S 133( 6) HAVE NOT BEEN COMPLIED WITH. IT WAS ACCORDINGLY SUBMITTED THAT ADDITION M ADE BY THE AO SOLELY FOR NON-COMPLIANCE TO NOTICE U/S 131 DESERVE TO BE DELE TED MORE PARTICULARLY WHERE THE SUMMONS WERE DULY SERVED AND AMOUNT WAS T RANSACTED THROUGH BANKING CHANNELS AND THE LENDERS WERE DULY ASSESSED TO TAX. 12. PER CONTRA, THE LD. DR SUBMITTED THAT DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE SUMMONS WERE ISSUED TO THE PARTIES U/S 131(1) BUT NONE OF THE PARTIES ATTENDED NOR ANY REPLY WAS RECEIVED FRO M THE SAID PARTIES. THE ASSESSEE WAS ALSO ASKED TO PRODUCE THE PARTIES AND ESTABLISHED THE CREDIT- ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 30 WORTHINESS OF THE PARTIES AND GENUINENESS OF THE TR ANSACTIONS. THE ASSESSEE ONLY FURNISHED CONFIRMATION OF ONE PARTY SUBHADRA K UMARI MUNOT BUT IN THIS CASE ALSO, NO BANK STATEMENT AND INCOME TAX RETURN WERE PRODUCED. HENCE, THE CREDIT WORTHINESS AND GENUINENESS OF THE CASH C REDITORS REMAINED UNVERIFIED AND THE ADDITION HAVE BEEN RIGHTLY MADE BY THE ASSESSING OFFICER U/S 68 AND WHICH HAS BEEN CONFIRMED BY THE LD. CIT(A). SHE ACCORDINGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS IN BUSINESS OF REAL ESTA TE AND FINANCING AND DURING THE YEAR UNDER CONSIDERATION, THERE ARE UNSECURED L OAN TRANSACTIONS TO THE TUNE OF RS 13,64,34,000/-. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE AO DESIRED TO VERIFY THESE LOAN TRANSACTIONS AND IN RE SPONSE, NECESSARY CONFIRMATIONS OF ALL THE LOAN TRANSACTIONS CONTAINI NG NAME, ADDRESS, PAN NUMBER, AMOUNT OF LOAN ADVANCED, RATE OF INTEREST, PAYMENT OF INTEREST AND TDS ON SUCH INTEREST, ETC WERE SUBMITTED BEFORE THE AO. THE SAME WERE TAKEN ON RECORD BY THE AO AND TO CARRY OUT FURTHER VERIFICATION, THE AO ISSUED NOTICES U/S 133(6) AND IN RESPONSE, ALL PARTIES EXC EPT SIX PARTIES RESPONDED TO THE SAID NOTICES AND NO ADVERSE VIEW WAS TAKEN BY T HE AO IN RESPECT OF THESE PARTIES WHO HAD RESPONDED TO THE NOTICES U/S 133(6) OF THE ACT. IN RESPECT OF REMAINING SIX PARTIES TO WHOM THE NOTICES WERE ISSU ED U/S 133(6) AND WHO HAVE NOT RESPONDED, THE ASSESSEE WAS AGAIN ASKED TO SUBMIT DETAILS. THE ASSESSEE THEREAFTER REACHED OUT TO THESE SIX PARTIE S AND TWO OF THEM RESPONDED AND NECESSARY DETAILS WERE SUBMITTED AND IN RESPECT OF REMAINING FOUR PARTIES, THE AO PROCEEDED AND MADE ADDITION U/ S 68 HOLDING THEM AS NOT SATISFACTORY EXPLAINED. WE THEREFORE FIND THAT WHE RE THE PARTIES TO WHOM THE NOTICES WERE ISSUED U/S 133(6) AND WHO HAVE CHOSEN NOT TO RESPOND AS THE NOTICES DIDNT RETURNED UNSERVED, THE AO HAS PROCEE DED TO MAKE THE ADDITION IN THE HANDS OF THE ASSESSEE AND THE PARTIES WHICH HAV E RESPONDED TO SUCH ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 31 NOTICES, THE AO HAS ACCEPTED THE TRANSACTIONS AS GE NUINE AND NO ADDITION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE. WE THEREFOR E FIND THAT MERELY ON ACCOUNT OF NON- RECEIPT OF RESPONSE TO NOTICES U/S 133(6) FROM THESE PARTIES, THE ADDITIONS HAS BEEN MADE BY THE AO. THE AO HAS NOT DOUBTED THE DETAILS AND OTHER PARTICULARS SO SUBMITTED BY THE ASSESSEE IN RESPECT OF THESE PARTIES. THE ASSESSEE HAS SUBMITTED NAME AND ADDRESS OF THES E PARTIES, THEIR PAN NUMBERS, THE AMOUNT RECEIVED THROUGH BANKING CHANNE L, THE QUANTUM OF UNSECURED LOAN, THE RATE OF INTEREST PAID ON SUCH L OAN TRANSACTIONS AND TDS DONE ON SUCH INTEREST PAYMENTS AND NECESSARY CONFIR MATION OF THESE PARTIES HAVE BEEN SUBMITTED WHEREIN THEY HAVE ACKNOWLEDGED THE TRANSACTION AND THE OUTSTANDING BALANCE IN THEIR RESPECTIVE LOAN ACCOUN TS. WE FIND THAT SIMILAR DETAILS WERE FURNISHED IN RESPECT OF OTHER LOAN TRA NSACTIONS AND WHICH HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER AND THEREFOR E, THERE CANNOT BE A DIFFERENT BENCHMARK IN TERMS OF EXAMINING THESE TRA NSACTIONS UNLESS THERE IS SOMETHING ADVERSE WHICH IS NOTICED BY THE ASSESSING OFFICER. THE NOTICES HAVE BEEN DULY SERVED ON THESE PARTIES AND THEREFORE, IT IS NOT A CASE WHERE WRONG NAME AND ADDRESS HAVE BEEN FURNISHED BY THE ASSESSE E. WHERE THE ASSESSEE IS IN THE FINANCING BUSINESS AND THERE ARE LOAN TRA NSACTIONS TO THE TUNE OF RS 13.64 CRORES IN RESPECT OF WHICH NECESSARY DETAILS AND OTHER CONFIRMATIONS HAVE BEEN FILED AND THE NOTICES HAVE BEEN RESPONDED, THE N MERELY BECAUSE 4 PERSONS HAVING TRANSACTIONS WORTH RS 9 LACS, HAVING RECEIVED THE NOTICES, CHOOSEN NOT TO RESPOND TO THE SAID NOTICES CANNOT B E HELD AGAINST THE ASSESSEE. IT IS NOT THE CASE OF THE REVENUE EITHER THAT THE CONFIRMATIONS OF THESE PARTIES SO FURNISHED DURING THE COURSE OF ASS ESSMENT PROCEEDINGS ARE EITHER FALSE OR HAVE BEEN FORGED. ONCE THESE CONFI RMATIONS HAVE BEEN ACCEPTED AND THE TRANSACTIONS HAVE BEEN EXECUTED BY THE ASSESSEE AS PART OF ITS NORMAL FINANCING BUSINESS THROUGH BANKING CHANN EL AND THE TRANSACTIONS CARRY THE NECESSARY ATTRIBUTES OF A LOAN TRANSACTIO N WHERE THE AO HAS TAKEN INTO CONSIDERATION THE CONFIRMATION AND OTHER DETAI LS SUBMITTED BY THE ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 32 ASSESSEE, NO ADVERSE VIEW CAN BE TAKEN AGAINST THE ASSESSEE AS THE ONUS CANNOT BE SHIFTED BACK TO THE ASSESSEE IN ABSENCE O F ANY ADVERSE FINDINGS ON RECORD IN TERMS OF DOCUMENTATION SO SUBMITTED BY TH E ASSESSEE. GIVEN THAT THESE ARE EXISTING INCOME TAX ASSESSEES, THERE IS N OTHING ON RECORD THAT THE AO HAS TAKEN ANY FURTHER STEPS IN TERMS OF ISSUING SUM MONS U/S 131 OR REACHING OUT TO JURISDICTIONAL OFFICERS FOR VERIFYING THEIR TAX RECORDS, ETC. SIMILAR VIEW HAS BEEN TAKEN BY THE COORDINATE BENCH IN CASE OF UMBRELLA PROJECTS PVT LTD (SUPRA) WHEREIN THE RELEVANT FINDINGS ARE CONTAINED AT PARA 10 WHICH READ AS UNDER: 10. IN VIEW OF THE ABOVE DOCUMENTS AND EVIDENCES F ILED BY THE ASSESSEE, WE ARE OF THE OPINION THAT THESE ARE SUFF ICIENT TO DISCHARGE ITS INITIAL ONUS REGARDING THE IDENTITY, CREDITWORTHINE SS AND GENUINENESS AS REQUIRED UNDER SECTION 68 OF THE ACT. THE ASSESSEE HAVING DISCHARGED ITS ONUS, IT WAS UPON THE AO TO BRING MATERIAL OR EVIDE NCE TO DISCREDIT THE SAME. IN THE PRESENT CASE, FROM THE ASSESSMENT ORDE R, IT IS EVIDENT THAT NO ADVERSE MATERIAL IS AVAILABLE WITH THE AO. THERE IS NO ALLEGATION AGAINST ANY OF THE ABOVE 4 SHAREHOLDERS OF DOING AN YTHING WRONG ON RECORD. THE AO HAS DRAWN ADVERSE INFERENCE AS HE DI D NOT RECEIVE REPLY FROM THE 4 AFORESAID SHAREHOLDERS IN RESPONSE TO NO TICE ISSUED BY HIM UNDER SECTION 133(6). ON THIS ISSUE, FIRSTLY, THE L D. AR HAS DRAWN OUR ATTENTION TO THE REPLIES ALONG WITH EVIDENCES SUBMI TTED BY THESE 4 SHAREHOLDERS TO THE AO TO DISCREDIT THE ALLEGATION OF THE AO THAT HE DID NOT RECEIVE REPLY IN RESPONSE TO NOTICE ISSUED BY H IM UNDER SECTION 133(6). DE HORSE THE NON-RECEIPT OF THE REPLY, EVEN FOR THE SAKE OF ARGUMENT WE ASSUME THAT THE AO HAS NOT RECEIVED THE REPLY, STILL THE FACT REMAINS THAT 133(6) NOTICE WERE SERVED ON THESE FOU R SHAREHOLDERS. ON GOING THROUGH THE ASSESSMENT ORDER WE NOTE THAT IT IS NOT THE CASE OF THE AO THAT NOTICES HAVE COME BACK UNSERVED OR THESE SH AREHOLDERS WERE ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 33 NOT AVAILABLE AT THE ADDRESS GIVEN BY THE ASSESSEE. IF THAT BE SO, WE ARE OF THE VIEW THAT NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE MERELY BECAUSE REPLY HAS NOT BEEN RECEIVED BY THE A O IN RESPONSE TO NOTICE ISSUED UNDER SECTION 133(6), BUT MERELY NON- RECEIPT OF REPLY CAN BE A JUSTIFICATION FOR DRAWING ADVERSE INFERENCE. O UR THIS VIEW IS SUPPORTED BY THE JUDGMENT OF THE HONBLE SUPREME CO URT IN THE CASE OF CIT VS. ORISSA CORPORATION 159 ITR 78 WHERE A SIMIL AR ISSUE HAS COME UP. THE FINDING OF THE HONBLE COURT IN THIS REGARD READS AS UNDER:- IN THIS CASE, THE ASSESSEE HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE KNOWLEDGE OF THE R EVENUE THAT THE SAID CREDITORS WERE INCOME-TAX ASSESSEES. THEIR INDEX NU MBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUIN G NOTICES UNDER SECTION 131 AT THE INSTANCE OF THE ASSESSEE, DID NO T PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CRE DITWORTHY OR WERE SUCH WHO COULD ADVANCE THE ALLEGED LOANS. THERE WAS NO EFFORT MADE TO PURSUE THE SO-CALLED ALLEGED CREDITORS. IN THOSE CI RCUMSTANCES, THE ASSESSEE COULD NOT DO ANYTHING FURTHER. IN THE PREM ISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSEE HAS DISCHA RGED THE BURDEN THAT LAY ON HIM, THEN IT COULD NOT BE SAID THAT SUCH A C ONCLUSION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. I F THE CONCLUSION IS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH ARISES. 14. IN THE RESULT, THE ADDITION SO MADE BY THE AO A ND CONFIRMED BY THE LD CIT(A) IS HEREBY SET-ASIDE AND THE GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO. 1077/JP/2018 SHRI RAVINDER KUMAR SHARMA, JAIPUR VS. DCIT, JAIPUR 34 ORDER PRONOUNCED IN THE OPEN COURT ON 11/11/2020. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11/11/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI RAVINDER KUMAR SHARMA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CIRCLE-07, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1077/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR