ACIT, Mangalore V. M/s Mohtisham Estates Pvt. Ltd., Mangalore

ITA 1392/BANG/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90050 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRI BUNAL BANGALORE BENCH C, BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1392(B)/2012 (ASSESSMENT YEAR : 2009-10) AND ITA NO.1409(B)/2013 (ASSESSMENT YEAR 2009-10) THE ASST. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE, MANGALORE. APPELLANT VS M/S MOHTISHAM ESTATES PVT.LTD- IN ITA NO.1392(B)/20 12 & M/S MOHTISHAM COMPLEXES PVT.LTD. IN ITA NO.1409(B)/ 2013 7 TH FLOOR, EMPIRE MALL, MG ROAD, MANGALORE PAN NO.AAFCM1684C RESPONDENT AND ITA NO.1462(B)/2013 (ASSESSMENT YEAR 2009-10) (BY ASSESSEE) REVENUE BY : SHRI R.K.MISHRA, CIT-III ASSESSEE BY : SHRI R. KRISHNAN, CA DATE OF HEARING : 01-07-2015 DATE OF PRONOUNCEMENT : 17-07-2015 O R D E R PER BENCH: THESE ARE THREE APPEALS IN THE CASE OF TWO ASSESSE ES FOR THE ASSESSMENT YEARS 2009-10. THE REVENUE HAS FILED TW O APPEALS IN ITA NO.1392(B)/12 AND 1409(B)/13 AND THE ASSESSEE HAS F ILED A CROSS APPEAL ITA NOS.1392(B)12,1409(B)13 & 1462-13 2 BEING ITA NO.1462(B)/13. SINCE COMMON ISSUES ARE I NVOLVED IN THESE APPEALS AND THE FACTS GIVING RISE TO THE ADDITION I N QUESTION ARE COMMON IN RESPECT OF THESE TWO RELATED ASSESSEES THEREFOR E, FOR THE SAKE OF CONVENIENCE THESE THREE APPEALS WERE HEARD TOGETHER AND DISPOSED OF BY THIS COMPOSITE ORDER. 2. THE BRIEF FACTS EMERGING FROM THE RECORDS OF TH ESE CASES ARE THAT A SEARCH & SEIZURE OPERATION WAS CARRIED OUT ON 13 -02-2009 IN THE GROUP OF MOHTISHAM COMPLEXES (P) LTD. THE CASE OF THE AS SESSEE WAS TAKEN UP FOR SCRUTINY. THE AO ON RECEIPT OF THE SEIZED DOC UMENTS OBSERVED THAT THESE DOCUMENTS SHOWS THE DETAILS OF EXPENSES INCUR RED IN CASH BY THE ASSESSEE. THE AO ASKED THE ASSESSEE AS TO WHY THE P AYMENT OF RS.1,09,09,277/- MADE IN CASH IN VIOLATION OF PROVI SIONS OF SEC.40A(3) OF THE ACT SHOULD NOT BE DISALLOWED. IN RESPONSE TO THE QUERY, THE ASSESSEE FILED WRITTEN SUBMISSION AND CONTENDED THAT IT HAS NOT INCURRED ANY EXPENDITURE, THEREFORE, SEC.40A(3)IS NOT APPLICABLE . THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND PLACED RELIANCE ON T HE JUDGMENT OF IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS ITO (191 ITR 6 67)AND HELD THAT THE EXPENSES INCURRED BY THE ASSESSEE WAS FOR ACQUI SITION OF THE LAND WHICH IS NOTHING BUT CLOSING STOCK OR WORK IN PROGR ESS FOR THE PURPOSE OF SALE IN FUTURE AFTER MAKING IMPROVEMENT/DEVELOPMENT TO THE SAME IN TO RESIDENTIAL/COMMERCIAL UNITS. ACCORDINGLY, THE AO INVOKED THE PROVISIONS OF SEC.40A(3) OF THE ACT AND DISALLOWED A SUM OF RS .1,09,09,277/-. THE ITA NOS.1392(B)12,1409(B)13 & 1462-13 3 AO ALSO MADE SIMILAR ADDITION IN THE HAND OF M/S MO HITSHAM ESTATES PVT.LTD UNDER THE PROTECTIVE ASSESSMENT. THE ASSESS EE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A). THE CIT(A) HA S DELETED THE ADDITION MADE BY THE AO BY OBSERVING THAT THE ASSESSEE HAS NOT CLAIMED THESE EXPENSES AND IT HAS NOT BEEN CLAIMED EVEN BY M/S MO HITSHAM COMPLEXES PVT.LTD. AS THEY CAPITALISED THESE EXPENSES. THE C IT(A) HAS ALSO DELETED THE ADDITION MADE BY THE AO IN THE HAND OF MOHITSHA M COMPLEXES PVT.LTD UNDER THE PROTECTIVE ASSESSMENT. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS; 1. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW I N HOLDING THAT THE CASH EXPENSES OF RS.1,09,09,277/- DOES NOT FALL UNDER THE AMBIT OF SEC.40A(3) OF THE IT AC T, 1961. 2. THE LEARNED CIT(A) ERRED IN FACT AND IN LAW IN ADJUDICATING THE ISSUE BY ADMITTING THE ADDITIONAL EVIDENCE INFORM OF DEVELOPMENT AND MEMORANDUM OF UNDERSTANDI NG WITHOUT ALLOWING THE OPPORTUNITY TO THE AO AS REQUI RED UNDER RULE 46A(3) AND ADMITTING SUCH EVIDENCE WITHO UT REGARDING ANY REASON AS REQUIRED AS PER RULE 46A(2) OF THE INCOME TAX RULES. 3. BEFORE US THE LEARNED DR HAS HEAVILY RELIED UP ON THE FINDING OF THE AO AND SUBMITTED THAT EVEN IF THE EXPENDITURE W AS NOT CLAIMED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, IT I S NOTHING BUT CLOSING ITA NOS.1392(B)12,1409(B)13 & 1462-13 4 STOCK /WORK IN PROGRESS AS THIS EXPENDITURE WAS INC URRED BY THE ASSESSEE FOR ACQUISITION OF LAND FOR THE PURPOSE OF DEVELOPI NG THE RESIDENTIAL/COMMERCIAL PROJECTS. 4. ON THE OTHER HAND, LEARNED AR HAS SUBMITTED THA T THE ASSESSEE HAS NOT CLAIMED THESE EXPENSES IN THE P&L ACCOUNT RATHER, NO P&L ACCOUNT WAS DRAWN, AS BEING THE FIRST YEAR OF THE A SSESSEE AFTER INCORPORATION. HE HAS FURTHER SUBMITTED THAT THIS PAYMENT WERE MADE BY THE PARENT COMPANY OF THE ASSESEE AS AN ADVANCE PAY MENT AND THEREFORE UNTIL AND UNLESS THE TRANSACTION OF ACQUISITION WAS COMPLETED THESE PAYMENTS CANNOT EVEN BEEN CONSIDERED AS CAPITAL EXP ENDITURE. THUS, THE LEARNED AR HAS SUPPORTED THE ORDER OF THE CIT(A) AN D SUBMITTED THAT WHEN NEITHER THE ASSESSEE NOR THE PARENT COMPANY MO HITSHAM COMPLEXES PVT.LTD CLAIMED THESE PAYMENTS AS EXPENDITURE THAN NO DISALLOWANCE CAN BE MADE U/S 40A(3) OF THE ACT. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DECISION OF THE DELHI BENCH DATED 15-06-20 15 IN CASE OF M/S MADHUSDAN BUILDCON PVT.LTD VS ACIT IN ITA NO.508(DE L.)/2014. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E MATERIAL ON RECORD. THE AO HAS NOTED FROM THE SEIZED MATERIAL CONTAINING THE DETAILS OF PAYMENTS MADE IN CASH THAT A TOTAL AMOUNT OF RS. 1,09,09,277/- HAS BEEN MADE IN CASH WHICH IS REQUIRED TO BE DISALLOWE D IN ASSESSEES HAND FOR THE YEAR UNDER CONSIDERATION UNDER THE PROVISIO NS OF SEC.40A(3) OF THE ACT. THE AO HAS NOT DISPUTED THAT THESE PAYMENTS WE RE NOT MADE BY THE ITA NOS.1392(B)12,1409(B)13 & 1462-13 5 ASSESSEE BUT WERE MADE BY ITS GROUP CONCERN M/S MOH ITSHAM COMPLEXES PVT.LTD ON BEHALF OF THE ASSESSEE. THE ASSESSEE CLAIMED THAT THESE PAYMENTS ARE ONLY ADVANCE PAYMENT FOR ACQUISITION O F LAND FOR THE PURPOSE OF DEVELOPMENT OF THE PROJECTS CALLED CELE BRATION PROJECT. THE SAME AMOUNT WAS ALSO ADDED IN THE HAND OF THE M/S M OHITSHAM COMPLEXES PVT.LTD. UNDER PROTECTIVE ASSESSMENT. TH E CIT(A) HAS DELETED THE ADDITION MADE BY THE AO BY RECORDING THE FACT I N PARA-5 & 6 AS UNDER; THE MAIN ISSUE THAT EMERGES OUT OF THE SECTION IS THAT SEC.40A(3) CONTEMPLATES THAT IT IS APPLICABLE ONLY IN CASE WHERE THE APPELLANT INCURS ANY EXPENDITURE; 1) IT IS A CASE WHERE THE APPELLANT HAS NOT INCUR RED ANY EXPENDITURE THE ASSESSEE HAS NO P&L ACCOUNT FOR THE YEAR AS THERE WAS NO BUSINESS AND THERE WAS NO CLAI M OF EXPENDITURE THAT HAS BEEN MADE BY THE APPELLANT FOR AY: 2009-10. 2) THE PROJECT HAS NOT MATERIALIZED AND THEREFORE NO EXPENDITURE HAS BEEN CHARGED TO THE P&L ACCOUNT. 3) THERE HAS BEEN NO EXPENDITURE BY THE APPELLANT AND NO CLAIMS OF EXPENDITURE HAS BEEN MADE IN THE TAX R ETURN. 4) THE EXPENSES HAS NOT BEEN INCURRED BY THE APPEL LANT BUT M/S MOHITSHAM COMPLEXES PVT.LTD IN ITS CAPACITY AS THE PROMOTER. M/S MOHITSHAM ESTATE DOES INVESTMENTS WITH M/S MOHITSHAM COMPLEXES. EVEN THE EXPENSES INCURRED BY ITA NOS.1392(B)12,1409(B)13 & 1462-13 6 M/S MOHITSHAM COMPLEXES ARE ONLY AN ADVANCE TOWARDS A PROPOSED PROJECT. THESE PROJECTS HAVE NOT BEEN REG ISTERED AND HAS NOT BEEN REGISTERED AND HAS NOT TAKEN OFF. THEREFORE, I AM OF THE OPINION THAT THE AO HAS NOT APPRECIATED SECTION 40A(3) AND HAS MADE THESE ADDIT IONS ON THE BASIS OF SEC.40A(3) WHICH IS NOT CORRECT. T HE AO HAS OBSERVED THAT THE EXPLANATIONS FILED BY THE ASSESSE E ARE NOT ACCEPTABLE FOR THE SIMPLE REASON THAT THE ASSESSEE HAS INCURRED THE ABOVE EXPENSES IN VIOLATION OF PROVISI ONS OF SEC.40A(3) OF THE IT ACT IRRESPECTIVE OF WHETHER TH IS EXPENDITURE IS CLAIMED IN P&L ACCOUNT OR NOT. IT IS RELEVANT TO NOTE HERE THAT THE ASSESSEE HA N OT CLAIMED THESE EXPENSES AND IT HAS NOT BEEN CLAIMED BY MS/S MOHITSHAM COMPLEXES PVT.LTD AS THEY HAVE CAPITALIZED THESE EXPENSES AS THEY ARE CAPITAL IN N ATURE AND THEY HAVE BEEN CAPITALIZED IN THEIR BOOKS OF AC COUNTS. IT IS VERY SIMPLE PROPOSITION THAT THESE EXPENSES HAVE NOT BEEN MADE BY THE ASSESSEE BUT HAVE BEEN MADE BY MOHITSHAM COMPLEXES WHO HAVE ALSO NOT CLAIMED IT AN D HAVE CAPITALIZED IN THEIR BOOKS OF ACCOUNTS SO, THE Y WOULD NOT FALL UNDER THE AMBIT OF SEC.40A(3). IN THIS CO NTEXT, THE AGREEMENT WAS ALSO PRODUCED BEFORE ME WHICH HAS ALS O MADE IT VERY CLEAR THAT IT IS THE M/S MOHITSHAM COM PLEXES PVT.LTD WHO WILL MAKE THE PAYMENTS. THE DEVELOPMEN T AND MEMORANDUM OF UNDERSTANDING IS PRESENTED AND IS ANALYSED. THE DEVELOPMENT AGREEMENT HAS MADE IT V ERY CLEAR THAT THE MOHITSHAM ESTATE PVT.LTD HAS AGREED TO INVEST A PARTICULAR AMOUNT. IN CONSIDERATION FOR THEIR INVESTMENT BY M/S MOHITSHAM ESTATE PVT.LTD , M/S MOHITSHAM COMPLEXES PVT.LTD (MCPL) SHALL TAKE UP T HE ITA NOS.1392(B)12,1409(B)13 & 1462-13 7 ENTIRE PROJECT DEVELOP IT AND PROMOTE IT. THEY SHAL L BE RESPONSIBLE FOR THE CONTACTS, CONSTRUCTION AND SHAL L BEAR THE INVESTMENT COST OF THE PROJECT AND THEY SHALL MAKE ALL MISCELLANEOUS EXPENSES OF THE PROJECT. THEREFORE, IT IS VERY CLEAR THAT M/S MOHITSHAM EST ATE IS A COMPANY WHICH HAS JUST MADE INVESTMENTS AND ALL T HE EXPENSES REGARDING PROJECTS UNDERTAKEN IN REGARD TO THE MEMORANDUM OF UNDERSTANDING HAS BEEN DONE BY M/S MOHITSHAM COMPLEXES. THEREFORE, AS FAR AS M/S MOHITSHAM ESTATES ARE CONCERNED, THERE ARE NO INVESTMENTS, NO P&L ACCOUNT HAS BEEN DRAWN, NO EXPENDITURE HAVE BEEN CLAIMED AND THEREFORE, DISAL LOWANCE OF EXPENSES U/S 40A(3) IN THE HANDS OF M/S MOHITSHA M ESTATE TO THE TUNE OF RS.1,09,09,277/- IS NOT CORRE CT AND IS ACCORDINGLY DELETED. 6. NOTHING HAS BEEN BROUGHT BEFORE US BY THE REVEN UE TO CONTROVERT THE FACT RECORDED BY THE CIT(A) THAT THE PAYMENT WA S TO BE MADE BY M/S MOHITSHAM COMPLEXES PVT.LTD AND THE ASSESSEE IN THE DEVELOPMENT AGREEMENT AGREED TO INVEST A PARTICULAR AMOUNT. TH EREFORE, WHEN THE ASSESSEE HAS NOT CLAIMED THE PAYMENT IN QUESTION AS AN EXPENDITURE THAN, THE QUESTION OF DISALLOWANCE OF THE SAID AMOU NT U/S 40A(3) OF THE ACT DOES NOT ARISE FOR THE YEAR UNDER CONSIDERATION . IN THE CASE OF MADHUSUDAN BUILDCON PVT.LTD (SUPRA) THE TRIBUNAL HE LD IN PARA-2 TO AS UNDER; ITA NOS.1392(B)12,1409(B)13 & 1462-13 8 A CAREFUL PERUSAL OF THIS PROVISION TRANSPIRES T HAT WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPEC T OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING RS.20,000/ - OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE ETC. THEN, T WENTY PERCENT OF THE AMOUNT PAID IN CASH IS DISALLOWABLE. THUS, IT BECOMES APPARENT THAT IN ORDER TO INVOKE THE PR OVISIONS OF SEC.40A(3), IT IS SINE QUA NON THAT THE ASSESSE E MUST HAVE INCURRED EXPENDITURE IN RESPECT OF WHICH SUCH PAYMENT IS MADE IN CASH. SEC.40A HAS THE MARGINAL NOTE. EXPENSES OR PAYMENT NOT DEDUCTIBLE IN CERTAIN CIRCUMSTANCES. THIS SECTION 40A HAS BEEN PLACED U NDER CHAPTER IVD OF TH ACT. SUB-SECTION (1) OF SEC.40A PROVIDES THAT THE PROVISIONS OF THIS SECTION SHALL HAVE EFF ECT NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISION OF THIS ACT RELATING TO THE COMPUTA TION OF INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINES S OR PROFESSION. 3. A CURSORY LOOK AT THE ABOVE PROVISIONS DIVULGES THAT IN ORDER TO MAKE ANY DISALLOWANCE UNDER SECTION 40A (3) IT IS A PRECONDITION THAT THE ASSESSEE MUST HAVE CLAIM ED DEDUCTION, DIRECTLY OR INDIRECTLY FOR WHICH PAYMENT IS MADE IN CASH EXCEEDING THE SPECIFIED LIMIT. PER CONTRA , IF THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION, DIRECTLY OR INDIRECTLY, EVEN IF THE PAYMENT IS MADE IN CASH, TH E PROVISIONS OF THE COMPUTATION OF INCOME UNDER THE H EAD PROFITS AND GAINS OF BUSINESS OR PROFESSION SHALL N OT APPLY TO THAT EXTENT AND SECTION 40A(3) WILL BECOME NON- OPERATIVE. ITA NOS.1392(B)12,1409(B)13 & 1462-13 9 4. IN THE SITUATION, THE ASSESSEE HAS MADE PAYMENT OF RS.1 LAC IN CASH TOWARDS ADVANCE FOR PURCHASE OF A PIECE OF LAND, BUT NO DEDUCTION WAS CLAIMED FOR THIS SUM. THE AMOUNT HAS BEEN DIRECTLY TAKEN TO THE BALANCE SHEET AND HAS BEEN SHOWN AS ADVANCES UNDER THE HEAD LOANS AN D ADVANCES. UNDER SUCH CIRCUMSTANCE, WHEN THERE IS NO CLAIM FOR DEDUCTION OF RS.1 LAC, THE PROVISIONS OF SEC.40A(3) CANNOT BE ATTRACTED FOR MAKING ANY DISALLOWANCE FOR A SUM OF RS.20,000/- AS THIS PAYMENT IS NOT TOWARDS ANY EXPENDITURE INCURRED DURING THE YEAR AND HAS NOT BE EN CLAIMED AS DEDUCTION BY THE ASSESSEE. THUS, THE AD DITION IS DELETED. THEREFORE, IN THE CIRCUMSTANCES OF THE CASE AND FO LLOWING THE ORDER OF THE TRIBUNAL IN CASE OF MADHUSUDAN BUUILDCON PVT .LTD (SUPRA) WE DO NOT FIND ANY ERROR IN THE ORDER OF THE CIT(A) IN DE LETING THE ADDITION MADE BY THE AO U/S 40A(3) OF THE ACT. 7. SIMILARLY, IN THE CASE OF M/S MOHITSHAM COMPLEXE S PVT.LTD THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) DEL ETING THE ADDITION N RESPECT OF THE PAYMENT IN CASH OF RS.1,68,40,850/-. 8. WE HAVE HEARD THE LEARNED DR AS WELL AS THE LEA RNED AR OF THE ASSESSEE AND CONSIDERED THE MATERIAL ON RECORD. TH ERE IS NO DISPUTE THAT THE ASSESSEE DID NOT CLAIM THE SAID EXPENDITURE IN THE P&L ACCOUNT EVEN THE AO MADE PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE. IN VIEW OF ITA NOS.1392(B)12,1409(B)13 & 1462-13 10 OUR FINDINGS IN CASE OF M/S MOHITSHAM ESTATES PVT. LTD. THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE IS UPHELD. 9. APPEAL ITA NO.1462(B)/20013 BY THE ASSESSEE: ON LY ISSUE RAISED BY THE ASSESSEE IS DISALLOWANCE U/S 40A(3) IN RESPE CT OF THE EXPENDITURE CLAIMED IN THE P&L ACCOUNT AND PAYMENTS WERE MADE I N CASH. THE ASSESSE CHALLENGED THE ACTION OF THE AO BEFORE THE CIT(A( AND CONTENDED THAT VARIOUS AMOUNTS PAID BY THE ASSESSEE ARE LESS THAN RS.20,000/-. THEREFORE, THE PROVISION OF SEC.40A(3) ARE NOT ATTR ACTED. THE CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND CONFI RMED THE ACTION OF THE AO. 10. BEFORE US LEARNED AR OF THE ASSESSEE HAS REFER RED TO THE ARGUMENTS FILED BEFORE THE CIT(A) IN RESPECT OF GRO UND NO.1 & 2 AND SUBMITTED THAT THE ASSESSEE RAISED A SPECIFIC GROUN D THAT SEVERAL PAYMENTS ARE BELOW THE LIMIT OF RS.20,000/-AND SEIZ ED DOCUMENTS IS A CONSOLIDATION OF SEVERAL PAYMENTS TO VARIOUS PARTIE S BELOW THE LIMIT. 11. THE LEARNED AR FURTHER SUBMITTED THAT THIS FAC T WAS POINTED OUT TO THE AO AS IT WAS RECORDED BY THE AO AT PAGE 4 OF HIS ORDER, BUT THE AO HAS NOT DISCUSSED THE FACT WHILE MAKING THE DISALLO WANCE IN QUESTION. THE LEARNED AR HAS THEN POINTED OUT THAT THE CIT(A) HAS ALSO NOT EXAMINED THE FACT THAT SEVERAL PAYMENTS WERE BELOW THE LIMIT OF ITA NOS.1392(B)12,1409(B)13 & 1462-13 11 RS.20,000/- AND THEREFORE, THE PROVISIONS OF SEC.40 A(3) CANNOT BE APPLIED IN RESPECT OF THE SAID PAYMENTS. 12. ON THE OTHER HAND, LEARNED DR HAS SUBMITTED AT THE CIT(A) HAS CONSIDERED THE CONTENTION OF THE ASSESSEE AND REJEC TED THE SAME ON THE GROUND THAT THE ASSESSEE WAS UNABLE TO SHOW THE PAY MENTS REFERRED TO ARE BELOW RS.20,000/- PER DAY, AS CLAIMED BY IT. IN A REBUTTAL, THE LEARNED AR REFERRED TO THE DETAI LS OF THE PAYMENTS AS RECORDED BY THE AO IN ASSESSMENT ORDER AND SUBMI TTED THAT THE DETAILS ITSELF SHOW THAT VARIOUS PAYMENTS ARE BELOW RS.20,0 00/-. THUS, THE LEARNED AR PLEADED THE MATTER MAY BE REMANDED TO TH E AO FOR VERIFICATION. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD. THE LIMITED GRIEVANCE OF THE ASSESSEE IS T HAT THE AO MADE THE ADDITION U/S 40A(3) OF THE ACT EVEN IN RESPECT OF T HE PAYMENT MADE IN CASH BELOW RS.20,000/-. BEFORE THE CIT(A), THE ASS ESSEE HAS SPECIFICALLY RAISED THIS POINT, HOWEVER, THE CIT(A) WITHOUT GOI NG INTO THE DETAILS AND VERIFICATION OF THE FACT HAS REJECTED THE ARGUMENT OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO SHOW THAT THE PAYMENTS WERE OF BELOW RS.20,000/-. WE FIND THAT AT PAGE-9 OF THE ASSESSMENT ORDER, THE AO HAD REPRODUCED THE DETAILS OF THE PAYMENT MADE I N CASH AND CLAIMED BY THE ASSESSEE AS EXPENDITURE. PRIMA FACIE IT APP EARS THAT SOME OF THE ITA NOS.1392(B)12,1409(B)13 & 1462-13 12 PAYMENTS ARE BELOW RS.20,000/- THEREFORE, THIS FACT HAS NOT BEEN PROPERLY EXAMINED BY THE AO WHILE MAKING THE DISALLOWANCE U/ S 40A(3) OF THE ACT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE AO FOR PROPER EXAMINATION AND VERIFIC ATION OF THE CLAIM OF THE ASSESSEE THAT CERTAIN PAYMENTS ARE BELOW THE LIMIT OF RS.20,000/-. THE AO IS DIRECTED TO ADJUDICATE THE ISSUE AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. 14. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DISMISSED AND THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL P URPOSES. PRONOUNCED IN THE OPEN COURT ON THE 17 TH JULY, 2015. SD/- SD/- (JASON P BOAZ) (VIJA Y PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER D A T E D : 17-07-2015 PLACE: BANGALORE AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE