Shri Sanjay Pradipbhai Patel, Junagadh V. The Income Tax Officer, Ward-2, Junagadh

ITA 152/RJT/2019

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3732 (ITAT-RAJKOT)
• Duration Of Justice: 4 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 06-02-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 27-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRIASHISHKUMARPANDEY

Judgement Text

आयकरअपीलीयअधिकरण , राजकोटनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, RAJKOTBENCH,RAJKOT (ConductedthroughVirtualCourt) BEFORESHRIWASEEMAHMED,ACCOUNTANTMEMBER And SHRITRSENTHILKUMAR,JUDICIALMEMBER आयकरअपीलसं./ITANo.152/Rjt/2019 धििाधरणवरध/Asstt.Year:2013-2014 ShriSanjayPradipbhaiPatel, C/o.M/s.GokulBuilders, 30-AshoknagarSociety, 31-BusStandRoad, Junagadh-362001. PAN:AGNPP6313N Vs. IncomeTaxOfficer, Ward-2, Junagadh. (Applicant)(Respondent) Assesseeby:None Revenueby:ShriAshishKumarPandey,Sr.DR सुिवाईकीतारीख/DateofHearing:07/02/2024 घोरणाकीतारीख/DateofPronouncement:21/02/2024 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: ThecaptionedappealhasbeenfiledattheinstanceoftheAssesseeagainst theorderoftheLearnedCommissionerofIncomeTax(Appeals)-3,Rajkot,arising inthematterofassessmentorderpassedunders.143(3)oftheIncomeTaxAct, 1961(here-in-afterreferredtoas"theAct")relevanttotheAssessmentYear 2013-2014. 2.Whenthematterwascalledforhearing,wenotethatnoneappearedon behalfoftheassessee.Itisseenfromtherecordsthattheappealwasinstituted bytheassesseeintheyear2019andthesamehasbeenfixedforhearingon multipleoccasions.Ontheearlieroccasion,ShriMehulRanpura,usedtoappear ITAno.152/Rjt/2019 Asstt.Year2013-2014 2 andeverytimeheusedtotaketimetocollectnecessarydetailsfromtheassessee butlaterShriMehulRanpura,hasalsowithdrawnhisPowerofAttorney.However, ShriMehulRanpura,videletterdated10/01/2024haswithdrawnthePowerof Attorneyonthereasoningthattherewerecertainpressingcircumstancesand therefore,hewasunabletoappearbeforetheBench.Consideringthenegligent anddelaydialingattitudeoftheassessee,wedecidedtoheartheappealex-parte totheassesseeandaccordinglyweproceedtoadjudicatethesame. 3.TheonlyissueraisedbytheassesseeisthattheLd.CIT(A)erredin confirmingtheadditionmadebytheAOonaccountofcashpaymentunderthe provisionofsection40A(3)oftheAct. 4.Thenecessaryfactsarethattheassesseeinthepresentcaseisan individualandengagedinthetradingofImmovableProperties.TheAOduringthe assessmentproceedingsfoundthattheassesseehasmadeacashpayment amountingtoRs.10,75,000/-againstthepurchaseoftwopropertieswhichwasin contraventiontotheprovisionofsection40A(3)oftheAct.Thus,theAO disallowedthesameandaddedtothetotalincomeoftheassessee. 5.AggrievedassesseepreferredanappealbeforetheLd.CIT(A),whoalso confirmedtheorderoftheAObyobservingasunder: 5.0Theorderu/s143(3)oftheActoftheAOaswellasstatementoffactoftheappellant hasbeenconsidered.TheonlygroundofappealoftheisthattheAOhaserredinmaking additionofRs.10,75,000/-byapplyingprovisionsofSection40A(3)oftheAct.Asperthis groundofappealthismaypleasebecancelledintheinterestofjustice.Withregardtothis groundofappealoftheappellantitismentionedthattheAOduringthecourseof assessmentproceedingsfoundthattheappellanthadpurchasedtwoimmovableproperties duringtheyearunder.consideration.AspertheAOoneimmovablepropertywas purchasedbytheappellantatthevalueofRs.36,00,000/-on06.11.2012alongwithtwo otherpersonsandtheappellanthaddebitedRs.12,80,000/-includingstampdutyand otherexpensesasplotnewSandhM.619.771/3”primeprimeInpurchaseaccount.As pertheAOotherimmovablepropertywaspurchaseatthevalueofRs.30,75,000/-forthe purchaseofotherpropertyandoutofthesamecashpaymentmadewasRs.8,75,000/-to foursellers.ThusaspertheAOtheappellanthadmadetotalcashpaymentofRs. 10,75,000/-forthepurchaseoftwoimmovablepropertiesandhehadshownthese propertiesInhistradingaccount.AspertheAOtheappellantinhistradingaccount,after consideringopeningstockandpurchaseaccountfromsalesaccounthadshownclosing ITAno.152/Rjt/2019 Asstt.Year2013-2014 3 stockofRs.1,00,08,149/-andthesamewasshownstockinhandinbalancesheet.Asper theAOduringthecourseofassessmentproceedingstheARoftheappellantwasasked videordersheetnotingdated18.03.2016astowhycashpaymentofRs.10,75,000/- shouldnotbeaddedtohistotalincomeu/s40A(3)oftheAct.AspertheAOtheappellant inresponsetothesamefurnishedwrittensubmissioninvernacularlanguageandthesame hasbeenreproducedbytheAOonpageno.2oftheassessmentorder.HowevertheAO didnotacceptthissubmissionoftheappellant.TheAOonpageno.4oftheassessment orderhasreproducedpartofboththepurchasedeedrelevanttodetailsofpayment.The AOwasoftheopinionthatthepropertieswereshownbytheappellantaspurchasedinthe balancesheet.TheAOonpageno.5hasreproducedtheexplanationoftheappellantand afterconsideringsuchexplanationhehasheldthatnopersoncaninsistforpaymentmade incashforaparticularamountonaparticulardateandforotheramountincheque.Asper theAOthereasonformakingpaymentincashassignedbytheappellantwasvagueand wasnotacceptable.InviewofthesefactstheAOdisallowedcashpaymentofRs. 10,75,000/-u/s40A(3)oftheAct. 5.1TheentirefindingsoftheAOasgivenintheassessmentorderu/s143(3)oftheAct havebeenconsideredandthesamearefoundtobelogicalandtenable.Theappellantin hisstatementoffacthimselfhasclearlyadmittedthatboththepropertiesaspurchase wereshownhisstockintradeinthebalancesheet.AspertheappellanthowevertheAO didnotconsiderthefactsandexplanationasgiveninrule6DDoftheIT,Rulesandhe proceededtomakeadditionofRs.10,75,000/-.AspertheappellantnormallyInthe purchaseofpropertythoughtreatedstockintrade,thefirstpaymentistobemadeincash andsuchpaymentiscalledasinitialpayment(suthi).Aspertheappellantineachand everycasesuchpaymentiscustomaryandmandatory.Aspertheappellantinhiscase thereweremorethanonesellerandassuchthetokencashpaymentwasmadetoeach seller.Aspertheappellantmoreoverthesellerhadinsistedforcashpaymentasatoken orinitialpayment.Aspertheappellantrestofpaymentweremadethroughaccountpayee chequewhichisevidentfromthechartpreparedbytheAOhimselfinhisassessment order.Aspertheappellant,therewasnointentionofbreachofanyprovisionoflawashe himselfwasabuilder.Aspertheappellant,hewasknowingtheprovisionofincometax act.Butthisentiresubmissionoftheappellantiswithoutanybasisandisliabletobe rejected.Thefactisthattheappellanthadshownthepropertiesasstockintradeinhis balancesheetandthushewasnotaninvestorinthepropertiesbuthewasdoingbusiness ofpurchaseandsaleofproperties.Theappellanthasnotbeenabletoexplainthathis caseiscoveredbyanyexceptionasgiveninRule6DDofITRule.Ifthesellerinsistedfor cashpaymentthenhewouldhavepreferredtoreceiveentirepaymentsincashbecauseof certaincircumstances.However,inthecaseofappellant,certainpaymenthasbeenmade incashandcertainpaymenthasbeenmadethroughcheque.Moreover,thereisnoany evidenceonrecordtoshowthatthesellerswereinsistingforcertainpartofthepayment incash.Thisisalsonotthecaseoftheappellantthatthesellerswerepurelyfarmersand becauseoflackofanybankfacilitiestheyinsistedforpaymentincash.Inmyopinion,the AOhascorrectlymadethedisallowanceofRs.10,75,000/-u/s40A(3)oftheActinviewof thereasonsasmentionedvbyhimintheassessmentorderandthereforesuchadditionis herebyconfirmed.Thusthegroundofappealoftheappellantisdismissed. 6.BeingaggrievedbytheorderoftheLd.CIT(A),theassesseeisinappeal beforeus. 7.TheLd.DRbeforeussubmittedthattheassesseehasmadeacash paymentincontraventiontotheprovisionsofsection40A(3)oftheActand ITAno.152/Rjt/2019 Asstt.Year2013-2014 4 thereforethesamehastobedisallowed.TheLd.DRinsupportofhiscontention reliedonthejudgmentofHon’bleSCinthecaseofGurmukhSinghAttarreported in191ITR667.TheLd.DRvehementlysupportedtheorderoftheauthorities below. 8.WehaveheardtheLd.DRandperusedthematerialsavailableonrecord. Theprovisionofsection40A(3)oftheActclearlydeniesthedeductionofthe expensesclaimedbytheassesseeinrespectofwhichapaymentoraggregateof paymentexceedsRs.20000incashinaday.Atthetimeofhearing,therewasno representationfromthesideoftheassessee.Furthermore,boththeconcurrent authoritiesbelowhavegivendetailedfindingswithreasonsafterconsideringthe submissionoftheassesseethatthepaymentindisputehasbeenmadein contraventiontotheprovisionsofsection40A(3)oftheAct.Assuch,wedonot findanyinfirmityintheorderoftheauthoritiesbelowintheabsenceofany representationfromtheassessee.Accordingly,weupholdthesame.Hence,the groundsofappealoftheassesseeareherebydismissed. 9.Intheresult,theappealfiledbytheassesseeisdismissed. OrderpronouncedintheCourton21/02/2024atAhmedabad. Sd/-Sd/- (TRSENTHILKUMAR)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated21/02/2024 Manish