ITO, Nabha V. M/s Mapple Builders & Developers Pvt. Ltd, Nabha

ITA 165/CHANDI/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2303 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 11-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: N K GARG
• Keywords: Additional evidence
• Section: 40A(3); 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.165 /CHD/2011 (ASSESSMENT YEAR : 2007-08) THE INCOME TAX OFFICER, VS. M/S MAPPLE BUILDERS & NABHA. DEVELOPERS PVT. LTD., NABHA. PAN: AAECM5092K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K.SAINI, DR RESPONDENT BY : SHRI N.K.GARG DATE OF HEARING : 19.02.2013 DATE OF PRONOUNCEMENT : 16.04.2013 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE REVENUE IS AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 15.12.2010 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST THE ORD ER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHET HER THE LD. CIT(A) IS LEGALLY JUSTIFIED IN DELETING THE ADDITION OF RS. 2 6,28,6007- MADE BY THE AO ON A/C OF CASH PAYMENTS MADE IN CONTRAVENTION OF THE PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961. 2. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPOSED OF. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E WAS ENGAGED IN THE BUSINESS OF REAL ESTATE. DURING THE YEAR UNDER CON SIDERATION THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING NIL INCOME . ON EXAMINATION OF THE BOOKS OF ACCOUNT THE ASSESSING OFFICER NOTED TH AT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD PURCHASED L AND FROM VARIOUS PERSONS. FROM THE DETAILS FURNISHED BY THE ASSESSE E THE ASSESSING OFFICER NOTED THAT FOR PURCHASE OF CERTAIN PIECES O F LAND, PAYMENTS WERE MADE IN EXCESS OF RS.20,000/- IN CASH AND THE TABUL ATED DETAILS ARE INCORPORATED AT PAGE 2 OF THE ASSESSMENT ORDER. TH E TOTAL CASH PAYMENTS MADE BY THE ASSESSEE AMOUNTED TO RS.1,31,43,000/-. THE ASSESSEE WAS SHOW CAUSED TO EXPLAIN AS TO WHY SUM OF RS.26,28,60 0/- I.E. 20% OF RS.1,31,43,000/- BE NOT ADDED TO THE TOTAL INCOME I N ACCORDANCE WITH THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE EXPLA NATION OF THE ASSESSEE WAS THAT THE COMPANY HAD PURCHASED AGRICULTURAL LAN D FROM FIVE PERSONS DURING THE YEAR AND AS MOST OF THE PERSONS DID NOT HAVE ANY BANK ACCOUNT THE PROPERTIES WERE PURCHASED BY MAKING PAYMENT IN CASH. IT WAS FURTHER CLAIMED THAT IN VIEW OF RULE 6DD(E) OF THE INCOME T AX RULES AND (G) SUCH PAYMENTS IN CASH WERE NOT COVERED UNDER THE PR OVISIONS OF SECTION 40A(3) OF THE ACT. IT WAS ALSO MENTIONED THAT THOU GH SALE DEED WAS EXECUTED BEFORE THE EXECUTIVE MAGISTRATE, BUT THE P AYMENTS WERE MADE AT VILLAGE SHAMSHER NAGAR AND VILLAGE HINDUPUR TEHSIL & DISTT. FATEHGARH SAHIB WHICH WERE NOT SERVED BY ANY BANK ON THE DATE OF SUCH PAYMENTS. THE ASSESSING OFFICER OBSERVED THAT THE PROVISIONS OF RULE 6DD(E) OF THE INCOME TAX RULES WERE NOT APPLICABLE AS THE SAI D RULE DEALT WITH THE PAYMENTS MADE FOR PURCHASE OF AGRICULTURAL PRODUCE, WHEREAS THE ASSESSEE HAS PURCHASED LAND FOR DEVELOPING A COLONY . THE ASSESSING OFFICER THEREAFTER HAS ELABORATELY DISCUSSED THE TR ANSACTION IN RESPECT OF EACH OF THE SELLERS: 3 A) SMT.BEANT KAUR : THE LAND WAS PURCHASED VIDE DEEDS DATED 31.10.2006 AND 12.7.2007 FOR RS.6LACS AND RS.16 LACS IN CASH. ON ENQUIRIES IT WAS FOUND THAT THE LADY HAD BANK ACCOUNT WITH PUNJAB NATIONAL BANK DUR ING THE FINANCIAL YEAR 2006-07 AND THE QUESTION THAT WHETHER THE PLAC E WHERE THE SELLER RESIDES HAD A BANK OR NOT WAS NOT RELEVANT. SECOND LY THE REGISTRY AND PAYMENT BEING MADE AT FATEHGARH SAHIB WHICH WAS A B IG TOWN HAVING SEVERAL BANKS, WAS ALSO AN ISSUE AGAINST THE ASSESS EE AS THERE WAS A NOTE ON THE PURCHASE DEED THAT THE CASH PAYMENTS WERE MA DE BEFORE SUB REGISTRAR. B) SHRI HARWINDER SINGH & SHRI JASKARANJIT SINGH : THE ASSESSEE PURCHASED THE LAND FOR RS.7,60,000/- IN CASH VIDE PURCHASE DEED DATED 30.3.2007 AND IT WAS FOUND THAT BOTH THE PERSONS HAD BANK ACCOUNT WITH HDFC DURING THE FINANCIAL YEA R 2006-07 (TWO SAVING ACCOUNTS RESPECTIVELY). IN VIEW THEREOF, IT WAS HELD THAT THE PAYMENTS MADE AT SANGRUR AND THE ASSESSEE HAVING BA NK ACCOUNT, AND VILLAGE RAMNAGAR SIBIAN BEING 2 KM. FROM THE TOWN, RULE 6DD OF THE INCOME TAX RULES WAS HELD AS NOT APPLICABLE. C) SMT.DALIP KAUR : THE ASSESSEE VIDE PURCHASE DEEDS DATED 13.4.2006 MADE PAYMENT OF RS.24,16,500/- AND RS.24,16,500/- IN CAS H. THE PAYMENT AS PER THE ASSESSING OFFICER WERE MADE BEFORE THE EXEC UTIVE MAGISTRATE AT FATEHGARH SAHIB, WHICH HAD SEVERAL BANKS AND THE CO NTENTION OF THE ASSESSEE WAS REJECTED. 4 D) SHRI JARNAIL SINGH : THE ASSESSEE PURCHASED THE LAND VIDE PURCHASE DEED S DATED 15.5.2006 FOR RS.12 LACS, DATED 15.5.2006 FOR RS.4 LACS AND DATED 22.5.2006 FOR RS.16 LACS IN CASH. SHRI JARNAIL SIN GH WAS THE GENERAL ATTORNEY HOLDER OF SHRI PRITAM SINGH WHO WAS THE OW NER OF THE LAND AND RESIDENT OF VILLAGE SHAMSHER NAGAR. THE PAYMENTS A S PER THE PURCHASE DEEDS WERE MADE BEFORE THE EXECUTIVE MAGISTRATE AT FATEHGARH SAHIB AND THE PLEA OF THE ASSESSEE WAS THAT THE PAYMENTS WERE MADE IN VILLAGE WERE REJECTED. E) SHRI NARINDER SINGH : THE PAYMENT OF RS.14 LACS IN CASH WAS MADE ON 1.2. 2007. SHRI NARINDER SINGH WAS THE POWER OF ATTORNEY HOLDER OF SHRI PRITAM SINGH, WHO WAS RESIDENT OF VILLAGE SHAMSHER NAGAR AND THE PAYMENTS AS PER THE PURCHASE DEED WERE MADE AT FATEHGARH SAHIB BEFORE T HE EXECUTIVE MAGISTRATE. F) SMT.HARJINDER KAUR : THE AGRICULTURAL LAND WAS PURCHASED VIDE DEED DATE D 30..3.2007 AND CASH PAYMENT OF RS.7,50,000/- AS PER THE ASSESS ING OFFICER WAS MADE AT FATEGARH SAHIB. THE SAID PERSON WAS RESIDE NT OF RAMNAGAR SIBIAN, SANGRUR. IN VIEW THEREOF, THE ASSESSING OF FICER MADE DISALLOWANCE OF RS.26,28,600/- UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 4. BEFORE THE CIT (APPEALS) IT WAS EXPLAINED BY THE ASSESSEE THAT IT WAS THE GENERAL PRACTICE IN WHICH THE REGISTRY WRIT ER IN ROUTINE MENTIONS THAT THE PAYMENTS WERE MADE BEFORE THE SUB REGISTRA R. HOWEVER, THE PAYMENTS WERE MADE AT THE RESPECTIVE VILLAGES ON TH E RESPECTIVE DATES AND EVEN THE SUB REGISTRAR ON THE LAST PAGE OF THE SAID TITLE DEEDS HAD 5 CERTIFIED THAT NOTHING WAS PAID BEFORE HIM. THE AM OUNT WAS CLAIMED TO HAVE BEEN PAID BEFORE REGISTRATION OF THE DOCUMENTS . THE COMMENTS OF THE ASSESSEE WERE FORWARDED TO THE ASSESSING OFFICE R WHO IN HIS COUNTER COMMENTS DATED 3.12.2010 STATED THAT AN OPPORTUNITY OF BEING HEARING WAS AFFORDED TO THE APPLICANT VIDE LETTER DATED 13. 11.2010 FOR FURNISHING NECESSARY PAPERS AND DOCUMENTS. SUMMONS UNDER SECT ION 131 OF THE ACT WERE ALSO ISSUED TO THE CONCERNED PERSONS AND THEIR STATEMENTS WERE RECORDED. THE STATEMENTS OF THE PERSONS ARE REFERR ED TO UNDER PARA 3.6 OF THE ORDER OF THE CIT (APPEALS). SMT.DALIP KAUR CON FIRMED TO HAVE SOLD HER AGRICULTURAL LAND AND RECEIVED THE CASH AT HER VILLAGE SHAMSHER NAGAR AND NOT BEFORE THE SUB REGISTRAR. THE TOTAL CASH RECEIVED WAS RS.48,33,000/-. SMT.BEANT KAUR CONFIRMED THAT SHE HAD RECEIVED THE PAYMENT OF RS.22 LACS IN CASH AT HER VILLAGE SHAMSH ER NAGAR AND NOT BEFORE THE SUB REGISTRAR. HOWEVER, SHE STATED THAT SHE HAD SAVING BANK ACCOUNT AT FATEHGARH SAHIB WHICH WAS FARAWAY FROM H ER VILLAGE. IN HIS STATEMENT SHRI HARVINDER SINGH CONFIRMED TO HAVE RE CEIVED CASH PAYMENT OF RS.7,60,000/- IN MARCH, 2007 ALONGWITH HIS BROTH ER IN CASH FROM THE ASSESSEE. HE CONFIRMED THAT HE HAD NO BANK ACCOUNT IN THE VILLAGE THOUGH HE WAS MAINTAINING A BANK ACCOUNT IN HDFC BA NK AT SANGRUR. SIMILARLY, SHRI NARINER SINGH, JARNAIL SINGH AND SM T.HARJINDER KAUR CONFIRMED TO HAVE RECEIVED THE PAYMENTS IN CASH IN THEIR RESPECTIVE VILLAGES. THE ASSESSEE FURTHER CLAIMED THAT THERE WAS NO BANK AT VILLAGE SHAMSHER NAGAR AND CERTIFICATE OF TEHSILDAR IN THIS RESPECT WAS FILED. FURTHER PATWARI, VILLALGE RAMNAGAR SIBIAN CONFIRMED THAT THERE WAS NO BANK BRANCH IN THE VILLAGE. THE ASSESSING OFFICER WAS ASKED FOR HIS COMMENTS AND THE CIT (APPEALS) VIDE PARA 3.9 NOTED THAT VIDE LETTER DATED 14.12.2010 HAS GIVEN NO OBJECTION FOR ADMISSI ON OF ADDITIONAL EVIDENCE AND FURTHER CONFIRMED THAT THERE WERE NO B ANK BRANCHES EXISTING IN SHAMSHER NAGAR AND RAMNAGAR SIBIAN, SAN GRUR. THE CIT 6 (APPEALS) ADMITTED THE TWO CONFIRMATORY LETTERS AS ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES AND IN VIEW OF THE FACTS AND CIRCUMSTANCES AND ALSO REMAND REPORT OF THE ASSESSI NG OFFICER, HELD THAT WHERE THE ASSESSEE IN UNAVOIDABLE CIRCUMSTANCE S HAD MADE THE PAYMENT N CASH, WHICH WAS GENUINE AND THE IDENTITY OF THE SELLERS BEING FULLY ESTABLISHED, IN VIEW OF RULE 6DD OF INCOME TA X RULES, WHERE THE ASSESSEE HAD ESTABLISHED THAT THE PAYMENTS WERE MAD E DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES, NO DISALLOWANCE WAS W ARRANTED. THE CIT (APPEALS) OBSERVED THAT IN THE PRESENT CASE THE AS SESSEE HAD BEEN ABLE TO ESTABLISH THAT THE SELLERS WERE AGRICULTURISTS H AVING NO BANK ACCOUNTS IN THE PLACES WHERE CASH PAYMENTS WERE MADE I.E. AT THEIR VILLAGES. THE ASSESSING OFFICER HAD MADE ENQUIRIES AS TO THE EXIS TENCE OF BANK ACCOUNTS SPECIALLY AT THEIR VILLAGES, CONFIRMATIONS FROM THE REVENUE AUTHORITIES I.E. THE TEHSILDAR AND PATWARI OF THE C ONCERNED VILLAGES HAS BEEN FILED SHOWING THAT THERE WAS NO BANK BRANCH AV AILABLE IN THE SAID VILLAGE. 5. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THA T AS PER THE PURCHASE DEED FURNISHED BY THE ASSESSEE IT IS APPAR ENT THAT THE PAYMENTS WERE MADE IN FATEHGARH SAHIB AND THE TEHSIL WAS VER Y NEAR TO THE RESPECTIVE VILLAGES. THE LEARNED D.R. FOR THE REVE NUE FURTHER POINTED OUT THAT SHRI NARINDER SINGH WAS A RESIDENT OF SIRH IND WHICH WAS SERVED BY BANK. SMT. BEANT KAUR AND SHRI HARWINDER SINGH AND SHRI JASKARANJIT SINGH HAD INDIVIDUAL BANK ACCOUNTS AND THERE WAS NO MERIT IN THE PLEA OF THE ASSESSEE THAT THE PAYMENTS WERE MADE IN THE VIL LAGES WHERE THERE WAS NO BANK ACCOUNT. 6. THE LEARNED A.R. FOR THE ASSESSEE PLACING RELIAN CE ON THE ORDER OF THE CIT (APPEALS) STATED THAT THE VILLAGES IN WHICH THE SELLERS OF AGRICULTURAL LAND WERE RESIDING WERE NOT SERVED BY ANY BANK AND REPORTS 7 OF BOTH THE TEHSILDAR AND PATWARI OF THE INDIVIDUAL VILLAGES WERE FILED BEFORE THE CIT (APPEALS) IN WHICH THEY HAD CERTIFIE D THAT THERE WERE NO BANKS IN THE RESPECTIVE VILLAGES. THE LEARNED A.R. FOR THE ASSESSEE STRESSED THAT IN VIEW OF THE ABOVE SAID FACTS AND C IRCUMSTANCES, THERE WAS NO MERIT IN THE DISALLOWANCE MADE UNDER SECTION 40A(3) OF THE ACT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT AT THE RELEVANT TIME IT WAS PROVIDED THAT WHERE THE ASSESSEE HAD MADE ANY PAYME NT IN EXCESS OF RS.20,000/- OTHER WISE THAN BY A CROSS CHEQUE OR BA NK DRAFT, 20% OF SUCH AMOUNT PAID WOULD BE DISALLOWED UNLESS AND UNTIL TH E CASE OF THE ASSESSEE IS GOVERNED BY THE EXCEPTIONS PROVIDED UND ER RULE 6DD OF THE INCOME TAX RULES. CLAUS (G) OF RULE 6DD PROVIDES T HAT WHERE THE PAYMENT IS MADE IN A VILLAGE OR TOWN WHICH ON THE D ATE OF SUCH PAYMENT WAS NOT SERVED BY ANY BANK, TO ANY PERSON WHO ORDIN ARILY RESIDES OR CARRIES ON ANY BUSINESS, PROFESSION OR VOCATION IN ANY SUCH VILLAGE OR TOWN THEN NO DISALLOWANCE WOULD BE MADE UNDER SECTI ON 40A(3) EVEN WHERE THE PAYMENT IS MADE EXCEEDING RS.20,000/-, OT HERWISE THEN BY A ACCOUNT PAYEE CHEQUE OR BANK DRAFT. READING THE PR OVISIONS OF THE ACT AND EXCEPTION PROVIDED UNDER RULE 6DD OF THE INCOME TAX RULES, IT IS LAID DOWN THAT IN CASE THE ASSESSEE CLAIMS A DEDUCT ION ON ACCOUNT OF CASH PAYMENT EXCEEDING RS.20,000/-, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR BANK DRAFT, THEN SUCH PAYMENT IS TO BE AL LOWED A DEDUCTION SUBJECT TO FULFILLMENT OF THE EXCEPTIONS. THE CON DITIONS LAID DOWN IN THE EXCEPTION CLAUSE (G) OF RULE 6DD OF THE INCOME TAX RULES IS ONE SUCH EXCEPTION THAT WHERE THE PAYMENT IS MADE TO A PERSON WHO GENERALLY RESIDES IN A VILLAGE OR CARRIES ON BUSINESS OR VOCA TION IN WHICH VILLAGE, WHICH IS NOT SERVICED BY ANY BANK, THEN SUCH CASH P AYMENT EXCEEDING RS.20,000/- IS TO BE ALLOWED AS DEDUCTION IN THE HA NDS OF THE PAYER. 8 8. NOW COMING TO THE FACTS OF THE PRESENT CASE THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD PURCHASED CERTAIN PI ECES OF LAND IN ORDER TO DEVELOP THE COLONY. THE ASSESSEE HAD MADE THE P AYMENT IN CASH ON RESPECTIVE DATES TO VARIOUS PERSONS TOTALING RS.1,3 1,43,000/- AS TABULATED AT PAGE 2 OF THE ASSESSMENT ORDER AND CLAIMED THE S AME AS DEDUCTION. THE ISSUE ARISING BEFORE US IS IN RELATION TO SUCH CASH PAYMENTS MADE BY THE ASSESSEE FOR PURCHASE OF AGRICULTURAL LAND. AD MITTEDLY AT PAGE 1 OF EACH SALE DEED, ON THE FACE OF THE DEED ITSELF IT I S MENTIONED THAT THE PAYMENT IS MADE IN CASH BEFORE THE EXECUTIVE MAGIST RATE. HOWEVER, ON THE REVERSE SIDE OF THE RESPECTIVE AGREEMENT/S, IT IS CERTIFIED THAT NO PAYMENT WAS MADE IN CASH AT THE TIME OF REGISTRATIO N OF THE DOCUMENTS I.E. BEFORE THE EXECUTIVE MAGISTRATE. THE CLAIM OF THE ASSESSEE IN THIS REGARD WAS THAT THE PAYMENTS WERE MADE TO THE RESPE CTIVE PERSONS IN CASH IN THEIR RESPECTIVE VILLAGES PRIOR TO THE EXEC UTION OF THE SALE DEEDS AND SUCH VILLAGES WERE NOT SERVED BY ANY BANK AND H ENCE THE NECESSITY OF MAKING THE PAYMENT IN CASH. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS HAD RECORDED THE STATEMENTS OF EACH OF THE SELLERS OF THE RESPECTIVE PIECES OF AGRICULTURAL LA ND, WHO ALSO ADMITTED TO HAVE RECEIVED THE PAYMENTS IN THEIR RESPECTIVE VILL AGES PRIOR TO EXECUTION OF SALE DEED BEFORE THE EXECUTIVE MAGISTR ATE AND ALSO IT HAS BEEN CONFIRMED THAT THE RESPECTIVE VILLAGES WERE NO T SERVED BY BANKS. HOWEVER, IN RESPECT OF THE TWO SELLERS I.E. SMT.BEA NT KAUR, SHRI HARWINDER SINGH AND SHRI JASKARANJIT SINGH THOUGH ORDINARILY RESIDING IN VILLAGES, BUT HAD RESPECTIVE SAVING ACCOUNTS IN BANKS, WHICH WERE IN THE AREAS ADJOINING TO THEIR VILLAGE. THE CASH REC EIPTS HAVE BEEN ADMITTED BY EACH OF THE INDIVIDUAL SELLERS IN THEIR RESPECTIVE STATEMENTS AND THE SAME HAVE BEEN DULY REPORTED BY THE ASSESSI NG OFFICER. FURTHER THE ASSESSEE HAD ALSO FURNISHED ON RECORD CERTIFICA TE OF TEHSILDAR OF 9 VILLAGE SHAMSHER NAGAR THAT THERE WAS NO BANK IN TH E AREA DURING THE FINANCIAL YEAR. ANOTHER CONFIRMATION HAS BEEN FILE D FROM THE PATWARI OF VILLAGE RAMNAGAR SIBIAN, SANGRUR THAT THERE WAS NO BANK IN THE SAID VILLAGE IN THE RELEVANT PERIOD. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE IN CONFORMITY WIT H THE ORDER OF THE CIT (APPEALS) TO THE EXTENT THAT THE PROVISIONS OF SECTION 40A(3) OF THE ACT ARE NOT TO BE APPLIED IN VIEW OF THE EXCEPTIONS PROVIDED UNDER RULE 6DD(G) OF THE INCOME TAX RULES. HOWEVER, THE FACTU M OF THE EXISTENCE OR NON-EXISTENCE OF THE BANK ACCOUNTS IN THE RESPEC TIVE AREAS ON THE APPOINTED DATES NEEDS TO BE VERIFIED BY THE ASSESSI NG OFFICER AND IN CASE THE CONTENTION OF THE ASSESSEE THAT THERE WAS NO BA NK ACCOUNT IN THE RESPECTIVE AREA ON THE APPOINTED DATES OF TRANSACTI ON IS FOUND TO BE CORRECT, THEN NO DISALLOWANCE IS WARRANTED UNDER SE CTION 40A(3) OF THE ACT IN VIEW OF THE PROVISIONS OF RULE 6DD(G) OF THE INCOME TAX RULES. HOWEVER, IN CASE THE CONTENTION OF THE ASSESSEE IS FOUND TO BE INCORRECT THEN DISALLOWANCE OF 20% OF THE TOTAL AMOUNT PAID I N CASH MERITS TO BE UPHELD IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER IN THIS REGARD WOULD CARRY OUT THE NECESSARY VERIFICATION A ND COMPUTE THE INCOME OF THE ASSESSEE IN LINE WITH OUR DIRECTIONS. HOWEVER, IN RESPECT OF SMT.BEANT KAUR, WHO ADMITTEDLY OWNS A BANK ACCOU NT WITH PUNJAB NATIONAL BANK ACCOUNT NO.042800-0100169241 DURING T HE FINANCIAL YEAR 2006-07, THE PAYMENT IN CASH EXCEEDING RS.20,000/- IS HIT BY THE PROVISIONS OF SECTION 40A(3). WE FIND NO MERIT IN THE PLEA OF THE ASSESSEE OR OF THE PAYEE THAT SHE WAS RESIDING IN A VILLAGE WHEREIN SHE HAD NO BANK ACCOUNT. THE ASSESSEE HAVING ALREADY U TILIZED THE SERVICE OF BANK ACCOUNT CANNOT BE GOVERNED BY THE EXCEPTION PR OVIDED UNDER RULE 6DD OF THE INCOME TAX RULES. SIMILARLY, SHRI HARWI NDER SINGH OPERATES A BANK ACCOUNT WITH HDFC ACCOUNT NO.02621930002846 AND SHRI JASKARANJIT SINGH OWNS A BANK ACCOUNT WITH HDFC ACC OUNT 10 NO.02621000175386 AND AS IN THE CASE OF SMT.BEANT K AUR, THE PAYMENT MADE IN CASH AT VILLAGE RAMNAGAR SIBIAN IS NOT TO B E ALLOWED AS A DEDUCTION AND THE RESTRICTION IS TO BE PLACED ON SU CH PAYMENT IN VIEW OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE L EARNED D.R. FOR THE REVENUE POINTED OUT THAT SHRI NARINDER SINGH WHO WA S THE POWER OF ATTORNEY HOLDER OF SHRI PRITAM SINGH WAS THE RESIDE NT OF SIRHIND MANDI, WHICH IS SERVICED BY A BANK AND HENCE THE PAYMENT I S HIT BY THE PROVISIONS OF SECTION 40A(3) OF THE ACT. WE FIND N O MERIT IN THE SAID PLEA OF THE LEARNED D.R. FOR THE REVENUE WHERE SHRI NARINDER SINGH HAD ACCEPTED THE PAYMENT ON BEHALF OF SHRI PRITAM SINGH , WHO IN TURN HAD SOLD HIS AGRICULTURAL LAND AND THE PAYMENT WAS RECE IVED IN CASH AT THE HOME OF SHRI PRITAM SINGH. THE ASSESSING OFFICER S HALL CARRY OUT THE EXERCISE OF FINDING OUT WHETHER IN THE RELEVANT YEA R THE VILLAGE OF SHRI PRITAM SINGH WAS SERVICED BY ANY BANK AND APPLY THE PROVISIONS OF SECTION 40A(3) OF THE ACT IN LINE WITH OUR DIRECTIO NS IN THE PARAS HEREINABOVE. CONSEQUENTLY, THE DISALLOWANCE MADE U NDER SECTION 40A(3) OF THE ACT IN RESPECT OF PAYMENT MADE TO SMT.BEANT KAUR, SHRI HARWINDER SINGH AND SHRI JASKARANJIT SINGH ARE UPHE LD AND IN RESPECT OF THE PAYMENT MADE TO SMT.DALIP KAUR, SHRI JARNAIL SI NGH, SHRI NARINDER SINGH AND SMT. HARJINDER KAUR, THE ISSUE IS SET ASI DE TO THE FILE OF THE ASSESSING OFFICER TO COMPLETE VERIFICATION AND DECI DE THE ISSUE IN LINE WITH OUR DIRECTIONS. THE GROUND OF APPEAL RAISED B Y THE REVENUE IS THUS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF APRIL, 2012. SD/- SD/- (T.R. SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED APRIL, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 11