Chandrakant Dadaji Bagul, Nashik V. Assistant Commissioner of Income-tax,

ITA 1663/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7734 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 16-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR VIVEK AGGARWAL
• Section: 40A(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . . . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 1663/PUN/2015 / ASSESSMENT YEAR 2011-12 CHANDRAKANT DADAJI BAGUL, OFFICE NO.9/12/15/16, SHREEJI GROUP, IST FLOOR, UTILITY CENTRE, OPP. TO RAJIV GANDHI BHAVAN, SHARANPUR ROAD, NASHIK 422 002 PAN : ABTPB2013N . / APPELLANT V/S ACIT , CIRCLE - 3, MALEGAON . / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : DR. VIVEK AGGARWAL / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-I, NASHIK, DATED 08-10-2015 FOR THE ASSESSMENT YEAR 2011-12. 2. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. AO HAS ERRED IN MAKING A DISALLOWANCE OF RS.9,50,000/- BY INVOKI NG THE PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961 BY REJECTING THE APPELLANTS CONTENTION COMPLETELY. YOUR APPELLANT PRAYS FOR DELETION OF EN TIRE DISALLOWANCE. / DATE OF HEARING : 10.08.2017 / DATE OF PRONOUNCEMENT: 18.08.2017 2 ITA NO.1663/PUN/2015 CHANDRAKANT DADAJI BAGUL 3. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSES SEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING OF LAND. IN THE YEAR UN DER CONSIDERATION, DURING THE ASSESSMENT PROCEEDINGS, AO NOTICED THAT THE ASSESSE E PURCHASED COUPLE OF PROPERTIES LOCATED AT 2 G.NO.SANGAON BHORYAHA PADA (IN SHORT SONGAON PROPERTY) AND 1 G.NO. MAUJE GAVALWADI, DINDORI (IN SHORT GAV ALWADI PROPERTY). THE PURCHASE CONSIDERATION FOR THE SAID LANDS LOCATED I N THESE VILLAGES AMOUNTS TO RS.25,77,370/- AND RS.16,80,310/- RESPECTIVELY. AO NOTICED THAT IN CONNECTION WITH THE PROPERTY LOCATED AT SONGAON PROPERTY, THE ASSESSEE PAID CASH OF RS.6.5 LAKHS. SIMILARLY, IN CONNECTION WITH GAVALWADI PRO PERTY THE ASSESSEE PAID CASH OF RS.3 LAKHS. THESE PAYMENTS IN CASH EXCEEDED THE SP ECIFIED LIMITS OF RS.20,000/- OR MORE. AO NOTICED THAT THESE PAYMENTS OF RS.6.5 LAKHS AND RS.3 LAKHS TOTALING TO RS.9.5 LAKHS STRAIGHT AWAY VIOLATED THE STIPULAT ED PROVISIONS OF SECTION 40A(3) OF THE ACT. ACCORDINGLY, HE INVOKED THE SAID PROVI SIONS AND PROPOSED TO MAKE ADDITION. IN THIS REGARD, AO ISSUED SHOW CAUSE NOT ICE CALLING FOR EXPLANATION FROM THE ASSESSEE. ASSESSEE REPLIED VIDE HIS LETTER DAT ED 20-01-2014 STATING THAT THERE IS NO BANKING FACILITIES IN THE SAID VILLAGES AND T HEREFORE, THE ASSESSEE IS ENTITLED FOR BENEFITS OF THE EXCEPTIONS PROVIDED IN RULE 6DD (G) OF THE INCOME TAX RULES, 1962. HE ALSO PROVIDED OTHER REASONS WHICH ARE DIS CUSSED IN PAGE 3 OF THE ASSESSMENT ORDER. HOWEVER, THE AO REJECTED THE ABO VE REASONS AND NOTICED THAT ASSESSEE MADE PAYMENTS TO OTHER PARTIES IN THE SAME VILLAGES BY WAY OF DEMAND DRAFTS AND CHEQUES. CONSIDERING THE SAME, AO EXTRA CTED THE RELEVANT LEDGERS FROM CASH BOOKS OF THE ASSESSEE AND PROCEEDED TO MA KE ADDITION OF RS.9.5 LAKHS (RS.6.5 LAKHS + RS. 5 LAKHS) U/S.40A(3) OF THE ACT. 4. DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE MADE WRITTEN SUBMISSIONS AND FORWARDED VARIOUS ARGUMENTS WHICH ARE EXTRACTED IN PARA 4.3 OF THE ORDER OF THE CIT(A). CONSIDERING THE ABOVE SUBMISSIONS/ARGU MENTS THE CIT(A) DISCUSSED THE PROVISIONS OF SECTION 40A(3) READ WITH RULE 6DD AND REJECTED THE ASSESSEES 3 ITA NO.1663/PUN/2015 CHANDRAKANT DADAJI BAGUL CLAIM OF EXEMPTION U/S.6DD(J) OF THE INCOME TAX RUL ES, 1962. CIT(A) IN UNDER THE PRESUMPTION THAT THERE IS EXISTENCE OF BANK FAC ILITIES IN THE TWO VILLAGES SONGAON AND GAVALWADI. THE CIT(A) RELIED ON VARIOU S DECISIONS BEFORE COMING TO THE CONCLUSION OF CONFIRMING THE ORDER OF THE AO. CONTENTS OF PARA 5 TO 5.9 OF THE ORDER OF CIT(A) ARE RELEVANT. AGGRIEVED WITH THE S AME THE ASSESSEE IS IN APPEAL BEFORE US. 5. AT THE OUTSET, BEFORE US, LD. COUNSEL FOR THE AS SESSEE FAIRLY SUBMITTED THAT THE ADDITION OF RS.6.5 LAKHS MADE BY THE AO AND CON FIRMED BY THE CIT(A) RELATING TO THE TRANSACTION OF PURCHASE OF LAND AT SONGAON I S NOT PRESSED. 6. CONSIDERING THE SAID CONCESSION GIVEN BY THE LD. AUTHORISED REPRESENTATIVE FOR THE ASSESSEE AND AFTER HEARING THE LD. DEPARTME NTAL REPRESENTATIVE FOR THE REVENUE, WE ARE OF THE OPINION THAT THIS PART OF TH E GROUND RAISED BY THE ASSESSEE SHOULD BE DISMISSED AS NOT PRESSED WITHOUT GOING TO THE MERITS OF THE ARGUMENTS MENTIONED IN THE ORDERS OF THE AO AND THE CIT(A). 7. REGARDING THE BALANCE AMOUNT OF RS.3 LAKHS OF CA SH PAID BY THE ASSESSEE IN CONNECTION WITH THE PURCHASE TRANSACTION OF LAND AT GAWALWADI PROPERTY, IT IS THE SUBMITTED THAT THE SAID PAYMENTS WERE MADE TO 3 WOM EN CO-OWNERS SUCH AS, (1) MRS. INDUBAI GOPALA KOTHULE RS.1,00,000/-, (2) MR S. SUNITA CHANDRAKANT DIWATE RS.1,00,000/- AND (3) MRS. VAISHALI MURLIDHAR KOT HULE RS.1,00,000/-. THESE CO-OWNERS ARE FROM ADIVASI BACKGROUND HAILING FROM SMALL PADA VILLAGES. THEY DO NOT HAVE BANK ACCOUNTS IN ANY BANK. ASSERTING THE SAME AND FOR CLAIMING THE BENEFITS OF RULE 6DD OF THE I.T. RULES, 1962, LD. C OUNSEL BROUGHT OUR ATTENTION TO PAGE 4 OF THE PAPER BOOK AND SUBMITTED THAT THERE I S NO BRANCH OF ANY NATIONALISED BANK IN THEIR VILLAGE. FOR THIS, LD. AUTHORISED REPRESENTATIVE RELIED ON A CERTIFICATE ISSUED BY THE OFFICE OF TALATHI, GAVA LWADI. THE SAID CERTIFICATE IS REPRODUCED AS UNDER : 4 ITA NO.1663/PUN/2015 CHANDRAKANT DADAJI BAGUL CERTIFICATE OFFICE OF TALATHI GAVALWADI, TAL. DINDORI DATE : 18/12/2014 TALATHI, KOUJE GAVALWADI TAL.DINDORI HEREBY CERTIFI ES THAT, IN THE VILLAGE MOUJE, GAVALWADI TAL: DINDORI, DIST. NASHIK THERE I S NO BRANCH OF ANY NATIONALISED BANK OR CO-OPERATIVE BANK. THE ABOVE CERTIFICATE IS ISSUED ON LOCAL ENQUIRIES MADE. SD/- TALATHI MOUJE: GAVALWADI TAL : DINDORI, DIST : NASHIK 8. EXPLAINING THE ARGUMENTS RELATING TO THE SAID RU LE 6DD, LD. COUNSEL DEMONSTRATED THAT THESE PEOPLE ARE DISTINCTLY DIFFE RENT FROM OTHERS WHO MANAGED TO HAVE THE BANK ACCOUNT IN SOME BRANCHES ELSEWHERE AND THEY CANNOT BE COMPARED WITH THESE 3 WOMEN CONSIDERING THEIR SOCIA L BACKWARDNESS AND BACKGROUND. THE CIT(A) ESSENTIALLY CONFIRMED THE A DDITION OF THIS RS. 3 LAKHS RELYING ON THE PAYMENTS MADE BY THE ASSESSEE TO OTH ER WOMEN IN THE SAME VILLAGE WHO HAVE THE BANK ACCOUNTS. 9. AFTER HEARING BOTH THE SIDES, WE ARE OF THE OPIN ION, IN PRINCIPLE, THE PROVISIONS OF RULE 6DD PROVIDES FOR EXCEPTION ON TH E BASIS OF ABSENCE OF ANY BANKING FACILITIES IN VILLAGE GAVALWADI VILLAGE. I F SOME PEOPLE MANAGED TO HAVE SOME BANKING FACILITIES ELSEWHERE, THAT WILL NOT TA KE AWAY THE BENEFITS OF THE PROVISIONS PROVIDED BY THE RULE TO THE SAME INDIVID UALS LIKE THE PRESENT THREE WOMEN. THEREFORE, ON THIS BASIS, WE ARE OF THE OPI NION THAT THE CIT(A) ERRED IN HOLDING THAT THESE PAYMENTS MADE TO THE 3 INDIVIDUA LS ARE OUTSIDE THE EXCEPTIONS PROVIDED UNDER RULE 6DD OF THE INCOME TAX RULES, 19 62. AS SUCH, IT IS AN UNDISPUTED FACT THAT THERE IS NO BANK BRANCH IN THE SAID VILLAGE. THERE IS NOTHING 5 ITA NO.1663/PUN/2015 CHANDRAKANT DADAJI BAGUL ON RECORD TO SHOW THAT THE LETTER OF THE TALATHI EX TRACTED ABOVE IS WRONG OR INCORRECT. THEREFORE, TO THIS LIMITED EXTENT, WE R EVERSE THE ORDER OF CIT(A) AND ALLOW RELIEF TO THE EXTENT OF RS.3 LAKHS IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF AUGUST, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 18 TH AUGUST, 2017. / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. THE CIT (A) - I , NASHIK THE CIT-I, NASHIK 5. % , , B BENCH PUNE; 6. / GUARD FILE.