Asstt.CIT,Cir-8, Nagpur V. Shri Shrikant B Ghongde, Nagpur

ITA 178/NAG/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3934 (ITAT-NAGPUR)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY MARATHE ACIT
• Assessee Lawyers: S C THAKAR; C J THAKAR
• Keywords: Capital asset
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR E-BENCH, NAGPUR (THROUGH VIDEO CONFERENCE AT MUMBAI) BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTAT MEMBER I.T.A. NO.178/NAG/2012 ASSESSMENT YEAR:2008-2009 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-8, NAGPUR, 5 TH FLOOR, AMBEDKAR BHAVAN, SEMINARY HILLS, NAGPUR-440 006. VS SHRI SHRIKANT B. GHONGDE, 11-B, TYPE-C, CORPORATION COLONY, GANDHI NAGAR, NAGPUR 440 010. PAN: ABTPG 5178 R (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ABHAY MARATHE, ACIT RESPONDENT BY : SHRI C.J. THAKAR & S.C. THAKAR DATE OF HEARING: 8.3.2013 DATE OF ORDER: 05.4.2013 O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 16.5.2012 IS AG AINST THE ORDER OF CIT (A)- II, NAGPUR DATED 11.2.2012 FOR THE ASSESSMENT YEAR 20 08-2009. 2. IN THIS APPEAL REVENUE RAISED THE FOLLOWING GROUN DS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 7,49,000/ - ON THE GROUND THAT THE PURCHASE OF LAND WAS MADE IN EARLIER YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT (A) HAS ERRED IN DELETING ADDITION OF RS. 21,50,000/- ASSUM ING THAT IT WAS THE CAPITAL ASSET AND NOT STOCK IN TRADE OF THE ASSESSEE. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION ACTIVITIES AND HE ENTERED INTO CER TAIN TRANSACTIONS OF PURCHASING OF LAND FROM SHRI DILIP BHAVSINGH THAKUR, SHRI NAMDEO DONDBA CHARDE AND SHRI MARUIT DONDBA CHARDE AND MADE THE PAYMENTS IN CASH TO THEM TOTALING TO RS. 33,99,000/-. ON FINDING, THE PAYMENTS ATTRACTS THE PROVISIONS OF SECTION 40A(3) OF THE ACT, AO MADE DISALLOWANCE UNDER THESE PROVISIONS AND MADE A DDITION OF RS. 33.99 LACS. FURTHER, AO MADE ANOTHER ADDITION OF A SUM OF RS. 5 ,000/- IN CONNECTION WITH 2 REGISTRATION EXPENSES. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL TO THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE CIT (A), ASSES SEE SUBMITTED THAT THE PAYMENTS WERE ACTUALLY MADE IN DEMAND DRAFTS INVOLV ING THE BANKING CHANNELS. IN THIS REGARD, THE DETAILED EXPLANATION WAS GIVEN BY THE ASSESSEE BEFORE THE CIT (A), WHICH IS EVIDENT FROM PARA 3.1 OF THE IMPUGNED ORDE R. AFTER EXAMINING THE DETAILS SUBMITTED, THE CIT (A) CAME TO THE CONCLUSION THAT THE PROVISIONS OF SECTION 40A(3) HAVE NO APPLICATION. PARAS 4 TO 4.3 ARE RELEVANT I N THIS REGARD AND THE SAME ARE REPRODUCED HERE UNDER: 4.0 IT IS SEEN THAT FIRST PROPERTY PURCHASED BY TH E APPELLANT FROM SHRI NAMDEO DONDBA CHARDE ON 27.02.2007, WHICH WAS REGIS TERED ON 09.03.2007. A.O. HAS DISALLOWED THE AMOUNT OF RS. 7 ,49,000/- OUT OF MONEY PAID BY THE APPELLANT TO SELLER. IT IS SEEN THAT TH E PROPERTY WAS PURCHASED IN EARLIER F.Y. AND APPELLANT HAS MADE CHEQUE PAYMENT EXCEPT THE FOLLOWING TWO AMOUNTS. A) RS. 11,000/- ON 18.06.2005 B) RS. 40,000/- ON 17.03.2007 HENCE, THE ADDITION MADE BY THE A.O. FOR THIS PROP ERTY CANNOT BE SUSTAINED FOR PAYMENT MADE BY CHEQUE EVEN THOUGH AP PELLANT AHS ACCEPTED THAT RS. 40,000/- CAN BE DISALLOWED BUT BOTH THESE CASH PAYMENT PERTAIN TO EARLIER YEAR. HENCE, DISALLOWANCE CANNOT BE SUSTAIN ED IN THIS YEAR. HENCE, DISALLOWANCE MADE BY A.O. ON THIS PROPERTY ACCOUNT IS DELETED. 4.1 IN CASE OF PROPERTY PURCHASED FROM MAROTI DONDB A CHARDE FOR RS. 21,50,000/- ON 16.04.2007. IT IS SEEN THAT THIS PRO PERTY WAS NOT REGISTERED AND APPELLANT HAS GIVEN ONLY RS. 14,50,000/- OUT OF HIS BANK ACCOUNT ON 27.03.2006 TO MRS. PRAGATI MANKAR FOR THE ADVANCE, WHICH SHE HAS GIVEN TO SELLER OF LAND MR. DONDBA. THE CONTENTION OF THE AP PELLANT TO THAT THIS IS NOT PURCHASED FOR STOCK IN TRADE BUT IT IS CAPITAL ASSE T PURCHASED BY HIM FOR MAKING OF HIS OWN OFFICE AND THE PROPERTY IS STILL WITH HIM. HE EVEN FILE AFFIDAVIT TO THAT EFFECT DURING THE APPEAL PROCEEDI NGS. 4.2 IT IS CLEAR THAT APPELLANT HAS PURCHASED THE CA PITAL ASSET AND APPELLANT DID NOT DEBIT THIS AMOUNT TO P & L ACCOUNT AND HAS TAKEN THE LAND AS CAPITAL ASSET ONLY. THEREFORE, SECTION 40A(3) IS NOT ATTRAC TED AND ADDITION MADE BY A.O. IS DELETED. 4.3 PROPERTY PURCHASED FROM SHRI DILIP BHIVSINGH WA S TAKEN OVER ON 25.07.2007, IT IS SEEN THAT APPELLANT HAS SUBMITTED THAT TWO DEMAND DRAFTS WERE GIVEN FOR RS. 11,00,000/- AND RS. 5,00,000/- B UT APPELLANT DID NOT PRODUCE ANY DETAILS OF THE DRAFT FOR RS. 5,00,000/- AND ADMITTED THAT HE IS 3 NOT IN A POSITION TO GIVE DETAILS. HENCE, THE DISAL LOWANCE TO THAT EXTENT IS SUSTAINED. 4.1. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRI BUNAL. 5. DURING THE E-COURT PROCEEDINGS BEFORE US, LD REP RESENTATIVES OF BOTH THE PARTIES HAVE RELIED ON THE ORDERS OF THE REVENUE AU THORITIES AS THE CASE MAY BE. 6. WE HAVE HEARD BOTH THE PARTIES AND THE PERUSED T HE ORDERS OF THE REVENUE AUTHORITIES. REVENUE COULD NOT DEMONSTRATE THAT THE PROVISIONS OF SECTION 40A(3) APPLY TO THE IMPUGNED TRANSACTIONS. AFTER CONSIDER ING THE ORDER OF THE CIT (A), WE ARE OF THE OPINION THAT THE REASONS GIVEN BY THE CI T (A), WHILE DELETING THE ADDITION MADE BY THE AO ARE FAIR AND REASONABLE. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) AND, THEREFORE, IT DOES NOT CALL FOR ANY INTERF ERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 5 TH DAY OF APRIL, 2013. SD/- SD/- (R.K. GUPTA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:05.4.2013 AT :MUMBAI OKK COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (A), CONCERNED. 4. THE CIT CONCERNED. 5. THE DR NAGPUR, BENCH, ITAT, MUMBAI. 6. GUARD FILE. // TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI