Shri Shashikant B. Takte, Nashik V. Asst. CIT, Circle-2, Nashik

ITA 2096/PUN/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7206 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-11-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 29-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Keywords: Earning of tax free income; Condonation of delay
• Section: 40A(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 2096 /P U N/201 2 / ASSESSMENT YEAR : 20 0 8 - 09 SHRI SHASHIKANT B. TAKTE, ASHIRWAD, S.T. COLONY, GANGAPUR ROAD, NASHIK 422005 PAN : AAKPT1043J ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2, NASHIK / RESPONDENT . / ITA NO . 913/PUN/2014 / ASSESSMENT YEAR : 2009 - 10 SHRI SHASHIKANT B ALASAHEB TAKTE, ASHIRWAD, S.T. COLONY, GANGAPUR ROAD, NASHIK 422005 PAN : AAKPT1043J ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2, NASHIK / RESPONDENT ASSESSEE BY : S HRI ABHAY AVCHAT REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 0 8 - 11 - 2017 / DATE OF PRONOUNCEMENT : 17 - 1 1 - 2017 2 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 / ORDER PER VIKAS AWASTHY, JM : TH ESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE. IN ITA NO. 2096/PUN/2012 THE ASSESSEE HAS IMPUGNED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - II, NASHIK DATED 22 - 03 - 2012 FOR THE ASSESSMENT YEAR 2008 - 09. IN ITA NO. 913/PUN/2014 THE ASSESSEE HAS AS SAILED THE ADDITIONS CONFIRMED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - II, NASHIK DATED 24 - 02 - 2014 FOR THE ASSESSMENT YEAR 2009 - 10. SINCE, SOME OF THE ISSUES INVOLVED IN BOTH THE APPEALS BY THE ASSESSEE ARE SIMILAR AND EMANATING FROM SAME SET OF FACTS, THESE APPEALS ARE TAKEN UP TOGETHER FOR ADJUDICATION AND ARE DISPOSED OF BY THIS COMMON ORDER. 2. FIRST, WE WILL TAKE UP THE APPEAL OF ASSESSEE IN ITA NO. 2096/PUN/2012. THE APPEAL IS TIME BARRED BY 160 DAYS. THE ASSESSEE HAS FILED AN APPLICATION SEEKING CONDONATION OF DELAY IN FILING OF THE APPEAL SUPPORTED BY AN AFFIDAVIT. AFTER PERUSAL OF THE SAME, WE ARE SATISFIED THAT THE DELAY IN FILING OF APPEAL IS NOT INTENTIONAL OR DELIBERATE BUT HAS BEEN CAUSE D DUE TO BONAFIDE REASONS AS STATED IN THE AFFIDAVIT. THUS, THE DELAY IN FILING OF APPEAL IS CONDONED AND THE APPEAL IS ADMITTED TO BE HEARD AND DISPOSED OF ON MERITS. 3. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS AN IND IVIDUAL AND IS ENGAGED IN THE BUSINESS OF TRADING IN LAND AND REAL ESTATE. THE ASSESSEE IS ALSO DERIVING INCOME FROM H OUSE P ROPERTY, CAPITAL GAINS AND INCOME FROM OTHER S OURCES. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008 - 09 ON 0 6 - 11 - 2008 DECLARING TOTAL INCOME OF RS. 49,48,920/ - . DURING THE COURSE OF SCRUTINY ASSESSMENT 3 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PAID INTEREST TO INDIA B ULLS LTD., A N ON - B ANKING FINANCE C OMPANY AND DADASAHEN VAMAN VISHNU SHINK AR NAGARI SAHKARI PATSANSTHA LTD. THE ASSESSEE WHILE MAKING PAYMENT OF INTEREST TO THE AFORESAID ENTITIES HAS NOT COMPLIED WITH TDS PROVISIONS. HENCE, THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.25,34,373/ - U/S. 40(A)(IA) O F THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT ). FURTHER, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS EARNED EXEMPT INCOME OF RS.17,438/ - . HOWEVER, NO DISALLOWANCE WAS MADE BY ASSESSING OFFICER IN RESPECT OF SUCH INTEREST FREE INCOME UNDER THE PROVISIONS OF SECTION 14A AS INTEREST PAYMENT W AS DISALLOWED UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. HOWEVER, THE ASSESSING OFFICER WHILE MAKING NO ADDITION IN RESPECT OF DISALLOWANCE U/S. 14A HAS PUT A RIDER THAT IN CASE THE ASSESSEE FILE S AN APPEAL AGAINST THE ADDITION OF INTEREST U/S. 40(A)(IA) , AND IF THE DECISION OF APPEAL GOES AGAINST THE REVENUE, THE DISALLOWANCE OF INTEREST U/S. 14A WHICH HAS NOT BEEN GIVEN EFFECT SHALL REVIVE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 31 - 12 - 2010, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) , THE ASSESSEE FURNISHED STATEMENT GIVING THE DETAILS OF INTEREST PAID TO VARIOUS FINANCIAL INSTITUTIONS/BANKS AGGREGATING TO RS.31,20,483/ - . THE ASSESSEE FURTHER INFORMED THAT THE I NTEREST PAID TO INDIA BULLS FINANCIAL SERVICES LTD. IN RESPECT OF THREE LOAN ACCOUNTS IS RS.7,51,962/ - INSTEAD OF RS.24,08,106/ - AS MENTIONED IN THE ASSESSMENT ORDER. THE COMMISSIONER OF INCOME TAX (APPEALS) SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER . THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE LEDGER ACCOUNTS OF VARIOUS LOAN ACCOUNTS MAINTAINED BY THE ASSESSEE DO NOT TALLY WITH THE DETAILS OF INTEREST FURNISHED BY THE ASSESSEE IN FIRST APPELLATE PROCEEDINGS. THE ASSESSEE 4 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 CLAIMED INTE REST EXPENDITURE OF RS.31,20,483/ - IN HIS BOOKS AS AGAINST ACTUAL PAYMENT OF RS.19,70,509/ - . THE COMMISSIONER OF INCOME TAX (APPEALS) SOUGHT EXPLANATION FROM THE ASSESSEE ON THE DISCREPANCIES. HOWEVER, THE ASSESSEE FAILED TO FURNISH ANY RECONCILIATION EI THER IN REMAND PROCEEDINGS OR DURING FIRST APPELLATE PROCEEDINGS. THE COMMISSIONER OF INCOME TAX (APPEALS) ISSUED ENHANCEMENT NOTICE. IN THE ABSENCE OF ANY EXPLANATION OR RECONCILIATION THE COMMISSIONER OF INCOME TAX (APPEALS) MADE ADDITION OF RS.11,49,9 70/ - . THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER MADE DISALLOWANCE OF RS.60,871/ - U/S. 14A R.W.R. 8D AND CONFIRMED DISALLOWANCE OF RS.10,93,702/ - U/S. 40(A)(IA) OF THE ACT . 4. AGGRIEVED BY THE ORDER PASSED BY COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE RAISED FOLLOWING GROUNDS OF APPEAL : 1 ) THE LD. CIT(APPEALS) ERRED IN MAKING ENHANCEMENT OF INCOME BY RS.11,49,970/ - . 2 ) THE LD. CIT(APPEALS) ERRED IN RETAINING DISALLOWANCE U/S. 40(A)(IA) OF THE ACT TO THE EXTENT OF RS.10,93,707/ - ESPECIALLY WHEN THE ENTIRE AMOUNT OF RS.10,93,707/ - WAS ACTUALLY PAID AS INTEREST ON VARIOUS LOANS AND NOTHING WAS REMAINING TO BE ACTUALLY PAID OUT OF THIS AMOUNT AS ON 31 - 03 - 2008. 3 ) THE LD. CIT(APPEALS) ERRED IN ENHANCING THE INCOME BY MAKING A DISALLOWANCE U/S. 14A OF RS.60,871/ - . 5. SHRI ABHAY AVCHAT APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT GROUND NOS. 1 AND 2 PERTAINS TO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. UNDISPUTEDLY, PAYMENT OF INTEREST HAS BEEN MADE TO FINANCIAL INSTITUTIONS/BANKS W ITHOUT DED UCTION OF TAX AT SOURCE. THE LD. AR CONTENDED THAT THE FINANCIAL INSTITUTIONS/BANK IN THEIR RESPECTIVE RETURNS OF INCOME HAVE DISCLOSED INTEREST INCOME. IN THE LIGHT OF NEWLY INSERTED SECOND PROVISO TO SECTION 40(A)(IA) THE ISSUE MAY BE REMITTED BACK TO ASSESSING OFFICER FOR VERIFICATION. 5 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 5.1 IN RESPECT OF GROUND NO. 3 THE LD. AR SUBMITTED THAT DISALLOWANCE U/S. 14A R.W.R. 8D HAS BEEN MADE IN RESPECT OF ALL THE INVESTMENTS, EVEN THOUGH ON SOME OF THE INVESTMENTS THE ASSESSEE HAS NOT EARNED ANY TAX FREE INCOME. THE LD. AR FURTHER CONTENDED THAT NO DISALLOWANCE UNDER RULE 8D WAS REQUIRED TO BE MADE AS THE ASSESSEE HAS NOT UTILIZED BORROWED FUNDS FOR MAKING INVESTMENTS. A PERUSAL OF BALANCE SHEET OF THE ASSESSEE WOULD SHOW THAT THE ASSESSEE IS HAVING SUFF ICIENT OWN INTEREST FREE FUNDS FOR MAKING INVESTMENTS. 6. ON THE OTHER HAND SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) AND PRAYED FOR DISMISSING THE APPEAL OF ASSESSEE. 7. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . THE GROUND NO. 1 RAISED IN APPEAL RELATES TO ENHANCEMENT OF INCOME ON ACCOUNT OF EXCESSIVE INTEREST CLAIMED IN THE P & L ACCOUNT. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS SOUGHT REMAND REPORT ON ACCOUNT OF DISCREPANCIES IN THE STATEMENT OF INTEREST FURNISHED BY THE ASSESSEE DURING FIRST APPELLATE PROCEEDINGS AND AS PER P & L ACCOUNT. TH E ASSESSEE NEITHER DURING REMAND PROCEEDINGS NOR DURING FIRST APPELLATE PROCEEDINGS COULD RECONCILE OR EXPLAIN THE DIFFERENCE IN THE INTEREST EXPENDITURE CLAIM ED . EVEN BEFORE US THE LD. AR HAS FAILED TO EXPLAIN THE DIFFERENCE IN INTEREST EXPENDITURE AS CL AIMED IN P & L ACCOUNT AND THE STATEMENT OF INTEREST FURNISHED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). IN P & L ACCOUNT THE ASSESSEE HAS CLAIMED INTEREST EXPENDITURE RS.31,20,483/ - AS AGAINST ACTUAL PAYMENT OF INTEREST RS.19,70,509/ - . IN THE ABS ENCE OF ANY EXPLANATION, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) QUA 6 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 THE ADDITION OF RS.11,49,970/ - . ACCORDINGLY, GROUND NO. 1 RAISED IN THE APPEAL BY ASSESSEE IS DISMISSED. 8. IN RESPECT OF GROUND NO. 2 RELATING TO DISALLOWANCE U/S. 40(A)(IA) THE LD. AR HAS PRAYED FOR REMITTING THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER IN THE LIGHT OF NEWLY INSERTED SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. THE SECOND PROVISO TO SECTION 40(A)(IA) INSERTED BY FINANCE ACT, 2012 W.E.F. 01 - 04 - 2013 READS AS UNDER : PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII - B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAU LT UNDER THE FIRST PROVISO TO SUB - SECTION (1) OF SECTION 201 , THEN, FOR THE PURPOSE OF THIS SUB - CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO . REMITTING THE ISSUE TO ASSESSING OFFICER FOR VERIFICATION IN THE LIGHT OF NEWLY INSERTED PROVISO EVEN RESPECT OF EARLIER ASSESSMENT YEAR HAS BEEN APPROVED BY HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANSAL LAND MARK TOWNSHIP P. LTD. REPORTED AS 377 ITR 635. THEREFORE, IN VIEW OF ABOVE WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION TO ASSESSEE TO FURNISH ALL THE RELEVANT DOCUMENTS BEFORE THE ASSESSING OFFICER EVIDENCING THAT INTEREST PAID BY ASSESSEE HAS BEEN OFFERED TO TAX BY RECIPIENTS IN THEIR RESPECTIVE RETURN OF INCOME. THE ASSESSING OFFICER WHILE RE - ADJUDICATING THIS ISSUE SHALL TAKE INTO CONSIDERATION ALL THE DOCUMENTS FURNISHED BY AS SESSEE AND SHALL AFFORD SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE, IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUND NO. 2 RAISED BY THE ASSESSEE IN APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 7 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 9 . IN GROUND NO. 3 THE ASSESSEE HAS ASSAILED DISALLOWANCE OF RS.60,871/ - MADE U/S. 14A BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE CONTENTION OF THE ASSESSEE IS THAT WHILE MAKING DISALLOWANCE U/S. 14A THE INVESTMENTS ON WHICH NO TAX FREE INCOME HAS BEEN EARNED AS ALSO BEEN INCLUDED. WE FIND THAT THE ASSESS EE HAS RAISED THIS CONTENTION FOR THE FIRST TIME BEFORE TRIBUNAL. THE LD. AR HAS FURTHER SUBMITTED THAT ASSESSEES OWN INTEREST FREE FUNDS ARE MUCH MORE THAN THE INVESTMENTS MADE. IN OUR CONSIDERED VIEW THIS ISSUE NEEDS REVISIT TO THE FILE OF ASSESSING O FFICER. THE ASSESSEE HAS NOT DEMONSTRATED BEFORE THE TRIBUNAL THAT INTEREST FREE FUNDS OF ASSESSEE ARE SUFFICIENT TO COVER THE INVESTMENTS. HOWEVER, IT IS MADE CLEAR THAT WHILE COMPUTING DISALLOWANCE U/S. 14A R.W.R. 8D(2)(I I I) ONLY THOSE INVESTMENTS SHOU LD BE TAKEN INTO CONSIDERATION ON WHICH THE ASSESSEE HAS EARNED INTEREST FREE INCOME . ACCORDINGLY, GROUND NO. 3 RAISED IN THE APPEAL BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATIST ICAL PURPOSE. ITA NO . 913/PUN/2014 (A.Y . 2009 - 10) 1 0 . THIS APPEAL HAS BEEN FILED WITH THE DELAY OF 07 DAYS. THE ASSESSEE HAS FILED AN APPLICATION SEEKING CONDONATION OF DELAY IN FILING OF THE APPEAL SUPPORTED BY AN AFFIDAVIT. AFTER PERUSAL OF THE SAME, WE ARE SATISFIED THAT THE DELAY IN FILING OF THE APPEAL IS NOT INTENTIONAL OR DELIBERATE BUT HAS BEEN CAUSED DUE TO BONAFIDE REASONS AS STATED IN THE AFFIDAVIT. THUS, THE DELAY IN FILING OF APPEAL IS CONDONED AND THE APPEAL IS ADMITTED TO BE HEARD A ND DISPOSED OF ON MERITS. 1 1 . THE ASSESSEE IN PRESENT APPEAL HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS : 8 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, 1 . THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2, NASIK HAS ERRED I N MAKING DISALLOWANCE OF RS. 17,13,786 IN RESPECT OF INTEREST PAID TO INDIA BULL FINANCE LTD. UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, NASHIK HAS ERRED IN CONFIRMING THE SAME. 2 . THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2, NASIK HAS ERRED IN MAKING DISALLOWANCE OF RS. 7,34,621 IN RESPECT OF INTEREST PAID TO CITI FINANCE LTD. UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, NASHIK HAS ERRED IN CONFIRMING THE SAME. 3 . THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2, NASIK HAS ERRED IN MAKING DISALLOWANCE OF RS . 3,58,859 IN RESPECT OF INTEREST PAID TO CO - OPERATIVE SOCIETIES UN DER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, NASHIK HAS ERRED IN CONFIRMING THE SAME. 4 . THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2, NASIK HAS ERRED BY MAKING ADDITION OF RS.5,5 0,000 / - UNDER SECTION 40A(3) AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, NASHIK HAS ERRED IN CONFIRMING THE SAME. 5 . THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 2, NASIK HAS ERRED BY MAKING DISALLOWANCE OF RS.25,000 / - IN RESPECT OF PROFESSIONAL FEES PAID UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 11, MASHIK HAS ERRED IN CONFIRMING THE SAME. 6 . THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEA L . 1 2 . IN RESPECT OF GROUNDS NOS. 1, 2 AND 3 THE LD. AR SUBMITTED THAT THIS PERTAINS TO PAYMENT OF INTEREST WITHOUT DEDUCTION OF TAX AT SOURCE. THE INTEREST HAS BEEN PAID TO INDIA BULL S FINANCE LTD., CITI FINANCE LTD., DADASAHEB WAMAN VISHNU URBAN CO - OPERATIVE CREDIT SOCIETY AND VEERSHAIV URBAN CO - OPERATIVE CREDIT SOCIETY. THE LD. AR CONTENDED THAT 9 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 GROUND NOS. 1 TO 3 CAN BE REMITTED BACK TO ASSESSING OFFICER FOR VERIFICATION IN THE LIGH T OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. 1 3 . IN GROUND NO. 4 , THE ASSESSEE HAS ASSAILED DISALLOWANCE U/S. 40A(3) ON ACCOUNT OF CASH PAYMENTS OF RS.5,50,000/ - MADE FOR PURCHASE OF LAND. THE LD. AR CONTENDED THAT THE ASSESSEE IS ENGAGED IN TH E BUSINESS OF PURCHASE AND SALE OF LAND. THE ASSESSEE PAID RS.4,50,000/ - IN CASH FOR PURCHASE OF LAND AT GAT NO. 316/2/A, VILLAGE - JALLALPUR, NASHIK AND RS.1,00,000/ - IN CASH FOR PURCHASE OF LAND COMPRISING IN SURVEY NO. 622/1, FINAL PLOT NO. 76, GOLE ROAD , NASHIK . THE ASSESSEE PAID AFORESAID AMOUNT S AS TOKEN TO CONFIRM THE TRANSACTION AND TH US CASH PAYMENTS WERE MADE ON ACCOUNT OF BUSINESS EXPEDIENCY. IN THE BUSINESS OF PURCHASE AND SALE OF LAND, THE TOKEN AMOUNT HAS TO BE PAID IMMEDIATELY TO CONFIRM THE TRANSACTION. SINCE, THE ASSESSEE WANTED TO SEAL THE TRANSACTION IMMEDIATELY THE ASSESSEE PAID TOKEN AMOUNT IN CASH OUT OF BUSINESS EXPEDIENCY. THE LD. AR CONTENDED THAT THE PAYMENT S FALL WITHIN THE EXCEPTIONS PROVIDED UNDER RULE 6DD OF THE INCOME TAX RU LES. THE LD. AR FURTHER SUBMITTED THAT THE AFORESAID TWO PARCEL OF LAND WERE PURCHASED BY THE ASSESSEE IN JULY, 2008 AND HAS SHOWN THE SAME AS STOCK - IN - TRADE AS ON 31 - 03 - 200 9 . NO DEDUCTION WAS CLAIMED BY THE ASSESSEE ON ACCOUNT OF PURCHASE OF SAID LAND S, AS THEY REMAINED UNSOLD AT THE END OF YEAR. SINCE, NO DEDUCTION IS CLAIMED IN RESPECT OF SUCH EXPENDITURE THE SAME CANNOT BE DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 14. IN RESPECT OF GROUND NO. 5, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF RS.25,000/ - PAID AS PROFESSIONAL FEES U/S. 40(A)(IA) OF THE ACT. THE LD. AR SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN MAKING DISALLOWANCE IN RESPECT OF AFORESAID AMOUNT AS THE ASSESSEE HAD COMPLIED W ITH THE PROVISIONS OF TDS . T HE ASSESSEE HAD 10 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 DEDUCTED AND HAD PAID THE TAX DEDUCTED AT SOURCE TO THE GOVERNMENT EXCHEQUER. 1 5 . ON THE OTHER HAND THE LD. DR VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). THE LD. DR SUBMITTED THAT THE ASSESSEE HAS FAILED TO DEMONSTRATE THAT CASH PAYMENTS FOR PURCHASE OF LAND WERE MADE OUT OF BUSINESS EX PEDIENCY. IT IS NOT THE CASE OF ASSESSEE THAT THE BANK FACILITIES WERE NOT AVAILABLE OR THE SELLER OF THE LAND HAD REFUSED TO ACCEPT ACCOUNT PA YEE CHEQUE. THE ASSESSEE HAS ALSO FAILED TO SHOW THAT ON THE DATE OF TRANSACTION S, THE BANKS WERE CLOSED ON ACCOUNT OF HOLIDAY OR STRIKE. THEREFORE, THE CASH TRANSACTIONS MADE BY THE ASSESSEE DO NOT FALL WITHIN THE EXCEPTION S PROVIDED UNDER RULE 6DD. IN RESPECT OF DISALLOWANCE U/S. 40(A)(IA) ON PAYMENT OF PROFESSIONAL FEES , THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENT IN SUPPORT OF HIS CONTENTION THAT THE TDS HAS BEEN DEDUCTED AND HAS BEEN PAID. THEREFORE, NO RELIANCE CAN BE P LACED ON MERE BALD ASSERTIONS. 1 6 . BOTH SIDES HEARD. ORDERS OF AUTHORITIES BELOW PERUSED. GROUND NOS. 1 TO 3 RELATE TO DISALLOWANCE U/S. 40(A)(IA) . THE ASSESSEE HAS PRAYED TO REMIT THIS ISSUE BACK TO ASSESSING OFFICER FOR VERIFICATION IN THE LIGHT OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. IN APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 SIMILAR DISALLOWANCE U/S. 40(A)(IA) WAS MADE . SINCE, THE ISSUE RAISED IN GROUND NOS. 1 TO 3 IN THE PRESENT APPEAL IS SIMILAR TO THE GROUND NO. 2 IN APPE AL FOR ASSESSMENT YEAR 2008 - 09, THE FINDINGS GIVEN BY US IN APPEAL OF ASSESSEE IN ITA NO. 2096/PUN/2012 FOR ASSESSMENT YEAR 200 8 - 09 WOULD APPLY MUTATIS MUTANDIS IN ASSESSMENT 11 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 YEAR 200 9 - 10 AS WELL. ACCORDINGLY, GROUND NOS. 1 TO 3 RAISED IN THE APPEAL BY AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 1 7 . IN GROUND NO. 4 THE ASSESSEE HAS ASSAILED THE ADDITION OF RS.5,50,000/ - U/S. 40A(3). ONE OF THE GROUNDS RAISED BY THE ASSESSEE ASSAILING THE ADDITION U/S. 40A(3) IS THAT THE ASSESSEE HAS NOT CLAIMED RS.5,50, 000/ - AS DEDUCTION DURING ASSESSMENT YEAR UNDER APPEAL , T HEREFORE, NO DISALLOWANCE CAN BE MADE DURING SAID ASSESSMENT YEAR. WE FIND MERIT IN THE SUBMISSION OF THE ASSESSEE. HOWEVER, AFTER PERUSAL OF THE IMPUGNED ORDER IT IS NOT EVIDENT WHETHER THE AUTHORI TIES BELOW HAVE EXAMINED THE FACT REGARDING CLAIM OF DEDUCTION BY ASSESSEE DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. WE DEEM IT APPROPRIATE TO RESTORE THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION. IF THE ASSESSE E HAS NOT CLAIMED THE AMOUNT OF RS.5,50,000/ - AS DEDUCTION DURING ASSESSMENT YEAR UNDER APPEAL , NO DISALLOWANCE U/S. 40A(3) IS WARRANTED. ACCORDINGLY, GROUND NO. 4 RAISED IN THE APPEAL BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 1 8 . IN GROUND NO. 5 THE ASSESSEE HAS ASSAILED DISALLOWANCE OF RS.25,000/ - U/S. 40(A)(IA) OF THE ACT. THE CONTENTION OF THE ASSESSEE IS THAT HE HAS DEDUCTED TAX AT SOURCE WHILE MAKING THE AFORESAID PAYMENTS AS PROFESSIONAL FEES. A PERUSAL OF THE IMPUGNED ORDER SHOWS THAT TH ERE IS NO FINDINGS BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE AFORESAID DISALLOWANCE. THEREFORE, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION. IF THE ASSESSEE HAS DEDUCTED TAX AT SOURCE ON THE PAYMENT OF PROFESSIONAL FEES AND HAS DEPOSITED THE TDS TO THE GOVERNMENT EXCHEQUER, NO DISALLOWANCE U/S. 40(A)(IA) IS TO BE MADE. THE ASSESSEE IS DIRECTED TO FURNISH NECESSARY EVIDENCE BEFORE 12 ITA N OS. 2096/PUN/2012 & 913/PUN/2014, A.YS. 2008 - 09 & 2009 - 10 ASSESSING OFFICER IN SUPPORT OF HIS CLAIM. ACCORDINGLY, GROUND NO. 5 RAISED IN THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 19 . IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO. 2096/PUN/2012 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND ITA NO. 913/PUN/2014 IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON FRIDAY, THE 17 TH DAY OF NOVEMBER, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 17 TH NOVEMBER, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - II, NASHIK 4. / THE CIT - II, NASHIK 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE