Shri Shamjibhai Jivabhai Balasara, Madhapar Village, Bhuj-Kutch V. The ITO Ward-1, Bhuj-Kutch

ITA 225/RJT/2022

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 4760 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-12-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 15-08-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIASHISHKUMARPANDEY
• Assessee Lawyers: SHRID.MRINDANI

Judgement Text

आयकरअपीलीयअधिकरण , राजकोटनयायपीी INTHEINCOMETAXAPPELLATETRIBUNAL, RAJKOTBENCH,RAJKOT (ConductedthroughE-Court) BEFOREMsSUCHITRAKAMBLE,JUDICIALMEMBER And SHRIWASEEMAHMED,ACCOUNTANTMEMBER आयकरअपीलसं ./ITANo.225/Rjt/2022 धििाधरणणवध / Asstt.Year:2014-2015 ShamjibhaiJivabhaiBalasara, 1/1,YadunandanChambers, Opp.BusStation, Junavas, Madhapar, Bhuj-370020. PAN:AKYPB5201A Vs.I.T.O, Ward-1, Bhuj. (Applicant)(Respondent) Assesseeby:ShriD.MRindani,with MsDevinaPatel,A.Rs Revenueby:ShriAshishKumarPandey,Sr.DR सुिणाईकीतारीख/DateofHearing:26/09/2023 घोवणाकीतारीख /DateofPronouncement:08/12/2023 आदेश/ORDER PERWASEEMAHMED,ACCOUNTANTMEMBER: Thecaptionedappealhasbeenfiledattheinstanceoftheassesseeagainst theorderoftheLd.CommissionerofIncomeTax,(Appeals)-7,Ahmedabadarising inthematteroforderpassedundersection143(3)oftheIncomeTaxAct,1961 (here-in-afterreferredtoas"theAct")relevanttotheAssessmentYear2013-14. ITANo.225/Rjt/2022 A.Y.2014-15 2 2.TheonlyissueraisedbytheassesseeisthattheLd.CIT(A)erredin confirmingtheadditionmadebytheAOforRs.11,75,720/-onaccountofcash paymentinviolationoftheprovisionsofsection40A(3)oftheAct. 3.Brieflystatedfactsarethattheassesseeinthepresentcase,anindividual, isengagedinthebusinessofdevelopinglandandconstructionofhouses.The assesseeintheyearunderconsiderationhasacquired5piecesoflandagainstthe cashpaymentamountingtoRs.11,75,720/-only.AspertheAO,thecash paymentagainstthepurchaseofland/plot,debitedintheprofitandlossaccounts, isinviolationoftheprovisionofsection40A(3)oftheActandthereforeheadded thesametothetotalincomeoftheassessee. 4.AggrievedassesseepreferredanappealtotheLd.CIT(A),whohas confirmedtheorderoftheAO. 5.BeingaggrievedbytheorderoftheLd.CIT(A),theassesseeisinappeal beforeus. 6.TheLd.ARbeforeusfiledapaperbookrunningfrompages1to21and submittedthatthepaymentincashwasmadebytheassesseeoutofthe withdrawalfromthebank.Similarly,thecashpaymentwasdulyrecordedinthe conveyancedeed.Allthesellershavegivenconfirmationsstatingthatthey insistedtheassesseeforcashpayment.Thus,theLd.ARcontendedthat genuinenessofthetransactionforthepurchaseoflandisbeyonddoubt.Likewise, thecashpaymentwasmadeattheinstantofthevendorandtherefore commercialexpediencyalsogetsestablished.Therefore,itwasprayedtotheLd. CIT(A)thattheamountoflandpurchasedshouldbeallowedasdeduction. 7.Ontheotherhand,theLd.DRsubmittedthattheassesseeisatraderin landactivities,andhehaspurchasedfivepiecesofplotagainstthecashpayment intheyearunderconsiderationwhichevidencesthattheassesseeishabitual ITANo.225/Rjt/2022 A.Y.2014-15 3 defaulter.AspertheLd.DR,thecaseoftheassesseealsodoesnotfallunderany oftheexceptionprovidedunderRule6DDofIncomeTaxRules.TheLd.DR vehementlysupportedtheorderoftheauthoritiesbelow. 8.Wehaveheardtherivalcontentionsofboththepartiesandperusedthe materialsavailableonrecord.Fromtheprecedingdiscussion,wenotethatthereis nodoubtasfarasgenuinenessofthetransactionisconcerned.Therewasa withdrawalfromthebankaccountoftheassessee,cashpaymentwasduly recordedinthebooksandvendorsoflandhavealsoconfirmedtohavereceived cashfromtheassessee.Accordingly,weholdthatthereisnoIOTAofdoubtasfar asgenuinenessoftransactionisconfirmed. 9.1Regardingthebusinessexpediency,wenotethatallthevendorsofthe plotshavestatedintheirconfirmation,placeonpage10to17,thattheyinsisted forcashpayment.Thus,insuchasituation,weareoftheviewthattheassessee tocarryitsbusinessactivitieshadtomakecashpayment.Accordingly,wefeel thatintheimpugnedlandtransactiondeals,thecommercialexpediencyisalso gettingestablished.TheJaipurTribunalinthecaseofVijayetaBuildconpvt.Ltd v/sACITreportedin123taxmann133hasobservedasunder: 29.Intheinstantcase,wefindthattheidentityofthepersonsfromwhomthepurchase ofvariouslandparcelshavebeenmadebytheassesseehasbeenestablishedandthe sourceofcashpaymentsisclearlyidentifiableinformofthewithdrawalsfromthe assessee'sbankaccountsandthesaiddetailsweresubmittedbeforethelowerauthorities andhavenotbeendisputedbythem.ItisnotthecaseoftheRevenueeitherthat unaccountedorundisclosedincomeoftheassesseehasbeenutilisedinmakingthecash payments.Thegenuinenessofthetransactionhasbeenestablishedasevidencedby registeredsaledeedswhereinthepaymentsthroughchequeaswellascashhasbeenduly mentionedandlastly,thetestofbusinessexpediencyhasbeenmetastheinitialpayments asinsistedbythesellersmostofwhomarefarmershavebeenmadeincashtosecurethe transaction.Further,asheldbytheHon'bleRajasthanHighCourtincaseofSmt.Harshila Chordia(supra),theconsequences,whichweretobefallonaccountofnon-observationof sub-section(3)ofsection40Amusthavenexustothefailureofsuchobject.Thereforethe genuinenessofthetransactionsanditbeingfreefromviceofanydeviceofevasionoftax isrelevantconsiderationforwhichsection40A(3)hasbeenbroughtonthestatutebooks andwhichhasbeensatisfiedintheinstantcase.Similarviewhasbeentakenbythe Hon'bleRajasthanHighCourtincaseofCITv.Solution[2017]80taxmann.com246/[2016] 382ITR337whereinitwasheldasunder: ITANo.225/Rjt/2022 A.Y.2014-15 4 '11.TheAppellateAuthoritieshaverelieduponthejudgmentrenderedinthecaseofAttar SinghGurmukhSinghv.ITO[1991]191ITR667/59Taxman11(SC),wherethehon'ble apexcourthasobservedasunder(page673): "Thetermsofsection40A(3)arenotabsolute.Considerationofbusinessexpediencyand otherrelevantfactorsarenotexcluded.Genuineandbonafidetransactionsarenottaken outofthesweepofthesection.Itisopentotheassesseetofurnishtothesatisfactionof theAssessingOfficerthecircumstancesunderwhichthepaymentinthemanner prescribedinsection40A(3)wasnotpracticableorwouldhavecausedgenuinedifficultyto thepayee.Itisalsoopentotheassesseetoidentifythepersonwhohasreceivedthecash payment.Rule6DDprovidesthatanassesseecanbeexemptedfromtherequirementof paymentbyacrossedchequeorcrossedbankdraftinthecircumstancesspecifiedunder therule.Itwillbeclearfromtheprovisionsofsection40A(3)andrule6DDthattheyare intendedtoregulatebusinesstransactionsandtopreventtheuseofunaccountedmoney orreducethechancestouseblackmoneyforbusinesstransactions." 12.Theaforesaidobservationdoesapplyintheinstantcase.TheAssessingOfficeronthe factsnoticedhasbeenunabletomakeoutacaseofinvolvementofunaccountedmoney. 13.ItisalsoafindingoffactrecordedbytheCommissionerofIncome-tax(Appeals)that copiesoftheledgeraccountswereproducedbeforetheAssessingOfficerwhohasnot foundanydiscrepancyinsuchbooksofaccountandnounaccountedtransactionhasbeen reported/noticedbytheAssessingOfficer.' 30.Intheentiretyoffactsandcircumstancesofthecaseandrespectfullyfollowingthe legalpropositionlaiddownbythevariousCourtsincludingthatoftheJurisdictionalHigh CourtandtheCoordinateBenchesreferredsupra,nodisallowanceiscalledforunder section40A(3)oftheActandthesameisdirectedtobedeleted.Intheresult,theground oftheassessee'sappealisallowed. 9.2Inviewoftheabove,weareoftheviewthatthelegitimatededuction availabletotheassesseecannotbedeniedinthegivenfactsandcircumstances. Accordingly,wesetasidethefindingsoftheLd.CIT(A)anddirecttheAOto deletetheadditionmadebyhim.Hence,thegroundofappealoftheassesseeis herebyallowed. 10.Intheresult,theappealfiledbytheassesseeisherebyallowed. OrderpronouncedintheCourton08/12/2023atAhmedabad. Sd/-Sd/- (SUCHITRAKAMBLE)(WASEEMAHMED) JUDICIALMEMBERACCOUNTANTMEMBER (TrueCopy) Ahmedabad;Dated08/12/2023 Manish,Sr.PS