INCOME TAX OFFICER ,WARD -4,AMRAVATI , AMRAVATI V. SHIR PRASHANT N PANPALIYA , AMRAVATI

ITA 231/NAG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7488 (ITAT-NAGPUR)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 03-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ MORIYANI
• Assessee Lawyers: R K BARAL
• Keywords: Question of law
• Section: 40A(3); 260A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 231 /NAG. / 2017 ( ASSESSMENT YEAR : 2013 - 14 ) INCOME TAX OFFICER, WARD - 4, AAYAKAR BHAVAN, AMBAPETH, AMRAVATI 444 601 APPELLANT V/S SHRI PRASHANT N. PANPALIYA PROP OF M/S. GANGA TRADERS, VIDARBHA TYRE BUILDING, MOTE COMPOUND, MORSHI ROAD, AMRAVATI - 444 602 PAN AATPP 8677 K .... RESPONDENT A S SESSEE BY : SHRI R. K. BARAL REVENUE BY : SHRI MANOJ MORIYANI DATE OF HEARING 08.05.2018 DATE OF ORDER 14.06 .2018 O R D E R PER SHAMIM YAHYA , A .M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 1, NAGPUR DATED 03.04.2017 AND PERTAINS TO ASSESSMENT YEAR 2013 - 14. 2. THE GROUND S OF APPEAL READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.80,00,000/ - MADE U/S. 40 A93) OF THE I.T. ACT, 1961 BY THE ASSESSING OFFICER. 2 ITA NO. 231/NAG./2017 SHRI PRASHANT N. PANPALIYA 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.10,00,080/ - MADE U/S . 68 R.W.S. 115BBE OF THE I.T. ACT, 1961 BY THE ASSESSING OFFICER. APROPOS GROUND RELATING TO DISALLOWANCE U/S. 40A(3) : 3. BRIEF FACTS ON THIS ISSUE ARE AS UNDER: THE ASSESSEE HAS PURCHASED AGRICULTURAL LAND SURVEY NO.42/5, MOUJE NAVSARI, AMRAVATI O N 20.12.2012 FOR RS.1,30,00,000/ - . THE ASSESSEE IS FOUND TO HAVE MADE CASH PAYMENTS OF RS.22,50,000/ - TO SHRI RAMESH SINGH PAWAR AND OF RS.57,50,000/ - TO SMT. PRABHAVATI CHAVAN ON 22.07.2011 FOR THIS LAND PURCHASE. THE ASSESSING OFFICER HAS DISALLOWED THESE CASH PAYMENTS, THOUGH MADE DURING FY 2011 - 12, ON ACCOUNT OF THE FACT THAT THE ASSESSEE HAS DEBITED THE PURCHASES IN LAND TRADING ACCOUNT FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEES REPLY FILED DURING ASSESSMENT HAS NOT BEEN ACCEPTED BY THE ASSESSING O FFICER . THEREFORE, ADDITION OF RS.80,00,000/ - BEEN MADE 40A(3) OF THE ACT. 4. UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THE SUBMISSIONS OF THE ASSESSEE. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE ASSES SING OFFICER HAS NOT CON TRO VERTED THE ASSESSEES CONTENTION THAT THE LAND HAS BEEN PURCHASED FROM AGRICULTURALIST WHICH HAS BEEN SHOWN BY THE ASSESSEE AS STOCK - IN - TRADE IN HIS BALANCE SHEET . THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN DISPUTED BY THE A SSESSING OFFICER. HE FURTHER NOTED THAT NO PAYMENT FOR THIS LAND HAS BEEN MADE DURING THE YEAR UNDER CONSIDERATION. HE FURTHER NOTED THAT ON SAME F ACTS IN ANOTHER CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE SIMILAR ADDITION. REFERRING TO THE SAME, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THIS ADDITION. 3 ITA NO. 231/NAG./2017 SHRI PRASHANT N. PANPALIYA 5. AGAINST THIS ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IN SI MILAR CASES OF PURCHASE OF LAND FROM AGRICULTURALIST, ON A GENUINE TRANSACTION OUT OF BUSINESS COMPULSION, THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY FOLLOWING CASE LAWS: 1. ITO VS. SWAPNIL AHIRKAR (IN ITA NO. 70/NAG/2015 VIDE ORDER DATED 30.06.2017); 2. M/S. SHREE B & B PARADISE LAND DEVELOPERS VS. ITO (IN ITA NO. 446/NAG/2013 VIDE ORDER DATED 31.03.2016); 3. ASST. CIT VS. R. P. REAL ESTATE PVT. LTD. (2015) 44 CCH 699 (MUM - TRIB); 4. ASST. CIT VS. R. P. REAL ESTATE PVT. LTD. (2016) CCH 86 (CHATT. HC ); AND 5. SARASWATI HOUSING & DEVELOPERS VS. ADDL. CIT (2013) 27 ITR 175 (DEL - TRIB) 7. WE FIND THAT IN THIS REGARD, IT MAY BE GAINFUL TO REFER TO THE ASSESSEES SUBMISSION BEFORE THE ASSESSING OFFICER WHICH HAS NOT ACCEPTED BY HIM. THE SAME READS AS UNDER: (1) THAT IN DEALING OF PURCHASE OF NAVSARI AGRICULTURE LAND BOTH THE SELLING PARTIES WERE LITIGANT. BESIDES SELLING PARTIES THERE WERE THREE CONSENTING PARTIES. MATTER WAS BEFORE THE COURT OF LAW FOR QUITE A LONG TIME. FOR DOING ISSAR OF THE SAID AGRICULT URE LAND THE SELLING PARTIES HAD KEPT CONDITION FOR CASH PAYMENT AT THE TIME OF REGISTERING THE ISSAR CHHITHI. BOTH WERE AGRICULTURIST. THE SAID AGRICULTURE LAND WAS 'BHOGWATA WARG - 2'. THEREFORE WE HAVE ALSO PAID THE PREMIUM AMOUNT TO THE STATE GOVERNMENT FOR GRANTING THE PERMISSION. ISSAR CHHITHI HAS REGISTERED BEFORE SUB REGISTRAR & PAYMENT AS PER ISSAR CHHITHI HAVE MADE TO BOTH THE SELLERS BEFORE THE SUB REGISTRAR ON 22.07.2012 (I.E.FY 11 - 12 & AY 12 - 13) AND KEPT AS AN ISSAR AMOUNT IN BALANCE SHEET. BOTH THE SELLERS ARE AGRICULTURIST THERE 7/12 EXTRACT ATTACHED WITH SALE DEED. BOTH ARE RESIDING IN VILLAGE AND ARE NOT MUCH LITERATE. (2) THAT BOTH THE PARTIES FROM WHOM WE HAVE PURCHASED WERE LITIGANT AND WE HAVE FEAR THAT IF PAYMENT COULD HAVE BEEN MADE IN ADVANCE THEN THEY WOULD NOT HAVE BEEN TURN - UP TO REGISTER THE ISSAR CHHITHI. THEREFORE WE HAVE MADE THE CASH PAYMENT TO THE SELLER BEFORE THE REGISTRAR AT THE SUB REGISTRAR OFFICE. PAYMENTS MADE BEFORE REGISTRAR HAS ALWAYS TREATED AS GENUINE & AS IF MADE T HROUGH BANK. 4 ITA NO. 231/NAG./2017 SHRI PRASHANT N. PANPALIYA (3) THAT ADVANCE PAYMENTS MADE IN EARLIER YEARS CAN NOT ATTRACT THE PROVISION OF SECTION 40A(3). IN OUR CASE ADVANCE HAS MADE IN FY 11 - 12 (AY 12 - 13) AND ONLY BY JOURNAL ENTRY IT HAS TRANSFERRED TO PURCHASE ACCOUNT IN FY 12 - 13(AY13 - 14) ON THE DATE OF EXECUTION OF SALE DEED. ACTUAL PAYMENT HAVE NOT MADE IN FY 12 - 13 (AY 13 - 14). SECTION 40A(3) DO NOT GIVE ANY REFERENCE FOR DISALLOWANCE FOR TRANSFER OF ADVANCE TO TRADING ACCOUNT WHICH HAS MADE IN EARLIER YEARS. THUS THE PROVISIONS OF SECTION 40A(3) NOT ATTRACT. (4) THAT THE SAID AGRICULTURE LAND PURCHASED HAD BEEN KEPT AS STOCK & TILL TODAY EVEN AFTER PASSING 3 YEARS TIME IT HAS NOT .PAID: PURCHASE OF AGRICULTURE LAND IS NOT AN EXPENDITURE BUT INVESTMENT WHICH HAS KEPT AS STOCK NOT YET SOLD. (5) T HAT THE TRANSACTION WAS GENUINE. BOTH ISSAR CHHITHI & SALE DEED ARE REGISTERED. WE HAVE ALSO PAID PREMIUM TO THE STATE GOVERNMENT & TAKEN A PERMISSION FOR PURCHASE. IN REVENUE RECORD IT HAS NOTED IN OUR NAME NOW. (6) THAT THE PURCHASE OF AGRICULTURE LAND A ND ADVANCES MADE IN EARLIER YEAR DO NOT COME UNDER THE PURVIEW OF SECTION 40A(3). 8 . IT TRANSPIRES THAT THE ASSESSEE HAD NOT MADE THE CASH PAYMENTS DURING THE CURRENT YEAR. THIS IS UN DISPUTED. FURTHERMORE, THE PAYMENT HAS BEEN MADE TO AGRICULTURALIST. THE GENUINENESS OF THE TRANSACTION IS NOT DISPUTED. IN THE IDENTICAL SITUATION, THE HONBLE CHHATTISGARH HIGH COURT HAS AFFIRMED THE DELETION OF ADDITION IN THIS REGARD (I N ASST. CIT VS. R. P. REAL ESTATE PVT. LTD. IN TAX CASE (I NCOME TAX APPEAL ) NO. 13 OF 20 16 (95 CCH 0086 CHHATTISGARH HIGH COURT VIDE ORDER DATED 01.03.2016), THE HONBLE HIGH COURT HAD CONCLUDED AS UNDER: THE TRIBUNAL AGAIN NOTICED THAT FULL PAYMENT HAD BEEN MADE TO THE SELLER UNDER THE REGISTERED DEEDS WAS NOT DISPUTED BY THE ASSESSING OFFICER AND NEITHER WAS THE IDENTITY OR GENUINENESS OF THE SELLERS IN DISPUTE OR THE CONTENTION OF THE ASSESSEE THAT THE SELLERS BEING VILLAGERS HAD NO BANK ACCOUNTS AND THEREFORE INSISTED ON CASH PAYMENT. THE TRIBUNAL HELD THAT PAYMENT IN CASH WAS OUT OF BUSINESS COMPULSION AND NOT OPTIONAL. THE TRIBUNAL HELD THAT THE FACTS OF THE CASE WERE IN PARI MATERIA WITH SARASWATI HOUSING & DEVELOPERS V. ADDITIONAL COMMISSIONER OF INCOME TAX, (2013) 142 ITD 0198, DELHI BENCH (G). REFERENCE MAY ALSO BE MADE TO RULE 6 DD(G) & (J) PERMITTING CASH PAYMENTS FOR REASONS SPECIFIED AND WHICH READS AS FOLLOWS: - 6DD.NO DISALLOWANCE UNDER SUB - SECTION (3) OF SECTION 40A SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER SUB - S ECTION (3A) OF SECTION 40A WHERE A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK 5 ITA NO. 231/NAG./2017 SHRI PRASHANT N. PANPALIYA DRAFT, EXCEEDS TWENTY THOUSAND RUPEES IN THE CASES AND CIRCUMSTANCES SPECIFIED HE REUNDER, NAMELY : - XXX XXX XXX (G) WHERE THE PAYMENT IS MADE IN A VILLAGE OR TOWN, WHICH ON THE DATE OF SUCH PAYMENT IS NOT SERVED BY ANY BANK, TO ANY PERSON WHO ORDINARILY RESIDES, OR IS CARRYING ON ANY BUSINESS, PROFESSION OR VOCATION, IN ANY SUCH VILLAGE OR TOWN; XXX XXX XXX (J) WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR STRIKE.' 5. THE TRIBUNAL HAS INTERPRETED THE AFORESAID TO HOLD THAT CASH PAYMENTS ABOVE TWENTY THOUSAND RUPEES COULD BE ACCEPTED IF THE CONDITIONS PRESCRIBED IN THE RULES WERE FULFILLED TO THE SATISFACTION OF THE AUTHORITY CONCERNED. THE REASONING OF THE TRIBUNAL AND THE NTERPRETATION BY IT OF SECTION 40A(3) AND RULE 6DD(G) SUPPORTED BY JUDICIAL PRECEDENTS HAVE NOT BEEN ASSAILED IN THIS APPEAL AND NO SUBMISSION HAS BEEN MADE BEFORE US WITH REGARD TO :HE SAME. WE ARE SATISFIED THAT THE APPEAL OUGHT NOT TO HAVE FILED AND RAISES NO SUBSTANTIAL QUESTION OF LAW FOR DETERMINATION UNDER SECTION 260A OF THE ACT. 9 . UPON CAREFUL CONSIDERATION, WE FIND THAT THE ABOVE CASE LAW IS APPLICABLE ON ALL FOURS ON THE PRESENT APPEAL. T HE FACTS ARE SIMILAR AND UNDISPUTED . T HE PAYMENTS ARE MADE TO AGRICULTURALIST. THE IDENTITY AND GENUINENESS OF NONE OF THE PARTIES IS DISPUTED. THE PAYMENT IN CASH WAS MADE OUT OF BUSINESS COMPULSION. HENCE, RESPECTFULLY FOLLOWING AS ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). ACCORDINGLY, WE UPHOLD THE SAME. APROPOS GROUND RELATING TO ADDIT ION U/S. 68: 10 . ON THIS ISSUE, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CREDITED A SUM OF RS.10,00,080/ - AGAINST THE SALE OF GOLD ORNAMENTS. IN SUPPORT THEREOF, THE ASSESSEE FURNISHED SALE RECEIPT OF GOLD ORNAMENTS. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE RECEIPT AS IN HIS OPINION; THE RECEIPT DID NOT GIVE ANY DETAIL PARTICULARS OF ORNAMENTS. FURTHER, THE ASSESSING OFFICER NOTED THAT THE ADDRESS WAS FURNISHED LATE AND THE CASE WAS TIME BARRED BY LIMITATION. HENCE, HE OBSERVED THAT IT WAS NOT POSSIBLE TO 6 ITA NO. 231/NAG./2017 SHRI PRASHANT N. PANPALIYA CROSS VERIFY THE PURCHASER OF THE GOLD ORNAMENTS. HENCE, HE MADE THE IMPUGNED ADDITION. 1 1 . UPON THE ASSESSEES APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE ABOVE ADDITION HAVE BEEN BASED ON PRESUMPTION AND SURMISES WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD. HE NOTED THAT THE ASSESSEE HAS SUBMITTED COMPLETE DOCUMENTARY EVIDENCE S . THE ASSESSING OFFICER HAS NOT EXAMINED THE PARTY WHO GIVE THE JEWELLERY NOR THE SELLER WHO HAS PURCHASED IT, BEFORE REJECTING THE ASS ESSEES SUBMISSION. HE OBSERVED THAT THE ASSESSING OFFICER HAS NOT CONTROVERTED THE FACT THAT THE ASSESSEE HAS GOT THE SAID GOLD ORNAMENT IN INHERITANCE NOR HE HAS PROVED THAT THE ASSESSEE HAS NOT SOLD IT DURING THE YEAR UNDER CONSIDERATION. HE FURTHER OBS ERVED THAT ASSESSEES EX PLANATION CANNOT BE REJECTED ARBITRARILY ON MERE SUSPICION OR IRRELEVANT GROUNDS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONCLUDED THAT THE ASSESSING OFFICERS SATISFACTION FOR REJECTING THE EXPLANATION MUST BE REASONABLE IN C ONSIDERING THE RELEVANT FACTORS. ACCORDINGLY, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION. 1 2 . AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE US. 1 3 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT T HE ASSESSEE HAS SUBMITTED THE NECESSARY DETAILS AND RECEIPT OF THE TRANSACTION. THE ASSESSING OFFICER HAS SHOWN DISSATISFACTION ON THE DOCUMENT SUBMITTED. HOWEVER, HE HAS NOT MADE ANY ENQUIRY OR VERIFICATION REGARDING THE DOCUMENTS SHOWN. HE HAS H IMSELF NO TED THAT SINCE THE PERIOD OF TIME B ARR ING WAS APPROACHING, NECESSARY VERIFICATION COULD NOT BE DONE. IN THESE CIRCUMSTANCES, WE AGREE WITH THE LD. 7 ITA NO. 231/NAG./2017 SHRI PRASHANT N. PANPALIYA COMMISSIONER OF INCOME TAX (APPEALS) THAT ADDITION HAS BEEN MADE ON SURMISES AND CONJUNCTURE WITHOUT COGENTLY REBUTTING THE EVIDENCE SUBMITTED BY THE ASSESSEE. ACCORDINGLY , IN THE BACKGROUND OF THE AFORE - SAID DISCUSSION WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). HENCE, WE CONFIRM THE SAME. 1 4 . IN THE RESULT, THIS APPEAL BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 4 . 0 6 . 2 0 1 8 . SD/ - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR , DATED : 1 4 . 0 6 . 2 0 1 8 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR ; (6) GUARD FILE . TRUE COPY BY ORDER ROSHANI , SR. PS ( SR. P.S. / P.S. ) ITAT, NAGPUR