The ITO, Ward-9(2), Ahmedabad V. Shri Dilipsinh N.Vaghela, Ahmedabad

ITA 2407/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85778 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .. , , BEFORE SHRI BEFORE SHRI G.D. AGARWAL,VICE PRESIDEN T (AZ) AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO. 2407/AHD/2011 ( / ASSESSMENT YEAR : 2008-09) THE ITO WARD-9(2) AHMEDABAD / VS. SHRI DILIPSINH N.VAGHELA 1, KUMKUM PARK SOCIETY SANAND DIST.AHMEDABAD ! '# ./ ./ PAN/GIR NO. : ABRPV 5392 E ( !% / APPELLANT ) .. ( &'!% / RESPONDENT ) !%(' / APPELLANT BY : SHRI M.K. SINGH, SR.DR &'!%)(' / RESPONDENT BY : MS.URVASHI SHODHAN, AR * +) ,# / DATE OF HEARING 17/03/2015 -./0 ) ,# / DATE OF PRONOUNCEMENT 19/03/2015 '/ O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-XV, AHMEDABA D (CIT(A) IN SHORT) DATED 22/07/2011 PERTAINING TO ASSESSMEN T YEAR (AY) 2008-09. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 1. THE LD.COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSI NG OFFICER TO ALLOW ITA NO.2407/AHD /2011 ITO VS. SHRI DILIPSINH N.VAGHELA ASST.YEAR 2008-09 - 2 - THE ASSESSEES CLAIM FOR DEDUCTION OF RS.3,78,490/- U/S.80IB(10) OF THE ACT. 2. THE LD.COMMISSIONER OF INCOME-TAX (APPEALS)-XV, AHM EDABAD HAS ERRED IN HOLDING THAT THE ASSESSEE FULFILLS THE CON DITIONS LAID DOWN FOR CLAIMING DEDUCTION U/S.80IB(10) EVEN WHEN THE L AND WAS IN THE NAMES OF SHAKARBHAI S.PATEL HUF, KANTABEN M.PATEL A ND VINODBHAI M.PATEL, HUF, WHICH ARE SEPARATE LEGAL EN TITIES IN THE EYE OF LAW AND THE ASSESSEE ENTERED INTO THE PROJEC T BY A DEVELOPMENT AGREEMENT WITH THE MAHALAXMI(NARODA) OW NERS ASSOCIATION. THE ENTIRE RESPONSIBILITY TO EXECUTE THE HOUSING PROJECT AND ABIDE BY THE TERMS AND CONDITIONS OF ITS APPROV AL RIGHT FROM THE INCEPTION OF THE PROJECT TILL ITS COMPLETION RESTS WITH THE MAHALAXMI(NARODA) OWNERS ASSOCIATION. ASSESSEE WAS JUST A CONTRACTOR AND NOT A DEVELOPER. 3. THE LD.COMMISSIONER OF INCOME-TAX(APPEALS)-XV, AHME DABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.7,15,237/- MADE BY THE ASSESSING OFFICER U/S.40A(3). 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.COMMISSIONER OF INCOME-TAX(APPEALS)-XV , AHMEDAB AD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD.CO MMISSIONER OF INCOME-TAX(APPEALS)-XV, AHMEDABAD MAY BE SET-ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 27/12/2010. WHILE MAKING ASSESSMENT THE AO MADE DISALLOWANCE FOR DEDUCTION CLAIMED U/S.80IB(10) OF THE ACT AMOUN TING TO RS.3,78,4980/-. THE AO ALSO MADE ADDITION OF RS.7, 15,237/- BY INVOKING SECTION 40A(3) OF THE ACT ON ACCOUNT OF THE PAYMENT MADE TO SHRI KANJIBHAI B.CHARAN AND SHRI OMPRAKASH R.PRAJAPATI O N THE BASIS THAT THE ITA NO.2407/AHD /2011 ITO VS. SHRI DILIPSINH N.VAGHELA ASST.YEAR 2008-09 - 3 - PAYMENT HAS BEEN MADE BY CASH. AGAINST THIS, THE A SSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS ALLOWED THE APPEAL. NOW, THE REVENUE IS IN APPEAL BEFORE US. 3. GROUND NOS.1 & 2 ARE INTER-CONNECTED AND THE SAM E HAVE BEEN RAISED AGAINST THE DIRECTION OF LD.CIT(A) TO AO FOR ALLOWING DEDUCTION TO THE ASSESSEE U/S.80IB(10) OF THE ACT. THE LD.SR.DR SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE CLAIM. HE SUBMITTED THAT THE AO HAS GIVEN A FINDING THAT THE ASSESSEE IS NOT A D EVELOPER. 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE AO WAS NOT JUS TIFIED IN DISALLOWING THE CLAIM OF DEDUCTION U/S.80IB(10) OF THE ACT. TH E LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CLAIM OF THE ASSESSEE W AS ALLOWED IN EARLIER YEARS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING IN P ARA-3 OF HIS ORDER WHICH READS AS UNDER:- 3. GROUND NO.1 IS THAT THE AO WRONGLY DISALLOWED THE CLAIM OF DEDUCTION OF RS.3,78,490 U/S.80IB(10) OF THE ACT. THE DISALLOWANCE HAS BEEN MADE AS PER PARA 3 OF THE ASSESSMENT ORDER (3.1 TO 3.18). ITA NO.2407/AHD /2011 ITO VS. SHRI DILIPSINH N.VAGHELA ASST.YEAR 2008-09 - 4 - DURING THE COURSE OF APPELLATE PROCEEDINGS THE LD.A R ARGUED THAT IN AY 2006-07 THE AO HAD DISALLOWED 80IB(10) DEDUCT ION WHICH WAS FOUND IN ORDER AND ALLOWED VIDE CIT(A)XV ORDER DATED 13.1.2009. IT WAS ALSO INFORMED THAT IN AY 2007-08 80IB(10) DEDUCTION HAS BEEN ALLOWED BY THE DEPARTMENT IN 143 (1) AND NO SCRUTINY ASSESSMENT WAS THERE. IT WAS ALSO CONFIRM ED BY THE LD.AR THAT THE FACTS OF THE CASE THIS YEAR ARE SAME AS WE RE IN AY 2006-07. AS THE FACTS OF THE CASE ARE SAME IN THE PRESENT AY AS WERE IN AY 2006-07 RELYING UPON THIS OFFICE APPELLATE ORDER DA TED 13.1.2009 IN AY 2006-07. 80IB(10) DEDUCTION IS ALLOWED IN THI S YEAR ALSO. THE DISALLOWANCE MADE BY THE AO U/S.80IB(10) OF RS. 3,78,490 IS DIRECTED TO BE DELETED. 4.1. THE AFORESAID FINDING OF THE LD.CIT(A) IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY MATERIAL ON RECORD. IT IS NOT DISPUTED BY THE REVENUE THAT IN EARLIER YEARS DEDUCTION U/S.80IB(10 ) HAS BEEN ALLOWED. NO CHANGE INTO THE FACTS AND CIRCUMSTANCES HAS BEEN POINTED OUT BY THE LD.SR.DR. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THU S, GROUND NOS.1 & 2 OF REVENUES APPEAL ARE REJECTED. 5. GROUND NO.3 IS AGAINST THE DELETION OF ADDITION OF RS.7,15,237/- MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTIO N 40A(3) OF THE ACT. THE LD.SR.DR SUPPORTED THE ORDER OF THE AO AND SUBM ITTED THAT BEFORE THE AO, NO DETAIL WAS FILED BY THE ASSESSEE. ITA NO.2407/AHD /2011 ITO VS. SHRI DILIPSINH N.VAGHELA ASST.YEAR 2008-09 - 5 - 5.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE S UPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE AO HAS WRONGLY INVOKED THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE LD.CO UNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) HAS GIVEN A FINDING ON FACT IN PARA-5 OF HIS ORDER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE AO HAS MADE ADDITION BY OBSERVING AS UNDER:- 4. DISALLOWANCE U/S.40A(3) ON VERIFICATION OF THE COPY OF ACCOUNT OF SHRI KANJ IBHAI B.CHARAN (CHANATAR PLASTER EXPENSES) AND SHRI OMPRAKASH R.PR AJAPATI (COLOUR WORKS) FILED BY THE ASSESSEE, IT IS NOTICED THAT THE ASSESSEE HAS MADE PAYMENT IN CONTRAVENTION OF SECTION 40A(3) OF THE I.T.ACT, 1961. AS SUCH, DURING THE ASSESSMENT PROC EEDING THE ASSESSEE WAS REQUIRED TO HOW CAUSE AS TO WHY THE PR OVISIONS OF SECTION 40A(3) OF THE ACT, SHOULD NOT BE INVOKED AN D WHY AN AMOUNT OF RS.6,85,237/- (SHRI KANJIBHAI B.CHARAN) A ND RS.30,000/- (SHRI OMPRAKASH R.PRAJAPATI) SHOULD NOT BE DISALLOWED. THE ASSESSEE FAILED TO FURNISH ANY DOC UMENTARY EVIDENCES REGARDING PAYMENT MADE TO SHRI KANJIBHAI B.CHARAN AND SHRI OMPRAKASH R.PRAJAPATI AND ALSO FAILED TO F URNISH CASH BOOK AND BANK BOOK FOR VERIFICATION OF THE GENUINEN ESS OF THE TRANSACTION. PAYMENT OF RS.7,15,237/- (RS.6,85,237 /- + RS.30,000/-) IS CLEARLY COVERED UNDER THE PROVISION OF SECTION 40A(3) OF THE I.T.ACT, IS DISALLOWED AND ADDED TO T HE TOTAL INCOME. 6.1. HOWEVER, THE LD.CIT(A) HAS DELETED THE ADDITIO N BY OBSERVING AS UNDER:- ITA NO.2407/AHD /2011 ITO VS. SHRI DILIPSINH N.VAGHELA ASST.YEAR 2008-09 - 6 - 5. THE APPELLANT HAS SUBMITTED LEDGER ACCOUNT COP Y OF THE TWO PERSONS WHICH SHOWS PAYMENTS BY CHEQUE AND NOT A SI NGLE RUPEE WAS PAID IN CASH. CHEQUE PAYMENTS WERE MADE FROM B ANK ACCOUNT (ACCOUNT NUMBER 1666) MAINTAINED BY THE APPELLANT I N GUJARAT MERCANTILE COOPERATIVE BANK LTD. GHODASAR BRANCH. IT WAS INFORMED BY THE LD.AR THAT BANK ACCOUNT WAS SUBMITT ED TO THE AO VIDE LETTER DATED 23.8.2010 VIDE POINT NUMBER 3 OF THE REPLY. COPY OF REPLY WAS PRODUCED DURING THE APPELLATE PROCEEDI NGS AND ALSO THE BANK STATEMENT. IT IS TO BE KEPT IN MIND THAT FORM 3CD AUDIT REPORT WAS FILED BY THE APPELLANT AND IN COLUMN 17 (H) THE AUDITORS HAV E NOT POINTED ANY CASH PAYMENT IN CONTRAVENTION TO PROVISIONS OF SECTION 40A(3). AS CLEAR FROM THE AFORESAID DISCUSSION NO PAYMENT H AS BEEN MADE IN CASH AS PRESUMED BY THE AO THE ADDITION OF RS.7, 15,237 IS DIRECTED TO BE DELETED. 6.2. AS PER PROVISIONS OF SECTION 40A(3) OF THE ACT , THE AO CAN DISALLOW THE EXPENDITURE IF THE PAYMENT OR AGGREGAT E PAYMENT MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYE E CHEQUE DRAWN ON A BANK OR BY AN ACCOUNT PAYEE DRAFT, EXCEEDS RS.2 0,000/-. IT IS NOT IN DISPUTE THAT THE EXPENDITURE IS RELATED TO BUSINESS . THE ONLY DISPUTE IS WHETHER THE PAYMENT MADE IN CASH IS ALLOWABLE U/S.4 0A(3) OF THE ACT. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON F ACT THAT THE PAYMENTS HAVE BEEN MADE BY WAY OF ACCOUNT PAYEE CHEQUE FRO M BANK ACCOUNT NO.1666 MAINTIANED BY THE ASSESSEE IN GUJARAT MERCA NTILE CO-OPERATIVE BANK LTD., GHODASAR BRANCH. THIS FINDING OF LD.CIT (A) IS NOT ITA NO.2407/AHD /2011 ITO VS. SHRI DILIPSINH N.VAGHELA ASST.YEAR 2008-09 - 7 - CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WI TH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, GROUND NO. 3 OF REVENUES APPEAL IS REJECTED. 7. GROUND NOS.4 & 5 ARE GENERAL IN NATURE AND REQUI RE NO INDEPENDENT ADJUDICATION. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON THURSDAY, THE 19 TH DAY OF MARCH, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( G.D. AGARWAL ) ( KUL BHARAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 19/ 03 /2015 4,..* , .*../ T.C. NAIR, SR. PS !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. !% / THE APPELLANT 2. &'!% / THE RESPONDENT. 3. 567 8 / CONCERNED CIT 4. 8 ( ) / THE CIT(A)-XV, AHMEDABAD 5. 9 :&*67 , ,670 , 5 / DR, ITAT, AHMEDABAD 6. : <= + / GUARD FILE. ! / BY ORDER, ' 9& //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD