Assistant Commissioner of Income Tax,Circle,6, Nagpur V. M/s. Laxmi Swapnpurti Planners & Developers Pvt.Ltd., Nagpur

ITA 256/NAG/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1600 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NARENDRA KANE
• Assessee Lawyers: KAILASH JOGANI
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 40A(3); 6; 144

Judgement Text

1 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO. 256 /NAG/201 2 ASSESSMENT YEAR : 200 8 - 09. ASSTT. COMMISSIONER OF INCOME - TAX, M/S LAXMISWAPNPURTI PLANNERS CIRCLE - 6, NAGPUR. VS. & DEVELOPERS PVT. LTD., NAGPUR. PAN AABCL2203N. APPELLANT. RESPONDENT. I.T.A. NO S . 291/NAG/2012 & 233/NAG/2014 ASSESSMENT YEARS : 2008 - 09 & 2009 - 10. M/S LAXMISWAPNPURTI PLANNERS & ASSTT. COMMISSIONER OF INCOME - TAX, DEVELOPERS PVT. LTD. , NAGPUR. VS. CIRCLE - 6, NAGPUR. APPELLANT. RESPONDENT. DEPARTMENT BY : SHRI NARENDRA KANE. ASSESSEE BY : SHRI KAILASH JOGANI & SHRI MUKESH AGRAWAL. DATE OF HEARING : 16 - 09 - 2015. DATE OF PRONOUNCEMENT : 24 TH NOV., 2015. O R D E R PER SHRI SHAMIN YAHYA, A.M . THESE APPEALS BY THE ASSESSEE AND REVENUE EMANATE OUT OF RESPECTIVE ORDERS OF LEARNED CIT(APPEALS). SINCE THE APPEALS WERE HEARD TOGETHER, THEY ARE BEING CONSOLIDATED AND DISPOSED OF TOGETHER. 2 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 2. ITA NO. 2 56/NAG/2012: THIS IS REVENUES APPEAL AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 13 - 03 - 2012 AND PERTAINS TO ASSESSMENT YEAR 2008 - 09. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.7,80,65,051/ - BEING TOTAL AMOUNT OF ADVANCE RECEIVED ON PLOTS (EXCEEDING RS.5 LAKHS) FROM 36 PARTIES WITHOUT ESTABLISHING THE GENUINENESS OF ALL THESE PARTIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,21,18,400/ - BEING TOTAL EXPENDITURE INCURRED AS SITE DEVELOPMENT EXPENDITURE, BEING CASH PAYMENTS TO VARIOUS PARTIES CONTRAVENING THE PROVISIONS OF SECTION 40A(3) OF I.T. ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LEARNED CIT(A) E RRED IN DELETING THE DISALLOWANCE OF RS.3,59,51,300/ - BEING PAYMENTS MADE WITH RESPECT TO PURCHASE OF LAND WITHOUT ASCERTAINING THE GENUINENESS OF THE TRANSACTIONS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWA NCE OF RS.6,76,49,983/ - BEING PAYMENTS MADE TO VARIOUS PARTIES ON ACCOUNT OF COMMISSION PAYMENTS WITHOUT ASCERTAINING THE GENUINENESS OF THE PAYMENTS SO MADE BY THE ASSESSEE. 3. APROPOS GROUND NO. 1: IN THIS CASE THE ADDITION WAS MADE ON THE ABOVE ISSUE BY THE AO IN THE ORDER PASSED U/S 144 OF I.T. ACT AS THE ASSESSEE HAD NOT COOPERATED. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED VARIOUS DETAILS AND THE S AME WERE SENT TO THE AO. LEARNED CIT(APPEALS) NOTED THAT THE AO IN THE REMAND REPORT HAS SUBMITTED THAT AFTER DUE VERIFICATION THESE ADVANCES HAVE BEEN FOUND TO BE GENUINE. HENCE LEARNED CIT(APPEALS) DIRECTED THAT THE ADDITION BE DELETED. 4. BEFORE US LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT SINCE THE AO IN THE REMAND REPORT HAS ACCEPTE D THE VERACITY OF THE ASSESSEES SUBMISSION, THERE 3 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 IS NO GRIEVANCE ON THE PART OF THE REVENUE NOW. LEARNED D.R. COULD NOT CONTRADICT THIS SUBMISSION AND ACCEPTED THAT THE AO IN REMAND REPORT AFTER DUE VERIFICATION HA S FOUND THESE ADVANCES TO BE GENUINE . 5. IN THE LIGHT OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY WE UPHOLD THE SAME. 6. APROPOS GROUND NO.2: CONSEQUENT TO AOS ADDITION, ON THIS ISSUE IN THE APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED VARIOUS DETAILS. LEARNED CIT(APPEALS) OBTAINED REMAND REPORT AND HELD AS UNDER : , ~ ~ . J B. ADDITION OF RS. 1,22,84,400/ - WITH RESPECT TO DISALLOWAN CE OF SITE DEVELOPMENT EXPENSES. / IN THE REMAND REPORT A . O . HAS SUBM I T T ED THA T ' THE ASSESSEE HAS CLA I MED A T RS . 1 , 22 , 18 , 400 1 - AS SI GHT D EVE L O P M E N T EXPENSES . THE DETAI L ED CHAR T SUBM IT TED B Y ASSESS E E ARE P R O DUCE D AS ANNEXURE B . THE ASSESSEE HAS BEEN ASKED TO PRO D U CE THE B I LLS A N D VOUCHERS ALONGWITH THE CONF I RMA TI ON F R OM THE PARTY CONC E R NED . T HE BI LLS AND VOUCHERS PRODUCED BY THE ASSESSEE HA V E BEEN V ER I F IE D AN D F OLL O W ING C O NCLUSI O N HA S BEEN DRA W N . (I) AS PER S R . NO . 1 & 2 , THE ASSESSEE HAS CLAIMED P AYMEN T OF RS . 1 L A K H AND RS . 1 , 57 , 500/ - RESPECT I VELY AGAINST MATERIAL P U RC HASE S , BUT NO B ILL S HAS BEEN PRODUCED IN SO FAR . I T IS W RITTEN THAT TH E P A Y MENT O F R S . 1 LAKH I S MADE BY SHRI SANDEEP GA W AI DI R ECTLY TO THE P A R T Y , B U T IT IS NOT CLEAR THAT W HETHER THIS PAYMENT HAS ACTUALLY MADE O R NO T . AS F AR AS THE PAYMENT OF RS . 1 , 57 , 500 1 - I S CO NCER N E D , I T I S R E M A IN E D TO BE U NPA I D I L L 31 . 03 . 2008 . (I I) AT THE SR. NO. 3 , 4 , & 7 OF THE CHART R EFLECT T H AT TH E S E PAYMEN TS HAVE BEEN MADE TO THREE PARTIES - SHRI SHACHIN KHAD E ( AT SR . N O . 3 ) , SH R I SUNIL WANKHEDE (AT SR . NO . 4) & SHRI KRISHNAKUMAR SHU K L A ( A T SR . NO . 7) AGAINST MATERIAL PURCHASES . THE ASSESSEE HAS S H O W N THE BILLS & VOUCHERS AND THE CONFIRMATION LETTER FROM THE PARTY CON CERNED AL SO . A L L THE PAYMENTS HAVE BEEN MADE TO THE PARTY IN CASH ONL Y HO W EVER , TH E COPY OF ACCOUNT OF THE SAID PARTY AND VOUCHER REFLECT THAT T H E S E P AYMENTS ARE MADE LESS THAN RS . 20 , 0001 - 4 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 IN A DAY . (III) AT SR . NO . 5 & 6 , THE ASSESSEE HAS SH O W N PA Y M E N T O F RS . 17 , 24 , 5301 - AND RS . 18 , 25 , 6101 - TO SHRI TEKCHAND R AHANGDALE & S HRI ASLAM KHAN RESPECTIVELY THE ASSESSEE HAS BEEN A SKED TO PRODU CE TH E CONF I RMATION FOR BOTH THE PARTIES . HO W EVER , THE ASS E S SEE HA S S U BMITTED : CONF I RMATION OF SHRI TEKCHAND RAHANGDALE . IT ALSO PR OD U CES TH E COPY OF . ' ~ \ ACCOUNTS OF BOTH THE PARTIES AND PHOTOCOPY OF CASH V OUCH ERS. ON PERUSAL : \ : I OF THE SAME , IT IS NOTICED THAT THESE PAYMENTS A R E MADE IN CASH ONL Y AND SHOWN BELOW RS . 20 , 0001 - I N A DAY IN THE COPY OF AC COU N T AN D CA S H I VOUCHERS . ' \ ' ' - F !' ~ , \ . ' . . : .: - . : : .~ ' OTHER PAYMENTS ARE VERY PETTY AND TH E SE A RE SUP P O RTED W IT H THE CASH VOUCHERS .' 9. 1 THERE IS NO DETA I LS OF RS.1 LAKH PAID FOR MAT ER I AL P U R CH A SED BY MR . SANDEEP GAWA I AND HOW HE HAS DIRECTLY PAID TO PARTY , NO PR OO F OF PA YMENT W ERE SUBMITTED TO THE AA . IN REMAND PROCEEDINGS . HENCE THE AD D I TION O F RS . 1 LAKH I S CONFIRMED , IN ABSENCE OF ANY PROOF , MANNER AND METHOD O F PA Y M EN T . THE OTHER EXPENDITURE . .,T ,., 0 ' I HAVE BEEN FOUND TO BE PROPERLY VOUCHED AND D E T AILS OF PAYMEN T W ERE SUBMITTED BEFORE A O . AND A O . EXAM IN ED TH EM AND FOUND THE M T O B E CO RR ECT . H EN CE , THE ADDITION ON THIS ACCOUNT , EXCEP T RS . 1 L A KH I S DE L ETED . 7. NOW BEFORE US LEARNED COUNSEL OF THE ASSESSEE HAS SUBMITTED T HAT PURSUANT TO AOS ADDITION DUE TO NON SUBMISSION OF DETAILS, THE ASSESSEE HAD DULY SUBMITTED THE NECESSARY DETAILS BEFORE THE LEARNED CIT(APPEALS) AND IT IS ONLY UPON RECEIPT OF REMAND REPORT WHEREIN THE AO HAS ACCEPTED THE VERACITY OF EXPENDITURE TO THE EXTENT OF RS.1,21,18,400/ - THAT LEARNED CIT(APPEALS) HAS DELETED THE ADDITION.. HENCE LEARNED COUNSEL SUBMITTED THAT THE REVENUE CANNOT HAVE ANY GRIEVANCE AGAINST SUCH A N ORDER. 8. LEARNED D.R. FAIRLY ACCEPTED THAT THE ADDITION HAS BEEN DELETED BY THE LEARNED CIT(APPEALS) ON THE BASIS OF THE REMAND REPORT BY THE AO IN WHICH THE COGENCY OF ASSESSEES SUBMISSION HAS BEEN EXAMINED AND ACCEPTED. 9. IN THE LIGHT OF AFORESAID DISCUSSION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS) ACCORDINGLY WE UPHOLD THE SAME. 5 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 10. APROPOS GROUND NO. 3: LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE REVENUES GROUND IS MISCONCEIVED AS THE AO IN HIS ORDER HAS NEVER COMMENTED UP ON GENUINENESS OF THE TRANSACTION. HENCE REVENUES GROUND IS MISCONCEIVED. 11. ON THIS ISSUE THE AO ADDED RS.78,30,330/ - BEING PAYMENT MADE IN RESPECT OF PURCHASE OF LAND BY INVOKING THE PROVISIONS OF SECTION 40A(3). 12. BEFORE THE LEARNED CIT(APPEALS) ASSESSEE SUBMITTED THE DETAILS. LEARNED CIT(APPEALS) OBTAINED THE REMAND REPORT. CONSIDERING THE REMAND REPORT LEARNED CIT(APPEALS) OBSERVED THAT IT IS SEEN THAT ALL PURCHASES EXCEPT ONE (PURCHASE OF KALDONGARI LAND AT RS.77,16,000/ - ) PAYMENT HAS BEEN MA DE PARTLY IN CASH AND PARTLY BY CHEQUES I.E. SELLER OF A LAND (SAME PERSON) HAS BEEN PARTLY IN CASH AND PARTLY BY CHEQUES THAT IS A VERY STRANGE PHENOMENA AND IT TAKES WIND OUT OF APPLICANT CONTENTION THAT THESE PERSONS ARE NOT SERVED BY BANK B ROUGHT OUT CLEARLY IN REMAND REPORT. THE CASE WHERE ENTIRE PAYMENT MADE IN CASH IS CONCERNED IT IS CLEAR THAT IT WAS PAID IN NAGPUR AND HENCE THE CONTENTION OF APPELLANT THAT BANKING FACILITY IS NOT AVAILABLE IS NOT TRUE. THEREAFTER THE LEARNED CIT(APPEALS) OBSERVED THAT COURTS HAVE MADE CERTAIN OBSERVATIONS REGARDING 40A(3). LEARNED CIT(APPEALS) ALSO REFERRED TO PROVISIONS OF RULES 6DD(J). THEREAFTER LEARNED CIT(APPEALS) HELD THAT IN VIEW OF THIS AND THE REMAND REPORT AND IN THE LIGHT OF THE DECISION OF HONBLE COUR TS, THE AMOUNT OF DISALLOWANCE IS RESTRICTED TO RS.4,23,52,000/ - U/S 40A(3) AND THE BALANCE IS DELETED. 13. AGAINST THE ABOVE ORDER, ASSESSEE AND REVENUE ARE IN CROSS APPEALS. 14. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT THE LE ARNED CIT(APPEALS) HAS PARTLY DELETED THE ADDITION AND PARTLY CONFIRMED THE AOS ACTION BY REFERRING TO PROVISIONS OF SECTION 40A(3) AND RULE 6DD(J). HE HAS NOT ELABORATED ON THE SUBJECT AS TO HOW THESE PROVISIONS ARE APPLICABLE ON 6 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 THE FACTS OF THE CASE. I T IS SETTLED LAW THAT EVEN ADMINISTRATIVE ORDERS HAVE TO BE CONSISTENT WITH THE RULES OF NATURAL JUSTICE. LEARNED CIT(APPEALS) SHOULD HAVE PASSED A SPEAKING ORDER AND CLEARLY SPELT OUT UNDER WHAT PROVISIONS AND UNDER WHAT CASE LAWS HE IS PARTLY CONFIRMIN G AND PARTLY DELETING THE ADDITION. PRIMA FACIE IT APPEARS THAT THE ASSESSEES SUBMISSION THAT THESE WERE AGRICULTURAL LANDS AND THE AREA WAS NOT SERVED BY BANK FACILITY AND THE VILLAGERS INSISTED ON CASH PAYMENT NEED TO BE PROPERLY EXAMINED. WE DO NOT FIN D ANY COGENCY IN THE LEARNED COUNSELS SUBMISSION THAT WHEN GENUINENESS OF THE PURCHASE IS NOT IN DOUBT, SECTION 40A(3) IS NOT APPLICABLE. THERE ARE VARIOUS CASE LAWS FROM THE HONBLE HIGH COURTS IN WHICH CONSTITUTIONAL VALIDITY OF SECTION 40A(3) HAS BEE N ACCEPTED. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, SINCE T H ERE IS A LACK OF SPEAKING ORDER ON THE PART OF THE LEARNED CIT(APPEALS), WE DEEM IT PROPER TO REMIT THE ISSUE TO THE FILE OF THE AO. THE AO SHALL CONSIDER THE ISSUE AFRESH BY TAKING INT O ACCOUNT THE VERACITY OF THE SUBMISSIONS OF THE LEARNED COUNSEL OF THE ASSESSEE AND THE OBSERVATION OF LEARNED CIT(APPEALS) IN THIS REGARD. 15. APROPOS GROUND NO.4: ON THIS ISSUE THE AO HAS DISALLOWED THE COMMISSION PAID AS DETAIL ED MATERIALS WERE NOT PRODUCED. LEARNED CIT(APPEALS) NOTED THAT DURING REMAND REPORT THE ASSESSEE HAS GIVEN DETAILS OF PERSONS TO WHOM COMMISSION WAS PAID ALONG WITH DETAILS OF TDS MADE AND THE AO HAS FOUND THESE DETAILS TO BE CORRECT. HENCE LEARNED CIT(APPE ALS) HELD THAT DISALLOWANCE MADE IN THIS ACCOUNT IS DELETED. 16. NOW BEFORE US LEARNED D.R. HAS SUBMITTED THAT LEARNED CIT(APPEALS) HAS ERRED IN COMING TO THE ABOVE CONCLUSION AND THE ISSUE IS NOT COVERED BY REMAND REPORT. REFERRING TO THE REMAND REPORT , LEARNED D.R. SUBMITTED THAT WHEN TDS HAS NOT BEEN DEDUCTED, COMMISSION CANNOT BE ALLOWED. A PERUSAL OF THE REMAND REPORT SHOWS THAT IN THE LAST PAGE THE AO HAS MENTIONED THAT ONLY 8.05 LAKHS IS ALLOWABLE. IN THIS REGARD LEARNED COUNSEL OF THE ASSESSEE HA S GIVEN RECONCILIATION 7 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 AND ALSO REFERRED TO THE ORDER U/S 201 OF THE I.T. ACT. IN THIS REGARD LEARNED D.R. HAS SUBMITTED THAT THIS ORDER U/S 201 WAS NOT BEFORE THE AUTHORITIES BELOW. HE FURTHER SUBMITTED THAT THE RECONCILIATION NOW BEING SUBMITTED BY THE L EARNED COUNSEL OF THE ASSESSEE SHOULD BE EXAMINED BY THE AO. 17. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT FROM THE PERUSAL OF RECORD, IT IS CLEAR THAT LEARNED CIT(APPEALS) IS NOT CORRECT IN HOLDING THAT THE AO HAS FOUND THE SUBMISSION OF THE ASSESSEE AS CORRECT AND HENCE NO DISALLOWANCE IS CALLED FOR. WE FIND THAT LEARNED CIT(APPEALS) HAS NOT PROPERLY DEALT WITH THE ISSUE. THE RECONCILIATION STATEMENT NOW BE ING SUBMITTED BY THE LEARNED COUNSEL OF THE ASSESSEE AND THE ORDER U/S 201 WERE AL SO NOT BEFORE THE AUTHORITIES BELOW. HENCE WE REMIT THE ISSUE TO THE FILE OF THE AO. THE AO SHALL EXAMINE THE ISSUE AFRESH IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE AFTER GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. 18. IN THE RESULT, THIS APPEAL BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 19. CROSS APPEAL OF THE ASSESSEE : ITA NO.291/NAG/2012: IN THIS APPEAL THE ASSESSEE HAS URGED THAT THE LEARNED CIT(APPEALS) ERRED IN CONFIRMING THE AMOUNT OF DISALLOWANCE U/S 40A(3) OF RS . 4,23,52,000/ - . WE FIND THAT WHILE DEALING WITH THE REVENUES APPEAL ABOVE VIDE GROUND NO. 3, WE HAVE ALREADY REMITTED THIS ISSUE TO THE FILE OF THE AO. ACCORDINGLY THIS ISSUE IN ASSESSEES APPEAL IS ALSO REMITTED TO THE FILE OF THE AO. HENCE THIS APPEAL BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 20. ITA NO. 233/NA G/2014: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 15 - 01 - 2014. THE GROUNDS OF APPEAL READ AS UNDER : 8 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 1. THE COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE AMOUNT OF DISALLOWANCE UNDER SECTION 40A(3) OF RS.60,00,000/ - WI TH RESPECT PAYMENT MADE FOR THE PURCHASE OF AGRICULTURAL LAND DULY ACKNOWLEDGE BY THE RECEIVER BEFORE THE SUB - REGISTRAR. 2. THE COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE AMOUNT OF DISALLOWANCE OF RS.2,20,220/ - WITH RESPECT PAYMENT MADE FOR BUSINESS PURP OSES. 3. THE COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE AMOUNT OF DISALLOWANCE OF RS.18,59,395/ - WITH RESPECT TO DELAYED PAYMENT TO THE SELLER. 21. APROPOS GROUND NO. 1: ON THIS ISSUE THE AO NOTED THAT THE ASSESSEE HAS PURCHASED THE LAND. TOTAL VALUE OF THE SALE DEED WAS RS.60 LAKHS. EXAMINING THE DETAILS THE AO FOUND THAT THE ENTIRE PAYMENT TO THE PARTIES HAVE BEEN MADE IN CASH. IN ASSESSMENT YEAR 2008 - 09 THE AFORESAID TRANSACTION WAS TAKEN IN THE BOOKS OF A THE ASSESSEE AS ADVANCE GIVEN FOR PURCHASE OF LAND. THE AO ASKED THE ASSESSEE AS TO WHY THE DISALLOWANCE SHOULD NOT BE MADE U/S 40A(3). THE AO WAS NOT SATISFIED WITH THE CASE LAWS QUOTED BY THE ASSESSEE AND HE DID NOT ACCEPT THE CONTENTION THAT SECTION 40A(3) IS NOT APPLICABLE AS THE LANDS WERE SITUA TED IN VILLAGE AND THE SELLERS WERE AGRICULTURISTS. 22. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) REFERRED TO SEVERAL CASE LAWS. LEARNED CIT(APPEALS) CONCLUDED AS UNDER : FURTHER THE CONTENTION OF THE APPELLANT THAT THE AGRICULTURAL LAND HAS BEEN PURC HASED FROM FARMERS/VENDORS WHO ARE INHABITANTS OF SMALL VILLAGES AND WHO DO NOT HAVE BANK ACCOUNT HAS ALSO BEEN CONSIDERED AT LENGTH BY THE LD. AO. THE LD. AO HAS BROUGHT ON RECORD CERTAIN FACTS, WHICH CLEARLY ESTABLISH THAT THE CONTENTION TAKEN BY THE AP PELLANT IS WITHOUT ANY BASIS AND DOES NOT DESERVE TO BE CONSIDERED WITH ANY SERIOUSNESS. IT IS STATED BY THE APPELLANT THAT THE SELLER PARTY HAS SHOWN AS ITS ADDRESS AT VISHWAKARMA NAGAR, NAGPUR WHICH IS VERY MUCH PART OF THE NAGPUR CITY AND NO EVIDENCE HA S BEEN BROUGHT ON RECORD THAT THE SELLER ARE RESIDING IN REMOTE AREA WHERE NO BANK FACILITIES IS AVAILAB.E THE VERY 9 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 FACTS THAT THE SELLER IS OF RESIDENT OF NAGPUR CITY CLEARLY DISPROVES THE CONTENTION OF THE APPELLANT. CONSIDERING THE ABOVE FACTS AND THE LEGAL POSITION AS ELABORATED , IT IS EVIDENT THAT THE CASE OF THE PURCHASE OF THE STOCK - IN - TRADE WILL ATTRACT THE PROVISIONS OF SECTION 40A(3) AND CONSEQUENTLY THE DISALLOWANCE MADE BY THE LD. AO OF THE SAID AMOUNT OF RS.60 LACS IS HEREBY UPHELD. 23. AGAI NST THE ABOVE ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 24. LEARNED COUNSEL OF THE ASSESSEE STATED THAT SINCE GENUINENESS OF THE PURCHASE IS NOT IN DOUBT, NO DISALLOWANCE U/S 40A(3) SHOULD BE MADE. HE FURTHER CLAIMED THAT THE AGRICULTURAL LANDS WERE NOT SERVED BY BANKING FACILITY AND THE VILLAGERS INSISTED ON CASH PAYMENT. 25. UPON HEARING BOTH THE COUNSEL AND PERUSING THE RECORDS, WE FIND THAT IDENTICAL ISSUE HAS BEEN DEALT WITH BY US IN ITA NO. 256/NAG/2012 IN GROUND NO.3 AND IN ITA NO. 291. WE FIND THA T WE HAVE REMITTED THIS ISSUE TO THE FILE OF THE AO. THE AO IS DIRECTED TO EXAMINE THE ISSUE IN THE LIGHT OF OUR DIRECTIONS AS ABOVE. 26. APROPOS GROUND NO.2: ON THIS ISSUE THE AO HAS NOTED THAT IN THE PURCHASE OF LAND THE ASSESSEE HAS DEBITED OTHER CHARG ES AT RS.2,20,220/ - . SINCE THE ASSESSEE DID NOT GIVE ANY DETAILS THEREOF, THE SAME WERE ADDED BY THE AO. 27. UPON ASSESSEES APPEAL, LEARNED CIT(APPEALS) CONFIRMED THE ADDITION HOLDING THAT ONUS WAS UPON THE ASSESSEE TO ESTABLISH THAT SUM WAS INCURRED FOR BUSINESS PURPOSES. 28. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE EXPENDITURE IN THIS REGARD HAS BEEN DISALLOWED BY THE LEARNED CIT(APPEALS) ON THE GROUND THAT THE VOUCHERS IN THIS REGARD WER E SELF MADE VOUCHERS. LEARNED COUNSEL SUBMITTED THAT IN PURCHASE OF LAND OF SUCH MAGNITUDE , VARIOUS MISCELLANEOUS EXPENDITURE ARE LIABLE TO BE INCURRED. SIN C E 10 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 THESE TRANSACTIONS WERE WITHIN RURAL AREAS, PROPER PRINTED VOUCHERS CANNOT BE INSISTED. 29. UPON CAREFUL CONSIDERATION, WE FIND THAT THE AO HAS MADE THE ADDITION ON THE GROUND THAT THE DE T AILS WERE NOT SUBMITTED. SINCE WE HAVE REMITTED THE MAIN ISSUE OF DISALLOWANCE OF THE PAYMENT OF LAND PURCHASED TO THE FILE OF THE AO, THIS ISSUE IS ALSO REMIT TED TO THE FILE OF THE AO. 30. APROPOS GROUND NO.3: ON THIS ISSUE THE AO MADE THE ADDITION HOLDING AS UNDER : IN THE PURCHASE ACCOUNT, THE ASSESSEE CLAIMED EXPENSES OF RS.9,06,695/ - AS DELAYED PAYMENT TO THE LAND OWNER, RS.6,92,000/ - TO SHRI SUMAN CHO UDHARY, IS RS.1,07,700/ - TO SHRI BUCHE GOVIND, RS.1,53,000/ - TO SHRI VISHNU MENDHE. THE ASSESSEE HAS BEEN ASKED TO GIVE THE CONCLUSIVE EVIDENCE IN SUPPORT OF HIS CLAIM. THE ASSESSEE FAILED TO GIVE THE DOCUMENTARY EVIDENCE WHICH CAN SUBSTANTIATE HIS CLAIM. THE ASSESSEE VIDE ORDER SHEET DATED 23.12.2011 WAS ALSO ASKED O PRODUCE THE ABOVE PERSONS FOR A STATEMENT, BUT HE HAS NOT PRODUCED ANY OF THE ABOVE PARTIES FOR STATEMENT. HENCE, THE CLAIM OF THE ASSESSEE IS FOUND TO BE DOUBFUL AND WITHOUT ANY EVIDENCE. IT IS, THEREFORE, THE CLAIM OF THE ASSESSEE IS REJECTED AND THE AFORESAID AMOUNT TOTALLED AS RS.18,59,395/ - IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 31. BEFORE THE LEARNED CIT(APPEALS), ASSESSEE HAS SUBMITTED AS UNDER : THE ASSESSING O FFICER HAS DISALLOWED THE PAYMENTS MADE TO THE LAND OWNERS AS ADDITIONAL PAYMENTS AS COMPENSATION AMOUNTING TO RS.18,59,395/ - . THE ASSESSEE HAS MADE EXTRA PAYMENT TO THE LAND OW NER FOR SETTLEMENT OF DISPUTE BETWEEN THE OWNER OF THE LAND AND ALSO THE DEFA ULT ON ACCOUNT OF ASSESSEE IN DEFERMENT FOR THE COMMITMENT MADE ON HIS SIDE WITH RESPECT TO DELAY IN PAYMENT. THE PAYMENTS MADE WERE MADE IN CASH AS WELL AS CHEQUE. DURING THE TIME OF ASSESSMENT PROCEEDINGS THE VENDORS WERE CALLED FOR AT THE LAST MOMENT AT THE TIME OF BARRING PERIOD, BUT DUE TO SHORT NOTICE THE VENDORS WERE NOT BE ABLE TO PRODUCE BEFORE THE RESPECTED AUTHORITY. YOUR HONOUR KNOW THE ASSESSEE IS IN THE POSITION TO PRODUCED THE VENDOR AND THEIR CONFIRMATION. THUS KEEPING IN VIEW OF THE 11 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 ABOVE F ACTS AND SUBMISSION, YOUR HONOUR IS HUMBLY REQUESTED TO TAKE THE LENIENT VIEW AND SCRUB OUT THE ADDITION OF RS. 18,59,395/ - . THE LEARNED CIT(APPEALS) DID NOT ACCEPT THE ABOVE SUBMISSIONS AND CONFIRMED THE ADDITION HOLDING THAT THE ASSESSEE DID NOT SUBMIT DOCUMENTARY E VIDENCE BEFORE THE AO NOR IT COULD PRODUCE PARTIES BEFORE THE AO. 32. AGAINST THE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE US. 33. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE AO HAS ASKED THE ASSESSEE TO PRODUCE THE SELLERS BY GIVING VERY SHO R T TIME. HENCE THE ASSESSEE COULD NOT COMPLY WITH THE SAME. HE SUBMITTED THAT THE ASSESSEE HAS REQUESTED BEFORE THE LEARNED CIT(APPEALS) TO GRANT AN OPPORTUNITY TO PRODUCE THESE PERSONS. HOWEVER, LEARNED CIT(APPEALS) HAS IGNORED THE REQUEST. 3 4. PER CONTRA LEARNED D.R. SUBMITTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THE VERACITY OF THESE PAYMENTS. HE SUBMITTED THAT OUT OF THE PAYMENT OF RS.18.59 LAKHS ONLY RS.4 LAKHS IS BY CHEQUE AND THE REST BY CASH. HE SUBMITTED THAT THE CASH PAYMENT ITSELF CREATES DOUBT ON THE VERACITY OF THE SO CALLED COMPENSATION PAID FOR DELAYED PAYMENT TO THE SELLER. 35. UPON CAREFUL CONSIDERATION, WE NOTE THAT ADVERSE INFERENCE HAS BEEN DRAWN IN THIS REGARD BECAUSE OF INABILITY OF THE ASSESSEE TO PRODUCE THE PAYEES WHEN CALLED FOR BY THE AO. THE ASSESSEE HAD SUBMITTED THAT ADEQUATE OPPORTUNITY WAS NOT PROVIDED. IN OUR CONSIDERED OPINION, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, INTEREST OF JUSTICE WILL BE SERVED IF THE ISSUE IS REMITTED TO THE FILE OF THE AO. THE AO IS DIRECTED TO CONSIDER THE ISSUE AFRESH BY GIVING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE AO. 12 ITA NOS.256, 291/NAG/2012 & ITA NO. 233/NAG/2014 36. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF NOV., 2015. SD/ - SD/ - (MUKUL K. SHRAWAT) ( SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER. NAGPUR, DATED: 24 TH NOV., 2015. COPY FORWARDED TO : 1. M/S LAXMISWAPNPURTI PLANNERS & DEVELOPERS PVT. LTD., NAGPUR. 2. A.C.I.T., CIRCLE - 3, NAGPUR. 3. C.I.T. II I, NAGPUR. 4. CIT(APPEALS) - I I , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY. BY ORDER WAKODE ASSISTANT REGISTRAR, ITAT, NAGPUR