Sh Gurdas Garg, Bathinda V. The Asstt. Commissioner of Income Tax , Bathinda

ITA 344/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0722 (ITAT-AMRITSAR)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-05-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 29-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.344(ASR)/2015 ASSESSMENT YEAR: 2011-12 PAN: ADUPG-2359M SH. GURDAS GARG, VS. ASSTT. COMMR. OF INCOME TAX, AMRIK SINGH ROAD, CIRCLE-1, BATHINDA. BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N.ARORA, ADVOCATE RESPONDENT BY: SH. UMESH TAKYAR, DR DATE OF HEARING: 19/05/2016 DATE OF PRONOUNCEMENT: 20/05/2016 ORDER PER A.D. JAIN, JM: THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2011-12, AGAINST THE ORDER, DATED 21.04.2015, PASSED BY THE LD. CIT(A), BATHINDA. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THAT ORDER PASSED UNDER SECTION 250(6) OF THE I .T. ACT, 1961, BY THE CIT(A), BATHINDA IS CONTRARY TO LAW AND FACT S OF THE CASE. 2. THAT THE LD. CIT(A), BATHINDA HAS ERRED IN CONFI RMING THE ADDITION OF RS.20,02,000/- MADE BY THE AO FOR VIOLA TION OF THE PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT, 1 961 WITHOUT APPRECIATING: A) THE FACT THAT CASH PAYMENTS OF RS.20,02,000/- WE RE MADE FOR PURCHASE OF IMMOVABLE PROPERTIES HELD AS STOCK-IN-TRADE WITHOUT DOUBTING THE GENUINENESS A ND BONA FIDE OF SUCH TRANSACTIONS. ITA NO.344(ASR)/2015 A.Y. 2011-12 2 B) THAT THE SELLERS OF THE PROPERTIES WERE STRANGER TO THE ASSESSEE AND THEY INSISTED ON CASH PAYMENT AND IN A N EFFORT TO MATURE THE DEALS, THE ASSESSEE WAS COMPEL LED TO MAKE CASH PAYMENTS WHICH WERE GENUINE AND BONA FIDE AND THESE ALSO STOOD DULY CORROBORATED BY THE SUB-REGISTRAR, BATHINDA. C. THAT THE CASH PAYMENTS WERE MADE DUE TO BUSINESS EXIGENCY. D. THAT ALTHOUGH THE CIRCUMSTANCES FOR MAKING CASH PAYMENTS WERE EXPLAINED BEFORE THE AO BUT HE WITHOU T CONSIDERING THE JUDICIAL PRONOUNCEMENTS OF VARIOUS HONBLE COURTS AND CONFRONTING HIS MIND MADE AN ADDITION OF RS.20,02,000/- FOR VIOLATION OF SECTION 40A(3) OF THE ACT WITHOUT AFFORDING REASONABLE OPPORTUNITY. E. ANY OTHER GROUND THAT MAY BE TAKEN AT LATER STAG E WITH THE PERMISSION OF THE HONBLE BENCH. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF IMPORT/EXPORT OF EDIBLE OILS AS WELL AS TRADING IN PROPERTIES. THE ASSESSEE FILED HIS RETURN SHOWING TOTAL INCOME AT RS.59,21,180/-. THE AO NOTICED THAT THE ASSESSEE HA D MADE CASH PAYMENTS OF RS.20,02,000/- FOR THE PURCHASE OF IMMO VABLE PROPERTIES (HELD AS STOCK-IN-TRADE) AND THUS VIOLATED THE PROV ISIONS OF SECTION 40A(3) OF THE ACT. THE ASSESSEE EXPLAINED THAT THE SELLE RS OF THE PROPERTIES WERE STRANGER TO THE ASSESSEE AND THEY INSISTED ON CASH PAYMENT, WHICH WAS NOT APPRECIATED BY THE A.O. IN AN EFFORT TO MATURE THE DEALS, THE ASSESSEE WAS COMPELLED TO MAKE CASH PAYMENTS, WHICH WERE GEN UINE AND BONA FIDE AND THESE STOOD DULY CORROBORATED BY THE SUB-R EGISTRAR, BATHINDA. IT WAS STATED THAT THE IDENTITY OF THE PAYEE WAS DISCL OSED AND GENUINENESS ITA NO.344(ASR)/2015 A.Y. 2011-12 3 OF PAYMENT ALSO ESTABLISHED. THE CASH PAYMENTS WERE MADE DUE TO BUSINESS EXIGENCY AND THUS, NO ADDITION WAS CALLED FOR. A DETAILED EXPLANATION ESTABLISHING BUSINESS EXIGENCIES WAS SU BMITTED BEFORE THE AO. HOWEVER, THE AO WITHOUT CONFRONTING HIS MIND AN D AFFORDING REASONABLE OPPORTUNITY, MADE AN ADDITION OF RS.20,0 2,000/- WHICH WAS NOT WARRANTED ON MERITS OF THE CASE. THE SAME WAS CONFIRMED BY THE LD. CIT(A). 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF PUNJAB & HARYANA, IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 , WHEREIN, IN ITA NO.413(ASR)/2014, VIDE ORDER DATED 16.07.21015, UND ER SIMILAR CIRCUMSTANCES, THE MATTER HAS BEEN DECIDED IN FAVO UR OF THE ASSESSEE. 4. ON THE OTHER HAND, THE LD. DR HAS STRONGLY RELIE D ON THE IMPUGNED ORDER. 5. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD, IT IS SEEN THAT THAT BY VIRTUE O F THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ADDITION MADE, BY INVO KING THE PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT, HOLDING AS FOLLOWS: 2. IN THE APPELLATE PROCEEDINGS, IT WAS EXPLAINED THAT THE SELLERS OF THE IMMOVABLE PROPERTY IN QUESTION WERE STRANGER TO THE APPELLANT WHO, THEREFORE, INSISTED ON CASH PAYMENT. IT WAS AV ERRED THAT IN AN EFFORT TO MATURE THE DEAL, THE APPELLANT WAS COMPEL LED TO MAKE SUCH PAYMENTS IN CASH, WHICH OTHERWISE WERE GENUINE AN D BONAFIDE AND STOOD DULY CORROBORATED BY THE SUB REGISTRAR, B ATHINDA. IT WAS THUS INSISTED THAT THE IDENTITY OF THE PAYEE WAS D ISCLOSED AND GENUINENESS OF THE PAYMENT WAS ESTABLISHED, THEREBY MITIGATING THE RIGOURS OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT UNDER THE SHELTER OF THE PROVISO APPENDED TO THE SAID SECTIO N. IT WAS ITA NO.344(ASR)/2015 A.Y. 2011-12 4 CANVASSED HAT THE IMPUGNED CASH PAYMENT WAS ON AC COUNT OF BUSINESS EXPEDIENCY AND THEREFORE, DISALLOWANCE WA S NOT WARRANTED. IN SUPPORT OF THE SAID ARGUMENT, THE APP ELLANT BROUGHT ON RECORD MANY JUDICIAL PRECEDENTS TO THE EFFECT TH AT IF THE BUSINESS EXPEDIENCY SO DEMANDS, THE APPELLANT CAN BE EXEMPTE D FROM THE REQUIREMENT OF PAYMENT OF CROSS CHEQUES OR DRAFT PR OVIDED THE TRANSACTION IS GENUINE AND BONA FIDE. HOWEVER, IT SHALL NOT BE NECESSARY HERE TO DISCUSS THOSE CASE LAWS AS THE IM PUGNED ISSUE HAS BEEN SQUARELY DEALT WITH BY THE HONBLE ITAT, A MRITSAR BENCH IN THE APPELLANTS OWN CASE FOR A.Y. 2009-10 IN WHICH IT WAS HELD THAT CASH PAYMENT OF RS.33,71,275/- FOR PURCHASE OF IMMO VABLE PROPERTY KEPT AS STOCK-IN-TRADE WAS STRUCK BY THE PROVISIONS OF SECTION 40A(3) OF THE ACT DESPITE THE TRANSACTION BEING GENUINE AN D BONAFIDE. RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE TRI BUNAL, THE ACTION OF THE A.O. IN MAKING THE ADDITION OF RS.20,02,000/- IS CONFIRMED. ACCORDINGLY, THE APPELLANTS GROUNDS OF APPEAL DEAL ING WITH THIS ISSUE STAND REJECTED. 6. THUS, IT IS SEEN THAT THE LD. CIT(A) FOLLOWED TH E DECISION OF THE ITAT, AMRITSAR BENCH, IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10. IT IS THIS ORDER OF THE TRIBUNAL, WHICH HA S BEEN SET ASIDE BY THE HONBLE PUNJAB & HARYANA HIGH COURT, WHILE OBSERVIN G AS FOLLOWS: 9. AT THE COST OF REPETITION, THE TRIBUNAL HAS NOT DISBELIEVED THE TRANSACTIONS OR THE GENUINENESS THEREOF. NOR HAS IT DISBELIEVED THE FACT OF PAYMENTS HAVING BEEN MADE. MORE IMPORTANT, THE REASONS FURNISHED BY THE APPELLANT FOR HAVING MADE THE CASH PAYMENTS, WHICH WE HAVE ALREADY ADVERTED TO, HAVE NOT BEEN DI SBELIEVED. IN OUR VIEW, ASSUMING THESE REASONS TO BE CORRECT, THE Y CLEARLY MAKE OUT A CASE OF BUSINESS EXPEDIENCY. 10. IN THE CIRCUMSTANCES, THE ORDER OF THE TRIBUNAL IN THIS REGARD IS SET ASIDE. THE PAYMENTS CANNOT BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT. 7. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE ORDER OF THE HONBLE HIGH COURT IN THE ASSESSEES OWN CASE FOR THE ASSES SMENT YEAR 2009-10, THE ADDITION IS DELETED. THE ORDER OF THE LD. CIT(A ) IS SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE ARE ACCEPTED. ITA NO.344(ASR)/2015 A.Y. 2011-12 5 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/05/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 20/05/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH. GURDAS GARG, BATHINDA 2. THE ACIT, BATHINDA. 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER