M/s Basera Builders, Mathura V. I.T.O. 1(3), Mathura

ITA 375/AGR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94118 (ITAT-AGRA)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 23-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BELU SINHA
• Assessee Lawyers: M M AGARWAL
• Keywords: Principle of natural justice
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SH RI G.C. GUPTA, VICE PRES ID ENT AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER ITA NO. 375/AGRA/2014 ASSESSMENT YEAR: 2010 - 11 BASERA BUILDERS, VS. INCOME - TAX OFFICER, GAUDHULIPURAM, VRINDA BAN, 1(3), MATHURA. MATHURA. (PAN : AAFFB 5568 B) APPELLANT BY : SHRI M.M. AGARWAL, C.A. RESPONDENT BY : SMT. BELU SINHA, SR. D.R. DATE OF HEARING : 23.07.2015 DATE OF PRONOUNCEMENT : 12.08.2015 O R D E R PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE APPELLANT AGAINST THE ORDER OF LD . CIT(A) - I, AGRA DATED 19.09.2014 FOR THE A.Y. 2010 - 11, RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. BECAUSE IN THE FACTS AND CIRCUMSTANCES OF THE LEARNED CIT(APPEALS) HAS ERRED I N CONFIRMING DISALLOWANCE OF RS.1,455,000 UNDER SECTION 40A(3) OF THE ACT. 2. BECAUSE WHILE DOING SO, LEARNED CIT(APPEALS) FAILED TO APPRECIATE THAT NO PART OF SUM OF RS.1,455,000/ - DISALLOWED BY THE AO UNDER SECTION 40A(3) OF THE ACT WAS CLAIMED BY THE APPELLANT AS EXPENDITURE AND HENCE NO DISALLOWANCE COULD HAVE BEEN VALIDLY UPHELD. 3. BECAUSE, LEARNED CIT(APPEALS) HAS WRONGLY AND WITHOUT ANY MATERIAL AND BASIS HELD THAT PAYMENTS IN SUM OF RS.20,000 STAGGERED ITA NO.368/AGRA/2014 A.Y. 2003 - 04 2 OVER A PERIOD WERE IMPRACTICABLE, ILLEGAL A ND DONE TO CIRCUMVENT THE PROVISION OF LAW. 4. BECAUSE IN DOING SO LEARNED CIT(APPEALS) FURTHER ERRED IN DISTINGUISHING THE FOLLOWING CASES RELIED BEFORE HIM BY THE APPELLANT. (I) CIT VS. SARGODHA FINANCE CO. LTD. (ITA NO. 79 OF 2007) DATED 07.01.2010 BY HON BLE ALLAHABAD HIGH COURT. (II) ASTHA REALESTATE (P) LTD. VS. DCIT (ITA NO. 343/AGRA/2011) DATED 27.07.2011 BY HON BLE ITAT, AGRA. (III) ACIT VS. KAILASH NARAIN GUPTA (ITA NO. 60/AGRA/2012 DATED 18.10.2013 BY HON BLE ITAT, AGRA. 5. BECAUSE THE ORDER DATED 19.09.20 14 PASSED BY THE CIT(APPEALS) IS WRONG, ILLEGAL, AGAINST PRINCIPAL OF NATURAL JUSTICE AND BAD IN LAW. 2. THE ISSUE IN APPEAL RELATES TO THE DISALLOWANCE OF A SUM OF RS.14,55,000/ - UNDER THE PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER). IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THOUGH EXPENDITURE WAS INCURRED IN CASH, NO AMOUNT WAS CLAIMED AS DEDUCTION AN D THE ENTIRE AMOUNT WAS TAKEN TO CLOSING STOCK AND, THEREFORE, THE QUESTION OF DISALLOWANCE UNDER SECTION 40A( 3) OF THE ACT DOES NOT ARISE. IN SUPPORT OF THIS PROPOSITION, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF HON BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S. SARGODH FINANCE CO. LTD. INCOME TAX APPEAL NO. 79 OF 20 07 - ORDER DATED 07.0 1.2010. 3. ON THE OTHER HAND, LD . SR. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. ITA NO.368/AGRA/2014 A.Y. 2003 - 04 3 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE DISALLOWANCE WAS MADE OVERLOOKING TO THE FACT THA T SUCH EXPENDITURE WAS NOT BEING CLAIMED BY THE ASSESSEE BUT HAD ONLY BEEN TAKEN OVER TO THE CLOSING STOCK. IN SUCH CIRCUMSTANCES, NO DISALLOWANCE CAN BE MADE AS HELD BY THE HON BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. RAJENDER PRASAD JAIN, 374 ITR 545 (P&H) . 5. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE CASE, WE HEREBY DELETE THE ADDITION OF RS.14,55,000/ - . 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 1 2.08.2015 ) SD / - SD/ - ( G.C. GUPTA ) ( INTURI RAMA RAO ) VICE PRESIDENT ACC OUNTANT MEMBER DATE: 1 2 TH AUGUST , 201 5 PBN/* COPY OF THE ORDER FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BEN CH, AGRA 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA