Ashok Kumar, Proprietor, Uttar Pradesh V. ITO, Noida

ITA 3776/DEL/2014

• Counselvise Citation: 377620114 RSA 2014
• Duration Of Justice: 1 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 03-11-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 27-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K BANSAL
• Assessee Lawyers: SANJAY MEHRA
• Keywords: Corroborative evidences
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC-1 : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.3776/DEL/2014 ASSESSMENT YEAR : 2008-09 ASHOK KUMAR, PROPRIETOR, M/S MANGAL DEVELOPERS, CHAIRMAN WALI GALI, AYODHYA GANJ, DADRI, GB NAGAR, UTTAR PRADESH. PAN : AKMPK9510B VS. ITO, WARD-1, NOIDA. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SANJAY MEHRA, FCA RESPONDENT BY: SHRI N.K. BANSAL, SR.DR DATE OF HEARING : 03.11.2016 DATE OF PRONOUNCEMENT: 04.11.2016 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 21.4.2014 IN RELATION TO THE ASSESSMENT Y EAR 2008-09. 2. THIS IS A RECALLED MATTER INASMUCH AS THE EAR LIER EX PARTE ORDER PASSED BY THE TRIBUNAL WAS RECALLED VIDE ITS LATER ORDER D ATED 18.3.2016. 3. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.12,52,000/- MADE U/S 40A(3) OF T HE ACT. ITA NO.3776/DEL/2014 2 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF FLATS AND GARAGE AND SALE THEREOF. THIS BUSINESS WAS STARTED DURING THE YEAR UNDER CONSIDER ATION. GROSS RECEIPTS WERE SHOWN AT RS.35,06,007/- AND THE NET PROFIT WAS DECLARED AT RS.2,18,799/-. IN THE IMMEDIATELY PRECEDING YEAR, THE ASSESSEE WAS ENGAGED IN RETAIL BUSINESS OF TRADING IN CLOTHES. T HE AO OBSERVED THAT THE ASSESSEE SOLD FIVE GARAGES AND SIX FLATS FOR A SUM OF RS.35.06 LACS. THE ASSESSEE WAS ALSO FOUND TO HAVE MADE TOTAL PAYMENT FOR PURCHASE OF LAND AMOUNTING TO RS.12,52,000/- IN CASH TO MS SAPNA RA WAT AND SHRI SURENDER SINGH RAWAT, DETAILING AS UNDER:- DATE NAME OF THE SELLER AMOUNT 11.06.2007 1. MS SAPNA RAWAT 300 SQ. YARD LAND PURCHASED 2. MS SAPNA RAWAT 252 SQ. YARD LAND PURCHASED RS.2,76,000/- RS.2,32,000/- 18.08.2007 SHRI SURENDER SINGH RAWAT 239.11 SQ. YARD LAND PURCHASED 2,20,000/- SH. SURENDER SINGH RAWAT 60.77 SQ. YARD PURCHASED 1,02,000/- 24.09.2007 SHRI SURENDER SINGH RAWAT 252 SQ. YARD LAND PURCHASED RS.4,22,00/- TOTAL 12,52,000/- ITA NO.3776/DEL/2014 3 5. AS THE ABOVE PURCHASES IN CASH WERE EXCEEDING RS .20,000/- EACH, THE AO DISALLOWED THE SAME U/S 40A(3) OF THE ACT WHICH RESULTED INTO DISALLOWANCE FOR A SUM OF RS.12.52 LAC. 6. THE ASSESSEE CONTENDED BEFORE THE LD. CIT(A) THA T OUT OF THE ABOVE PAYMENTS OF RS.12.52 LAC, A SUM OF RS.11 LAC WAS PA ID IN THE PRECEDING YEAR WHICH WAS BROUGHT FORWARD BALANCE IN THE ACCOU NTS OF THESE TWO PERSONS AND DURING THE YEAR UNDER CONSIDERATION, ON LY A SUM OF RS.1,52,000/- WAS PAID TO THEM. THE ASSESSEE ALSO CONTENDED THAT SUCH PAYMENTS OF RS.5 LAC TO SHRI SURENDER SINGH RAWAT A ND RS.6 LAC TO MS SAPNA RAWAT MADE IN THE PRECEDING YEAR WERE REFLECT ED IN THE STATEMENT OF AFFAIRS OF THE ASSESSEE ON 31.3.2007, A COPY OF WHI CH WAS CLAIMED TO HAVE BEEN SUBMITTED BEFORE THE AO. NOT CONVINCED WITH T HE ASSESSEES SUBMISSIONS, THE LD. CIT(A) OPINED THAT THE ASSESSE E DID NOT FURNISH ANY SUPPORTING EVIDENCE TO ESTABLISH THE GENUINENESS OF THE CASH PAYMENTS CLAIMED TO HAVE BEEN MADE IN THE PRECEDING YEAR AND FURTHER HELD THAT SO- CALLED STATEMENT OF AFFAIRS AS ON 31.3.2007 COULD N OT BE ACCEPTED ON ITS FACE VALUE. HE, THEREFORE, UPHELD THE ADDITION. THE ASS ESEE IS AGGRIEVED AGAINST THE SUSTENANCE OF SUCH ADDITION. ITA NO.3776/DEL/2014 4 7. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD. COPIES OF ACCOUNTS OF SHRI SURENDER SIN GH RAWAT AND MS SAPNA RAWAT HAVE BEEN PLACED ON RECORD, WHICH INDICATE TH E OPENING BALANCE OF RS.6 LAC AND RS.5 LAC RESPECTIVELY, BEING THE AMOUN TS PAID IN CASH IN THE PRECEDING YEAR TOWARDS ADVANCE OF LAND. THE ASSESS EE HAS ALSO FURNISHED AFFIDAVITS FROM THESE TWO PERSONS ACCEPTING THAT TH EY RECEIVED SUCH PAYMENTS IN CASH FROM THE ASSESSEE IN THE PRECEDING YEAR. IT IS AN ADMITTED POSITION THAT THE ASSESSEE FILED HIS RETURN OF INCO ME FOR THE A.Y. 2007-08, WHOSE ACKNOWLEDGEMENT HAS BEEN PLACED ON RECORD. S TATEMENT OF AFFAIRS INDICATES PAYMENT OF RS.11 LAC TO THESE TWO PARTIES . WHEN THE FACTS ARE SUCH THAT THE ASSESSEE MADE PAYMENT OF RS.11 LAC TO THESE PARTIES IN THE PRECEDING YEAR, NATURALLY, IT CANT GIVE CAUSE TO M AKING DISALLOWANCE U/S 40A(3) IN THE ASSESSMENT FOR THE INSTANT YEAR. ADDI TION TO THIS EXTENT IS, THEREFORE, DELETED. 8. NOW, COMING TO THE REMAINING AMOUNT OF RS.1.52 L AC, IT IS SEEN THAT THE ASSESSEE PAID A SUM OF RS.22,000/- TO SHRI SURE NDER SINGH RAWAT ON 18.8.2007 IN TWO SEPARATE TRANSACTIONS OF RS.20,000 /- AND RS.2,000/-. A FURTHER SUM OF RS.1,22,000/- WAS PAID TO SHRI SUREN DER SINGH RAWAT BY MEANS OF VARIOUS TRANSACTIONS ON 24.9.2007 EACH, BE ING, LESS THAN ITA NO.3776/DEL/2014 5 RS.20,000/- EACH. DETAILS OF SUCH PAYMENTS HAVE BE EN MADE AVAILABLE ON PAGE 5 OF THE PAPER BOOK. ANOTHER CASH PAYMENT OF RS.8,000/- WAS MADE BY THE ASSESSEE TO MS SAPNA RAWAT, WHICH DOES NOT, IN ANY CASE, ATTRACT THE MISCHIEF OF SECTION 40A(3). THUS, IT IS OVERT THA T THE ASSESSEE PAID A SUM OF RS.1,44,000/- TO SHRI SURENDER SINGH RAWAT ON TW O DIFFERENT DATES BY MEANS OF MORE THAN ONE TRANSACTION, EACH BEING LESS THAN RS.20,000/-. AT THIS STAGE, IT IS RELEVANT TO NOTE THAT THE LEGISLA TURE HAS BROUGHT IN AMENDMENT TO SECTION 40A(3) W.E.F. 1.4.2009 AND TH E RELEVANT PROVISION NOW READS AS UNDER :- `WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPE CT OF WHICH 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 PAY EE BANK DRAFT, EXCEEDS TWENTY THOUSAND RUPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE. 9. PRIOR TO SUCH AMENDMENT, THE RELEVANT PART OF S UB-SECTION (3)(A) READ AS UNDER :- `WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPE CT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING TWENTY THOUSAND RUPEES OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPEN DITURE; 10. ON A CONJOINT READING OF SECTION 40A(3) AS APP LICABLE UP TO THE A.Y. 2008-09 AND THE A.Y. 2009-10 ONWARDS, IT BECOMES MA NIFEST THAT THE FINANCE ACT, 2008 HAS WIDENED THE SCOPE OF DISALLOW ANCE BY PROVIDING FOR ITA NO.3776/DEL/2014 6 DISALLOWANCE OF A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY. IN THE PERIOD AS APPLICABLE UP TO THE A.Y. 2008-0 9, THE DISALLOWANCE WAS CONFINED TO A PAYMENT MADE IN A SUM EXCEEDING R S.20,000/-. THERE WAS NO PROVISION FOR AGGREGATION OF VARIOUS CASH PA YMENTS MADE DURING A DAY FOR THE PURPOSES OF DISALLOWANCE U/S 40A(3). A S THE ASSESSEE, ADMITTEDLY, PAID RS.1,44,000/- TO SHRI SURENDER SIN GH RAWAT BY MEANS OF VARIOUS PAYMENTS ON A DAY AND EACH BEING BELOW RS.2 0,000/- EACH, THERE CAN BE NO QUESTION OF ANY DISALLOWANCE U/S 40A(3) I N THE ASSESSMENT YEAR 2008-09 UNDER CONSIDERATION. I, THEREFORE, ORDER F OR THE DELETION OF ADDITION OF RS.12,52,000/-. 11. THE ONLY OTHER GROUND IS AGAINST THE CONFIRMATI ON OF DISALLOWANCE OF RS.16,892/-. THE FACTS APROPOS THIS GROUND ARE THA T THE ASSESSEE CLAIMED DEDUCTION OF OFFICE EXPENSES, STATIONERY AND WATCH AND WARD EXPENSES TOTALING TO RS.84,460/-. SINCE SUCH PAYMENTS WERE MADE IN CASH AND WERE NOT PROPERLY VERIFIABLE, THE AO MADE DISALLOWANCE A T 20% OF SUCH EXPENSES AMOUNTING TO RS.16,892/-. THE LD. CIT(A) REDUCED S UCH ADDITION TO 10% BY ALLOWING A RELIEF OF RS.8,446/-. THE ASSESSEE IS AG AINST THE SUSTENANCE OF THE BALANCE ADDITION. ITA NO.3776/DEL/2014 7 12. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL ON RECORD, I FIND IT AS AN UNDISPUTED POSI TION THAT ALL THE EXPENSES CLAIMED AS DEDUCTION ARE NOT PROPERLY VERIFIABLE. IN THE GIVEN CIRCUMSTANCES, THE SUSTENANCE OF ADDITION AT RS.8,4 46/- IS HELD TO BE IN ORDER NOT REQUIRING ANY FURTHER INTERFERENCE. THIS GROUN D IS NOT ALLOWED. 13. IN THE RESULT, THE APPEAL FILED BY THE AS SESSEE IS PARTLY ALLOWED. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 04 TH NOVEMBER, 2016. SD/- (R.S. SYAL) ACCOUNTANT MEMBER DATED:04 TH NOVEMBER, 2016. DK COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI