Girdhari Lal Chawla, Delhi V. ACIT, New Delhi

ITA 3800/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6818 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 29-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VED JAIN SHRI AKSHIT GOEL
• Keywords: Opportunity of being heard; Principle of natural justice; Assessment record; Set aside
• Section: 40A(3); 191; 139(1); 147; 148; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3800/DEL./2016 (ASSESSMENT YEAR : 2006-07) SHRI GIRDHARI LAL CHAWLA, VS. ACIT, CIRCLE 36 (1), C 93, PREET VIHAR, NEW DELHI. DELHI 110 092. (PAN : ADDPC7437K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, ADVOCATE SHRI AKSHIT GOEL, CA REVENUE BY : SHRI J.K. MISHRA, CIT DR DATE OF HEARING : 11.09.2019 DATE OF ORDER : 21.10.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, SHRI GIRDHARI LAL CHAWLA (HEREINAFTER R EFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL, SOUGH T TO SET ASIDE THE IMPUGNED ORDER DATED 29.03.2016 PASSED BY THE COMMI SSIONER OF INCOME - TAX (APPEALS)-19, NEW DELHI QUA THE ASSES SMENT YEAR 2006-07 ON THE GROUNDS INTER ALIA THAT:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] IS BAD, BOTH IN THE EYE OF LAW A ND ON THE FACTS. ITA NO.3800/DEL./2016 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW I N PASSING THE IMPUGNED ORDER, WITHOUT GIVING THE ASSE SSEE A PROPER AND ADEQUATE OPPORTUNITY OF BEING HEARD IN C LEAR VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. 3.(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW I N CONFIRMING THE ORDER OF THE AO, DESPITE THE FACT TH AT THE INITIATION OF PROCEEDINGS UNDER SECTION 147, READ W ITH SECTION 148 ARE BAD IN LAW, AS THE CONDITIONS AND P ROCEDURE PRESCRIBED UNDER THE STATUTE HAVE NOT BEEN COMPLIED WITH. (II) THAT THE LEARNED CIT(A) HAS ERRED BOTH ON FACT S AND IN LAW IN CONFIRMING THE ORDER OF THE AO DESPITE TH E FACT THAT THE ORDER WAS PASSED BY THE AO WITHOUT PROVIDI NG THE COPY OF REASONS RECORDED, ON THE BASIS OF WHICH THE RE- ASSESSMENT HAS BEEN DONE AND THUS, THE RE-ASSESSMEN T IS VOID AB-INITIO AND LIABLE TO BE QUASHED. 4.(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF RS.11,5 9,000/- ON ACCOUNT OF PAYMENT MADE FOR PURCHASE OF LAND, BY INVOKING THE PROVISION OF SECTION 40A(3) OF THE ACT . (II) THAT THE SAID DISALLOWANCE HAS BEEN CONFIRMED BY THE LD. CIT(A) BY REJECTING THE CONTENTION OF THE ASSES SEE THAT THE CASE OF THE ASSESSEE IS COVERED UNDER THE EXCEP TIONS PROVIDED IN RULE 6DD OF THE INCOME TAX RULES, 1962. 5. WITHOUT PREJUDICE TO THE ABOVE AND IN THE ALTERN ATIVE, THE LD. CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF 100% EXPENDITURE U/S40A(3)OF THE ACT, DESPITE THE FACT THAT THE DISA LLOWANCE PERMISSIBLE AS PER LAW IS 20% OF SUCH EXPENDITURE. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE REAL ESTATE BUSINESS WHO HAS FILED RETURN FOR THE YEAR UNDER ASSESSMENT AT AN INCOME OF RS.1,07,36,390/- AS ON 31.10.2006 AND THE SAME WAS PROCESSED UNDER ITA NO.3800/DEL./2016 3 SECTION 143 (1) OF THE INCOME-TAX ACT, 1961 (FOR SH ORT THE ACT). WHEN ASSESSEES CASE WAS REOPENED UNDER SECTION 147 OF T HE ACT AND ASSESSEE OPTED FOR TREATING HIS RETURN OF INCOME FILED UNDER SECTION 139(1) OF THE ACT AS RETURN FILED IN RESPONSE TO THE NOTICE ISSUE D UNDER SECTION 148 OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, ASSESS EE WAS CALLED UPON TO EXPLAIN THE CASH PAYMENT OF RS.11,59,000/- (RS.4 ,00,000/-, RS.3,26,000/- + RS.4,00,000 (BAYANA) & RS.33,000/- QUA THE PROPERTY BEARING KHASRA NO.159, MAUJA TAPOVAN, TEHSIL NAREND RANAGAR, TEHRI GARHWAL, KHASRA NO.82D, 86D, 87B, MAUJA HARIPUR KAL A, RISHIKESH, DEHRADUN AND KHASRA NO.82D, MAUJA HARIPUR KALA, RIS HIKESH, DEHRADUN RESPECTIVELY). DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, ASSESSING OFFICER (AO) PROCEEDED TO MAKE ADDITION OF RS.11,59,000/- ON ACCOUNT OF CASH PAYMENT HAVING BE EN MADE IN CONTRAVENTION OF SECTION 40A(3) OF THE ACT AND THER EBY ASSESSED THE TOTAL INCOME AT RS.1,18,95,390/-. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITION BY DISMISSIN G THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.3800/DEL./2016 4 GROUNDS NO.1 & 2 5. GROUNDS NO.1 & 2 ARE GENERAL IN NATURE AND DO NO T REQUIRE ANY SPECIFIC ADJUDICATION. GROUND NO.3 6. GROUND NO.3 IS DISMISSED HAVING NOT BEEN PRESSED DU RING THE COURSE OF ARGUMENTS. GROUND NO.4 7. UNDISPUTEDLY, ASSESSEE HAS MADE CASH PAYMENT OF RS.11,59,000/- FOR PURCHASING THREE PROPERTIES IN VIOLATION OF PRO VISIONS CONTAINED UNDER SECTION 40A(3) OF THE ACT. IT IS CONTENDED B Y THE LD. AR FOR THE ASSESSEE THAT SINCE THE DATE OF SALE OF LAND FELL O N THE DATE ON WHICH THE BANKS WERE CLOSED, THE PROPERTIES WERE PURCHASED WI TH CASH AND IT IS FURTHER CONTENDED THAT SINCE THE AO HAS NOT DISPUTE D THE GENUINENESS OF THE PAYMENT MADE, ADDITION IS NOT SUSTAINABLE AND I S REQUIRED TO BE TREATED HAVING BEEN MADE IN EXCEPTIONAL CIRCUMSTANC ES AND RELIED UPON THE DECISION RENDERED BY HONBLE SUPREME COURT IN CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO, LUDHIANA 191 ITR 667 ( SC). 8. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVEN UE TO REPEL THE ARGUMENTS ADVANCED BY THE LD. AR FOR THE ASSESSEE C ONTENDED THAT THE PLEA OF GENUINENESS OF THE TRANSACTION HAS NEVER BE EN TAKEN BY THE ASSESSEE BEFORE THE AO NOR HE HAS PRODUCED ANY CONF IRMATION FROM THE VENDOR AND THE AFFIDAVIT RELIED UPON IS SELF-SERVIN G DOCUMENT. ITA NO.3800/DEL./2016 5 9. NO DOUBT, HONBLE SUPREME COURT IN CASE OF ATTAR SINGH GURMUKH SINGH (SUPRA) HELD THAT GENUINE AND BONAFIDE TRANSACTIONS ARE TAKEN OUT OF THE SWEEP OF THE SECTION 40A(3) AND IT IS OPEN TO THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE AO T HE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTI ON 40A(3) WAS NOT PRACTICABLE AND WOULD HAVE GENUINE DIFFICULTIES TO THE PAYEE. BUT, IN THE INSTANT CASE, THE ASSESSEE HAS BEEN GIVEN AMPLE OPP ORTUNITIES BY THE AO AS WELL AS LD. CIT (A) TO PROVE IF THE TRANSACTION WAS GENUINE AND BONAFIDE AND THE PAYMENT HAS BEEN MADE IN THE EXCEP TIONAL CIRCUMSTANCES BUT, EXCEPT FOR GETTING ADJOURNMENTS, THE ASSESSEE HAS NOT BROUGHT ON RECORD AN IOTA OF EVIDENCE TO BRING THIS FACT RATHER CONTINUED TO HARP ON AFFIDAVITS WHICH ARE NOTHING BUT SELF SE RVING DOCUMENTS. EVEN, DURING THE REMAND PROCEEDINGS, NUMEROUS OPPOR TUNITIES HAVE BEEN GRANTED BY THE AO TO THE ASSESSEE TO BRING ON RECORD THE NECESSARY EVIDENCE BUT HE HAS NOT PREFERRED TO DO SO. SO, IN THESE CIRCUMSTANCES, AO HAS RIGHTLY MADE THE ADDITION WHICH HAS BEEN VAL IDLY AND LEGALLY CONFIRMED BY THE LD. CIT (A). CONSEQUENTLY, GROUND NO.4 IS DETERMINED AGAINST THE ASSESSEE. GROUND NO.5 10. LD. CIT (A) HAS CONFIRMED THE DISALLOWANCE OF 1 00% EXPENDITURE MADE U/S 40A(3) OF THE ACT BY THE AO. LD. AR FOR T HE ASSESSEE CONTENDED THAT AS PER THE PROVISIONS CONTAINED UNDE R SECTION 40A(4), RELEVANT FOR AY 2006-07, 20% OF SUCH EXPENDITURE MA DE UNDER SECTION ITA NO.3800/DEL./2016 6 40A(III) OF THE ACT SHALL NOT BE ALLOWED AS DEDUCTI ON. LD. AR FOR THE ASSESSEE CONTENDED THAT LD. CIT (A) HAS ERRED IN MA KING PERMISSIBLE DISALLOWANCE TO THE TUNE OF 20% OF THE TOTAL EXPEND ITURE OF RS.11,59,000/- MADE UNDER SECTION 40A (3) OF THE AC T. 11. LD. AR FOR THE ASSESSEE HAS BROUGHT ON RECORD T HE FACT THAT HE HAD MOVED AN APPLICATION UNDER SECTION 154 OF THE ACT B EFORE THE AO WHO HAS ALLOWED THE SAME BY RETURNING FOLLOWING FINDING S :- THE ASSESSMENT IN THIS CASE WAS COMPLETED U/S 143 (3) ON 24.03.2014 AT INCOME OF RS. ,18,95,390/-. THE ASSES SEE VIDE LETTER DATED 01/04/2014 FILED APPLICATION U/S 154 SUBMITTI NG THAT IN THE ASSESSMENT ORDER AN ADDITION OF RS.11,59,000/- WAS DISALLOWED FOR CASH PAYMENT U/S 40A(3) OF THE I.T. ACT, 1961 @ 100% OF CASH PAYMENT OF RS.11,59,000/ -, WHILE FOR THE ASSE SSMENT YEAR UNDER CONSIDERATION, THE CASH PAYMENT WAS DISALLOWA BLE @20% U/S 40A(3). THE APPLICATION OF ASSESSEE HAS BEEN CONSIDERED AND ON VERIFICATION OF ASSESSMENT RECORDS IT WAS FOUND THA T ASSESSEE'S CONTENTION IS CORRECT ACCORDINGLY, THE TOTAL INCOME OF THE ASSESSEE IS RECOMPUTED AS UNDER: INCOME AS PER RETURNED FILED BY THE ASSESSEE R S.1,07,36,390/- ADD: 20% OF CASH PAYMENT OF RS.11,59,000/- U/S 40A(3) RS.2,31,800/- TOTAL ASSESSED INCOME RS.1,09,68,190/- 12. HOWEVER, LD. CIT (A) LOSING SIGHT OF THE FACT T HAT THE AO HAS ALREADY GRANTED THE RELIEF TO THE ASSESSEE BY DISAL LOWING 20% OF THE CASH AMOUNT OF RS.11,59,000/- UNDER SECTION 40A(3) VIDE ORDER DATED 10.07.2014 PASSED UNDER SECTION 154 OF THE ACT CONF IRMED THE ENTIRE ADDITION OF RS.11,59,000/-. WE ARE OF THE CONSIDER ED VIEW THAT WHEN THE RELIEF SOUGHT FOR IS ADMISSIBLE TO THE ASSESSEE AS PER PROVISIONS CONTAINED UNDER SECTION 40A(3) RELEVANT TO THE ASSESSMENT YEA R UNDER ITA NO.3800/DEL./2016 7 CONSIDERATION, LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.11,59,000/-. CONSEQUENTLY, GROUND NO.5IS DETERM INED IN FAVOUR OF THE ASSESSEE AND DISALLOWANCE PERMISSIBLE AS PER LA W TO THE EXTENT OF 20% OF CASH PAYMENT OF RS.11,59,000/- IS HELD TO BE SUSTAINABLE IN THE EYES OF LAW. 13. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE I S PARTLY ALLOWED ORDER PRONOUNCED IN OPEN COURT ON THIS 21 ST DAY OF OCTOBER, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 21 ST DAY OF OCTOBER , 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-19, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.