ITO, Budaun V. Pt. Mohit Land Construwell Pvt. Ltd, Budaun

ITA 3915/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3444 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 20-07-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 18-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Assessee Lawyers: SANAT KAPOOR S
• Keywords: Bonafide mistake; TDS; Set aside
• Section: 40A(3); 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3754/DEL/2009 (ASSESSMENT YEAR : 2006-07) M/S. MOHIT LAND CONSTRUWELL (P) LTD., VS. ITO, AHUJA BHAWAN, CHANDAUSI ROAD, BUDAUN (U.P.). BISAULI, BUDAUN (U.P.) (PAN : AADCM9879P) ITA NO.3915/DEL/2009 (ASSESSMENT YEAR : 2006-07) ITO, VS. M/S. MOHIT LAND CONSTRUWELL (P) LTD., BUDAUN (U.P.). AHUJA BHAWAN, CHANDAUSI ROAD, BISAULI, BUDAUN (U.P.) (PAN : AADCM9879P) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI SALIL KAPOOR & SANAT KAPOOR, ADVOCATES REVENUE BY : SMT. MONA MOHANTY, DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : BOTH THE CROSS APPEALS FILED BY THE ASSESSEE AND RE VENUE ARISE OUT OF THE ORDER OF THE CIT (APPEALS), BAREILLY DATED 20.6.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL :- 1. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREIL LY HAS ERRED IN LAW AND FACTS OF THE CASE IN ALLOWING RELIEF OF RS. 20,00,000/- TO THE ASSESSEE ON ACCOUNT OF ADDITION MADE BY THE AO BY I NVOKING THE PROVISIONS OF SECTION 69 OF THE IT ACT-1961. ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 2 2. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREILL Y HAS ERRED IN LAW AND FACTS OF THE CASE WHILE ALLOWING RELIEF TO THE ASSESSEE AT RS.20,00,000/- IGNORED THE FACT THAT THE AMOUNT UND ER CONSIDERATION WAS NOT FOUND ENTERED IN THE CASH BOOK THOUGH THE RELAT ED CHEQUE AMOUNT WAS FOUND CREDITED IN THE RELEVANT BANK ACCOUNT. 3. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREILL Y HAS ERRED IN LAW AND FACTS OF THE CASE WHILE ALLOWING RELIEF TO THE ASSESSEE AT RS.20,00,000/- IGNORED THE BASIC PRINCIPLE FOR MAIN TENANCE OF ACCOUNTS THAT EACH AND EVERY TRANSACTION MUST PASS THROUGH T HE CASH-BOOK BEING THE BASIC ACCOUNT BOOK. (COPY OF CASH BOOK SUBMITTED DU RING THE COURSE OF ASSESSMENT IS ENCLOSED HEREWITH ALONGWITH THE RELEV ANT BANK ACCOUNT STATEMENT SHOWING CREDIT OF SUCH AMOUNT). 4. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREILL Y HAS ERRED IN LAW AND FACTS OF THE CASE IN ALLOWING RELIEF TO THE ASSESSEE FOR RS.15,00,000/-WHICH WAS ADDED BY THE AO DUE TO THE REASONS THAT ENTRIES OF CASH ARE NOT MADE ON THE DATE ON WHICH THE CASH HAS ACTUALLY BEEN WITHDRAWN FROM BANK BUT WAS MADE AT A DATE PRIOR TO DRAWL OF SUCH MONEY. 5. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREILL Y HAS ERRED IN LAW AND FACTS OF THE CASE IN ALLOWING. RELIEF TO TH E ASSESSEE FOR RS.15,00,000/- HAS NOT APPRECIATED THE BASIC PRINCI PLE OF MAINTAINING THE ACCOUNT BOOK THAT ENTRY OF CASH WITHDRAWN FROM BANK IS TO BE MADE IN THE CASH BOOK EXACTLY ON THE SAME DATE AS ON WHICH THE CASH IS WITHDRAWN FROM BANK THROUGH SELF CHEQUE. CASH BOOK AND THE RE LEVANT BANK STATEMENTS ARE IN TESTIMONY OF THIS FACT. 6. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREILL Y HAS ERRED IN JAW AND FACTS OF THE CASE IN ALLOWING RELIEF TO THE ASSESSEE ON ACCOUNT OF THE ADDITIONS MADE BY THE AO ON ACCOUNT OF THE PAYM ENTS MADE IN CONTRAVENTION TO THE PROVISIONS OF SECTION 40A(3) O F THE IT ACT, 1961. 7. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREILL Y HAS ERRED IN LAW AND FACTS OF THE CASE IN NOT APPRECIATING THE F ACT THAT THE BENEFIT TO BE ALLOWED FOR THE EXCEPTIONAL CIRCUMSTANCES AS MENTIO NED IN THE PROVISIONS CONTAINED IN RULE 6DD ARE NOT AUTOMATIC BUT THE CON DITIONS PRECEDENT ARE TO BE PROVED BY THE ASSESSEE BY FURNISHING DOCUMENT ARY EVIDENCE. 8. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREILL Y HAS ERRED IN LAW AND FACTS OF THE CASE IN ALLOWING RELIEF TO THE ASSESSEE FOR A SUM OF RS.8,89,145/- WHICH WAS RIGHTLY MADE BY THE AO DUE TO THE REASONS THAT THE ASSESSEE FAILED TO MAINTAINED VOUCHERS FOR THE EXPENSES CLAIMED. ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 3 9 THE COMMISSIONER OF INCOME TAX (APPEAL), BAREILLY HAS ERRED IN LAW AND FACTS OF HE CASE IN ALLOWING RELIEF TO THE ASSESSEE AT RS.8,89,145/- IN NOT APPRECIATING THE FACT THAT THE BOOKS OF ACCO UNT ARE NOT MAINTAINED BY THE ASSESSEE PROPERLY AND CERTAIN SUMS WERE NOT FOU ND RECORDED THEREIN.(PLEASE REFER GROUND OF APPEAL AT SL. NO. 1 TO 3 ABOVE) AS ALSO CERTAIN CASH WAS FOUND RECORDED AT AN EARLIER DATE TO THE DATE ON WHICH CASH HAS ACTUALLY BEEN WITHDRAWN FROM BANK (PLEASE REFER GROUND OF APPEAL NO. 4 AND 5). 10. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREIL LY HAS ERRED IN LAW AND FACTS OF THE CASE IN ALLOWING RELIEF TO THE ASSESSEE FOR A SUM OF RS.7,11,316/- WHICH WAS RIGHTLY MADE BY THE AD ON A CCOUNT OF LOW PROFITS DISCLOSED. 11. THE COMMISSIONER OF INCOME TAX (APPEAL), BAREIL LY HAS ERRED IN LAW AND FACTS OF THE CASE IN ALLOWING RELIEF TO THE ASSESSEE FOR A SUM OF RS.7,11,316/-BY NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS DISCLOSED NET PROFIT @ 1.6% (AFTER ADJUSTING OTHER INCOME CRE DITED TO PROFIT AND LOSS ACCOUNT) AND THE PROFIT RATE FOR THE CIVIL CONTRACT OR MAY BE ESTIMATED FROM 6% TO 10% DEPENDING UPON THE CIRCUMSTANCES OF EACH CASE. THE ASSESSEE IS CARRYING ON THE BUSINESS OF REAL ESTATE AFTER GE TTING SERVICES OF CIVIL CONTRACTOR THUS NET PROFIT OF THE ASSESSEE BEING TH E PRINCIPAL PERSON IN THIS LINE, IF IT CAN NOT BE HIGHER TO THAT IS EARNED BY ITS CIVIL CONTRACTOR THEN IT CAN ALSO NOT BE AT A LESSER FIGURE IN COMPARISON TO THE PROFITS EARNED BY THAT CIVIL CONTRACTOR. THUS WHEN THE BOOKS OF ACCOU NTS WERE NOT REFLECTING THE CORRECT STATE OF AFFAIRS, THE PROFIT RATE APPLI ED BY THE AO WAS JUSTIFIED. 12. THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEAL), BAREILLY MAY BE SET-A-SIDE AND THE ORDER OF THE AD MAY BE RESTORED. 13. ANY OTHER GROUND, WHICH MAY BE TAKEN DURING THE COURSE OF THE APPELLATE PROCEEDINGS. ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL : 1. THAT CIT (A) HAS, IN VIEW OF THE FACTS AND CIRC UMSTANCES OF CASE, ERRED ON FACTS AND IN LAW IN CONFIRMING THE ADDITIO N/DISALLOWANCE U/S 40A (3) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF PAYME NT MADE TO M/S SOFIA ADVERTISERS OF RS.1,07,668/-, TO M/S AJIT BRICKS SA HARANPUR OF RS.20,13,169/- AND TO NAUSHAD RS.2,37,000/-. 2. THAT THE EXPLANATION FILED AND MATERIAL AVAILABL E ON RECORD HAS NOT BEEN PROPERLY CONSIDERED AND HAS BEEN WRONGLY AND I LLEGALLY IGNORED. ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 4 3. THAT THE CIT (A) HAS FAILED TO APPRECIATE THAT T HE CASE OF THE ASSESSEE IS COVERED BY THE PROVISO TO SECTION 40A ( 3) AND NO SUCH ADDITION/DISALLOWANCE IS CALLED FOR. 4. THAT THE ADDITION/DISALLOWANCE U/S 40A HAS BEEN WRONGLY AND ILLEGALLY MADE AND SAME HAS BEEN WRONGLY UPHELD BY THE CIT (A). 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND, M ODIFY OR DELETE ANY GROUNDS OF APPEAL DURING THE COURSE OF PROCEEDI NG. 3. WHILE PLEADING ON GROUND NOS.1 TO3 RELATED TO TH E ADDITION MADE U/S 69 OF THE INCOME-TAX ACT, THE LEARNED DR SUBMITTED THAT THERE WAS A DEPOSIT OF RS.20 LACS IN THE BANK ACCOUNT NO.D 1000/105410 WITH THE STATE BANK O F INDIA, CIVIL LINES, MORADABAD, ON 21.10.2005 BY WAY OF TRANSFER. HE PLEADED THAT NO ENTRY MADE BY THE ASSESSEE IN THE BANK LEDGER ACCOUNT APPEARING IN THE ASSESSEES BOO KS OF ACCOUNT. ASSESSEES CLAIM THAT THIS AMOUNT WAS RECEIVED FROM SHRI MANOJ AHUJA AND RAKESH AHUJA FOR THE PURPOSE OF LAND AT SAHARANPUR AND THESE AMOUNTS WERE CREDITED IN THEIR RESPECTIVE ACCOUNT IS INCORRECT. COPY OF LEDGER ACCOUNT OF BANK ACCOUNT FILED BEFORE ASSESSING OFFICER IS NOT REFLECTING THESE ENTRIES. THE ASSESSEES CLAIM BE FORE ASSESSING OFFICER THAT THE AMOUNT WAS REFUNDED, THEREFORE, WAS NOT REFLECTED IN THE L EDGER ACCOUNT CANNOT BE BELIEVED AS BOOKS OF ACCOUNT WERE AUDITED BY THE AUDITOR AND HE HAS NOT MENTIONED ANYTHING IN THIS REGARD. THE CIT (A) SIMPLY ACCEPTED THE SUBMISSION S MADE BEFORE HIM BY THE ASSESSEE WITHOUT REACHING AT THE CORRECT FACTS OF THE ISSUE. THESE ENTRIES WERE NOT REFLECTED IN THE CERTIFIED COPY OF THE BANK LEDGER ACCOU NT MAINTAINED BY THE ASSESSEES. THE CIT (A) HAS NOT GONE INTO THE SOURCE FROM WHE RE THE AMOUNT OF RS.20 LACS CAME INTO THE BANK ACCOUNT OF THE ASSESSEE, WHICH HAS BEEN LATER TRANSFERRED, TO MANOJ AHUJA AND RAKESH AHUJA ON 9.11.2005. WITHOUT REACHING TO THE CORRECTS FACTS, THE ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 5 CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. THEREFORE, THE ORDER OF THE CIT (A) DESERVES TO BE SET ASIDE. 4. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT REVENUES ALLEGATION THAT THIS AMOUNT WAS NOT REFLECTED IN THE BANK ACCOUNT OF THE ASSESSEE IS NOT CORRECT. THIS AMOUNT WAS RECEIVED THROUGH THE BANKING CHANNELS FROM SHRI RAKESH AHUJA AND SHRI MANOJ AHUJA. THE SAME HAVE GONE BACK THROUGH THE BANKING CHANNEL. THE NECESSARY EVIDENCE REFLECTING THESE TRANSACTIONS IN THEIR RESPECTIVE L EDGER ACCOUNTS ARE PLACED AT PAGES 81 TO 86 OF THE PAPER BOOK. THEREFORE, THE REVENUES CLA IM THAT IT WAS NOT REFLECTED IN THE BOOKS OF THE ASSESSEE IS NOT CORRECT. THIS WAS ALS O REFLECTED IN THE LEDGER ACCOUNT OF THE STATE BANK OF INDIA, MORADABAD, WHICH IS PLACED AT PAGE 80 OF THE PAPER BOOK. SIMILARLY, THIS AMOUNT WAS APPEARING IN THE ASSESSEES BANK AC COUNT, COPY OF THE BANK ACCOUNT IS PLACED AT PAGE 79 OF THE PAPER BOOK. IT IS ALSO RE FLECTED IN THE BANK ACCOUNT OF SHRI RAKESH AHUJA AND MANOJ AHUJA FROM WHERE IT HAS COME , A COPY OF THEIR BANK ACCOUNTS ARE PLACED AT PAGE 83 & 87 RESPECTIVELY. HE SUBMIT TED THAT ORDER OF CIT (A) IS JUSTIFIED AND THE SAME DESERVES TO BE SUSTAINED. 5. AFTER HEARING BOTH THE SIDES AND LOOKING TO THE FACTS OF THE CASE, WE FIND THAT THIS AMOUNT WAS REFLECTED IN THE LEDGER ACCOUNT OF THE S TATE BANK OF INDIA MAINTAINED IN THE ASSESSEES BOOKS OF ACCOUNT, COPY OF WHICH HAS BEEN PLACED AT PAGE 80 OF THE PAPER BOOK. SIMILARLY, THIS AMOUNT IS ALSO REFLECTED IN THE RES PECTIVE LEDGER ACCOUNT OF SHRI RAKESH AHUJA AND SHRI MANOJ AHUJA, COPY PLACED AT PAGE 81 & 86 OF THE PAPER BOOK RESPECTIVELY. THIS AMOUNT IS ALSO REFLECTED IN THE IR BANK ACCOUNTS, THE COPY OF THESE BANK ACCOUNTS ARE PLACED AT PAGES 83 & 87 OF PAPER BOOK. THE COPY OF BANK ACCOUNT OF ASSESSEE AS WELL AS OF SHRI RAKESH AHUJA AND MANOJ AHUJA ARE INDEPENDENT EVIDENCE ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 6 WHICH VERIFY THE ENTRIES IN THE ASSESSEES BOOKS OF ACCOUNT. IN VIEW OF THIS MATTER, THE REVENUES ALLEGATION THAT THERE IS NO ENTRY IN BOOK S OF ACCOUNT OF ASSESSEE IS FACTUALLY INCORRECT. THEREFORE, WE UPHOLD THE ORDER OF THE C IT (A) AND DISMISS REVENUES GROUND NOS.1 TO 3. 6. GROUND NOS.4 & 5 IN THE REVENUES APPEAL ARE AGA INST THE DELETION OF ADDITION OF RS.15 LACS ON ACCOUNT OF ENTRIES MADE IN CASH BOOK PRIOR TO THE DATE ON WHICH THE CASH WAS ACTUALLY WITHDRAWN FROM THE BANK. 7. LD. DR RELIED ON THE ORDER OF ASSESSING OFFICER AND SUBMITTED THAT ON THREE OCCASIONS, THE CHEQUES WAS ENCASHED ON A LATER DATE THEN THE ENTRY MADE IN THE CASH BOOK. IN THE CURRENT ACCOUNT NO.4226002100000812 WITH PNB (HIGH VALUE BRANCH), CIVIL LINES, BAREILLY, THE FOLLOWING ENTRIES ARE MADE :- S.NO. CHEQUE NO./AMOUNT ENCASHED ON ENTERED IN CASH BOOK ON 1. 693332 / 10,50,000/- 13-04-2005 12-04-2005 2. 693388 / 1,50,000/- 16-09-2005 13-09-2005 3. 649196 / 3,00,000/- 13-03-2006 11-03-2006 THE ASSESSING OFFICER HELD THAT IT WAS A CASE OF TE MPORARY INDUCTION OF THE UNACCOUNTED MONEY IN BOOKS OF ACCOUNT WHICH HE ADDED U/S 68 OF THE INCOME-TAX ACT. HE PLEADED TO SET ASIDE THE ORDER OF CIT (A) ON THIS ISSUE. 8. LEARNED AR RELIED ON THE ORDER OF CIT (A) AND SU BMITTED THAT ON THE DATE ON WHICH THE ENTRY WAS MADE IN THE CASH BOOK, THE ASSE SSEE WAS HAVING SUFFICIENT CASH-IN- HAND IN THE BOOKS OF ACCOUNT. THEREFORE, THERE WAS NO NEED / REQUIREMENT TO INTRODUCE CASH IN THE BOOKS OF ACCOUNT OF ASSESSEE. THERE CA NNOT BE ANY MOTIVE WHEN ASSESSEE WAS HAVING SUFFICIENT CASH BALANCE AVAILABLE IN THE BOO KS OF ACCOUNT ON THOSE DATES. ONLY DUE TO THE COMMUNICATION GAP, THESE TYPOGRAPHICAL E RROR OCCURRED IN THE CASH BOOK OF THE ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 7 ASSESSEE, WHICH DESERVES TO BE IGNORED. THIS WAS A GENUINE AND BONAFIDE MISTAKE AND DOES NOT CALL FOR ANY DISALLOWANCES. THEREFORE, TH E CIT (A) RIGHTLY DELETED THE ADDITION. 9. AFTER HEARING BOTH THE SIDES, WE FIND THAT ON TH E THREE OCCASIONS, THE ENTRY HAS BEEN MADE IN THE CASH BOOK PRIOR TO THE ACTUAL DATE OF WITHDRAWAL. ON ONE OCCASION, IT WAS ONE DAY PRIOR TO THE ACTUAL WITHDRAWAL, ON THE OTHER IT WAS TWO DAYS PRIOR TO THE ACTUAL WITHDRAWAL AND ON THE THIRD OCCASION, IT WAS THREE DAYS PRIOR TO THE DATE OF WITHDRAWAL. IN THE PAPER BOOK, THE ASSESSEE HAS SU BMITTED THE CASH BOOK REFLECTING THE CASH BALANCE AVAILABLE ON THESE DATES ON WHICH THE ENTRIES IN CASH BOOK WERE MADE. THIS CASH BOOKS SHOW THAT THERE WAS SUFFICIENT CASH BALA NCE AVAILABLE ON THESE DATES. THEREFORE, THERE CANNOT BE A MOTIVE TO INTRODUCE TH E ALLEGED UNACCOUNTED CASH IN THE BOOKS OF ACCOUNT ON THESE DATES. THIS CASH BOOK AL SO SHOWS THAT CASH BALANCE HAS NOT BEEN UTILIZED PRIOR TO THE DATE OF ACTUAL WITHDRAWA L. IN VIEW OF THIS FACT, WE UPHOLD THE ORDER OF CIT (A) AND GROUND NOS.4 & 5OF THE REVENUE S APPEAL ARE DISMISSED. 10. GROUND NOS.6 & 7 ARE RELATED TO THE DELETION OF SOME ADDITIONS MADE BY THE ASSESSING OFFICER FOR PAYMENTS MADE IN CONTRAVENTIO N OF SECTION 40A(3) OF THE INCOME- TAX ACT,1961. 11. THE ASSESSING OFFICER MADE AN ADDITION OF RS.20 ,78,178/- UNDER THE PROVISIONS OF SECTION 40A(3) OF INCOME-TAX ACT IN VIOLATION OF PR OVISIONS WHICH ARE NOT COVERED BY PROVISIONS OF RULE 6DD OF THE INCOME-TAX RULES. TH E DETAILS OF PARTIES TO WHOM THE PAYMENTS MADE IN CASH ARE AS UNDER :- (I) M/S. R.A. TRADERS, CONTRACTOR RS.1802464.00 (II) RAKESH GAUR HUF, CONTRACTOR RS.2115936.00 (III) SHRI NITIN CHHABRA RS. 60000.00 (IV) NEW SUN CITY LAND ADVANCE ACCOUNT RS.2000000. 00 (V) M/S SHREE GANESH ENTERPRISES SAHARANPUR RS. 5 06175.00 (VI) M/S. V.P. BRICKS SAHARANPUR RS. 21200.00 ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 8 (VII) M/S. SOFIA ADVERTISERS RS. 107668.00 (VIII) M/S. AJIT BRICKS SAHARANPUR RS.2013169.00 (IX) HEMANT AHUJA AGENT RS. 76924.00 (X) NAUSHAD RS. 237000.00 (XI) PAYMENT OF SALARY RS.1450350.00 THE CIT (A) DELETED ADDITION IN RESPECT OF ITEM NO. (I), (II), (III), (IV), (V), (VI) AND (XI). THE CIT (A) DELETED THESE ADDITIONS BY HOLDING AS U NDER :- (I) M/S. R.A. TRADERS, CONTRACTOR I HAVE CAREFULLY GONE THROUGH THE FACTS OF THE C ASE. FROM THE ABOVE, IT IS SEEN THAT THE ASSESSEE HAD MADE ABOVE PAYMENTS TO THE CONTRACTOR ON BEING PERSISTENTLY INSISTED BY THE PA YEE. IT IS NOTICED THAT THE APPELLANT CO. HAD DEDUCTED TDS ON THE PAYMENTS MADE TO THE CONTRACTOR AND DEPOSITED THE SAME WITH THE GOVERNMENT. IN THE INSTANT CASE, THE AR HAS ALSO SUBMITTED THAT THE ASSESSEE HAD MADE BONAF IDE PAYMENTS TO THE CONTRACTOR AND ASSESSEE'S BUSINESS AND THE CONSTRUC TION ACTIVITIES WOULD HAVE HAMPERED IN CASE THE PAYMENTS WERE NOT MADE IN CASH. TAKING INTO ACCOUNT FACTS AND CIRCUMSTANCES OF CASE, IT IS VIEW ED THAT THE APPELLANT CO. HAD GENUINE REASONS FOR MAKING CASH PAYMENT TO THE SAID CONCERN. IT IS ALSO OBSERVED THAT TIME AND AGAIN THE COURTS HAVE H ELD THAT DISALLOWANCE U/S 40A(3) OF THE ACT SHOULD BE MADE AFTER CONSIDER ING THE FACTORS AND CIRCUMSTANCES IN WHICH THE PAYMENTS HAVE BEEN MADE. IN THE INSTANT CASE, THE APPELLANT CO HAS FURNISHED DETAILS OF ASSESSMEN T OF M/S RA TRADERS, THE COPY OF ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S RA TRADERS, WHICH HAS CONFIRMED THE SAID RECEIPTS. THE AR HAS ALSO RE FERRED TO SUPREME COURT DIRECTIONS IN THE CASE OF ATAR SINGH GURMUKH SINGH VS. ITO 191 ITR 607 REFERRED TO ABOVE. IN VIEW OF THE FOREGOING CIRCUMSTANCES, I AM OF THE VIEW THAT THE DISALLOWANCE MADE U/S 40A(3) WAS UNJUSTIFIED. THE SAME IS DIRECTED TO BE DELETED. (II) RAKESH GAUR HUF, CONTRACTOR I HAVE CAREFULLY CONSIDERED THE ISSUE. IT IS OBSE RVED THAT APPELLANT HAS MADE PAYMENT TO SAID CONTRACTOR ON THEIR INSIST ENCE AS THEY HAD NO BANK A/C THERE & IN THE NEED OF BUSINESS THE PAYMEN T WAS NECESSARY TO BE GIVEN IN CASH. BESIDES, THE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF ASSESSMENT OF RAKESH GAUR HUF, AND THE SAID PARTY H AS ALSO CONFIRMED TO HAVE INSISTED THE ASSESSEE FOR CASH PAYMENTS. IN VI EW OF THE FOREGOING CIRCUMSTANCES, I AM OF THE CONSIDERED VIEW THAT THE DISALLOWANCE MADE U/S 40A(3) IS UNJUSTIFIED LOOKING TO THE FACTS AND CIRC UMSTANCES OF THE CASE. THE SAME DESERVES TO BE DELETED. (III) NITIN CHHABRA ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 9 I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCE OF THE CASE. IN THE INSTANT CASE THERE IS NO DOUBT THAT THE IDENTITY OF THE LANDLORD. THE LANDLORD HAS INSISTED FOR THE PAYMENT OF THE RENT FOR ALMOST THE ENTIRE YEAR IN MAY WHEN THE BEARER CHEQUE WAS ISSUED TO HIM FOR RS.50, 000.00 ON 25.05.05. IN SUCH AN EVENTUALITY, I AM OF THE CONSIDERED VIEW THAT THE DISALLOWANCE MADE IS UNJUSTIFIED AND DESERVES TO BE DELETED. (IV) NEW SUN CITY LAND ADVANCE ACCOUNT I HAVE GONE THROUGH THE FACTS OF THE CASE. IT IS S EEN THAT THE PAYMENT HAS BEEN MADE AS ADVANCE FOR THE PURPOSE OF PURCHASE OF LAND. THE ASSESSING OFFICER HAS NOT DISPUTED THE SAID NATURE OF PAYMENT . IT MAY BE STATED THAT THE ADVANCE PAYMENT MADE IN CASH FOR PROPERTY PURCH ASE DOES NOT FALL UNDER THE DEFINITION OF EXPENDITURE. THE SAME HAS N OT BEEN CLAIMED AS EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT OF THE A SSESSEE. AS SUCH THE PROVISIONS OF SECTION 40A (3) SHALL NOT APPLY TO TH E INSTANT CASE. IN VIEW OF THE SAME, THE DISALLOWANCE MADE DESERVES TO BE DELE TED. (V) SHREE GANESH ENTERPRISES SAHARANPUR IT IS SEEN FROM THE CIRCUMSTANCES OF THE CASE, T HAT THE ASSESSING OFFICER HAS ERRED IN STATING THAT THE PAYMENT WAS M ADE BY BEARER CHEQUES NO.649191. IT IS EVIDENT FROM THE CASH BOOK DATED 3 1.03.2006 THAT THE SAID CHEQUE WAS USED TO WITHDRAW CASH FROM THE BANK. LAT ER CASH PAYMENT WAS MADE TO M/S SREE GANESH ENTERPRISES AT RS.506175.00 . THE PAYMENT HAS BEEN MADE IN CASH AND NOT THROUGH THE BEARER CHEQUE S AS ALLEGED BY THE ASSESSING OFFICER. FROM THE CIRCUMSTANCES OF THE CA SE, IT IS SEEN THAT THE ASSESSEE HAS MADE A TOTAL PAYMENT OF RS.16 LAKHS AP PROX DURING THE RELEVANT YEAR. HOWEVER AS ON THE 31.03.06, THE SAID PARTY IN ORDER TO CLEAR ITS ACCOUNT BEFORE THE CLOSE OF THE FINANCIAL YEAR , INSISTED THE ASSESSEE TO PAY THE BALANCE IMMEDIATELY. THE ASSESSEE THUS WAS COMPELLED TO MAKE THE PAYMENT IN CASH AS THE CLEARING OF THE CHEQUE W OULD HAVE TAKEN COUPLE OF DAYS TO WHICH THE PARTY OBJECTED. THIS HAPPENS I N PRACTICAL LIFE WHEN THE PARTIES INSIST TO CLEAR ALL THE DUES IN THEIR B ALANCE SHEETS AND DO NOT WANT TO KEEP ANY OUTSTANDING BALANCE. THE FACT THAT SUBSTANTIALLY ALL THE PAYMENTS HAVE BEEN MADE IN CHEQUES AND ONLY THE LAS T PAYMENT HAS BEEN MADE IN CASH SUPPORTS THE CONTENTION OF THE ASSESSE E. I HAVE CAREFULLY CONSIDERED THE ISSUE. IT IS SEEN THAT OUT OF TOTAL 16 LAKH, ONLY RS.5,06,175/- HAS BEEN PAID IN CASH THAT TOO ON LAST DAY OF F.Y. ON INSISTENCE OF PAYEE & THE NEXT TWO DAYS WERE CLOSED DAYS FOR BANKING WORK . IN SUCH CIRCUMSTANCES, I AM OF THE CONSIDERED VIEW THAT SIN CE THE PAYEE'S IDENTITY IS GENUINE AND THE EXPLANATION GIVEN BY THE ASSESSE E IS PLAUSIBLE, THE DISALLOWANCE MADE BY THE ASSESSEE IS DELETED. (VI) M/S. V.P. BRICKS SHARANPUR ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 10 THE ASSESSEE WAS COMPELLED TO MAKE PAYMENT IN CAS H BEING CLOSING DAY OF BOOKS AFTER BANKING HOURS WHILE 01.0 4.2006 & 02.04.2006 WERE BANK CLOSED DAYS. (ADDITION OF RS.4240/- 20% R S.21200/-). THE ASSESSEE INSISTED FOR THE SAID PAYMENT OF THE BALAN CE AMOUNT TO CLEAR THE DUES IN IT'S FINANCIAL STATEMENTS OF THE RELEVANT Y EAR AND HENCE THE ASSESSEE WAS COMPELLED TO MAKE THE SAID PAYMENT SO THAT THE RELATIONS WITH THE PARTY DID NOT TURN SOUR. FROM THE CIRCUMSTANCES OF THE CASE, IT IS SEEN THAT THE ASSESSEE HAS MADE A TOTAL PAYMENT OF RS.90600.0 0 DURING THE RELEVANT YEAR. HOWEVER AS ON THE 31.03.06, THE SAID PARTY IN ORDER TO CLEAR IT'S ACCOUNT BEFORE THE CLOSE OF THE FINANCIAL YEAR, INS ISTED THE ASSESSEE TO PAY THE BALANCE IMMEDIATELY. THE ASSESSEE THUS WAS COMP ELLED TO MAKE THE PAYMENT IN CASH AS THE CLEARING OR THE CHEQUE WOULD HAVE TAKEN COUPLE OF DAYS TO WHICH THE PARTY OBJECTED. THIS HAPPENS IN P RACTICAL LIFE WHEN THE PARTIES INSIST TO CLEAR ALL. THE DUES IN THEIR BALA NCE SHEETS WITHIN ACCOUNTING YEAR AND DO NOT WANT TO KEEP ANY OUTSTANDING. THE F ACT THAT SUBSTANTIALLY ALL THE PAYMENTS HAVE BEEN MADE IN CHEQUES AND ONLY THE LAST PAYMENT HAS BEEN MADE IN CASH SUPPORTS THE CONTENTION OF THE AS SESSEE. IN SUCH CIRCUMSTANCES, I AM OF THE CONSIDERED VIEW THAT PRO VED THE EXPLANATION GIVEN BY THE ASSESSEE IS PLAUSIBLE, THE DISALLOWANC E MADE BY THE ASSESSEE IS NOT LIABLE TO BE SUSTAINED, THE SAME IS DELETED. (XI) PAYMENT OF SALARY I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES O F THE CASE. THE DISALLOWANCE MADE IN THE INSTANT CASE IS NOT CALLED FOR AS THE SALARY RELATES TO VARIOUS MONTHS IN CASE OF DIFFERENT EMPLOYEES. THE SALARY BECOMES DUE & PAYABLE TO THE EMPLOYEES AS AT THE END OF EACH MO NTH. IN NO CASE THE SALARY DUE FOR EACH MONTH EXCEEDS RS.20000.00. HEN CE UNDER THE FACTS & CIRCUMSTANCES THE DISALLOWANCE IS HELD AS UNCALLED FOR AND THE SAME IS DIRECTED TO BE DELETED. APPELLANT GETS RELIEF ACCO RDINGLY. 11.2 WHILE PLEADING ON BEHALF OF THE REVENUE LEARNE D DR RELIED ON THE ORDER OF ASSESSING OFFICER WHEREAS LEARNED AR RELIED ON THE ORDER OF CIT (A). 11.3 WE HAVE HEARD BOTH SIDES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE CIT (A), WHILE DELETING ADDITION ON ALL SEVEN PARTI ES/ITEMS MADE U/S 40A(3) OF THE INCOME-TAX ACT, HAS NOT MENTIONED ANY SPECIFIC EXEM PTION AS PROVIDED IN RULE 6DD. IN THE CASE OF ITO VS.KENARAM SAHA & SUBHASH SAHA, ITA T KOLKATA BENCH (SB) REPORTED IN 116 ITD 1(KOL.)(SB) HAS HELD THAT ONCE THERE IS A PAYMENT OF ANY EXPENDITURE IN ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 11 VIOLATION OF SECTION 40A(3), THEN THE ASSESSEE CAN ESCAPE THE DISALLOWANCES U/S 40A(3) ONLY IF HIS CASE FALLS WITHIN THE AMBIT OF ANY CLAU SES OF RULE 6DD. IN NONE OF THE AFORESAID CASES, THE CIT (A) HAS SPECIFIED THE CLAU SE UNDER WHICH HE HAS GRANTED THE RELIEF. IT IS ALSO HELD THAT IF A PLACE WHERE THE RECIPIENTS OF THE CASH PAYMENT IN EXCESS OF RS.20,000/- RESIDES OR CARRIES ON BUSINESS IS HAVIN G BANKING FACILITY, CONDITIONS OF RULE 6DD(H) OF 1962 RULES WOULD NOT BE SATISFIED MERELY BECAUSE THE RECIPIENT HAS NOT OPENED HIS BANK ACCOUNT. THEREFORE, THE ASSESSEES CLAIM WOULD REQUIRE EXAMINATION OF FACTS WITH REFERENCE TO THE CIRCUMSTANCES AND SITUATIONS WHERE THE EXEMPTIONS PROVIDED UNDER RULE 6DD CAN BE MADE APPLICABLE. IT IS ALSO TO BE ASCERTAINED WHETHER PAYMENTS WERE MADE ON BANK HOLIDAY OR NOT. KEEPING ALL THESE FAC TS IN VIEW, WE SET ASIDE THE ORDER OF CIT (A) IN RESPECT OF AFORESAID SEVEN PERSONS AND R ESTORE THE ISSUE TO THE FILE OF THE CIT (A). THESE GROUNDS ARE ALLOWED ON THE ABOVE TERMS. 12. GROUND NOS.8 & 9 ARE RELATED TO DELETION OF ADD ITION OF RS.8,89,145/- MADE BY ASSESSING OFFICER ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE FOR MAINTAINING VOUCHERS FOR THE EXPENSES CLAIMED AND GROUND NO.10 & 11 ARE AGAINST THE DELETION OF ADDITION OF RS.7,11,316/- MADE ON ACCOUNT OF LOW PR OFIT. 13. THE ASSESSING OFFICER MADE THREE ADDITIONS AS U NDER :- (I) ADDITION OUT OF DEVELOPMENT EXPENSES RS.100000 .00 (II) ADDITION OUT OF EXPENSES RS.889145.00 (III) ADDITION ON ESTIMATE OF PROFIT RS.711316.00 14. WHILE PLEADING ON BEHALF OF THE REVENUE LEARNED DR RELIED ON THE ORDER OF ASSESSING OFFICER. WHILE PLEADING ON BEHALF OF THE ASSESSEE LEARNED AR RELIED ON THE ORDER OF CIT (A) AND HE SUBMITTED THAT ASSESSEE HAS DEBITED EXPENDITURE OF RS.88,91,445/- UNDER HEAD HOUSE CONSTRUCTION WORK IN PROGRESS. THE ASSESSING OFFICER ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 12 HELD THAT IN THIS ACCOUNT, VARIOUS FACTORS OF COST OF CONSTRUCTION HAVE BEEN DEBITED. FROM THE NUMEROUS PAYMENTS WHERE PROPER SUPPORTING EXPEN SES VOUCHERS ARE NOT KEPT BY THE ASSESSEE, HENCE DISALLOWANCE WAS MADE OF 10% OF THE TOTAL EXPENSES UNDER THIS HEAD. HE SUBMITTED THAT EACH AND EVERY ITEM OF EXPENDITURE D EBITED UNDER THIS HEAD IS DULY VOUCHED AND THE DISALLOWANCE HAS BEEN MADE ONLY ON THE BASIS OF ESTIMATES AND JUST FOR THE SAKE OF MAKING THE ADDITION. ASSESSING OFFICER HAS NOT BEEN ABLE TO POINT OUT ANY DEFECTS IN THE BOOKS OF ACCOUNT PRODUCED BEFORE HIM . MERELY STATING THAT NUMEROUS PAYMENTS WERE MADE, THE SAME CANNOT BE MADE A GROUN D FOR ADDITION. THEREFORE, THE CIT (A) RIGHTLY DELETED THE ADDITION. THE ASSESSING OF FICER HAD ALSO MADE ADDITION OF RS.7,11,316/- BY ESTIMATING 8% PROFIT ON WORK IN PR OGRESS BUT THE ASSESSEE IS FOLLOWING THE PROJECT COMPLETION METHOD AND HENCE ASSESSING O FFICER WAS NOT JUSTIFIED TO MAKE SUCH ADDITION. HE PLEADED TO SUSTAIN THE ORDER OF CIT (A). 16. AFTER HEARING BOTH THE SIDES, WE FIND THAT THIS ADDITION HAS BEEN MADE ON THE AMOUNT OF EXPENDITURE SHOWN UNDER THE HEAD HOUSE C ONSTRUCTION WORK IN PROGRESS. THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD AND THE AMOUNT HAS NOT BEEN TAKEN INTO CONSIDERATION FOR WORKING OUT THE INCOME FOR THE YE AR UNDER CONSIDERATION. HOWEVER, ASSESSING OFFICER HAS ALL THE RIGHT TO INVESTIGATE AND ESTABLISH WHETHER ALL EXPENSES MADE WHICH FORM PART OF WORK IN PROGRESS ARE GENUINE. T HE ASSESSING OFFICER HAD NOT PINPOINTED OR ESTABLISHED THAT ANY OF EXPENSES DEBI TED ARE BOGUS OR NOT FOR THE WORK IN PROGRESS OF THE PROJECT. WITHOUT SPECIFIC FINDINGS AD HOC DISALLOWANCES ARE NOT JUSTIFIED. SIMILARLY THE ASSESSING OFFICER HAS ALSO MADE ADDIT ION BY ESTIMATING PROFIT @ 8% ON THIS AMOUNT OF WORK IN PROGRESS. SINCE THE ASSESSEE IS OFFERING THE INCOME ON THE PROJECT COMPLETION METHOD, THEREFORE, THE ESTIMATING PROF IT ON THE AMOUNT SHOWN IN THE WORK ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 13 IN PROGRESS ACCOUNT IN THE BOOKS OF ACCOUNT IS NOT JUSTIFIED. WE UPHOLD THE ORDER OF CIT (A) ON THESE GROUNDS AND DISMISS REVENUES GROUND N OS.8 & 9. 17. GROUND NOS.12 & 13 OF REVENUES APPEAL ARE GENE RAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 18. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOW ED. ASSESSEES APPEAL 18. IN THE ASSESSEES APPEAL, THE GROUNDS ARE RELAT ED TO THE CONFIRMATION OF ADDITION MADE U/S 40A(3) OF INCOME-TAX ACT, 1961 IN RESPECT OF PAYMENTS MADE TO THE FOLLOWING PERSONS :- (I) SOFIA ADVERTISERS RS.1,07,668/- (II) M/S. AJIT BRICKS RS.20,13,169/- (III) NAUSHAD RS.2,37,000/- 19. THE CIT (A) HAS CONFIRMED THE ADDITION IN RESPE CT OF THESE THREE PERSONS WHERE THE CASH PAYMENT HAS BEEN MADE BY HOLDING AS UNDER :- SOFIA ADVERTISERS I HAVE CAREFULLY CONSIDERED THE ISSUE. AS STATED BY THE ASSESSEE, RULE 6DD(K) IS NOT APPLICABLE, AS THE DATE OF PAYME NT WAS NOT A BANKING HOLIDAY, THE APPELLANT HAS MADE PAYMENT OF RS.1,07, 668/- IN CASH TO M/S SOPHIA ADVERTISERS AN AGENT OF LEADING NEWS PAPERS, DAINK JAGRAN & AMAR UJALA ON 31.03.2006. IT HAS BEEN CLAIMED THAT THE PAYMENT IN CASH WAS MADE ON BEING INSISTED BY THE PAYEE. BUT IN MY CONSIDERED VIEW, THE PAYMENT IS HIT BY DISALLOWANCE U/S 40A(3) BECAUSE B OTH PAYER & PAYEE ARE WELL KNOWN TO EACH OTHER, REGULAR BUSINESS CONCERNS , THERE WAS NO URGENCY. NORMALLY A BUSINESS WOULD LIKE TO RECEIVE ITS DOES AT THE EARLIEST, BUT CERTAIN NORMS/RULES HAVE TO BE FOLLOWED. IF THE RE IS RESTRICTION IN MAKING CASH PAYMENTS THE SAME HAS TO BE RESPECTED. THE ARGUMENT THAT PAYEE INSISTED IS NOT PLAUSIBLE BECAUSE THE BUSINES S OF PAYEE WOULD NOT HAVE BEEN HAMPERED IF PAYMENT WAS MADE THROUGH ACCO UNT PAYEE CHEQUE ON ACCOUNT PAYEE BANK DRAFT. ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 14 IN MY CONSIDERED VIEW THE DISALLOWANCE/ADDITION MAD E BY THE A.O. IS JUSTIFIED & THE GROUND OF APPEAL FAILS. M/S. AJIT BRICKS I HAVE GONE THROUGH THE FACTS AND CIRCUMSTANCES O F THE CASE. THE ASSESSEE HAS CLAIMED BEFORE THE ASSESSING OFFICER T HAT THE PAYMENT WAS MADE THROUGH AGENTS. IT WAS ALSO SUBMITTED THAT THE PAYMENT WAS MADE AFTER BANKING HOURS ON THE 31.03.2006. THE CONTENTI ON OF THE ASSESSEE IS NOT ACCEPTABLE. IT IS SEEN THAT THE PURCHASES WERE MADE ROUND THE YEAR AND THE ALMOST EVERY BILL WAS IN EXCESS OF OVER RS.1 LA KH. IT CANNOT BE ASSUMED THAT THE SUPPLIER INSISTED FOR THE PAYMENT ONLY ON THE LAST DAY OF THE YEAR. THE SUPPLIER HAS ALSO BEEN ACCEPTING OUTS TATION CHEQUES OF THE ASSESSEE FROM TIME TO TIME THOUGH THEY WERE OF PETT Y AMOUNT. IN SUCH A CASE, IT CANNOT BE IMAGINED THAT THE SUPPLIER INSIS TED ONLY ON THE LAST DAY OF THE YEAR. THE ASSESSEE SHOULD HAVE MADE THE PAYM ENTS IN TIME AND THROUGH ACCOUNT PAYEE CHEQUES AND NOTHING PREVENTED THE ASSESSEE FROM DOING SO. IN MY CONSIDERED VIEW, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IN THE INSTANT CASE IS JUSTIFIED. NAUSHAD IT IS SEEN FROM THE BOOKS OF ACCOUNTS THAT ADVANC ES HAVE BEEN MADE TO ONE SHRI NAUSHAD FROM TIME TO TIME THROUGH CHEQUES WHICH ARE OF PETTY AMOUNTS. NO BILLS SEEM TO HAVE BEEN RECEIVED FOR WORK DONE BY SHRI NAUSHAD AS THERE IS NO CREDIT TO HIS ACCOUNT. ON 31 ST OF MARCH, THERE IS A PAYMENT OF RS.237000.00 THROUGH BEARER CHEQUE. HOWE VER NO REASONABLE EXPLANATION HAS BEEN SUBMITTED BY THE ASSESSEE TO J USTIFY THE NEED OF PAYMENT THROUGH BEARER CHEQUES ON LAST DAY OF ACCOU NTING YEAR. IN SUCH A CASE I AM NOT CONVINCED BY THE EXPLANATION FURNISHE D BY THE ASSESSEE THAT IT HAD TO BE PAID BY THE LAST DAY OF THE YEAR. THE CONTENTION COULD HAVE BEEN ACCEPTED, HAD THERE BEEN ANY WORK DONE BY NAUS HAD AND SOME BILLS WERE OUTSTANDING, WHICH IS NOT THE CASE HERE. IN TH E INSTANT CASE, ONLY ADVANCES HAVE BEEN GIVEN. INSISTENCE CAN BE JUSTIFI ED WHERE THE ASSESSEE OWES SOME PAYMENT TOWARDS THE PARTY, WHICH IN THIS CASE HAS NOT BEEN PROVED BY THE ASSESSEE. IN SUCH AN EVENTUALITY, I AM OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICE R IS LIABLE TO BE SUSTAINED. 20. LEARNED DR RELIED ON THE ORDER OF AUTHORITIES B ELOW. LEARNED AR SUBMITTED THAT THE MATTER MAY BE RESTORED TO THE FILE OF ASSESSING OFFICER TO EXAMINE CLAIM OF ASSESSEE UNDER RULE 6DD OF INCOME-TAX RULES 21. AFTER HEARING BOTH THE SIDES ON THESE ISSUES, W E HOLD AS UNDER :- ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 15 THE CASH PAYMENT MADE TO SOFIA ADVERTISERS WHO WAS AN AGENT OF NEWSPAPERS LIKE DANIK JAGRAN AND AMAR UJALA. THIS PAYMENT WAS MADE ON 31.3.2006. THE 31 ST MARCH, 2006 WAS NOT A BANK HOLIDAY. HENCE, PROVISI ONS OF RULE 6DD(J) ARE NOT APPLICABLE. M/S. SOFIA ADVERTISERS WAS AGENT OF LE ADING NEWSPAPERS, I.E., DANIK JAGRAN AND AMAR UJALA. THE ASSESSEES PLEA IS THAT THE PA YMENTS WERE MADE ON THE PAYEES INSISTENCE. BUT WHEN THE ASSESSEE AND PAYEE WERE W ELL KNOWN TO EACH OTHER AND HAVING LONG BUSINESS RELATION, SUCH PLEA IS NOT ACCEPTABLE . THE PERSON WHOM PAYMENT WAS MADE WAS NOT AN AGENT OF ASSESSEE WHO HAD TO MAKE PAYMEN T IN CASH OR SERVICES. HENCE, THE PROVISION OF RULE 6DD(K) IS ALSO NOT APPLICABLE. T HE CASE ALSO DO NOT FALL UNDER ANY EXEMPTION OF RULE 6DD. IN VIEW OF THESE FACTS, WE UPHOLD THE ORDER OF CIT (A) REGARDING APPLICABILITY OF SECTION 40A(3) OF INCOME -TAX ACT. IN THE CASE OF M/S. AJIT BRICKS, CASH PAYMENT WAS MADE FOR PURCHASES OF RS.20,13,169/- ON 31.3.2006. THE TOTAL PURCHASES D URING THE YEAR WERE OF RS.27,18,169. THESE PURCHASES WERE MADE ROUND THE YEAR. THIS AMO UNT WAS PAID ON 31.3.2006, WHICH WAS NOT A BANK HOLIDAY. HENCE, EXEMPTION AVAILABLE UNDER RULE 6DD(J) IS NOT AVAILABLE. FURTHER EACH PURCHASE BILL WAS OF MORE THAN RS.1 LA C. NO EVIDENCE ON RECORD WHICH COULD SHOW THAT THE PAYMENT WAS MADE THROUGH AGENT WHO IN TURN HAS TO MAKE CASH PAYMENTS FOR GOODS OR SERVICES ON BEHALF OF ASSESSE E. THUS, EXEMPTION AVAILABLE IN RULE 6DD(K) IS NOT AVAILABLE TO THE ASSESSEE. THE SUPPL IER WAS ACCEPTING THE OUTSTATION CHEQUES IN THE PAST. IT WAS A KNOWN PARTY HENCE AS SESSEES PLEA THAT M/S. AJIT BRICKS INSISTED FOR CASH PAYMENT IS NON-GENUINE. ASSESSEE /S CASE DO NOT FALL UNDER ANY OF EXEMPTION CATEGORY AVAILABLE UNDER RULE 6DD, HENCE WE SUSTAIN THE ORDER OF CIT (A) ON THIS ISSUE. ITA NO.3754/DEL/2009 ITA NO.3915/DEL/2009 16 IN THE CASE OF NAUSHAD, THE AMOUNT OF RS.2,37,000/ - WAS PAID. THE PAYMENT WAS MADE BY BEARER CHEQUES ON 31.3.2006. ASSESSEE HAD NOT PROVIDED THE DETAILS THAT UNDER WHICH SITUATION OF RULE 6DD, THE AMOUNT IS EXEMPTED . IN SUCH A SITUATION, WE FIND THAT THE CIT (A) WAS JUSTIFIED IN SUSTAINING THE ADDITIO N ON THIS BASIS U/S 40A(3) OF INCOME- TAX ACT AND ACCORDINGLY WE UPHOLD THE SAME. 22. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED AND THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE 30 TH DAY OF JULY 2010. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 30 TH DAY OF JULY, 2010/TS COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. CIT(A), BAREILLY. 5. DR, ITAT. ASSTT.REGISTRAR ITAT, NEW DELHI.