The Income Tax Officer, Amritsar. V. Sh. Shiv Raj Singh Bawa, Amritsar.

ITA 407/ASR/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5003 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-12-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset converted into stock in trade; Capital asset; Business income; Cost of acquisition; Onus to prove
• Section: 40A(3); 143(3); 37(1); 43D; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 407/ASR/2016 ASSES SMENT YEAR: 2012-13 INCOME TAX OFFICER, WARD-4(5), AMRITSAR VS. SHIV RAJ SINGH BAWA, C/O BAWA STEEL, G.T. ROAD, AMRITSAR [PAN: AGLPB 1944K] (APPELLANT) (RESPONDENT) CROSS OBJECTION NO. 11/ASR/2017 (ARISING O UT OF ITA NO. 407/ASR/2016) ASSESSMENT YEAR: 2012-13 SHIV RAJ SINGH BAWA, C/O BAWA STEEL, G.T. ROAD, AMRITSAR [PAN: AGLPB 1944K] VS. INCOME TAX OFFICER, WARD-4(5), AMRITSAR (CROSS OBJECTOR) (RESPONDENT) APPELLANT BY : SH. CHARAN DASS (D.R. ) RESPONDENT BY: SH. TARUN BANSAL (ADV.) DATE OF HEARING: 03.12.2018 DATE OF PRONOUNCEMENT: 30.01.201 9 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE AND CROSS OBJECTIO N (CO) BY THE ASSESSEE, DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF I NCOME TAX (APPEALS)-2, AMRITSAR (CIT(A) FOR SHORT) DATED 29.04.2016, ALL OWING THE ASSESSEES APPEAL ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 2 CONTESTING HIS ASSESSMENT UNDER SECTION 143(3) OF T HE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) DATED 10.03.2015 FOR ASSESSMENT Y EAR (A.Y.) 2012-13. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE-INDIVIDUAL, DEALING BUSINESSES MATERIAL (VIZ., IRON/STEEL, CEMENT, TIMB ER, ETC.) AS WELL AS A PARTNER IN A FIRM RUNNING A HOTEL, ENTERED INTO AN AGREEMENT TO PURCHASE 137 KANALS 18 MARLAS OF LAND AT VILLAGE BUDHA THEH, TEHSIL BABA BAKALA, DISTRICT AMRITSAR, I.E., 1/4 TH SHARE THEREIN, ALONG WITH OTHERS, ON 21.04.2011, AT THE RATE OF RS.105 LACS PER ACRE, FROM ONE, BALWANT SINGH (ALIAS BANTA SINGH) SON OF SH. RATTAN SINGH. UNDER THE AGREEMENT, THE PURCHASERS HAD THE RIGHT TO FILL-UP THE LAND; CUT IT INTO PLOTS; CONSTRUCT ROADS, PROVIDE SEWERAGE, STREET LIGHTS, E TC. (PB PGS. 54-56). TOWARD HIS PART OF THE PURCHASE COST (I.E., RS.2,58,77,200), T HE ASSESSEE PAID RS.175.17 LACS BY CHEQUE/S AND RS.83.602 LACS IN CASH. ON 18.05.2011, THE CO-OWNERS ENTERED INTO ANOTHER AGREEMENT TO SELL THE SAID LAND AT THE RATE OF RS.140 LACS PER ACRE, TO ONE DARPAN JAIN S/O SH. DHARAMVIR JAIN, WHO HAD, UNDER THE SAID AGREEMENT, SIMILARLY, THE RIGHT TO CUT PLOTS; CONSTRUCT ROADS; PROVIDE FO R SEWERAGE, STREET LIGHTS, ETC. (PB PGS. 57-60). THE VALUE OF THE ASSESSEES SHARE CAME TO RS.345.029 LACS. SH. DARPAN JAIN, WHO APPEARS TO BE A DEVELOPER, DEVELOPED THE LAND, ALSO PLOTTING IT. HOWEVER, DUE TO SOME DISPUTE, THE TRANSACTION COULD NOT BE C OMPLETED, WITH MR. JAIN REPORTING THE TAKE-OVER OF THE RESIDENTIAL COLONY D EVELOPED THEREAT (BY THE NAME SUKHCHAIN CITY), BY THE ASSESSEE AND OTHER CO-OWNER S, TO THE SSP, AMRITSAR ON 01.04.2013. THE ASSESSING OFFICER (AO) REGARDED THE PURCHASE AND SALE TRANSACTION AS A VENTURE IN THE NATURE OF TRADE, I. E., AS A BUSINESS VENTURE AND, ACCORDINGLY, DISALLOWED THE CASH COMPONENT OF RS.83 ,60,200 PAID BY THE ASSESSEE U/S. 40A(3), BEING NOT COVERED BY ANY OF THE EXCEPT IONS PRESCRIBED UNDER RULE 6DD (OF THE INCOME TAX RULES, 1962 THE RULES). IN A PPEAL, THE ASSESSEE FOUND FAVOUR WITH THE LD. CIT(A) ON THE BASIS THAT THE ASSESSEE HAD MADE INVESTMENT IN PURCHASE ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 3 OF IMMOVABLY PROPERTY, IN THE FORM OF AGRICULTURAL LAND AND, IN ANY CASE, HAD NOT CLAIMED ANY PART OF THE EXPENDITURE, INCLUDING THE IMPUGNED SUM OF RS.83.602 LACS, AS A DEDUCTION IN COMPUTING BUSINESS INCOME, A FACT LOST SIGHT BY THE AO, FOR HIM TO HAVE DISALLOWED THE CASH COMPONENT OF THE PU RCHASE TRANSACTION, FOR WHICH RELIANCE WAS PLACED BY HIM ON CIT V. MOTILAL KHATRI [2008] 218 CTR 602 (RAJ). WITHOUT PREJUDICE, EVEN IF IT WAS CONSIDERED THAT T HE ASSESSEE ALONG WITH OTHERS HAD ENTERED INTO A JOINT VENTURE, THE VIOLATION OF SECT ION 40A(3) AND, THUS, DISALLOWANCE THERE-UNDER, COULD ONLY BE EFFECTED IN THE HANDS OF THE ASSOCIATION OF PERSONS (AOP) CONSISTING OF THE ASSESSEE AND THE OTHER PURC HASERS (OWNERS) OF THE SUBJECT LAND. RELYING UPON ITO V. CH. ATTCHAIAH [1996] 218 ITR 239 (SC), IT WAS STATED THAT THE LAW DOES NOT GIVE THE ASSESSING AUTHORITY THE OPTION TO TAX EITHER THE MEMBERS OF AN AOP INDIVIDUALLY OR AS AN AOP. IF, IN LAW, IT IS THE AOP WHICH IS TO BE TAXED, ITS MEMBERS CANNOT BE TAXED ON THE INCOM E OF THE AOP. AS SUCH, HE OPINED THAT ASSUMING, THOUGH NOT ADMITTING, IT WAS A JOINT VENTURE, IT COULD BE DISALLOWED U/S. 40A(3) ONLY IN THE HANDS OF THE SAI D AOP. AGGRIEVED, THE REVENUE IS IN APPEAL, WHILE THE ASSESSEE HAS FILED A CO WHI CH IS LARGELY SUPPORTIVE. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 THE FIRST THING TO DETERMINE IS IF THE PURCHASE OF LAND ACQUIRED BY THE ASSESSEE AND OTHERS DURING THE RELEVANT YEAR IS BY WAY OF INVESTMENT, I.E., ACQUISITION OF A CAPITAL ASSET, OR AS STOCK-IN-TRAD E OF HIS BUSINESS. THE LD. CIT(A) HAS REFERRED TO THE SUBJECT LAND AS AN AGRICULTURA L LAND WITHOUT ISSUING ANY FINDING OF IT BEING AN AGRICULTURAL LAND. IN FACT, AT NO ST AGE IT IS CLAIMED TO BE AN AGRICULTURAL LAND FALLING OUTSIDE THE APPLICABLE THRESHOLD LIMIT FROM THE CONCERNED MUNICIPAL LIMIT (8 KM. FOR AMRITSAR), BEING BOUGHT TO BE USED FOR AGRICULTURAL PURPOSES. NO PLEA OR OTHERWISE ANY GROUND IN ITS RESPECT STANDS RAISED, INCLUDING BEFORE US. ON THE CONTRARY, THE RATE AT WHICH IT WAS PURCHASED (R S.105 LACS PER ACRE), THE RIGHTS ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 4 WITH WHICH IT WAS; THE CLAIM OF FINANCIAL DIFFICULT Y BEING FACED BY THE CO-OWNERS, RESULTING IN NON-IMPLEMENTATION OF THE PROJECT AND THE DECISION TO DISPOSE THE LAND, WHICH IS TO AN NON-AGRICULTURALIST, WITH THE SAME R IGHTS OF DEVELOPMENT AND, WHO IN FACT PROCEEDS TO DEVELOP A RESIDENTIAL COLONY THERE AT, MAKES IT ABUNDANTLY CLEAR THAT THE LAND WAS, FIRSTLY, NOT PURCHASED AS AN AGRICULT URAL LAND (REFER: SARIFABIBI MOHMED IBRAHIM & ORS. V. CIT [1993] 204 ITR 631 (SC)) AND, TWO, WAS WITH A CLEAR VIEW AND INTENT TO EXPLOIT IT COMMERCIALLY. T HE MARKED INCREASE IN THE SALE RATE, I.E., OVER 33%, WITHIN A MATTER OF DAYS, ITSE LF IS A POINTER TO THE PERCEIVED COMMERCIAL VALUE/POTENTIAL OF THE SAID LAND. THE SA ME WAS, ACCORDINGLY, SOLD FOR BEING DEVELOPED AND PLOTTED. AS IT APPEARS, ON ACCO UNT OF FINANCIAL DIFFICULTIES (REFER WRITTEN SUBMISSIONS BY THE ASSESSEE BEFORE T HE LD. CIT(A), REFERRED TO AT PG. 5 OF HIS ORDER), SOLD TO ANOTHER DEVELOPER. IN FACT , THE PAYMENT, THE CASH COMPONENT OF WHICH IS LISTED AT PG. 4 OF THE ASSESSMENT ORDER , CONTINUES UP TO 28.03.2012 (MARCH-END), I.E., LONG AFTER THE SALE OF THE SUB JECT LAND. THAT IS, THE DECISION TO SALE WHICH IS ESSENTIALLY OF RIGHTS IN LAND, WAS TAKEN AND IMPLEMENTED WITHIN THE DAYS OF THE PURCHASE WITHOUT EVEN THE LATTER TRANSA CTION BEING CLOSED, WHICH IN FACT CONTINUED FOR MONTHS THEREAFTER. NO WONDER, THE ORI GINAL OWNER WAS ALSO MADE A CONFIRMING PARTY TO THE AGREEMENT. THERE IS, ACCORD INGLY, NO QUESTION OF THE SAME HAVING BEEN PURCHASED BY THE ASSESSEE, A NON-AGRICU LTURIST, AS A PERSONAL INVESTMENT, FOR USE BY HIMSELF OR HIS FAMILY. THE S AME CANNOT BE REGARDED AS A CAPITAL ASSET IN HIS HANDS, BUT ONLY AS STOCK-IN-TR ADE OF HIS BUSINESS (OF DEVELOPMENT OF/TRADING IN LAND). THAT THE ASSESSEE, A BUSINESSMAN WITH VARIED INTERESTS, HAS APPARENTLY NO BUSINESS EXPERIENCE OF LAND DEVELOPMENT, WOULD NOT PRECLUDE HIM FOR VENTURING INTO IT ALONG WITH OTHER S, WHO MAY, FOR ALL WE KNOW, HAVE THE RELEVANT BUSINESS EXPERIENCE. TRADING IN L AND IS SOMETHING ANY PERSON WITH COMMERCIAL EXPERIENCE, AS THE ASSESSEE, AS ALS O OTHER CO-OWNERS WITH ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 5 APPARENTLY LIKE EXPERIENCE, COULD DO. FURTHER, CONS IDERING THAT THE LAND WAS NOT DEVELOPED AND PLOTTED, BUT SOLD AS SUCH WITHIN DAYS , EVEN IMPENDING PAYMENT OF THE PURCHASE PRICE, THE SAME IN ANY CASE WOULD QUAL IFY TO BE A VENTURE IN THE NATURE OF TRADE, I.E., A TRADE IN THE SAID LAND. THE LAW I N THE MATTER IS WELL SETTLED, AND WE MAY IN THIS REGARD, FOR THE SAKE OF COMPLETENESS OF OUR ORDER, REFER TO SOME CELEBRATED DECISIONS BY THE APEX COURT SETTLING THE LAW IN THE MATTER, VIZ. G. VENKATASWAMI NAIDU & CO. V. CIT [1959] 35 ITR 594 (SC); JANKI RAM BAHADUR RAM V. CIT [1965] 57 ITR 21 (SC); KHAN BAHADUR AHMED ALLADIN & SONS V. CIT [1968] 68 ITR 573 (SC); CIT V. SUTLEJ COTTON MILLS SUPPLY AGENCY LTD . [1975] 100 ITR 706 (SC). THE REFERENCE BY THE LD. DEPARTMENTAL REPRESENTATIVE (DR), SH. CHARAN DASS, TO DECISIONS IN KARANPURA DEVELOPMENT CO. LTD. V. CIT [1962] 44 ITR 362 (SC) AND S.G. MERCANTILE CORPORATION (P.) LTD . V. CIT [1972] 83 ITR 700 (SC) IN THIS REGARD IS ALSO APPOSITE. THE FACTS OF ALL THESE CASES ARE PERTINENT. IN KARANPURA DEVELOPMENT CO. LTD. (SUPRA), FOR INSTANCE, THE APPELLANT COMPANY ACQUIRING COAL MINING LEASES, DEVELOPING THEM AS CO AL FIELDS AND THEN SUB-LEASING THEM TO COLLIERIES AND OTHER COMPANIES, ACQUIRED LE ASES FOR A TERM OF 999 YEARS. THE SAME WERE SUB-LET FOR THE BALANCE OF THE TERM O F THE RESPECTIVE LEASES MINUS TWO DAYS. THE COMPANY NEVER WORKED THE COAL FIELDS WITH A VIEW TO RAISING COAL, NOR DID IT ACQUIRE AND SELL THE COAL RAISED BY THE SUB-LESSEES. AS AGAINST A SALAMI OF RS.40 PER BIGHA PAID BY THE ASSESSEE TO THE LESSORS , IT REALIZED RS.400 PER BIGHA AS SALAMI FROM THE SUB-LESSEES. THE TRANSACTIONS OF AC QUIRING LEASES AND GRANTING SUB- LEASES WERE HELD TO BE IN THE NATURE OF TRADING ACT IVITY AND NOT ENJOYMENT OF PROPERTY AS A LAND OWNER. THERE WAS NO SALE OF ITS FIXED CAPITAL BY THE COMPANY, AS CONTENDED BY IT. THE AMOUNTS RECEIVED BY WAY OF SAL AMI WERE THE TRADING RECEIPTS OF THE BUSINESS OF ACQUIRING LEASES AND GRANTING SU B-LEASES, AND THE PROFIT THEREFROM LIABLE TO TAX AS BUSINESS INCOME. ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 6 3.2 THE NEXT ISSUE CONFRONTING US IS IF THE DISALLO WANCE U/S. 40A(3) COULD BE EFFECTED WITHOUT THE ASSESSEE HAVING RETURNED ANY B USINESS INCOME (FOR THE RELEVANT YEAR) CLAIMING A DEDUCTION FOR THE IMPUGNED EXPENDI TURE. THE NON-RETURNING OF ANY BUSINESS INCOME, BY ITSELF, CANNOT BE DETERMINATIVE OF THE MATTER AS THERE IS NO ESTOPPEL AGAINST LAW, SO THAT IF THE ASSESSEE IS LI ABLE TO BE ASSESSED FOR BUSINESS INCOME, THE SAME HAS TO BE ASESSED IN ACCORDANCE WI TH LAW, ALLOWING DEDUCTION IN ACCORDANCE WITH THE PROVISIONS OF THE ACT, I.E., SE CTIONS 30 TO 43D (SEC. 29). IN FACT, THE HONBLE COURTS HAVE, AS IN THE CASE OF CIT V. HYNOUP FOOD AND OIL INDUSTRIES PVT. LTD . [2007] 290 ITR 702 (GUJ), HELD THAT SECTION 40A(3 ) SHALL APPLY EVEN IN RESPECT OF UNDISCLOSED INCOME. NOW, WITHOUT DOUBT, THE ASSESSEE IS ASSESSABLE TO TAX IN RESPECT OF INCOME, IF ANY, OF HIS BUSINESS, WHICH CAN BE SAID TO HAVE COMMENCED WITH THE PURCHASE OR ACQUISITION OF THE L AND FOR BEING SOLD, EITHER AS SUCH OR AS DEVELOPED LAND; THAT FROM A BUSINESS VEN TURE BEING ONLY BUSINESS INCOME ASSESSABLE U/S. 28. THOUGH THE ASSESSEE HAS SOLD HIS RIGHTS IN LAND, ACQUIRED THROUGH AGREEMENT TO SELL (ATS) DATED 21.04.2011, V IDE ATS DATED 18.05.2011, I.E., AT A NEAT MARGIN OF RS.35 LACS PER ACRE, NO B USINESS INCOME HAS BEEN REGARDED AS ACCRUED, BOTH BY THE ASSESSEE OR THE REVENUE. TH IS PERHAPS IS ON ACCOUNT OF THE DISPUTE ARISING ON THE SALE, STATED TO BE SUBJECT T O THE LITIGATION BETWEEN THE ASSESSEE (& OTHERS) AND THE BUYER, WITH THE FORMER HAVING, AS STATED, ASSUMED THE POSSESSION OF THE LAND. NO LIGHT HAS BEEN THROWN ON THE STATUS (OR IN FACT EVEN THE NATURE) OF THE SAID DISPUTE, OR OF THE MONEY RECEIV ED ON SALE, EVEN AS THE POSSESSION OF HIS SHARE IS STATED TO BE WITH THE ASSESSEE. THE RE IS, ACCORDINGLY, NO QUESTION OF ANY INCOME, POSITIVE OR NEGATIVE, ARISING TO THE AS SESSEE, WHICH COULD ONLY BE ON THE SALE OF LAND OR RIGHTS THEREIN, INCLUDING THE C ERTAINTY OF THE RECEIPT, WITH THE POSSESSION ITSELF IN DISPUTE. REFERENCE IN THIS REG ARD MAY BE MADE TO THE DECISIONS, INTER ALIA, IN E.D. SASOON & CO. LTD. V. CIT [1954] 26 ITR 27 (SC); CIT V. SHOORJI ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 7 VALLABH DAS & CO. [1962] 46 ITR 44 (SC); MORVI INDUSTRIES LTD. V. CIT [1971] 82 ITR 835 (SC); CIT V. EXCEL INDUSTRIES LTD . [2013] 358 ITR 295 (SC). THERE IS, HOWEVER, NO DISPUTE QUA THE PURCHASE OR ACQUISITION OF THE LAND BY THE ASS ESSEE ALONG WITH OTHERS. WE HAVE ALREADY HELD THAT THE SA ME WAS SO WITH A VIEW TO BE SOLD AS SUCH OR UPON DEVELOPMENT/PLOTTING, I.E., FO RMS PART OF THE STOCK-IN- TRADE OF THE SAID BUSINESS VENTURE. THE QUESTION THEREFORE I S IF THE PURCHASE COST IS CLAIMED AS DEDUCTION ONLY ON THE DISPOSAL (SALE) OF THE REL EVANT GOODS (STOCK) OR SERVICES, OR ON ITS PURCHASE. THE SAME HAS BEEN CONSIDERED BE T HE HONBLE APEX COURT IN ATTAR SINGH GURMUKH SINGH V. ITO [1991] 191 ITR 667 (SC), WHEREIN A SIMILAR ARGUMENT, I.E., OF THE RELEVANT GOOD HAVING NOT BEE N SOLD DURING THE YEAR OF PURCHASE, SO THAT NO CLAIM FOR EXPENDITURE COULD BE REGARDED AS HAVING BEEN MADE IN THE YEAR OF PURCHASE, BEING HELD IN STOCK, FOR S ECTION 40A(3), WHERE THE PAYMENT FOR PURCHASE IS MADE IN VIOLATION OF THE SAID SECTI ON, TO APPLY. IT WAS EXPLAINED THUS: (AT PAGES 673-674): AS TO THE SECOND QUESTION IT MAY BE STATED THAT TH E WORD 'EXPENDITURE' HAS NOT BEEN DEFINED IN THE ACT. IT IS A WORD OF WIDE IMPORT. SEC. 40A(3 ) REFERS TO THE EXPENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF WHICH PAYMENT IS MADE. IT ME ANS THAT ALL OUTGOINGS ARE BROUGHT UNDER THE WORD 'EXPENDITURE' FOR THE PURPOSE OF THE SECTI ON. THE EXPENDITURE FOR PURCHASING STOCK- IN-TRADE IS ONE OF SUCH OUTGOINGS . THE VALUE OF THE STOCK-IN-TRADE HAS TO BE TAKEN I NTO ACCOUNT WHILE DETERMINING THE GROSS PROFITS UNDER S. 28 ON PRINCIPLES OF COMMERCIAL ACCOUNTING. THE PAYMENTS MADE FOR PURCHASES WOULD ALSO BE COVERED B Y THE WORD 'EXPENDITURE' AND SUCH PAYMENTS CAN BE DISALLOWED IF THEY ARE MADE IN CASH IN THE SUMS EXCEEDING THE AMOUNT SPECIFIED UNDER S. 40A(3). WE HAVE EARLIER OBSERVED THAT R. 6DD HAS TO BE READ ALONG WITH S. 40A(3). THE RULE ALSO CONTEMPLATES PAYMENTS MADE FOR STOCK- IN-TRADE AND RAW MATERIALS. THIS RULE IS IN ACCORDANCE WITH THE TERMS OF S. 40A (3). THE RULE PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY CROS SED CHEQUE OR A CROSSED BANK DRAFT WHERE PURCHASES ARE MADE OF CERTAIN AGRICULTURAL OR HORTICULTURAL COMMODITIES OR FROM A VILLAGE WHERE THERE IS NO BANKING FACILITY. SEC. 40A(3) IS, THEREFORE, ATTRACTED TO PAYMENTS MADE FOR ACQUIRING STOCK-IN-TRADE AND OTHER MATERIA LS. THIS IS ALSO THE VIEW TAKEN BY SEVERAL HIGH COURTS. [SEE: (1) SAJOWANLAL JAISWAL VS. CIT 1 976 CTR (ORI) 204 : (1976) 103 ITR 706 (ORI) : TC18R.477; (2) U.P. HARDWARE STORE VS. CIT (1976) 104 ITR 664 (ALL) : (3) RATAN UDYOG VS. ITO 1977 CTR (ALL) 134 : (1977) 109 ITR 1 (ALL) : (4) P.R. TEXTILES VS. CIT (1980) 121 ITR 237 (KER) : (5) CIT VS. KISHAN CHAND MAHESWARI DASS (1980) 14 CTR (P&H) 90 : (1980) 121 ITR 232 (P&H) : (6) KANTI LAL PURSHOTTAM & CO. VS. CIT (1986) 53 ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 8 CTR (RAJ) 19 : (1985) 155 ITR 519 (RAJ) : (7) CIT V S. NEW LIGHT TIN MANUFACTURING. CO. (1980) 14 CTR (P&H) 143 : (1980) 121 ITR 229 (P&H); (8) FAKRI AUTOMOBILES VS. CIT (1986) 52 CTR (RAJ) 59 : (1986) 160 ITR 504 (RAJ); (9) VENKATA SATYANARAYANA TIMBER DEPOT VS. CIT (1987) 60 CTR (AP) 157 : (1987) 165 I TR 253 (AP); (10) AKASH FILMS VS. CIT (1991) 95 CTR (KAR) 56 : (1991) 190 ITR 32 (KAR ). THE DECISIONS OF THE HIGH COURTS OF ANDHRA PRADESH, ORISSA, ALLAHABAD, KERALA, KARNATAK A, PUNJAB AND HARYANA, RAJASTHAN AND PATNA ARE TO THE EFFECT THAT THE PAYMENTS MADE FOR PURCHASING STOCK-IN-TRADE OR RAW MATERIALS SHOULD ALSO BE REGARDED AS EXPENDITURE FOR THE PURP OSE OF S. 40A(3). THE ONLY DISCORDANT NOTE STRUCK ON THIS ASPECT IS BY THE GAUHATI HIGH COURT IN CIT VS. HARDWARE EXCHANGE (1991) 95 CTR (GAU) 183 : (1991) 190 ITR 61 (GAU). THE GAUHAT I HIGH COURT HAS OBSERVED THAT S. 40A(3) APPLIES ONLY TO PAYMENTS MADE ON ACCOUNT OF 'EXPENDITURE INCURRED' AND THAT THE PAYMENT MADE FOR PURCHASE OF STOCK-IN-TRADE CANNOT BE TERMED AS 'EXPENDITURE INCURRED' SINCE MONEY DOES NOT GO OUT IRRETRIEVABLY IN SUCH C ASES. WE ARE UNABLE TO AGREE WITH THE VIEW TAKEN BY THE GAUHATI HIGH COURT. [EMPHASIS, OURS] SIMILAR VIEW HAD BEEN, APART FROM ITS DECISIONS CI TED ABOVE, TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT ALSO IN HARICHAND VIRENDER PAUL [1983] 140 ITR 148 (P&H); CIT V. KISHAN CHAND MAHESHWARI DASS [1980] 121 ITR 232 (P&H) AND CIT V. GREWAL GROUP OF INDS. [1997] 110 ITR 278 (P&H). THE MATTER, AS WOULD BE APPARENT, IS WELL SETTLED. THE SAME HAS A STRONG BA SIS, BOTH IN LAW AND IN ACCOUNTANCY, TO THE LATTER WHICH ALSO REFERENCE STA NDS MADE BY THE APEX COURT. IT IS ONLY BECAUSE THE PURCHASE IS AN EXPENDITURE THAT IT GOES TO FORM PART OF THE VALUE OF THE STOCK-IN- TRADE, SOLD OR UNSOLD AT THE YEAR- END, IN WHICH LATTER CASE IT WOULD STAND TO BE TAKEN INTO ACCOUNT AT COST (OR NET REAL IZABLE VALUE, WHICHEVER IS LOWER). TO SAY, THEREFORE, THAT NO EXPENDITURE HAS BEEN CLA IMED AS THERE HAS BEEN NO DISPOSAL/SALE OF THE STOCK-IN-TRADE DURING THE RELE VANT YEAR IS NOT CORRECT. IT WOULD, ACCORDINGLY, BE NOT CORRECT TO ASSAIL THE INVOCATIO N OF SECTION 40A(3), AS DOES THE ASSESSEE, AND WHICH HAS FOUND FAVOUR WITH THE LD. C IT(A), ON THE BASIS THAT NO BUSINESS INCOME HAS BEEN DISCLOSED, WHERE THE RELEV ANT EXPENDITURE STANDS INCURRED ON PURCHASE OF GOODS HELD AS STOCK-IN-TRAD E. THE DECISION IN MOTILAL KHATRI (SUPRA) IS WITHOUT REFERENCE TO THE DECISION IN ATTAR SINGH GURMUKH SINGH (SUPRA) AS WELL AS IN FACT THE EARLIER DECISIONS BY THE SAID COURT, BESIDES BEING ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 9 INCONSISTENT WITH THAT BY THE APEX COURT AS WELL AS THE JURISDICTIONAL HIGH COURT CITED SUPRA. THE DECISION IN CIT V. SANTOSH JAIN [2008] 296 ITR 324 (P&H), RENDERED FOLLOWING CIT V. BANWARI LAL BANSIDHAR [1998] 229 ITR 229 (ALL), ALSO RELIED UPON, IS ON A DIFFERENT FOOTING. THE INCOME HAVING BEEN ESTIMATED ON REJECTION OF ACCOUNTS, THERE WAS NO SPECIFIC DEDUCT ION QUA THE IMPUGNED EXPENDITURE FOR SECTION 40A(3) TO APPLY. THE SAME H AS NO APPLICATION TO THE INSTANT CASE. 3.3 THE ASSESSEE HAS TAKEN AN ALTERNATE ARGUMENT AS WELL, I.E., EVEN GRANTING APPLICATION OF SECTION 40A(3), THE SAME COULD NOT B E DISALLOWED THEREUNDER WHERE THE EXPENDITURE IS GENUINE, INCURRED BONA FIDE FOR THE PURPOSE OF BUSINESS, AND TOWARD WHICH HE CITES THE DECISION IN ITO V. DHANSHREE ISPAT [2017] 50 CCH 86 (PUNE). THE TRIBUNAL HAS OPINED THAT WHERE THE PAYM ENTS ARE GENUINE AND THE PAYEE/S IDENTIFIABLE, KEEPING IN VIEW THE OBJECT OF THE PROVISION, SECTION 40A(3) WOULD NOT HOLD. THE SAID DECISION, CAREFULLY PERUSE D, WOULD NOT APPLY BOTH ON FACTS IN LAW. THE DECISION IN ATTAR SINGH GURMUKH SINGH (SUPRA), RELIED UPON BY THE TRIBUNAL IN THIS CASE, IS ON A DIFFERENT ASPECT; TH E APEX COURT UPHOLDING THE CONSTITUTIONALITY OF THE PROVISION IN VIEW OF THE G ATEWAY OF RULE 6DD, IN CONJUNCTION WITH WHICH THE PROVISION IS TO BE READ. THE DECISION IN GURDAS GARG V. CIT , 63 TAXMANN.COM. 289 (P&H), THE OTHER BINDING DECI SION CITED IN THE SAID DECISION, HAS SINCE BEEN RECALLED BY THE HONBLE JU RISDICTIONAL HIGH COURT, AND FOR PRECISELY THIS REASON, I.E., THE NON-EXCLUSION OF T HE PAYMENT UNDER REFERENCE UNDER THE EXTANT RULE 6DD; THE RULE 6DD CITED BEFORE THE HONBLE COURT AT THE TIME OF HEARING BEING DIFFERENT FROM THAT ON THE STATUTE BO OK FOR THE RELEVANT YEAR; THE SAID RULE HAVING WITNESSED SEVERAL CHANGES FROM TIME TO TIME KEEPING IN VIEW THE CHANGE IN CIRCUMSTANCES. IN FACT, AS A READING OF E ACH OF THE DECISIONS BY THE HONBLE JURISDICTIONAL HIGH COURT CITED SUPRA WOULD SHOW, THE GENUINENESS OF THE ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 10 PURCHASE OF GOODS WAS NOT DOUBTED. RATHER, IF THE I MPUGNED EXPENDITURE IS CONSIDERED AS NON-GENUINE, HOW COULD THE SAME BE AL LOWED UNDER THE REGULAR PROVISIONS OF THE ACT, AS SECTION 37(1) FOR THE PUR CHASE OF GOODS, FOR SECTION 40A, THE VARIOUS SUB-SECTIONS OF WHICH PROVIDE FOR CIRCU MSTANCES UNDER WHICH EXPENDITURE, OTHERWISE ALLOWABLE, SHALL NOT BE DEDU CTIBLE, AS LAID OUT IN SUB-SECTION (1) THEREOF, WHICH READS AS UNDER, TO APPLY: EXPENSES OR PAYMENTS NOT DEDUCTIBLE IN CERTAIN CIR CUMSTANCES. 40A. (1) THE PROVISIONS OF THIS SECTION SHALL HAVE EFFE CT NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISION OF THIS A CT RELATING TO THE COMPUTATION OF INCOME UNDER THE HEAD PROFIT AND GAINS OR BUSINESS OR PRO FESSION. FURTHER, IT IS WELL SETTLED THAT A TAXING STATUTE I S TO BE STRICTLY CONSTRUED ( CIT V. CALCUTTA KNITWEARS [2014] 362 ITR 673 (SC); AJMERA HOUSING CORPORATION V. CIT [2010] 326 ITR 642 (SC)). SECTION 40A(3) READS AS U NDER: EXPENSES OR PAYMENTS NOT DEDUCTIBLE IN CERTAIN CIR CUMSTANCES. 40A. (3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN R ESPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OT HERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEED S TWENTY THOUSAND RUPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE. (3A) WHERE AN ALLOWANCE HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF ANY LIABILITY INCURRED BY THE ASSESSEE FOR ANY EXPENDIT URE AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR (HEREINAFTER REFERRED TO AS SUBSEQUENT YEAR) T HE ASSESSEE MAKES PAYMENT IN RESPECT THEREOF, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, THE PAYMENT SO MADE SHALL BE DEEMED TO BE TH E PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS INCOME OF THE SUBSEQUENT YEAR IF THE PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON I N A DAY, EXCEEDS TWENTY THOUSAND RUPEES: PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER S UB-SECTION (3) AND THIS SUB-SECTION WHERE A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON I N A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUES DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAND RUPEES, IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED, HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILAB LE, CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS: ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 11 PROVIDE FURTHER THAT IN THE CASE OF PAYMENT MADE FOR PLYING, HIRIN G OR LEASING GOODS CARRIAGES, THE PROVISIONS OF SUB-SECTIONS (3) AND ( 3A) SHALL HAVE EFFECT AS IF FOR THE WORDS TWENTY THOUSAND RUPEES, THE WORDS THIRTY- FIVE THOUSAND RUPEES HAD BEEN SUBSTITUTED. (EMPHASIS, OURS) THERE IS THEREFORE NO AMBIGUITY IN THE PROVISION, S O THAT EXCEPTING PRESCRIBED CIRCUMSTANCES, AN EXPENDITURE INCURRED FOR BUSINESS PURPOSES AND OTHERWISE ALLOWABLE IN COMPUTING BUSINESS INCOME, IS NOT DEDU CTIBLE WHERE PAID FOR OTHERWISE THAN THE PERMITTED MODES OF PAYMENT. AS W OULD BE APPARENT FROM A READING OF THE PROVISION, IT IS THE MODE OF PAYMENT IN DISCHARGING THE LIABILITY ARISING OUT INCURRING THE EXPENDITURE, WHICH FORMS THE BASIS OF THE DISALLOWANCE OF THE RELEVANT EXPENDITURE. COULD, ONE MAY ASK, A NON-GENUINE EXPENDITURE LEAD TO A GENUINE LIABILITY FOR THE MODE OF ITS DISCHARGE TO BECOME RELEVANT ? WE HAVE ALREADY NOTED THAT THE EXCLUDING CLAUSES OF RULE 6D D, WHICH HAVE TO BE READ ALONG WITH, ARE NOT APPLICABLE IN THE INSTANT CASE. THE S ECTION, ACCORDINGLY, SHALL SQUARELY APPLY. IN FACT, IT MAY BE RELEVANT HERE TO REPRODUC E FROM THE DECISION IN STATE OF TAMIL NADU V. KANADASWAMI [1975] 36 STC 191, REFERRED TO AND RELIED UPON BY THE HONBLE COURT IN GREWAL GROUP OF INDUSTRIES (SUPRA): (AT PG. 280) 'ITS MAIN OBJECT IS TO PLUG LEAKAGE AND PREVENT EVA SION OF TAX. IN INTERPRETING SUCH A PROVISION, A CONSTRUCTION WHICH WOULD DEFEAT ITS PU RPOSE AND, IN EFFECT, OBLITERATE IT FROM THE STATUTE BOOK SHOULD BE ESCHEWED. IF MORE THAN ONE C ONSTRUCTION IS POSSIBLE, THAT WHICH PRESERVES ITS WORKABILITY AND EFFICACY IS TO BE PRE FERRED TO THE ONE WHICH WOULD RENDER IT OTIOSE OR STERILE. THE VIEW TAKEN BY THE HIGH COURT IS REPUGNANT TO THIS CARDINAL CANON OF INTERPRETATION.' IN FACT, THE ARGUMENT STANDS CONSIDERED BY THE SPEC IAL BENCH OF THE TRIBUNAL IN ITO V. KENARAM SAHA AND SUBHASH SAHA [2008] 116 ITD 1 (KOL)(SB), PARAS 13.5 AND 15 OF WHICH, CONTAINING THE GIST OF THE DECISION, A RE REPRODUCED AS UNDER: FROM THE PLAIN READING OF S. 40A(3) ITSELF IT IS E VIDENT THAT IT WOULD BE APPLICABLE WHERE THE ASSESSEE INCURS ANY EXPENDITURE EXCEEDING RS. 20,00 0 OTHERWISE THAN BY A CROSSED CHEQUE OR BY A CROSSED BANK DRAFT. IN SUCH CIRCUMSTANCES, 20 PER CENT OF SUCH EXPENDITURE SHALL BE DISALLOWED. THERE IS NO AMBIGUITY IN THE LANGUAGE O F S. 40A(3) AND, THEREFORE, THE SECTION IS ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 12 TO BE INTERPRETED BY GIVING LITERAL MEANING TO THE LANGUAGE USED IN THE SECTION ITSELF. IN VIEW OF THE ABOVE, THE PURPOSE BEHIND THE ENACTMENT OF S . 40A(3) IS NOT RELEVANT. WHAT IS RELEVANT IS THE ENACTMENT ITSELF, I.E. S. 40A(3). THE IT AUT HORITIES HAVE TO GIVE EFFECT TO THE SECTION AS ENACTED BY THE PARLIAMENT. CONTENTION THAT THE SECO ND PROVISO TO S. 40A(3) IS A SUBSTANTIVE PROVISION OF THE LAW, FULL EFFECT TO WHICH SHOULD B E GIVEN AND THEREFORE, EVEN IF THE FACTS OF THE CASE OF AN ASSESSEE ARE NOT SQUARELY COVERED BY ANY OF THE CLAUSES OF R. 6DD, STILL THE EXEMPTION FROM THE RIGOR OF S. 40A(3) CAN BE ALLOWE D IN VIEW OF THE PROVISIONS OF SECOND PROVISO TO S. 40A(3), IS NOT SUSTAINABLE. IT IS NOT POSSIBLE TO AGREE WITH THE CONTENTION OF THE COUNSEL. THE MANDATE OF THE SECOND PROVISO IS TO EX EMPT THE PAYMENT IN VIOLATION OF PROVISIONS OF S. 40A(3) IN SUCH CASES AND UNDER SUC H CIRCUMSTANCES AS MAY BE PRESCRIBED. THE LAST SENTENCE OF THE PROVISO, I.E., 'HAVING REG ARD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE, CONSIDERATIONS OF BUSINESS EX PEDIENCY AND OTHER RELEVANT FACTORS', IS THE GUIDELINE FOR THE AUTHORITY WHO HAS TO PRESCRIBE TH E CASES AND CIRCUMSTANCES UNDER WHICH THE DISALLOWANCE UNDER S. 40A(3) WILL NOT BE MADE DESPI TE THE PAYMENT EXCEEDING RS. 20,000 OTHER THAN BY CROSSED CHEQUE/BANK DRAFT. IN PURSUAN CE TO THIS PROVISO, R. 6DD HAS BEEN BROUGHT INTO THE STATUTE. THIS RULE HAS BEEN AMENDE D FROM TIME TO TIME. THE ASSESSEE WILL GET THE EXEMPTION FROM THE RIGORS OF S. 40A(3) IF HE IS ABLE TO ESTABLISH THAT HIS CASE FALLS WITHIN ANY OF THE CLS. (A) TO (M) OF R. 6DD. BURDEN WOULD BE UPON THE ASSESSEE TO ESTABLISH UNDER WHICH PARTICULAR CLAUSE HIS CASE FALLS .CIT VS. TARA AGENCIES [2007] 292 ITR 444 (SC) AND CIT VS. ANJUM M.H. GHASWALA & ORS. [2001] 252 ITR 1 (SC) RELIED ON. (EMPHASIS BY US) CONTINUING FURTHER, ON FACTS, THE TRIBUNAL IN DHANSHREE ISPAT (SUPRA) FOUND THAT THE FREIGHT EXPENDITURE HAD INDEED BEEN INCURRED, NOTIN G THE FACT THAT THE TRUCK DRIVERS, AS PER THE TRADE PRACTICE, DID NOT ACCEPT PAYMENTS OTHER THAN IN CASH. IN THE PRESENT CASE, THE PAYMENTS HAVE BEEN MADE IN CASH FOR NO AP PARENT REASON. IN FACT, THE PAYMENTS THROUGH THE BANKING CHANNEL HAVE ALSO BEEN MADE TO THE BUYER, I.E., ALONG WITH THE CASH PAYMENTS. THE SAID DECISION MAY THUS BE REGARDS AS RENDERED IN THE PECULIAR FACTS OF THE CASE. WE MAY THOUGH HA STEN TO ADD THAT THE SAID DECISION STANDS RENDERED BY THE TRIBUNAL WITHOUT RE FERENCE TO THE DECISION BY ITS LARGER BENCH, BINDING ON THE DIVISION BENCH. THE CL ARIFICATIONS ISSUED BY THE BOARD TO THE AMENDMENTS TO SEC. 40A(3), WHICH HAS WITNESS ED MANY FROM TIME TO TIME WITH A VIEW TO STRENGTHEN THE DETERRENCE POTENTIAL OF THE PROVISION, AS VIDE CIRCULAR NO. 03/2008, DATED 12.03.2008 (299 ITR (ST.) 8) (PA RA 25) AND 01/2009 DATED 27.03.2009 (310 ITR (ST.) 42) (PARA 13), HAVE ALSO BEEN CONSIDERED BY US. SIMILAR VIEW, FOLLOWING THE AFORE-REFERRED DECISIONS, HAS B EEN TAKEN BY THE AMRITSAR BENCH ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 13 OF THE TRIBUNAL, AS IN GURDAS GARG V. ASST. CIT (IN ITA NO. 456/ASR/2013, DATED 28/2/2014); ASST. CIT V. DARSHAN MAHAJAN [2018] 52 CCH 352 (ASR); ITO V. REHMAT TRADERS (IN ITA NO. 454/ASR/2016, DATED 01/6/2018), DISCUS SING THE MATTER IN CONSIDERABLE DETAIL, AND TO WHICH REFEREN CE MAY PROFITABLY BE MADE. THE ASSESSEES PLEA IS, IN VIEW OF THE FORE-GOING, NOT ACCEPTABLE. 3.4 FINALLY, WE MAY ADVERT TO THE WITHOUT PREJUDICE ARGUMENT BY THE LD. CIT(A), STATING THAT EVEN ASSUMING APPLICABILITY OF SECTION 40A(3), THE SAME WOULD ONLY BE IN THE HANDS OF THE AOP. THE SAID ARGUMENT, WITH RE SPECT, COULD BE TAKEN BY THE LD. CIT(A) WHERE IN HIS OPINION THE SUBJECT LAND WAS AC QUIRED NOT BY THE SEVERAL INDIVIDUAL PERSONS JOINTLY BUT BY AN AOP CONSISTING OF THE ASSESSEE AND OTHER CO- OWNERS AN OPINION WHICH HE CLEARLY DISOWNS AND DI SCREDITS. WE SAY SO AS, UNDER THE GIVEN CIRCUMSTANCES, IT IS NOBODYS CASE THAT T HE PAYMENT IS BY THE AOP. THAT BEING THE CASE, THE ARGUMENT HAS NO LEGS TO STAND O N. IN FACT, THE SAME WAS NOT ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE, SH. BAN SAL, WHILE THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD SUBMIT THAT WHERE THE LD. CIT(A) WAS OF THE VIEW THAT THE EXPENDITURE UNDER REFERENCE STANDS INCURRED BY THE AOP, HE OUGHT TO HAVE ISSUED A DIRECTION U/S. 150 TO THE AO TO FRAME THE ASSESSMENT IN THE HANDS OF THE AOP. WE AGREE. BUT SUCH A FINDING FROM HIM WOULD EN SUE ONLY WHERE HE IS, AS AFORE-STATED, OF THE VIEW THAT THE EXPENDITURE STAN DS INCURRED BY THE AOP. BE THAT AS IT MAY BE, THE ASSESSMENT PROCEEDINGS UNDER A TA XING (FISCAL) STATUTE ARE, STRICTLY SPEAKING, NOT JUDICIAL PROCEEDINGS; ARE NOT ADVERSA RIAL IN NATURE OR IN THE NATURE OF A LIS ( S.S. GADGIL V. LAL & CO . [1964] 53 ITR 231 (SC); DEEPAK AGRO FOODS V. STATE OF RAJASTHAN , IN CA NOS. 4327-29 OF 2008, DATED 11/7/2008; CIT V. INDIAN EXPRESS (MADURAI) PVT. LTD . [1983] 140 ITR 705 (MAD)). FURTHER, THE POWER OF THE TRIBUNAL IS NOT CONFINED TO THE GROUNDS RAISED IN A PPEAL BEFORE IT (RULE 11 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963), EVEN AS RULES 11 AND 27 OF THE SAID ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 14 RULES, AS CLARIFIED IN HUKUMCHAND MILLS. LTD. V. CIT [1969] 63 ITR 232 (SC), ARE NOT EXHAUSTIVE OF THE POWERS OF THE TRIBUNAL. IN CIT V. KANPUR COAL SYNDICATE [1964] 53 ITR 225 (SC), IT WAS HELD THAT THE TRIBUN AL HAD AMPLE POWER TO SET ASIDE THE ASSESSMENT MADE ON AN ASSOCIATION OF PERSONS AND TO DIRECT THE ITO TO ASSESS THE MEMBERS INDIVIDUALLY, OR TO DIRECT THE AMENDMEN T OF THE ASSESSMENT ALREADY MADE ON THE MEMBERS. THAT IS, THERE IS NO BAR FOR D IRECTING AN ASSESSMENT IN A DIFFERENT STATUS. WE, THEREFORE, CONSIDER THE WITHO UT PREJUDICE ARGUMENT; THE INCOME BEING LIABLE TO BE ASSESSED ONLY IN THE HAND S OF THE RIGHT PERSON, AS EXPLAINED IN CH. ATTCHAIAH (SUPRA). IN OUR VIEW THE SUBJECT LAND WAS ACQUIRED AND SOLD, THOUGH JOINTLY, BY THE CO-OWNERS INDIVIDUALLY, WITH DEFINED SHARES THEREIN . IT IS A COMMON INTENT, INCLUDING CAPACITY AND OPPORTUNITY, THAT MAY HAVE P ROMPTED THE BUYERS, FOUR IN NUMBER, TO HAVE COME TOGETHER FOR ACQUIRING THE LAN D IN DEFINED SHARES (1/4 EACH), PAYING FOR THEIR SHARE. THE TIME PERIOD FOR PAYMENT AND REGISTRATION, ORIGINALLY SET AT 31.10.2011, WAS SUBSEQUENTLY REVISED TO 30.06.20 12. NO FURTHER CAPITAL WAS INTRODUCED, OR HAS BEEN SHOWN TO BE SO, FOR LAND DE VELOPMENT; INDEED NO ACTIVITY TOWARD THE SAME UNDERTAKEN. BOTH THE PURCHASE AND S ALE AGREEMENT WERE SIGNED INDIVIDUALLY BY ALL THE CO-OWNERS. AS IT APPEARS TO US, THE BUYERS, THOUGH ACUTELY CONSCIOUS OF AND INTENDING TO REALIZE THE COMMERCIA L VALUE OF LAND, DID NOT HAVE ADEQUATE RESOURCES AND EXPERIENCE, EXTENDING EVEN T HE TIME PERIOD FOR THE PAYMENT OF THE PURCHASE PRICE. THE SEARCH FOR THE BUYER INT ENDING TO DEVELOP THE SAID LAND, CLEARLY, STARTED IMMEDIATELY AFTER THE PURCHASE AGR EEMENT. FOR ALL WE KNOW, THE NEGOTIATIONS WITH THE BUYER/S MAY WELL HAVE BEEN ON AT THE TIME OF PURCHASE ITSELF. WE SAY SO AS THE INTENT TO DEVELOP THE SUBJECT LAND IS APPARENT IN BOTH THE AGREEMENTS. IT IS OTHERWISE DIFFICULT TO EXPLAIN TH E PRICE RISE OF 1/3 WITHIN A MATTER OF DAYS. THE SALE PROCEEDS, BEGINNING RS. 200 LACS ON 30/5/2011, WERE AGAIN PAID ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 15 SEPARATELY TO EACH BUYER PER AN AGREEMENT, DULY WIT NESSED BY THE ORIGINAL BUYER, ALSO A CONFIRMING PARTY IN THE AGREEMENT. THE TRANS ACTIONS OF PURCHASE AND SALE, THOUGH EXECUTED IN COHESION, THUS, ARE IN THEIR IND IVIDUAL CAPACITIES OF THE CO- BUYERS. THE ASSESSEE IS STATED TO HAVE SUBSEQUENTLY (FROM APRIL, 2014 TO JULY, 2016) GOT HIS SHARE IN THE LAND REGISTERED IN HIS N AME, WHICH POSITION CONTINUES TO DATE (29.11.2018). THE POSITION ABOUT THE OTHER CO- OWNERS, OR THE DATES ON WHICH THEY GOT THEIR RESPECTIVE SHARES REGISTERED IN THEI R NAMES, IF SO, IS NOT CLEAR, AS ALSO AS TO WHETHER THE POSSESSION OF THEIR RESPECTIVE SH ARES IS WITH THEM OR WITH SH. JAIN. THE SUBSEQUENT REGISTRATION BY THE ASSESSEE I N HIS NAME, HOWEVER, SHALL NOT DETRACT FROM; RATHER, DOVETAILS WITH OUR FINDING OF THE LAND HAVING BEEN ACQUIRED IN PERSONAL CAPACITY. THE ENTERPRISE OF PURCHASE BY PA YMENTS (BY THE BUYERS) DIRECT TO THE OWNER IN THE RATIO OF THEIR RESPECTIVE SHARES, AND SALE, REALIZING MONIES IN THEIR INDIVIDUAL NAMES, SO THAT IT IS WITH THE CONSENT OF ALL, IS AN ACT FOR PERSONAL GAIN, UNDERTAKEN TOGETHER. IF THE SALE FELL IN DISPUTE, A ND THE MATTER IS SUB JUDICE , THAT WOULD NOT IN ANY MANNER ALTER THE ASSESSEES INTENT AND OBJECT IN ACQUIRING THE LAND, WHICH IN FACT GETS EVIDENT FROM ITS SUBSEQUE NT SALE SOON AFTER. WHY, THE LAND COULD SUBSEQUENTLY EVEN BE REGARDED AS A CAPITAL AS SET, THOUGH, GIVEN THE DISPUTE WHICH, AS GIVEN TO UNDERSTAND, IS SUB JUDICE , IT IS DIFFICULT TO ISSUE ANY FINDING IN THE MATTER. WHAT THE ASSESSEE DOES WITH THE LAND LA TER, STATED BY SH. BANSAL AS AGRICULTURE, IS A MATTER SUBSEQUENT AND OF LITTLE C ONSEQUENCE. IN FACT, THE ASSESSEE HIMSELF DOES NOT SAY SO, I.E., OF THE LAND BEING PU T TO AGRICULTURAL USE (I.E., IN HIS AFFIDAVIT DATED 29.11.2018/PB PG. 61), AND EVEN MR. BANSAL, ON BEING ASKED AS TO IF THE ASSESSEE IS THEREFORE DISCLOSING AGRICULTURAL I NCOME, COULD NOT FURNISH ANY SATISFACTORY ANSWER. IN FACT, CONSIDERING THAT THE LAND STOOD PLOTTED AND A RESIDENTIAL COLONY SET UP THEREON, WHICH IS SUBJECT TO CONTRA C LAIMS, THE CLAIM OF AGRICULTURAL ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 16 USE, LARGELY IRRELEVANT FOR OUR PURPOSE, DOES NOT T HOUGH APPEAR TO BE CONVINCING IN THE LEAST. 3.5 THE ASSESSEES CO, AS AFORE-STATED, IS SUPPORTI VE. THE ONLY ADDITIONAL ARGUMENT TAKEN IS WITH REFERENCE TO SECTION 43(1), AMENDED BY FINANCE ACT, 2017 (W.E.F. 01.04.2018) BY WAY OF INSERTION OF SECOND PROVISO THERETO. PER THE SAME, ANY EXPENDITURE INCURRED IN VIOLATION OF SECTION 40 A(3) WOULD BE EXCLUDED IN DETERMINING THE ACTUAL COST OF AN ASSET. THE ARGUME NT, EVEN AS OBSERVED DURING HEARING, IS MISCONCEIVED. FIRSTLY, THE SAME IS APPL ICABLE ONLY AY 2018-19 ONWARDS, I.E., WHERE AN EXPENDITURE IS DISALLOWED F OR THOSE YEARS, AND HAS NO APPLICATION FOR THE CURRENT YEAR. EVEN OTHERWISE, H OW COULD THE COST OF GOODS BE REVISED RETROSPECTIVELY? TWO, WE DO NOT THINK THAT THE SAME, IMPINGING ON THE COST OF AN ASSET, WOULD APPLY TO VALUATION OF STOCK-IN-T RADE OF A BUSINESS, THE VALUATION OF WHICH IS GOVERNED BY WELL ACCEPTED ACCOUNTING PR INCIPLES. IT IS WELL SETTLED THAT THE PROFIT AND LOSS OF AN ENTERPRISE IS TO BE DETER MINED FOLLOWING THE ACCEPTED NORMS OF COMMERCIAL ACCOUNTING (REFER, INTER ALIA, CHALLAPALLI SUGARS LTD. V. CIT [1975] 98 ITR 167 (SC), ATTAR SINGH GURMUKH SINGH (SUPRA)). THE SAME HAVE IN FACT OVER THE YEARS BEEN MORE SHARPLY DEFINED THROU GH THE ACCOUNTING STANDARDS, MADE MANDATORY U/S. 145(2) OF THE ACT AS WELL AS TH E COMPANIES ACT. THE ACTUAL COST WOULD THEREFORE IMPLY THE ACTUAL COST INCURRED BY THE ASSESSEE; THE VALUATION OF CLOSING STOCK BEING NOT, AS EXPLAINED BY THE APE X COURT IN CHAINRUP SAMPATRAM V. CIT [1953] 24 ITR 481 (SC), A SOURCE OF PROFIT, BUT ON LY TO OFFSET THE COST AS DEBITED IN THE ACCOUNTS, I.E., TO ARRIV E AT THE CORRECT PROFIT OR LOSS. SECTION 40A(3) IS A LEGAL FICTION WHEREBY AN EXPEND ITURE (IN THE PRESENT CONTEXT BEING THE COST OF GOODS PURCHASED FOR THE PURPOSE O F BUSINESS) STANDS TO BE DISALLOWED TO THE EXTENT THE PAYMENT IN ITS RESPECT IS MADE OTHERWISE THAN BY THROUGH THE PRESCRIBED MODES, I.E., ACCOUNT PAYEE C HEQUE (DRAWN ON A BANK) OR ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 17 BANK DRAFT. CONTINUING FURTHER, EVEN ASSUMING APPLI CATION OF THE AMENDMENT TO STOCK-IN-TRADE, INASMUCH AS IT CAN BE REGARDED AS A TRADING ASSET OF THE BUSINESS, IT ONLY SEEKS TO GIVE A LEGAL DEFINITION TO ACTUAL CO ST, IN CONSONANCE WITH THE PROVISION OF SECTION 40A(3). IT CANNOT, HOWEVER, BR ING THE SAME SUM TO TAX TWICE; FIRSTLY, WHILE DISALLOWING THE EXPENDITURE, AND THE N AGAIN WHILE COMPUTING THE INCOME ON THE SALE OF THE CORRESPONDING GOODS. TO E XEMPLIFY, GOODS ARE BOUGHT FOR RS.1 LAC (SAY), MAKING PAYMENT OF RS.12,000 (SAY) I N CONTRAVENTION OF SECTION 40A(3). THE GOODS REMAIN UNSOLD AS AT THE YEAR-END (YR. 1). A DISALLOWANCE U/S. 40A(3) IS ATTRACTED FOR THAT YEAR. ON A SALE IN THE FOLLOWING YEAR (YR. 2), AT RS.1.10 LACS (SAY), IT IS THE NORMAL PROFIT OVER COST, I.E. , RS.10,000, THAT ONLY COULD BE BROUGHT TO TAX. IT IS ONLY WHERE A VIEW, AS BY THE HONBLE GUWAHATI HIGH COURT IN HARDWARE EXCHANGE (SUPRA), WHICH DID NOT FIND APPROVAL BY THE HONBL E APEX COURT IN ATTAR SINGH GURMUKH SINGH (SUPRA), THAT THE GOODS REMAINING IN STOCK THERE IS IN EFFECT NO CLAIM FOR EXPENDITURE FOR ANY DISALLOWANCE U/S. 40A(3) TO BE EFFECTED, THAT THE ARGUMENT ADVANCED ASSUMES SIGNIF ICANCE. THIS IS AS IN THIS CASE SECTION 43(1) WOULD BECOME APPLICABLE ONLY ON THE S ALE OF THE RELEVANT GOODS. THE AMENDMENT IS APPLICABLE W.E.F. AY 2018-19, SO THAT IT HAS NO APPLICATION FOR THE CURRENT YEAR, AND THE ARGUMENT ESSENTIALLY SOUGHT T O BE CANVASSED WITH REFERENCE TO THE AMENDMENT TO SECTION 43(1), I.E., THAT SECTION 40A(3) WOULD APPLY IN THE YEAR OF SALE AND NOT IN THE YEAR IT IS HELD AS STOCK-IN-TRA DE, STANDS ALREADY ANSWERED BY US WITH REFERENCE TO THE BINDING DECISIONS BY THE HON BLE APEX COURT AND THE HONBLE JURISDICTIONAL HIGH COURT. 4. CONCLUSION STATING OF THE SUBJECT LAND AS AGRICULTURAL, IN-AS- MUCH AS THERE IS NO CLAIM (MUCH LESS A FINDING) OF IT BEING OUTSIDE THE PRESC RIBED LIMIT (OF A MAXIMUM 8 KM) FROM THE RELEVANT MUNICIPAL LIMIT, IN WHICH CASE ON LY IT SHALL NOT BE A CAPITAL ASSET ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 18 U/S. 2(14), IS OF NO MOMENT. THE SAME, IN FACT, CON SIDERING THE FACTS AND CIRCUMSTANCES OF ITS PURCHASE, I.E., BY NON-AGRICU LTURISTS, AT A PREMIUM, WITH DEVELOPMENT RIGHTS, I.E., WITH VIEW TO DEVELOP REAL ESTATE, BEING IN THE VICINITY OF THE EXPANDING CITY OF AMRITSAR, AND ITS SALE IMM EDIATELY AFTER, AND EVEN AS THE PURCHASE IS NOT COMPLETE, AT AN INORDINATE INCREA SE TO ANOTHER, FOR DEVELOPMENT, AND WHO ACTUALLY PROCEEDS TO DEVELOP IT AS A RESIDE NTIAL AREA, LEAVES ONE IN NO MANNER OF ANY DOUBT THAT THE ACQUISITION OF LAND WA S TO TURN IT INTO ACCOUNT, AND THE ENTIRE EXERCISE AN ADVENTURE IN THE NATURE OF TRADE , INCOME FROM WHICH IS ASSESSABLE U/S. 28. THE ASSESSEES CLAIM OF IT BEING A CAPITA L ASSET, ACQUIRED FOR INVESTMENT, IS WITHOUT SUBSTANCE; THE PRIMARY FACTS BEING NOT I N DISPUTE AND THE LAW IN THE MATTER WELL SETTLED. THE ARGUMENT OF SECTION 40A(3) BEING NOT APPLICABLE AS THE PURCHASE BY ITSELF DOES NOT CONSTITUTE AN EXPENDITU RE, OR THAT NO EXPENDITURE HAS BEEN CLAIMED, IS AGAIN, IN VIEW OF THE BINDING JUDI CIAL PRECEDENTS HOLDING THE PURCHASE OF GOODS HELD AS STOCK-IN-TRADE TO BE AN E XPENDITURE WITHIN THE MEANING OF SECTION 37(1) R/W S. 40A(3), WITHOUT MERIT. THE ALTERNATE ARGUMENT OF SECTION 40A(3) BEING NOT APPLICABLE AS THE EXPENDITURE HAS NOT BEEN FOUND UNGENUINE, AGAIN, STANDS EXAMINED WITH REFERENCE TO THE JUDICI AL PRECEDENTS; THE BOARD CIRCULARS; AND THE PRINCIPLES OF INTERPRETATION OF A TAX STATUTE, TO FIND IT AS WITHOUT SUBSTANCE IN LAW AND, RATHER, IN CONTRADICTION TO T HE DECISION BY THE SPECIAL BENCH OF THE TRIBUNAL RENDERED AFTER CONSIDERING A HOST O F JUDICIAL DECISIONS, INCLUDING BY THE HONBLE JURISDICTIONAL HIGH COURT, AS WELL AS T HE PRINCIPLES OF INTERPRETATION OF STATUTES AS ADVOCATED BY THE APEX COURT, ALSO REFER RED TO BY THE HONBLE JURISDICTIONAL HIGH COURT IN GREWAL GROUP OF INDS . (SUPRA), AND INDEED FOLLOWED BY THIS TRIBUNAL. THE ARGUMENT MADE WITH REFERENCE TO SECTION 43(1) IS AGAIN UNTENABLE, HAVING IN FACT NO RELEVANCE FOR THE CURR ENT YEAR. THE ARGUMENT OF THE ASSESSMENT HAVING NOT BEEN FRAMED IN THE HANDS OF T HE AOP (BY THE AO) IS NEITHER ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 19 HERE NOR THERE, I.E., IN VIEW OF THE FIRST APPELLAT E AUTHORITY, IN WHOSE ORDER THAT BY THE AO MERGES, BEING HIMSELF OF THE VIEW, AS THE AO , THAT ACQUISITION OF THE SUBJECT LAND IS BY THE PURCHASERS INDIVIDUALLY AND NOT AS AN AOP, A FINDING WHICH STANDS ENDORSED BY US UPON EXAMINING CLOSELY THE FA CTS OF THE CASE, INCLUDING THE MANNER (AND TIMING) OF PURCHASE AND SALE; AN ALMOST ABSENCE OF ANY ACTIVITY TOWARD DEVELOPMENT OF LAND; ITS SALE AS SUCH WITHI N DAYS OF ITS PURCHASE, YET NOT COMPLETE IN THAT THE FULL PAYMENT HAD NOT BEEN MADE , ETC. THE CLEAR INTENT OF PURCHASE (FOR COMMERCIAL PURPOSES) IS THOUGH MANIFE ST FROM THE ATS AS WELL AS THE CONDUCT. WE MAY THOUGH HASTEN TO ADD THAT A FIN DING BY US AS TO IT BEING AN ACTIVITY ATTRIBUTABLE TO AOP (CONSISTING OF THE ASS ESSEE AND OTHER CO-OWNERS) WOULD MAKE IT INCUMBENT ON US TO ISSUE A DIRECTION U/S. 1 50 TO BRING THE SAME TO TAX IN THE HANDS OF THE AOP, EVEN AS ARGUED BY SH. DASS BEFORE US, INASMUCH AS INCOME IS LIABLE TO BE ASSESSED IN THE HANDS OF THE RIGHT PE RSON, WITH THERE BEING FURTHER NO RESTRAIN ON THE POWER OF THE TRIBUNAL IN THIS REGAR D, CLARIFIED WITH REFERENCE TO SETTLED LAW. REFERENCE IN THIS REGARD WITH PROFIT M AY ALSO BE MADE TO THE DECISION IN KAPURCHAND SHRIMAL V. CIT [1981] 131 ITR 451 (SC) WHEREIN IT STANDS EXPLAINED BY THE APEX COURT THAT AN APPELLATE AUTHO RITY HAS THE JURISDICTION AS WELL AS THE DUTY TO CORRECT ALL ERRORS IN THE PROCEEDING S UNDER APPEAL, AND TO, IF NECESSARY, ISSUE APPROPRIATE DIRECTIONS TO THE AUTH ORITY AGAINST WHOSE DECISION THE APPEAL IS PREFERRED IN DISPOSING THE MATTER BEFORE IT. WE, ACCORDINGLY, SEE NO INFIRMITY IN LAW OR ON FACTS IN THE IMPUGNED DISALL OWANCE. WE MAY, BEFORE PARTING, CLARIFY THAT WE ARE ACUTELY AWARE THAT THE PROPERTY UNDER REFERENCE STANDS PURCHASED BY THE ASSESSEE, ALONG WITH OTHERS, WHO MAY HAVE PA ID THE ENTIRE CONSIDERATION (IN RESPECT OF THEIR SHARES) BY CHEQUE/S DRAWN ON A BAN K/BANK DRAFT. THE PROPERTY BEING PURCHASED THROUGH A COMMON AGREEMENT, AT THE SAME PRICE, HOW COULD, ONE MAY ASK, THE PROVISION BE SELECTIVELY APPLIED ONLY TO THOSE, AS THE ASSESSEE, WHO ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 20 HAVE PAID PARTLY IN CASH. THE PROVISION, IT MAY BE NOTED, THOUGH AN ATTEMPT TO CURB TAX-EVASION, DOES NOT REQUIRE THE AO TO PROVE TAX-E VASION WHILE APPLYING OR INVOKING THE SAME. THERE IS NO EXPLANATION AT ANY S TAGE AS TO WHY THE ASSESSEE, WHO ALSO PAID BY CHEQUE/S, MADE PART PAYMENT IN CAS H. WHY, HE COULD PAY THE ENTIRE CONSIDERATION THROUGH THE BANKING CHANNEL, I NCLUDING BY ISSUING CHEQUES ON DEPOSITING CASH IN HIS BANK ACCOUNT/S. THAT WOULD T HOUGHT RAISE A BURDEN TO PROVE SATISFACTORILY THE NATURE AND SOURCE OF THE CASH CR EDIT IN HIS BOOKS U/S. 68 ON THE ASSESSEE. SURE, THE ASSESSEE CAN EVEN NOW BE REQUIR ED TO SATISFACTORILY PROVE THE SOURCE OF THE CASH AVAILABLE WITH HIM, AND WHICH WO ULD, WHERE SO, HAVE TO BE CONSIDERED ON ITS OWN MERITS, WITHOUT NECESSARILY L INKING IT WITH THE UTILIZATION OF CASH. THE ASSESSEE THOUGH COULD PLEAD FOR TELESCOPI NG BENEFIT WHERE HE USES THE SAME CASH ATTRACTING DISALLOWANCE U/S. 40A(3). IN O THER WORDS, THE LAW DOES NOT OBLIGE THE AO TO ENQUIRE THE SOURCE OF THE CASH IN CASE OF A CASH PAYMENT, I.E., WHERE HE SEEKS TO INVOKE SECTION 40A(3), WHICH DISA LLOWANCE CANNOT BE SAID TO BE FOUND WANTING OR NOT PROPERLY APPLIED ON THE GROUND OF HAVING SATISFACTORILY EXPLAINED THE SOURCE OF CASH WITH THE ASSESSEE. THE AO, ACCORDINGLY, HAS NOT MADE ANY ENQUIRY IN THE MATTER. THIS, IT MAY BE NOTED, I S IN THE SAME MANNER AS THE LAW DOES NOT OBLIGE TO AO TO PROVE OR SHOW THE SOURCE O F THE CASH AVAILABLE WITH THE ASSESSEE WHERE HE FINDS HIM TO HAVE NOT SATISFACTOR ILY EXPLAINED THE NATURE AND SOURCE THEREOF ( CIT V. DEVI PRASAD VISHWANATH PRASAD [1969] 72 ITR 194 (SC); ROSHAN DI HATTI V. CIT [1977] 107 ITR 938 (SC)). THE PROVISION IS SEEMING LY HARSH, BUT THAT IS NOT GROUND FOR NOT APPLYING THE SAME WHERE IT IS OTHERWISE APPLICABLE, BEING IN FACT IN THE NATURE OF A STATUT ORY DISALLOWANCE, SO THAT IT SHALL HAVE EFFECT WHERE THE CONDITIONS STATED IN THE STAT UTE ARE MET. IT IS THE ASSESSEE WHO ALONE IS RESPONSIBLE FOR THE SAME FOR MAKING THE PA YMENTS IN CASH, WHICH HE COULD HAVE EASILY MADE BY CHEQUE/S, AND WHICH IN FACT HE HAS TO A SUBSTANTIAL EXTENT. THAT ITA NO. 407/ASR/2016 & CO 11/ASR/2017 (AY 2012-13) ITO V. SHIV RAJ SINGH BAWA 21 THERE IS NO EQUITY ABOUT TAX IS WELL-SETTLED, EVEN AS THE PROVISION, AS WOULD APPARENT FROM THE DISCUSSION IN THE MATTER AND REFE RENCE TO THE CASE LAW, IS ON THE STATUTE BOOK FOR DECADES NOW. THE CONSIDERATIONS OF EQUITY, OR EVEN EQUALITY BEFORE LAW THE CLASSIFICATION MADE BEING WITH A DEFINED PURPOSE/OBJECTIVE OF SERVING AS AN EFFECTIVE DETERRENCE TO TAX EVASION, AND EVEN AS THE SOURCE OF THE CASH HAS NOT BEEN INQUIRED INTO OR IS UNVERIFIED, WOULD NOT APPL Y. THE PROVISION WOULD THUS APPLY, AND HAS BEEN RIGHTLY SO BY THE REVENUE IN TH E PRESENT CASE. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED A ND THE ASSESSEES CO, DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 30, 2 019 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 30.01.2019 /GP/SR PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: INCOME TAX OFFICER, WARD-4(5 ), AMRITSAR (2) THE RESPONDENT: SHIV RAJ SINGH BAWA, C/O BA WA STEEL, G.T. ROAD, AMRITSAR (3) THE CIT(APPEALS)-2, AMRITSAR (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER