ACIT, Chandigarh V. Sh. Krishan Lal Dham, Chandigarh

ITA 419/CHANDI/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77130 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-04-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 22-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANJIT SINGH
• Keywords: Capital asset; Gift; Business income; Assessment record; Capital expenditure
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 278/CHD/2010 ASSESSMENT YEAR: 2006-07 SH. KRISHAN LAL DHAM VS. THE DCIT, SCO 358-59, SECTOR 34A, CIRCLE 1(1), CHANDIGARH CHANDIGARH PAN NO. ABBPD2269A & ITA NO. 419/CHD/2010 ASSESSMENT YEAR: 2006-07 THE ACIT VS. SH. KRISHAN LAL DHAM CIRCLE1(1), H.NO. 617, SECTOR 16-D CHANDIGARH CHANDIGARH PAN NO. ABBPD2269A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMAN PARTI RESPONDENT BY : SHRI MANJIT SINGH DATE OF HEARING : 09/04/2014 DATE OF PRONOUNCEMENT : 29.05.2014 ORDER PER T.R. SOOD A.M. THE APPEAL FILED BY THE ASSESSEE AND CROSS APPEAL F ILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER DATED 20/01/2010 OF CIT (A),CHANDIGARH. ITA NO. 278/CHD/2010 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING AMENDED GROUNDS:- 1. BECAUSE THE ACTION IS UNDER CHALLENGE ON FACTS & LA W FOR TREATING THE CAPITAL GAIN ON SALE OF AGRICULTURE LA ND TO BE AS BUSINESS INCOME AMOUNTING TO RS. 12,55,000/- EVEN T HE QUANTUM OF ADDITION IS DISPUTED. 2. BECAUSE THE ACTION IS UNDER CHALLENGE OF FACTS & LA W FOR MAKING AN ADDITION OF RS. 80,000/- WHICH HAS ALREAD Y BEING 2 DISCLOSED BY THE ASSESSEE UNDER THE HEAD SHORT TERM CAPITAL GAIN, HENCE DOUBLE TAXATION AND WHICH ACTION IS UNSUSTAINABLE IN LAW. 3. BECAUSE THE ACTION IS UNDER CHALLENGE OF FACTS & LA W FOR MAKING ADDITION OF RS. 3,86,454/- TOWARDS, WORK IN PROGRESS WHEREAS THE SAME STANDS DISCLOSED AND DECLARED IN T HE FINANCIAL STATEMENT BY A DIFFERENT NOMENCLATURE AND THE MERITS OF THE CLAIM HAVE NOT BEEN EXAMINED. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD INDULGED IN VARIOUS TRANSACTIONS OF SALE / PURCHASE OF LAND. SUCH TRANS ACTIONS WERE REFLECTED UNDER THE HEAD CAPITAL GAIN BY TREATING ADDITION AS ADDIT ION TO FIXED ASSETS. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ASSESSEE HAS MADE ADDITIONS OF RS. 75,77,123/- BEFORE SEPTEMBER 2005 AND RS. 54,66,119 /- UP TO 31.3.2006. IN ADDITION TO THESE TRANSACTIONS THE ASSESSEE WAS ALR EADY HOLDING VARIOUS PIECES OF LAND AT VARIOUS PLACES, THEREFORE, THE ASSESSEE WAS DIRECTED TO FURNISHED THE DETAILS OF LAND TRANSACTIONS. THE ASSESSEE DULY FUR NISHED THE DETAILS WHICH HAVE BEEN INCORPORATED BY THE ASSESSING OFFICER AT PAGES 2 TO 8 OF THE ASSESSMENT ORDER. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM THAT LAND TRANSACTIONS HAVE BEEN CORRECTLY REFLECTED UNDER THE HEAD CAPITAL GA IN. IN RESPONSE, IT WAS MAINLY SUBMITTED THAT LAND SALE/PURCHASE TRANSACTIO NS CLEARLY SHOWS THAT SAME WAS MADE BY SELF AS ALSO ON BEHALF OF THE ASSOCIATE SISTER CONCERN WHERE ASSESSEE WAS PARTNER. THE ASSESSING OFFICER OBSERV ED THAT THIS CLEARLY SHOWS THAT ASSESSEE IS ACTUALLY ENGAGED IN THE BUSINESS O F SALE / PURCHASE OF PROPERTIES AND ACCORDINGLY THE PROFITS FROM SUCH PROPERTIES AM OUNTING TO RS. 12,25,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL, SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER WERE REITERATED AND FURTHER DETAILED SUBMISSIONS WERE MADE WHICH HA VE BEEN EXTRACTED BY THE LD. CIT(A) IN PARA 5, WHICH ARE AS UNDER:- 3 THE LANDS (DETAIL GIVEN ON PAGE 3 TO 8 OF THE ASSE SSMENT ORDER) HAVE BEEN PURCHASED EITHER BY SHRI VARUN DHA M (SON OF APPELLANT) OR BY M/S. ASIAN CITY DEVELOPERS, A F IRM IN WHICH THE APPELLANT IS A PARTNER HAVING 1/3 RD SHARE. THE LAND WHETHER, IT IS A CAPITAL ASSET OR STOCK IN TRADE HA S TO BE SEEN IN THE HANDS OF THE SAID FIRM AND NOT IN THE HANDS OF APPELLANT. IF THE APPELLANT HAS MADE PAYMENTS TO CE RTAIN PERSONS FOR AND ON BEHALF OF THE SAID FIRM, IN THAT CASE, THE AMOUNT IS A CAPITAL CONTRIBUTION OF THE ASSESSEE IN THE SAID FIRM, M/S. ASIAN CITY DEVELOPERS. IT IS NOT A CASE OF PURCHASE OF LAND BY THE ASSESSEE AND THEN SALE TO M/S. ASIAN CITY DEVELOPER. COPY OF CAPITAL ACCOUNT OF APPELLANT IN THE BOOKS OF M/S. ASIAN CITY DEVELOPERS AND COPY OF BALANCE S HEET ARE ENCLOSED AT P.B. PAGE: 10 TO 15 AS EVIDENCE TO PROV E THAT THE AMOUNT PAID BY THE APPELLANT HAS BEEN SHOWN AS CAPI TAL INTRODUCED BY THE ASSESSEE IN THE SAID FIRM. SIMILA RLY, THE ASSESSEE HAS MADE VARIOUS PAYMENTS TO SHRI VARUN DH AM OR TO CERTAIN PERSONS FOR & ON BEHALF OF HIS SON, DETA IL ENCLOSED AT PAGE 16 & 17 WHICH WERE FOR PURCHASE OF LAND BY SHRI VARUN DHAM. IN CASE, THE LAND HAS BEEN PURCHASED BY THE SON OF THE APPELLANT AND THE PAYMENT HAS BEEN GIVEN BY THE APPELLANT TO HIS SON AS LOAN OR GIFT, IN SUCH CASE, IT IS WRONG TO HOLD THAT THE APPELLANT IS ENGAGED IN SALE PURCH ASE OF LAND. MOREOVER, NO LAND PURCHASED BY ASIAN CITY DEV ELOPERS OR VARUN DHAM OR BY THE APPELLANT HIMSELF HAS BEEN SOLD DURING THE SAME YEAR ITSELF WHICH COULD HAVE LEAD T O THE INFERENCE THAT THE ASSESSEE IS ENGAGED IN SUCH BUSI NESS. THE LANDS SOLD BY THE APPELLANT WERE PURCHASED IN 2002 AND 2003. THUS THESE HAVE BEEN SOLD AFTER HOLDING THESE FOR M ORE THAN 2 YEARS AND HENCE, THE INVESTMENT CANNOT BE TREATED A S STOCK IN TRADE. IT IS IMPORTANT TO MENTION THAT THE ASSESSEE HAS NEVER SHOWN THESE INVESTMENTS AS STOCK IN TRADE IN HIS BO OKS NOR HAS EVER STATED THAT HIS INTENTION WAS TO TRADE LAN D. THE APPELLANT IS AN ARCHITECT HAVING SUBSTANTIAL BUSINE SS INCOME OF MORE THAN RS. ONE CRORE AND SMALL INVESTMENT OF RS. 5 TO 7 LACS OUT OF HIS SAVINGS CANNOT BE HELD AS BASIS FOR ARRIVING AT THE INFERENCE THAT THE APPELLANT IS ENGAGED IN SALE PURCHASE OF LAND. 4 5. FURTHER VARIOUS CASE LAWS WERE ALSO RELIED. THE LD. CIT(A) ON EXAMINATION OF THESE SUBMISSIONS REFERRED TO THE EX PRESSION BUSINES AS DEFINED IN SECTION 2(13) OF THE ACT. SHE OBSERVED THAT WHEN PURCHASES OF LAND WERE MADE WITH THE INTENTION TO RESALE, SUCH TRANSACTIONS WOU LD FALL IN THE NATURE OF TRADE BECAUSE THERE WAS NO OTHER OCCASION WITH THE PROFES SION OF THE ASSESSEE WHO WAS AN ARCHITECT. SHE ALSO OBSERVED THAT MERELY SHOWIN G THE LAND TRANSACTIONS UNDER THE HEAD FIXED CAPITAL ACCOUNT WILL NOT CHANGE THE CHARACTER OF THE TRANSACTIONS. SHE WAS OF THE OPINION THAT THE CASE LAW REFERRED T O BY THE ASSESSEE WAS TOTALLY DISTINGUISHABLE. IN THIS BACKGROUND THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED. 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGES 23 TO 26 WHICH IS THE COPY OF THE RETURN AND POINTED OUT THAT SHORT T ERM CAPITAL GAIN HAS ALREADY BEEN DECLARED BY THE ASSESSEE. HE ALSO REFERRED TO THE ASSESSMENT ORDER AND POINTED OUT THAT OBSERVATION OF THE ASSESSING OFFIC ER THAT THERE ARE 54 TRANSACTIONS IS NOT CORRECT. IN FACT IN SOME OF TH E TRANSACTIONS THE ASSESSEE HAS SIMPLY MADE THE PAYMENT OF PURCHASE OF AGRICULTURAL LAND ON BEHALF OF ASIAN CITY DEVELOPER WHERE THE ASSESSEE WAS A PARTNER AND THOSE TRANSACTIONS CANNOT BE COUNTED AS THE TRANSACTIONS OF THE ASSESSEE. TH E ASSESSEE HAD MADE VERY FEW PURCHASES OF LAND WHICH WERE SOLD LATER ON. THE PU RCHASES WERE MADE WITH THE INTENTION OF CAPITAL ACCRETION BY SELLING THEM LATE R ON. 7. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORTED THE ORDER OF ASSESSING OFFICER AND CIT(A). 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DO N OT FIND ANY FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL FOR THE ASSESSEE. FI RST OF ALL, THE ASSESSEE IS AN ARCHITECT AND IF HE HAS MADE SIMPLY AND INVESTMENT THEN THE ASSESSEE WOULD HAVE USED THE LAND FOR AGRICULTURAL INITIALLY AND WOULD HAVE SOLD THE SAME ONLY WHEN 5 GOOD PROFIT COULD BE EARNED. BUT IN THE CASE BEFOR E US THE ASSESSEE IS REGULARLY BUYING LAND AND SELLING THE SAME SOMETIMES AFTER SH ORT TERM AND SOMETIMES AFTER 3-4 YEARS. THIS BECOMES CLEAR FROM THE FACT THAT SO ME OF THE LANDS HAVE BEEN SOLD IMMEDIATELY ON WHICH SHORT TERM CAPITAL GAIN H AS BEEN DECLARED BY THE ASSESSEE HIMSELF. FURTHER, THE ASSESSEE IS ALSO PA RTNER IN THE FIRM KNOWN AS ASIAN CITY DEVELOPER WHICH IS ALSO ENGAGED IN THE B USINESS OF BUYING & SELLING OF LANDS, WHICH FURTHER DEPICTS THE INTENTION OF TH E ASSESSEE. READING OF THE VARIOUS INSTANCES OF SALE / PURCHASE OF THE LAND CL EARLY SHOWS THAT LANDS HAVE BEEN PURCHASED AND MAY BE FOR SOME CONSTRUCTION BY ASIAN CITY DEVELOPER AND THE SAME WERE SOLD LATER ON. BEING AN ARCHITECT, I T IS EASY FOR THE ASSESSEE TO PURCHASE LAND THEN CONSTRUCT BUILDING AND SELL THE SAME. THE NATURE OF TRANSACTIONS INDULGED BY THE ASSESSEE CLEARLY SHOWS THAT SAME HAS BEEN CARRIED OUT AS A BUSINESS AND, THEREFORE, THE SAME HAVE BEE N CORRECTLY HELD TO BE THE TRADE OF THE ASSESSEE. IN VIEW OF THIS POSITION, WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. 9. GROUND NO.3: AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS SHOWN EXPENDITURE ON PURCHASE ON MITTI, PLANTS AND LABO UR CHARGES AS UNDER:- A) PURCHASE OF MITTI 6,37,332/- B) PURCHASE OF PLANTS 79,666/- C) LABOUR CHARGES 79,666/- TOTAL 7,96,664/- 10. AGAINST THIS, THE ASSESSEE HAS SHOWN WORK IN PR OGRESS ONLY OF RS. 4,10,200/-. THE ASSESSEE COULD NOT FILE FURTHER DET AIL OF EXPENDITURE, THEREFORE, ACCORDING TO ASSESSING OFFICER THE ASSESSEE SHOULD HAVE SHOWN FURTHER WORK IN PROGRESS OF RS. 3,86,464/- AGAINST THIS EXPENDITURE AND ADDED THIS AMOUNT TO THE INCOME OF THE ASSESSEE. 6 11. ON APPEAL BEFORE LD. CIT(A) IT WAS MAINLY STATE D THAT MITTI AND PLANTS WERE PURCHASED FOR A SPECIFIC JOB DONE FOR GILCO DE VELOPER AND M/S SHIVALIK INFRASTRUCTURE. THIS JOB HAD ALREADY BEEN COMPLETED AND ASSESSEE HAD RECEIVED A PAYMENT OF RS. 7 LAKHS AND RS. 1.5 LAKHS. FOR THIS , FURTHER DETAILES WERE FIELD. LD. CIT(A) DID NOT FIND FORCE IN THESE SUBMISSIONS AND CONFIRMED THE ADDITIONS. 12. BEFORE US LD. COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE ASSESSING OFFICER. HOWEVER, HE COULD NOT EX PLAIN HOW MITTI AND PLANTS WERE RELATED TO THE JOB DONE FOR M/S GILCO DEVELOPE RS AND M/S SHIVALIK INFRASTRUCTURE. 13. ON THE OTHER HAND, LD. DR STRONGLY SUPPORTED TH E ORDER OF CIT(A). 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY LD. CIT(A) VIDE PARA 22 WHICH IS AS UNDER:- 22. I HAVE PERUSED THE INCOME & EXPENDITURE ACCOUN T AND WRITTEN SUBMISSIONS. TO ME, THE STAND NOW TAKEN APP EARS TO BE AN AFTER THOUGHT. THE ACCOUNTS HAVE BEEN AUDITED AND A SEPARATE HEAD WORK IN PROGRESS MUST HAVE BEEN RIG HTLY GIVEN AS IT DOES NOT APPEAL TO REASON AS TO WHY A N EW HEAD WAS CREDITED AND THE AMOUNT NOT CREDITED TO PROFESS IONAL FEE ACCOUNT. SINCE A PARTICULAR EXPENDITURE WAS PICKED UP BY THE ASSESSING OFFICER AND FOR COMMENTS AS TO WHERE THE BALANCE AMOUNT HAS DISAPPEARED, THE APPELLANT COINED A NEW EXPLANATION THAT BY MISTAKE, A NEW HEAD HAD BEEN CR EDITED IN ACCOUNTS. IN CASE IT WAS PROFESSIONAL FEE AND BILLE D AS PROFESSIONAL FEE, THE SAME OUGHT TO HAVE BEEN CORRE CTLY RECORDED. THIS MISTAKE ALOE CAPED THE NOTICE OF THE AUDITORS. THE EXPENDITURE OF RS. 796664/- WAS FOR A DISTINCT ACTIVITY AND ACCORDINGLY INCOME FROM THE SAME HAD TO BE SHOW N SEPARATELY. I AM THEREFORE SATISFIED THAT THE ASSES SING OFFICER HAS RIGHTLY POINTED OUT THAT RS. 386454/- HAS BEEN SUPPRESSED AND NOT SHOWN IN WORK IN PROGRESS. THE DOCUMENTS IN SUPPORT 7 OF NEW STAND WERE NEVER PRODUCED BEFORE THE ASSESSI NG OFFICER. AS A RESULT, THE ADDITION OF RS. 386454/- IS CONFIRMED DISMISSING THIS GROUND OF APPEAL. 15. WE FIND THAT THE REASONS GIVEN BY THE LD. CIT(A ) IS TOTALLY CORRECT BECAUSE ASSESSEE HAS NOT BEEN ABLE TO LINK EXPENDIT URE ON PURCHASE OF MITTI ETC. WITH THE JOB DONE FOR M/S GILCO DEVELOPERS AND SHIV ALIK INFRASTRUCTURE, THEREFORE, WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ITA NO. 419/CHD/2010 17. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADD ITION OF RS. 36,500/- AND ALLOWING THE RELIEF ON THE BALANCE AMOUNT EVEN WHEN THE AO HAS MENTIONED DETAILED REASONING I N HIS ORDER WHILE MAKING THE DISALLOWANCES ON THIS ISSUE AND THE FACTS OF THE CASE ON THIS ISSUE ARE DIFFERENT AS ME NTIONED BY THE LD. CIT(A) IN HER ORDER. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDIT ION OF RS. 7,50,000/- MADE BY THE AO EVEN WHEN THE FACTUAL STA TUS IS THAT THE PAYMENTS HAVING BEEN RECEIVED TWICE AND TH E ISSUE REGARDING REFUND OF RS. 7.5 LAC HAS ADMITTED BY THE ASSESSEE DURING THE COURSES OF ASSESSMENT PROCEEDINGS 18. AFTER HEARING BOTH THE PARTIES WE FIND THAT DUR ING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD MAD E CERTAIN PAYMENTS IN CASH AS PER THE FOLLOWING DETAILS:- S.NO DATE AMOUNT PARTICULARS 8 1 23.06.2005 2,00,000/- AMOUNT OF LAND & REGISTRATION CHARGES CH AJJU MAJRA 2 14.07.2005 80,000/- AMOUNT PAID TO VARUN DHAM FOR PURCHASE OF REGISTRATION PAPERS FOR REGISTRY 3 02.11.2005 7,50,000/- CASH RECEIVED FROM MR. SURINDER SINGH AS SECURITY FOR LAND AT V.KAHLON 4 02.11.2005 6,30,823/- AMOUNT PAID TO VARUN DHAM FOR PURCHASE O F LAND 5 21.12.2005 1,80,000/- AMOUNT PAID FOR ASIAN CITY DEVELOPERS FO R PURCHASE OF LAND 6 27.12.2005 81,000/- AMOUNT PAID FOR REGISTRATION OF SAWARA LAN D 7 31.12.2005 96,000/- AMOUNT PAID TO VARUN DHAM FOR PURCHASE OF STAMP PAPERS 19. THE ASSESSEE WAS ASKED TO JUSTIFY THIS CLAIM. I T WAS MAINLY SUBMITTED THAT PAYMENTS HAVE BEEN MADE TOWARDS PURCHASE OF STAMP P APERS FOR REGISTRATION OF SALE DEEDS. SOME CASH WAS PAID TOWARDS CAPITAL CONT RIBUTION TO ASIA DEVELOPERS. HOWEVER, ASSESSING OFFICER WAS NOT SATISFIED WITH T HE REASONING AND OBSERVED THAT PAYMENTS WERE NOT COVERED BY RULE 6DD OF INCOM E TAX RULES. THEREFORE, 20% OF THE TOTAL CASH PAYMENT AMOUNTING TO RS. 10,6 7,823/- I.E. RS. 2,13,565/- WAS DISALLOWED. BEFORE CIT(A), IT WAS MAINLY SUBMIT TED THAT PROVISIONS OF SECTION 40A(3) ARE APPLICABLE ONLY IN RELATION TO T HE EXPENDITURE CLAIMED UNDER THE HEAD INCOME FROM BUSINESS & PROFESSION AND I S NOT APPLICABLE TOWARDS CAPITAL EXPENDITURE I.E. PURCHASE OF LAND. IT WAS FURTHER SUBMITTED THAT CASH WAS MAINLY SPENT FOR PURCHASE OF STAMP PAPERS ETC. WHICH HAS TO BE DEPOSITED IN THE GOVERNMENT TREASURY AND, THEREFORE, WOULD BE CO VERED BY RULE 6DD. RELIANCE WAS ALSO PLACED ON THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. AKHA TOYO LTD. (2008) 174 TAXMAN 427 (P & H). THE LD. CIT(A) AFTER EXAMINING THE SUBMISSIONS PARTIALLY AG REED WITH THE SAME AND RESTRICTED THE ADDITION TO RS. 36,500/-. 20. BEFORE US LD. DR STRONGLY SUPPORTED THE ORDER O F ASSESSING OFFICER. 9 21. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE SUPPORTED THE IMPUGNED ORDER. 22. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT LD. CIT(A) HAS ADJUDICATED THIS ISSUE VIDE PARAS 13 & 14, WHICH IS AS UNDER:- I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE S UBMISSIONS OF THE COUNSEL. I HAVE ALREADY HELD THAT THE APPELLANT IS ENGAGED IN BUSINESS OF SALE/PURCHASE OF LAND BESIDES BEING ENG AGED IN PROFESSION. LAND IN VILLAGES IS NOT A TOOL REQUIRED BY HIM. THE SEVEN TRANSACTIONS RELATED TO APPLICATION OF PROVISIONS O F SECTION 40 A(3) HAVE TO BE GIVEN DIFFERENT TREATMENT AS DETAILED BE LOW: SL. NO. DATE AMOUNT PARTICULARS 1 23.06.2005 2,00,000/- THIS IS EXPENSE TO BE CLAIM ED AS COST OF LAND. THE AMOUNT PAID FOR STAMP PROPER IS RS. 1,42,000. THE BALANCE RS. 58,000/- WOULD ATTRACT 40A (3) 2 14.07.2005 80,000/- THIS AMOUNT IS SHOWN TO HAVE RECEIVED IN CAPITAL ACCOUNT IN M/S ASIAN CITY DEVELOPERS WHOSE APPELLANT IS A PARTNER. THIS PAYMENT WOULD NOT ATTRACT 40A(3). 3 02.11.2005 6,30,823/- -DO- 4 21.12.2005 1,80,000/- -DO- 5 27.12.2005 81,000/- THE AMOUNT PAID FOR STAMP PAP ER CAN BE READ AS RS. 52,500/- (NOT CLEAR FROM THE COPY OF REGISTERED DEED. BALANCE AMOUNT OF RS. 28,500/- WOULD ATTRACT 40A(3). 6 31.12.05 96,000/- THIS AMOUNT PAID TO SH. VARUN DHAM AND NOT DEPOSITED WITH M/S ASIAN CITY DEVELOPERS. THIS PAYMENT CLAIMED UNDER THE HEAD LAND WOULD ATTRACT 40A(3). 14. THUS, ADDITION @ 20% ON RS. 1,82,500/- (58,000+28,500+96,000) AT RS. 36,500 IS CONFIRMED. THE APPELLANT GETS A RELIEF OF RS. 2,17,065/-. THIS GROUND IS PAR TLY ALLOWED. FROM THE ABOVE IT BECOMES CLEAR THAT LD. CIT(A) HAS DELETED THE ADDITION WHEN CASH IS PAID FOR PURCHASE OF STAMP PAPERS OR FOR PU RCHASE OF LAND OR WHERE THE 10 AMOUNT HAS BEEN CONTRIBUTED IN THE CAPITAL ACCOUNT OF M/S ASIAN CITY DEVELOPER WHERE THE ASSESSEE IS PARTNER. OBVIOUSLY, THE PROVI SIONS OF SECTION 40A(3) ARE NOT APPLICABLE AND, THEREFORE, WE FIND NOTHING WRON G WITH THE ORDER OF LD. CIT(A) AND WE CONFIRM THE SAME. 23. GROUND NO.2: AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT ASSESSEE HAS RECEIVED CASH OF RS. 7,50,000/- FROM SHRI SURINDER SINGH ON ACCOUNT OF SALE OF LAND. HOWEVER, THE PERUSAL OF THE SALE DEED SHOWS THAT TH IS AMOUNT WAS TO BE RECEIVED BY CHEQUES. ON AN ENQUIRY, IT WAS SUBMITTED AS UND ER:- SMT MEENA BATRA W/O SH. VIJAY BATRA HOUSE NO. 28, SBI COLONY, NEW DELHI HAS PURCHASED AGRICULTURAL LAND, WHICH WAS OWNED BY MR. KRISHAN LAL DHAM. THE SALE DEED WA S EXECUTED ON 27.11.05 AND CHEQUE NO. 132826 DATED 25.10.2005 DRAWN ON ICICI BANK GURGAON WAS ISSUED A ND THE SAME CHEQUE GOT MISPLACED HENCE THEREBY REQUEST ED TO THE SELLERS TO PAY CASH WHICH WAS PROMPTLY PAID BY THE COMPANY THROUGH HIS MANAGER NAMELY MR. SURINDER SIN GH AGAINST THE EXECUTION OF SALE. THE PHOTOCOPY OF AGR EEMENT HAS BEEN ALREADY SUBMITTED. SUBSEQUENTLY, THE PARTY ISSUED US A CHEQUE NO. 662584 AMOUNTING RS. 7,50,000/- IN LIE OF CASH PAID AGAINST LOST CHEQUE. THE SAME CHEQUE WAS CREDITED TO OUR BANK ACCOUNT NAMELY VIJAYA BANK ON 09.12.05. WE RECEIVED RS. 15,00,000/- FROM THE PARTY THROUGH CHE QUE NO. 132826 AND THROUGH CASH OF RS. 7,50,000/- DATED 02. 11.05 AGAINST DUES OF ONLY RS. 7,50,000/-, HENCE EXCESS A MOUNT RECEIVED AGAINST SALE OF LAND AMOUNTING RS. 7,50,00 0/- WAS REFUNDED TO THE COMPANY ON 20.12.05 VIDE CHEQUE NO. 971958. 24. ACCORDING TO ASSESSING OFFICER THE ABOVE EXPLAN ATION IS TOTALLY VAGUE AND CONFUSING AND THEREFORE, HE DID NOT ACCEPT THE SAME AND MADE ADDITION OF RS. 7.5 LAKHS. 11 25. ON APPEAL, THE FOLLOWING EXPLANATION WAS GIVEN BEFORE THE CIT(A). AS REGARDS THE SALE OF LAND TO MR. MEENA BATRA IS CONCERNED THE PAYMENT OF RS. 7,50,000/- WAS TO BE RECEIVED TH ROUGH CH. / D.D.NO. 132826 DT. 25.10.2005 DRAWN ON ICICI BANK . HOWEVER, THE SAID CHEQUE WAS NOT GIVEN TO THE APPEL LANT AS IT GOT MIS-PLACED IN TRANSIT. SINCE THE APPELLANT REFU SED TO GET THE SALE DEED EXECUTED TILL THE CHEQUE/DRAFT IS GIV EN TO HIM OR THE PAYMENT IS MADE IN CASH, SO THE REPRESENTATIVE OF THE PURCHASER. MR. SURINDER SINGH GAVE THE PAYMENT OF R S. 7.5 LACS IN CASH AGAINST HE LOST CHEQUE AND ON RECEIPT OF PAYMENT IN CASH, SALE DEED WAS GOT EXECUTED. HOWEVER, ON IN FORMATION GIVEN BY SHRI SURINDER SINGH TO MRS. MEENA BATRA TH AT THE CHEQUE HAS BEEN MIS-PLACED, SHE SENT ANOTHER CHEQUE /DRAFT OF RS. 7,50,000/- WHICH HAS DULY BEEN CREDITED IN THE IN THE BANK ACCOUNT ON 09.12.2005. SINCE THE ASSESSEE HAS RECEIVED THE PAYMENT TWICE, I.E. ONCE FROM SHRI SURINDER SIN GH AND AGAIN FROM MRS. MEENA BATRA, SO THE REPRESENTATIVE OF THE PURCHASER REQUESTED FOR REFUND OF CASH PAYMENT, MAD E BY HIM ON BEHALF OF PURCHASER AT THE TIME OF SALE DEED. TH E APPELLANT REFUNDED THE SAID AMOUNT ON 20.12.2005 THROUGH ACCO UNT PAYEE CHEQUES. THE AFORESAID FACTS ARE NOT IN DISPU TE THAT THE PAYMENT HAVING BEEN RECEIVED TWICE AND THE ISSUE RE GARDING REFUND OF RS. 7.5 LACS HAS BEEN ADMITTED BY THE A.A . 26. THE LD. CIT(A) ACCEPTED THE SAME AND DELETED TH E ADDITION. 27. BEFORE US, THE LD. DR SUPPORTED THE ORDER OF A SSESSING OFFICER. 28. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE SUPPORTED THE IMPUGNED ORDER. 29. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE HAS BEEN ADJUDICATED BY THE LD. CIT(A) VIE PARA 17 & 18 WHI CH ARE AS UNDER:- 17. A CONFIRMATION CERTIFICATE FROM PURCHASER CERT IFYING THAT THE 1 ST CHEQUE WAS NEVER ENCASHED AND SECOND DRAFT WAS GIVEN IN LIEU OF CHEQUES DATED 25.10.05 HAS ALSO BE EN PLACED ON RECORD. 12 18. I HAVE GONE THROUGH THE ASSESSMENT RECORDS, WRI TTEN SUBMISSIONS AND HEARD THE LD. COUNSEL. I AM SATISFI ED THAT IN THE EVEN OF MISPLACEMENT OF CHEQUE TOWARDS SALE CONSIDERATION AND WHEN SALE DEED HAD ALREADY BEEN E XECUTED, THERE IS EVERY LIKELIHOOD OF MAKING PAYMENT THE SEC OND TIME. SINCE THE PURCHASER WAS LIVING IN NEW DELHI, HER SE NDING A FRESH CROSSED CHEQUE AS A MATTER OF ABUNDANT CAUTIO N CANNOT BE RULED OUT. I AM IN AGREEMENT WITH THE COUNSEL OF THE APPELLANT AND DIRECT DELETION OF THE ADDITION OF R S. 7,50,000/- 30. THE LD. CIT(A) HAS GIVEN PROPER REASONING FOR DELETING THE ADDITION AND NOTHING MORE IS REQUIRED TO BE ADDED TO THAT ORDER. SIMPLY BECAUSE THE PAYMENT WAS RECEIVED TWICE AND, THEREFORE, PART OF THE PAYM ENT WAS REFUNDED IN CASH WOULD NOT CALL FOR ADDITION. THEREFORE, WE FIND NOT HING WRONG WITH THE ORDER OF CIT(A) AND WE CONFIRM THE SAME. 31. IN THE RESULT APPEAL OF THE ASSESSEE AND REVENU E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29.05.20 14 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 29 TH MAY, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSTT REGISTRAR ITAT, CHANDIGARH 13