Girish Kushalchandra Poddar, Nashik V. Income-tax Officer, Ward - 2 (2), Nashik

ITA 467/PUN/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7657 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-09-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 25-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAVIN CHAVAN
• Keywords: Business income; Set aside
• Section: 40A(3); 143(3); 191; 131; 6; 263

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.467/PUN/2019 / ASSESSMENT YEAR : 2010-11 SHRI GIRISH KUSHALCHANDRA PODDAR, 203-204, GURU ASHISH, SHARANPUR ROAD, CANADA CORNER, NASHIK. PAN NO.ABLPP2178A. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 2(2), NASHIK. . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK. REVENUE BY : SHRI PRAVIN CHAVAN. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 1, NASHIK DATED 01.0 1.2019 FOR A.Y. 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL STATED TO BE DEALING IN LAND/PLOT S AND LAND DEVELOPMENT. IN THIS CASE, ORIGINALLY ASSESSMENT WAS FRAM ED U/S 143(3) OF THE ACT VIDE ORDER DATED 15.02.2013 AND THE TOTAL INCOME WAS DETERMINED AT RS.4,21,410/-. SUBSEQUENTLY, LD.CIT VIDE ORDER PASSED U/S 263 OF THE / DATE OF HEARING : 10.10.2019 / DATE OF PRONOUNCEMENT: 30.10.2019 2 ACT HELD THE ORDER OF AO TO BE PREJUDICIAL AND ERRONEOU S TO THE INTEREST OF REVENUE AND ACCORDINGLY SET ASIDE THE ORDER AND DIRECT ED THE AO TO COMPLETE THE ASSESSMENT AFRESH AS PER THE DIRECTIONS CO NTAINED THEREIN. CONSEQUENT TO THE ORDER OF LD.CIT PASSED U/S 263 OF TH E ACT, ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 263 OF THE ACT VIDE ORDER DAT ED 28.03.2016 AND THE TOTAL INCOME WAS DETERMINED AT RS.14,09,585/- INTE R-ALIA BY DISALLOWING EXPENDITURE U/S 40A(3) OF THE ACT OF RS.9,88,175/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 01.01.2019 (IN APPEAL NO.NSK/CIT(A)-1/180/2017 -18) DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS : THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITIO N OF RS.9,88,175/- U/S 40A(3) IN RESPECT OF THE CASH PAYMENTS MADE FOR PUR CHASE OF LAND. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT HAD GENUINE REASONS FOR MAKING CASH PAYMENTS AND THEREFORE, THE DISALLOWANCE U/S 40A(3) WAS NOT WARRANTED. 3. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN CONFIRMI NG THE DISALLOWANCE U/S 40A(3) WHEN DURING THE YEAR, THE APPELLANT HAD NOT CLAIMED THE COST OF THE LAND IN RESPECT OF WHICH CASH PAYMENTS WERE MAD E AS A DEDUCTION FROM THE BUSINESS INCOME. 3.1 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT TH E LAND FOR WHICH CASH PAYMENTS WERE MADE CONTINUED WITH THE APPELLANT AS A CLOSING STOCK AT THE END OF THE YEAR AND THEREFORE, THE DISALLOWANCE U/S 40A(3) WAS NOT WARRANTED DURING THE YEAR. 3. ALL THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGETHER . 4. IT WAS NOTICED THAT DURING THE YEAR UNDER CONSIDERA TION ASSESSEE HAD PURCHASED LAND, (THE DETAILS OF WHICH ARE GIVEN IN PAGE 2 OF THE ASSESSMENT ORDER) AMOUNTING TO RS.35,04,926/- AND OUT OF WHICH RS.11,67,710/- WAS PAID IN CASH. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE PAYMENT FOR PURCHASE OF LAND MADE IN CASH AGG REGATING TO RS.11,67,710/- NOT BE DISALLOWED U/S 40A(3) OF THE ACT, TO W HICH ASSESSEE 3 INTER-ALIA SUBMITTED THAT ASSESSEE HAD PURCHASED THE LAN D FROM VARIOUS SELLERS AND THE SALE DEED WAS REGISTERED WITH THE SUB-RE GISTRAR. IT WAS SUBMITTED THAT SOME OF THE SELLERS WERE NOT READY TO CO ME TO THE SUB- REGISTRARS OFFICE AND SIGN THE DOCUMENTS UNTIL THEY RECEIV ED THE FULL PAYMENTS AND SOME OF THEM WERE ASKING FOR CASH PAYMEN T STATING THAT THEY DID NOT HAVE THE BANK ACCOUNTS. IN SUCH A SITUA TION, THE CASH WAS WITHDRAWN BY THE ASSESSEE FROM THE BANK ACCOUNT, A D AY PRIOR TO THE PROPOSED DATE OF REGISTRATION, AND THE PAYMENT WAS MADE IN CASH. IT WAS FURTHER SUBMITTED THAT THE TRANSACTION IS GENUINE AND WE LL SUPPORTED BY DOCUMENTARY EVIDENCE IN THE FORM OF BANK STATEMENTS, RE GISTERED SALE DEEDS ETC., AND THEREFORE NO DISALLOWANCE BE MADE U/S 4 0A(3) OF THE ACT. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTAB LE TO THE AO. AO NOTED THAT SUMMONS U/S 131 OF THE ACT WERE ISSUED TO ALL THE NINE PARTIES. OUT OF WHICH TWO PARTIES RESPONDED TO THE SUMMONS ISSUE D AND ATTENDED. IN THE STATEMENT, THOSE PARTIES SUBMITTED THAT THEY WA NTED CASH PAYMENT TO MEET SOME RELIGIOUS / MARRIAGE AND AGRICULTURAL PURPOS ES. AO NOTED THAT APART FROM MAKING SUBMISSION FOR ASKING FOR CASH PAYM ENT, NO SUPPORTING DOCUMENTARY PROOF WAS FURNISHED BY THEM TO S UBSTANTIATE THEIR SUBMISSIONS. AO THEREFORE CONCLUDED THAT THERE WA S NO SITUATION THAT COMPELLED THE ASSESSEE TO MAKE CASH PAYMENT TO T HE SELLERS OF THE LAND AND THAT ASSESSEE HAD VIOLATED THE PROVISIONS OF SE C.40A(3) OF THE ACT BY MAKING CASH PAYMENT EXCEEDING RS.20,000/- IN A DAY TO A SINGLE PARTY TOWARDS PURCHASE. HE THEREFORE COMPUTED THE PAYMEN TS EXCEEDING RS.20,000/- IN CASH AMOUNTING TO RS.9,88,175/- OUT OF THE TOTAL CASH PAYMENT OF RS.11,67,700/- AND DISALLOWED THE SAME. AGGRIEV ED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO UPHELD THE ORDER OF AO BY OBSERVING AS UNDER : 4 5.1 ON PERUSAL OF THE ASSESSMENT ORDER, THE SUBM I SSIONS OF THE APPELLANT AND THE FACTS OF THE CASE, IT IS SEEN THA T, THE APPELLANT HAS VIOLATED THE PROVISIONS TO SECTION 40A(3) OF THE AC T. IN THIS REGARD, THE PLEA TAKEN BY THE APPELLANT IN APPELLATE PROCEEDING S IS NOT ACCEPTABLE ON THE GROUND THAT A) DURING 263 PROCEEDINGS, THE A R OF THE APPELLANT HAS NOT EXPLAINED WITH DOCUMENTARY EVIDENCES BEFORE THE LD.PR.CIT-2, NASHIK, AND ALSO FAILED TO SUBMIT THE DETAILS AS FO LLOWS I) NAME AND ADDRESSES OF THE PERSONS, WHO DO NOT HAVE BANK ACCO UNT AND TO WHOM I NSTALLMENTS TOWARDS THE PURCHASE HAVE BEEN MADE IN CASH, AS MENTIONED IN APPELLANT'S SUBMISSION DATED 24.02.201 5. II) BREAK-UP BETWEEN THE CASH PAYMENT AND CHEQUE PAYMENT, NAME W ISE AND AMOUNT WISE. B) EVEN, IN THE ASSESSMENT PROCEEDING S, THE APPELLANT HAS FAILED TO SUBMIT THE COMPLETE DETAILS OF THE BR EAK-UP OF CASH AND CHEQUE PAYMENTS TO PARTIES/PERSONS IN ORDER T O ASCERTAIN THE CORRECT TRANSACTION. IN PARA 4 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS ELABORATELY DISCUSSED, THE REASONS FOR DISALLOW ANCE U/S 40A(3) OF THE ACT. THEREFORE, IN VIEW OF THE ABOVE STATED FACTS, THE A DDITION MADE BY THE ASSESSING OFFICER IS SUSTAINED. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL. 5. BEFORE ME, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFOR E AO AND LD.CIT(A) AND FURTHER POINTED TO THE SUBMISSIONS MADE BEFO RE AO WITH RESPECT TO THE COMPULSION FOR MAKING THE PAYMENT IN CASH . HE FURTHER SUBMITTED THAT THE CASH AMOUNTS WITHDRAWN FROM THE BAN K WERE DULY REFLECTED IN THE BANK STATEMENTS AND THE SALE DEEDS WER E ALSO REGISTERED BEFORE THE SUB-REGISTRAR. HE THEREFORE SUBMITTED THAT T HE TRANSACTIONS ARE GENUINE AND ARE BEING SUPPORTED WITH DOCUMENTARY EVIDE NCE. WITH RESPECT TO THE OBSERVATION OF THE AO THAT THE PURCHAS E DEED WAS REGISTERED ON 21.08.2009, HE SUBMITTED THAT THE OBSERVATION IS INCORR ECT AS THE DEED WAS GOT READY ON 21.08.2009 BUT WAS REGISTERED ON 24.08 .2009 AND THE COPIES OF THE DEED WERE ALSO PRESENTED BEFORE THE AO BU T THE SAME WAS DISREGARDED BY HIM. HE FURTHER SUBMITTED THAT LD.CIT(A) WH ILE DECIDING THE ISSUE HAS ONLY CONSIDERED THE FACT ABOUT NOT SUBMIT TING THE DOCUMENTARY EVIDENCES IN 263 PROCEEDINGS BUT HAS NOT CONTROVERTED THE SUBMISSIONS MADE BY ASSESSEE BEFORE LD.CIT(A). HE FURTHER SUBMITTED 5 THAT SINCE THE PURCHASE PRICE HAS BEEN PAID BEFORE THE SUB-REGISTRAR AND THE TRANSACTION IS GENUINE, THEN NO DISALLOWANCE U/S 40A(3) OF THE ACT IS CALLED FOR AND IN SUPPORT OF THIS PROPOSITION, HE RELIED ON TH E DECISION IN THE CASE OF PUNE TRIBUNAL IN THE CASE OF SHRI MADANLAL BAS TIMAL CHORDIYA VS. ACIT IN ITA NO.2944/PUN/2016 ORDER DATED 27.06.2019. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION. WITH RESPECT TO HIS CONTENTION THAT WHEN THE TRANSACTIONS ARE GENUINE AND THERE WAS REASONABLE EXPLANATION FOR MAKING PAYMENTS IN CASH, NO DIS ALLOWANCE U/S 40A(3) OF THE ACT IS CALLED FOR, HE RELIED ON THE DECISION IN TH IS CASE OF PUNE TRIBUNAL IN THE CASE OF SHRI SHOUKAT AHAMED MAKHUBHAI VS . ACIT IN ITA NO.508/PUN/2015 ORDER DATED 18.01.2018. HE ALSO PLACED ON RECORD THE COPY OF THE AFORESAID DECISION AND FURTHER SUBMITTED THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL WHILE HOLDING THAT WHEN THE TRANSACT IONS ARE GENUINE AND THERE WAS REASONABLE EXPLANATION FOR PAYMEN T OF CASH, NO DISALLOWANCE U/S 40A(3) OF THE ACT IS CALLED FOR, HAD RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF ANUPAM TELES ERVICES VS. ITO REPORTED IN (2014) 366 ITR 122 AND THE DECISION OF HONB LE APEX COURT IN THE CASE OF ATTAR SINGH GURUMUKH SINGH VS. ITO REPORTED IN 191 ITR 667 (SC). HE THEREFORE SUBMITTED THAT THE ADDITION MADE BY T HE AO AND CONFIRMED BY LD.CIT(A) BE DELETED. LD. D.R. ON THE OTHER HAN D SUPPORTED THE ORDER OF AO AND SUBMITTED THAT OUT OF NINE PARTIES TO WHOM THE SUMMONS WERE ISSUED ONLY TWO PARTIES ATTENDED AND THU S, THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN PROVED BY THE ASSESSEE. HE THUS SUPPORTED THE ORDER OF LOWER AUTHORITIES. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO THE DISALLOWANCE 6 U/S 40A(3) OF THE ACT. IT IS AN UNDISPUTED FACT THAT ASS ESSEE IS IN THE BUSINESS OF BUYING OF LAND/PLOTS, HAD PURCHASED LAND AMOUN TING TO RS.35,04,926/- AND OUT OF WHICH AN AMOUNT OF RS.10,51,700/ - WAS PAID IN CASH. IT IS THE CONTENTION OF THE ASSESSEE THAT THE BUYERS OF THE LAND HAD INSISTED FOR CASH PAYMENTS AND THEREFORE, ASSESSEE H AD MADE THE CASH PAYMENT AS THERE IS NO OTHER OPTION BUT TO MAKE THE CASH PAYMENT SO AS TO COMPLETE THE DEAL. IT IS ALSO THE SUBMISSION OF THE L D.A.R. THAT THE CASH WITHDRAWN BY THE ASSESSEE FOR MAKING THE PAYMENTS IS DU LY REFLECTED IN THE BOOKS OF ACCOUNTS AND THE REGISTRATION OF DOCUMENT WAS DONE BEFORE THE SUB-REGISTRAR. THE AFORESAID CONTENTION OF THE LD.A.R. HAS NOT BEEN CONTROVERTED BY THE REVENUE. I FURTHER FIND THAT AO H AS NOTED ABOUT TWO OUT OF NINE PARTIES APPEARING BEFORE HIM IN RESPONSE TO S UMMONS ISSUED U/S 131 OF THE ACT HAD STATED ABOUT THE NEED FOR CAS H PAYMENT TO MEET RELIGIOUS EXPENSES, MARRIAGE EXPENSES AND FOR AGRICULTURAL PURPOSE. THE CONTENTIONS OF THOSE PARTIES HAVE NOT BEEN FOUND TO BE FALSE OR UNTRUE. I FIND THAT HONBLE APEX COURT IN THE CASE OF ATTAR SINGH GURUMUKH SINGH (SUPRA) HAS HELD THAT THE GENUINE AND BONAFIDE TRANSACTION S ARE NOT TO BE DISALLOWED U/S 40A(3) OF THE ACT. I FURTHER FIND THAT HON BLE GUJARAT HIGH COURT IN THE CASE OF ANUPAM TELESERVICES (SUPRA) AFTER RE LYING ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF ATTAR SINGH GURUMUKH SINGH (SUPRA) HELD THAT WHEN THE TRANSACTIONS ARE GENUINE AN D THERE WAS REASONABLE EXPLANATION OF PAYMENT OF CASH, NO DISALLOWANCE U/S 40A(3) OF THE ACT IS CALLED FOR. I FURTHER FIND THAT IN THE CASE OF SHRI MADANLAL BASTIMAL CHORDIYA (SUPRA), THE CO-ORDINATE BENCH OF THE TR IBUNAL HAS HELD THAT WHEN THE PURCHASE PRICE HAS BEEN PAID BY THE ASS ESSEE BEFORE THE SUB-REGISTRAR AND THE TRANSACTION IS GENUINE, NO DISALLOWAN CE U/S 40A(3) OF THE ACT IS CALLED FOR. BEFORE ME, NO MATERIAL HAS BEEN PLA CED BY 7 REVENUE TO DEMONSTRATE THAT THE TRANSACTION OF LAND PU RCHASE MADE BY THE ASSESSEE WAS NOT A GENUINE TRANSACTION. IN SUCH A SITUATION, CONSIDERING THE TOTALITY OF THE AFORESAID FACTS AND RELYING ON THE AFORESAID DECISIONS, I AM OF THE VIEW THAT NO DISALLOWANCE U/S 40A(3 ) OF THE ACT IS CALLED FOR IN THE PRESENT CASE. I THEREFORE DIRECT THE DE LETION OF ADDITION MADE BY THE AO. THUS, THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED ON 30 TH DAY OF OCTOBER, 2019. SD/- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 30 TH OCTOBER, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR. CIT-2, NASHIK. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.