VVR Housing Private Limited, Hyderabad V. DCIT, Circle-3(3), Hyderabad

ITA 486/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74660 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Cost of acquisition; Reasonable cause; Corroborative evidences
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 468/HYD/2013- A.Y. 2007-08 ITA NO. 469/HYD/2013- A.Y. 2008-09 ITA NO. 470/HYD/2013- A.Y. 2009-10 THE DEPUTY CIT CIRCLE-3(3) HYDERABAD VS. M/S. V.V.R. HOUSING PVT. LTD., HYDERABAD PAN: AACCV1648N [APPELLANT] [RESPONDENT] ITA NO. 485/HYD/2013- A.Y. 2007-08 M/S. V.V.R. HOUSING PVT. LTD., HYDERABAD PAN: AACCV1648N VS. THE ASST. CIT CIRCLE-3(3) HYDERABAD [APPELLANT] [RESPONDENT] ITA NO. 486/HYD/2013- A.Y. 2008-09 M/S. V.V.R. HOUSING PVT. LTD., HYDERABAD PAN: AACCV1648N VS. THE DEPUTY CIT CIRCLE-3(3) HYDERABAD [APPELLANT] [RESPONDENT] REVENUE BY: SRI D. SUDHAKAR RAO ASSESSEE BY: SRI S. RAMA RAO DATE OF HEARING: 05.03.2014 DATE OF PRONOUNCEMENT: 05.03.2014 ORDER PER CHANDRA POOJARI, AM : THE ABOVE APPEALS ARE BOTH BY THE REVENUE AND THE ASSESSEE DIRECTED AGAINST DIFFERENT ORDERS OF THE C IT(A)-IV, HYDERABAD FOR ASSESSMENT YEARS 2007-08 TO 2009-10. SINCE ALL THE APPEALS BELONG TO ONE ASSESSEE, ALL THESE A PPEALS ARE ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 2 CLUBBED AND HEARD TOGETHER AND ARE BEING DISPOSED O F BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE WILL TAKE UP REVENUE APPEALS IN ITA NOS. 468 TO 470/HYD/2013 FOR A.YS. 2007-08 TO 2009-10, RESPECT IVELY. SINCE THE REVENUE RAISED COMMON GROUNDS IN ALL THES E APPEALS, THE EFFECTIVE GROUNDS AS RAISED IN ITA NO. 468/HYD/2013 ARE AS UNDER: (II) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE M ETHOD OF VALUATION OF CLOSING STOCK IS LOGICAL AND IN ACCORD ANCE WITH ACCOUNTING PRACTICES. (III) THE LEARNED CIT(A) HAS FAILED TO APPRECIATE T HAT THE VALUATION OF CLOSING STOCK WAS ADOPTED TAKING INTO CONSIDERATION THE METHOD EMPLOYED BY THE ASSESSEE A ND PURCHASES, SALES AND PROFITS ADMITTED BY THE ASSESS EE ITSELF. 3. BRIEF FACTS OF THE CASE, AS IN ASSESSMENT ORDER FOR A.Y. 2007-08, ARE THAT THE ASSESSEE HAD SHOWN CLOSING ST OCK AS ON 31.3.2007 AT RS. 12,25,62,145. DURING THE YEAR THE ASSESSEE PURCHASED LAND AND CONVERTED SOME LAND INTO PLOTTED AREA AND SOLD SOME OF THE PLOTS. THEREFORE, THE LAND WH ICH HAS BEEN CONVERTED INTO PLOTS AND SOLD DURING THE YEAR HAVE BEEN CONSIDERED FOR VALUATION. THE COST OF UN PLOTTED L AND HAS BEEN TAKEN AT PURCHASE COST BY THE AO BY DEDUCTING 5.21% FROM THE SALE VALUE AS THE ASSESSEE DECLARED NET PR OFIT RATE AT 5.21%. AGAINST THIS THE ASSESSEE WENT IN APPEAL BE FORE THE CIT(A). ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 3 4. THE CIT(A) OBSERVED THAT THE AO CONSIDERED QUANTITATIVE DETAILS OF CLOSING STOCK OF LAND WRONG LY AND HE COMPUTED SALE PRICE OF THE CLOSING STOCK, THEREAFTE R DEDUCTED NET PROFIT FROM IT TO ARRIVE AT CLOSING STOCK FIGUR E WHICH IS NOT PROPER. ACCORDINGLY, HE OBSERVED THAT ADMINISTRATI VE AND SELLING EXPENSED INCURRED BY THE ASSESSEE CANNOT FO RM PART OF THE CLOSING STOCK. FURTHER, HE OBSERVED THAT THE C LOSING STOCK IS TO BE ARRIVED AS PER ACCOUNTING PRACTICES BY APP LYING THE GP RATE FOR EACH OF THE PROJECT AND ACCORDINGLY, HE UPHELD THE VALUATION ADOPTED BY THE ASSESSEE. AGAINST THIS TH E REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE, THE AO CONSIDERE D THE SALES VALUE LESS 5.21% PROFIT SO AS TO DETERMINE THE CLOS ING STOCK FIGURE. AS THE ASSESSEE DID NOT FURNISH THE DETAIL S IN SUPPORT OF THE CLAIM OF THE CLOSING STOCK, IN OUR OPINION, THE CLOSING STOCK IS TO BE VALUED AT COST OR MARKET PRICE, WHIC HEVER IS LOWER, AND THE METHOD IS TO BE FOLLOWED CONSISTENTL Y FROM YEAR TO YEAR. ACCORDINGLY, WE REMIT THE ISSUE BACK TO THE FILE OF THE AO WITH A DIRECTION TO THE ASSESSEE TO FURNI SH FULL DETAILS OF THE METHOD OF VALUATION OF THE CLOSING S TOCK. THEREAFTER, THE AO SHALL DETERMINE THE VALUE OF CLO SING STOCK, IF NECESSARY, HE MAY MAKE NECESSARY ADDITION ON THI S COUNT. ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 4 WE ALSO FIND THAT THIS WAS DECIDED BY THE TRIBUNAL IN ITA NO. 1681/HYD/2010 AND ITA NO. 222/HYD/2011 ORDER DATED 8.11.2013 ON ABOVE LINES. ACCORDINGLY, ITA NO. 468/HYD/2013 IS ALLOWED FOR STATISTICAL PURPOSES. AS THE ISSUE RAISED IN OTHER APPEALS OF THE REVENUE IS SIM ILAR THESE ISSUES ARE REMITTED BACK TO THE AO WITH SIMILAR DIR ECTION. ITA NOS. 469 & 470/HYD/2013 ARE ALSO ALLOWED FOR STATISTI CAL PURPOSES. 6. NOW COMING TO ASSESSEE'S APPEALS IN ITA NO. 485/HYD/ 2013 AND 486/HYD/2013. THE FIRST GROUND RELATES TO DISALLOWANCE U/S. 40A(3) OF RS. 9,68,400. ONE OF TH E LOOSE SHEETS FOUND DURING THE SURVEY, AND IMPOUNDED AS PA GE 1 OF ANNEXURE A/VVR/1 SHOWED THE FOLLOWING NOTINGS: NAME OF THE PERSON TO WHOM THE PAYMENTS MADE AMOUNT (RS.) PAID IN FY 2006-07 PA GOUD 12,92,000 KURNOOL-I 25,50,000 KURNOOL-II 10,00,000 TOTAL 48,42,000 THE PAYMENTS HAD BEEN MADE IN LAKHS OF RUPEES ON EA CH DAY TO THE PERSON BUT CASH PAYMENT @ RS. 20,000 PER PAY MENT HAS BEEN RECORDED A NUMBER OF TIMES ON THE SAME DAY IN A BID TO AVOID SEC. 40A(3). THE AO DISALLOWED 20% OF THE TOTAL PAYMENT OF RS. 48,42,000 AMOUNTING TO RS. 9,68,400. ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 5 7. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT THE PAYMENT TO SRI P. ASHOK GOUD HAS BEEN MADE FOR PURC HASE OF 3 ACRES OF AGRICULTURAL LAND AT PINJARLA AND IMMULN ARVA VILLAGES, THAT SRI GOUD WAS ENGAGED IN CARRYING ON AGRICULTURAL OPERATIONS AT THESE PLACES AND THAT NO BANKING FACI LITIES WERE AVAILABLE AT THE VILLAGES. THE AR SUBMITTED THAT T HE PAYMENTS WERE, THEREFORE, COVERED BY RULE 6DD(G) OF THE ACT. 8. THE CIT(A) OBSERVED THAT THE EXCEPTION PROVIDED U/R 6DD(G) OF THE IT RULES APPLIES TO PURCHASE OF AGRIC ULTURAL PRODUCE AND NOT FOR PURCHASE OF LAND. THE FACT THA T THE SRI P. ASHOK GOUD WAS ENGAGED IN FARMING ACTIVITIES IS, TH EREFORE, OF NO RELEVANCE TO RULE 6DD(G) OF THE ACT. THOUGH THE AR HAS CLAIMED THAT PINJARLA VILLAGE DID NOT ENJOY ANY BAN KING FACILITIES, NO EVIDENCE HAS BEEN FILED EVEN DURING THE APPELLATE PROCEEDINGS THAT THE PAYMENT WAS INDEED M ADE AT PINJARLA AND THAT THERE WERE NO BANKING FACILITIES THERE. UNDER THE CIRCUMSTANCES, THE DISALLOWANCE U/S. 40A(3 ) FOR THE PAYMENT TO SRI PA GOUD WAS UPHELD BY THE CIT(A). T HE AR NOT FURNISHED ANY EXPLANATION WITH REGARD TO THE PA YMENT OF RS. 35,50,000 FOR KURNOOL-I AND KURNOOL-2. THEREFO RE, THE CIT(A) WAS OF THE OPINION THAT THE ASSESSEE HAS NO EXPLANATION FOR THESE PAYMENTS IN CASH. THE DISALL OWANCE OF ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 6 RS. 9,68,400 IS UPHELD BY THE CIT(A), ACCORDINGLY. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 9. BEFORE US, THE LEARNED AR SUBMITTED THAT THE ABOVE PAYMENTS WERE MADE TO AGRICULTURISTS IN THE PLACES WHERE THERE ARE NO BANKING FACILITIES. BEING SO, THERE I S REASONABLE CAUSE FOR SUCH PAYMENT WHICH FALLS UNDER THE EXCEPT ION PROVIDED UNDER RULE 6DD OF INCOME-TAX RULES, 1962 A ND HE PRAYED TO DELETE THE ADDITION. HE FURTHER SUBMITTE D THAT THE SELLERS WERE NOT ACCEPTING PAYMENTS BY CHEQUE AND M OST OF THE PAYMENTS WERE MADE BEFORE THE REGISTRATION OF S ALE DEED AND ON SUNDAYS AND HOLIDAYS. THE PAYMENTS ARE COVE RED BY RULE 6DD(G) OF THE IT RULES). ACCORDING TO HIM, TH E PAYMENTS ARE COVERED BY THE EXCEPTION PROVIDED IN THE ABOVE RULE AND THE ADDITION HAS TO BE DELETED. 10. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH E PAYMENTS ARE MADE TO THE PERSONS AT THE PLACES WHER E THERE ARE BANKING FACILITIES AND THERE IS NO RECORD TO SH OW THAT THESE PLACES ARE NOT COVERED BY BANKING FACILITIES. THE PROVISIONS OF SECTION 40A(3) ARE APPLICABLE AND THE DISALLOWANCE HAS TO BE SUSTAINED. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN CONTENTION OF THE ASS ESSEE'S ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 7 COUNSEL IS THAT THE PAYMENTS ARE MADE IN THE VILLAG ES OF PENJARLA, OOTAPALLI, IMMULANARVA, NAGARAM, KONGANNA GUDA, SANGAM, SIDDAPUR THANDA, IRUWADA, AVASOMAVARAM, ETC . THE PAYMENTS ARE MADE TO THE AGRICULTURISTS AND THEY HA VE NO BANK ACCOUNTS. THE AR RELIED ON THE DECISION OF CO -ORDINATE BENCH IN THE CASE OF DCIT VS. M/S. ABHINANDANA HOUSI NG PVT. LTD., IN ITA NO. 695/HYD/2013 AND ITA NO. 612/HYD/2012 ORDER DATED 12.02.2014 AND IN THE CASE OF SAHITYA H OUSING PVT. LTD. VS. DCIT, IN ITA NO. 246/HYD/2011 ORDER DA TED 24.1.2014. 12. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT FO R THESE PERSONS THE ASSESSEE ALSO PAID BY CHEQUES AND HE DOUBTED THAT HOW IT IS POSSIBLE TO MAKE CERTAIN PAY MENTS BY CHEQUES AND CERTAIN PAYMENTS BY CASH WHEN THE LANDL ORDS DO NOT HAVE THEIR BANK ACCOUNTS AND THE AR IS MAKING CONTRADICTORY STATEMENTS. 13. HOWEVER, WE FIND THAT SIMILAR ISSUE CAME FOR CONSIDERATION OF THIS TRIBUNAL IN ASSESSEES OWN CA SE FOR A.Y. 2006-07 IN ITA NO. 1681/HYD/2010 & ITA NO. 222/HYD/2011 . THE TRIBUNAL VIDE ORDER DATED 8.11.2013 HELD AS FOL LOWS: '11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE CIT(A) OBSERVED THAT OUT OF THE PAY MENT OF RS. 7,67,19,715 AN AMOUNT OF RS. 43,35,000 WAS PAID BY CHEQUE AND AN AMOUNT OF RS. 63,00,000 WAS NOT PAID AND OUT STANDING. BEING SO, THE CIT(A) CONSIDERED THE BALANCE AMOUNT OF RS. 6,60,84,715 FOR DISALLOWANCE U/S. 40A(3) AND DISALL OWED RS. ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 8 1,32,16,943. THE CONTENTION OF THE ASSESSEE'S COUN SEL BEFORE US IS THAT THESE PAYMENTS WERE MADE TO AGRICULTURISTS AND THERE ARE NO BANKING FACILITIES ARE AVAILABLE AT THE PLAC E WHERE THE PAYMENTS WERE MADE. HOWEVER, IT IS OBSERVED BY THE CIT(A) THAT THE ASSESSEE BEING DEALER IN LAND AND THE PLAC ES WHERE THE PAYMENTS ARE MADE AND RECEIVED ARE HAVING BANKING F ACILITIES. BEING SO, IT IS INCUMBENT UPON THE ASSESSEE TO MAKE PAYMENT BY CROSSED CHEQUES OR DDS. THE PLEA OF THE ASSESSEE B EFORE US IS THAT THE PAYMENTS WERE MADE TO THE AGRICULTURISTS I N CASH AS BANKING FACILITIES WERE NOT AVAILABLE TO THEM. THE RE IS NO MATERIAL ON RECORD TO SHOW THAT NO BANKING FACILITI ES WERE NOT AVAILABLE AT THE PLACES WHERE THE PAYMENT WERE MADE . 12. BEFORE US THE ASSESSEE STATED THAT THE IMPUGNED PAYMENTS WERE MADE TO JALADI KIRAN KUMAR, HYDERABAD (RS. 12, 02,755 AND RS. 19,04,565); V. VASUDEVA RAO, HYDERABAD (RS. 44,10,455); VELMATTI JAI PAL REDDY, PENJARLA (RS. 2 4,03,805); Y. RAM REDDY & ORS., INMULNARVA (RS. 18,63,710); AG EER VENKAT RAMANA, HYDERABAD (RS. 2,01,18,625); P. ASHO K GOUD, TONDUPALLY (RS. 33,55,135); SURESH KUMAR AGARWAL, M ALLAPUR (RS. 1,56,74,085) AND M. VIJAYA LAKSHMI AND V. PRAB HA, JUKAL (RS. 30,26,580). 13. FURTHER, IT IS SUBMITTED THAT THESE PAYMENTS WE RE MADE IN EXCESS OF THE SALES CONSIDERATION SHOWN IN THE DOCU MENTS REGISTERED AND IT WAS PAID BECAUSE OF INSISTENCE OF THE RECIPIENTS AND MOSTLY ON BANK HOLIDAYS. THIS CLAIM OF THE ASSESSEE AS BEING TOTALLY UNSUBSTANTIATED COMPRISIN G BALD STATEMENT ADVANCED ONLY TO MEET THE EXIGENCIES WITH A VIEW TO ALIGN ITS INFERENCE OF THE PROVISIONS OF THE STATUT E. MOST OF THE PARTIES MENTIONED HEREINABOVE WERE IN HYDERABAD. T HE PROPERTIES SOLD BY THEM MIGHT BE SITUATED OUTSIDE H YDERABAD. BEING SO, IT CANNOT BE CONCLUDED THAT THE RECIPIENT S WERE HAVING NO BANK ACCOUNTS OR ACCESS TO THE BANKING FA CILITIES. AS SUCH IT CANNOT BE SAID THAT THE ASSESSEE'S CASE IS COVERED UNDER THE EXCEPTION PROVIDED IN RULE 6DD OF THE INCOME-TA X RULES, 1962. EVEN CLAUSE (J) OF THIS RULE CANNOT BE APPLI ED WHICH IS PROVIDING AN EXCEPTION DUE TO NON ACCESS TO THE BAN KING FACILITIES CAUSING HARDSHIP TO THE PAYEE OR TO THE BUSINESS EXIGENCIES. BEING SO, THE ASSESSEE HAS FAILED TO E STABLISH THE CIRCUMSTANCES NECESSITATING THE PAYMENT IN CASH. M ORE SO, THE OMISSION OF THE ERSTWHILE CLAUSE (J) OF RULE 6DD WH ICH EXCLUDES THE GROUND OF HARDSHIP TO THE PAYEE FROM MITIGATING CIRCUMSTANCES AND THE ASSESSEE'S CASE COULD SUCCEED ONLY ON IT ESTABLISHING THE SAME TO FALL WITHIN THE SPECIFIC C LAUSE OF RULE 6DD. IN THE PRESENT CASE, THE ASSESSEE HAS FAILED TO ESTABLISH THE EXCEPTION PROVIDED IN RULE 6DD. BEING SO, WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SA ME IS CONFIRMED. ACCORDINGLY, THIS GROUND IS DISMISSED.' ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 9 14. SINCE THE ISSUE IN THE PRESENT ASSESSMENT YEAR IS S IMILAR AS THAT OF THE CONSIDERED IN THE EARLIER OCCASION I N ASSESSEE'S OWN CASE AS ABOVE, WE ARE INCLINED TO TAKE A CONSIS TENT VIEW THAT THE ASSESSEE FAILED TO ESTABLISH THE EXCEPTION TO MAKE PAYMENT OTHERWISE THAN CROSSED DD OR CHEQUE AS PROV IDED IN RULE 6DD. BEING SO, WE ARE INCLINED TO CONFIRM THE CIT(A) ON THIS ISSUE. THIS GROUND OF THE ASSESSEE IS DISMISS ED IN ITA NO. 485/HYD/2013. 15. IN A.Y. 2008-09, THE FACTS RELATING TO DISALLOWANC E U/S. 40A(3) ARE THAT THE DISALLOWANCE OF RS. 4,76,75,000 U/S. 40A(3) WAS MADE ON THE BASIS OF THE FOLLOWING ENTRI ES OF CASH PAYMENTS FOUND IN PAGE 1 OF ANNEXURE A/VVR/1 IMPOUNDE D DURING THE SURVEY: NAME OF THE PERSON AMOUNT (RS.) K.S. RAO 24,50,000 PA GOUD 1,16,28,000 KURNOOL-I 76,50,000 KURNOOL-II 90,00,000 KURNOOL-III 9,00,000 ALNP RAO-I 1,20,000 KS RAO-II 21,00,000 BALBSNM 45,000 P. SARADA 3,00,000 PAG-II 20,00,000 K. SARADA 4,50,000 V. VIJAY KUMAR 4,50,000 A. VIJAY KUMAR 2,25,000 V. VIJAY KUMAR 4,50,000 BSNM 3,00,000 RAO 22,000 TOTAL 4,76,75,000 ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 10 THE PAYMENTS HAD BEEN MADE IN LAKHS OF RUPEES ON EA CH DAY TO THE PERSON BUT CASH PAYMENT @ RS. 20,000 PER PAY MENT HAS BEEN RECORDED A NUMBER OF TIMES ON THE SAME DAY IN A BID TO AVOID SEC. 40A(3). THE AO DISALLOWED THE EN TIRE SUM U/S. 40A(3) OF THE ACT. THE CIT(A) CONFIRMED THE DISALLOWANCE. 16. THE CIT(A) OBSERVED THAT THE DISALLOWANCE OF RS. 35,00,000/- U/S. 40A(3) FOR PAYMENTS TO MS. G. AHALY AMMA, W/O SRI G. RAGHAVA REDDY FOR LAND AT GHT, HYDERABAD ON THE BASIS OF ENTRIES IN PAGE 6 OF ANNEXURE A/VVR/2. THO UGH THE ASSESSEE CLAIMED THAT THE PAYMENTS WERE COVERED BY RULE 6DD OF THE INCOME TAX RULES, THE ASSESSING OFFICER DISALLOWED THE PAYMENT IN VIEW OF THE FAILURE OF TH E ASSESSEE TO SUBMIT ANY EVIDENCE IN SUPPORT OF ITS CLAIM. 17. THE NEXT ISSUE RELATES TO A DISALLOWANCE OF RS. 10,00,000/- U/S. 40A(3) FOR PAYMENT TO SRI SALLA ASH OK YADAV AND SRI J. SANTOSH GOUD, SANGAM VILLAGE FOR PURCHAS E OF LAND ON THE BASIS OF PAGE 7 OF ANNEXURE A/VVR/2. THE AR CLAIMED DURING THE APPELLATE PROCEEDINGS THAT THE PAYMENT H AD BEEN MADE AT SANGAM VILLAGE WHICH DID NOT HAVE ANY BANKI NG FACILITY. HOWEVER, NO EVIDENCE WAS FILED IN SUPPOR T OF THE CLAIM. ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 11 18. THE NEXT ISSUE RELATES TO DISALLOWANCE U/S. 40A(3) O F RS. 50,99,250 FOR PAYMENT CLAIM TO HAVE BEEN MADE TO FA RMERS IN VILLAGES AND CLAIMED TO BE COVERED BY THE EXCEPTION S IN RULE 6DD. HOWEVER, SINCE THE ASSESSEE DID NOT FILE ANY D ETAILS IN SUPPORT OF ITS CLAIM THE AO DISALLOWED THE PAYMENTS U/S. 40A(3). 19. IN THE COURSE OF THE, APPELLATE PROCEEDINGS THE AR SUBMITTED THAT THE PAYMENTS HAD BEEN MADE FOR PURCH ASE OF THE LAND FROM AGRICULTURISTS, THAT THE VILLAGERS WE RE NOT COVERED BY BANKING FACILITIES AND THAT THE PAYMENTS TOOK PLACE AFTER THE BANKING HOURS. THE AR, THEREFORE, S OUGHT SHELTER OF RULE 6DD. 20. THE CIT(A) OBSERVED THAT ALL THE ABOVE DISALLOWANCE U/S 40A(3) IS UNDER SIMILAR FACTS. THE EXCEPTION PROVI DED U/R 6DD(G) OF THE INCOME TAX RULES APPLIES TO PURCHASE OF AGRICULTURAL PRODUCE AND NOT FOR PURCHASE OF LAND. THE FACT THAT THE RECIPIENTS WERE ENGAGED IN FARMING ACTIVIT IES IS, THEREFORE, OF NO RELEVANCE TO RULE 6DD(G). THOUGH T HE AR HAS CLAIMED THAT VILLAGES WHERE THE PAYMENTS WERE MADE DID NOT ENJOY ANY BANKING FACILITIES, NO EVIDENCE HAS BEEN FILED, EVEN DURING THE APPELLATE PROCEEDINGS THAT THE PAYMENT W AS INDEED MADE AT SUCH VILLAGES AND THAT THERE WERE NO BANKING ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 12 FACILITIES THERE. UNDER THE CIRCUMSTANCES, THE DISA LLOWANCES OF RS. 4,76,75,000/-, RS. 35,00,000/-, RS. 10,00,000/- AND RS. 50,99,250/- ARE UPHELD BY THE CIT(A). AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 21. THE ARGUMENT OF THE ASSESSEE'S COUNSEL FOR THIS ASSESSMENT YEAR ALSO IS SIMILAR AS ARGUED IN EARLIE R PARAS ON SIMILAR ISSUE. ACCORDING TO THE AR THE AO HAS NOT BROUGHT ANYTHING ON RECORD SO SHOW THAT BANK FACILITY IS AV AILABLE IN THOSE VILLAGES AND THE ASSESSEE CANNOT PROVE THE NE GATIVE. THE ARGUMENT OF THE DR IS ALSO SIMILAR AS EARLIER. 22. AFTER HEARING BOTH THE PARTIES, WE FIND THE FACTS A ND CIRCUMSTANCES OF THE A.Y. ARE SIMILAR TO THE A.Y. 2 007-08 IN ITA NO. 485/HYD/2013. APPLYING THE SAME RATIO, THIS GROUND IS ALSO DISMISSED. 23. THE NEXT GROUND IN ITA NO. 485/HYD/2013 IS WITH REGARD TO DISALLOWANCE OF RS. 10 LAKHS FROM THE DEV ELOPMENT EXPENDITURE OF RS. 5,49,47,637 DUE TO THE FAILURE O F THE ASSESSEE TO PRODUCE THE VOUCHERS AND SUPPORTING EVI DENCE. THE AR HAS FAILED TO ESTABLISH THE CLAIM OF THE ASS ESSEE BY PLACING NECESSARY EVIDENCE AND THERE IS EVERY CHANC E OF INFLATING EXPENDITURE BY WAY OF SELF-MADE VOUCHERS. IN VIEW OF THE FACT THAT THE ASSESSEE HAD FAILED TO PRODUCE ALL THE ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 13 VOUCHERS AND SUPPORTING EVIDENCE FOR THE EXPENSES I NCURRED BY IT, THE DISALLOWANCE OF RS. 10,00,000 WAS CONFIR MED BY THE CIT(A). 24. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATERIAL ON RECORD. BEFORE US ALSO THE ASSESSEE IS NOT ABLE TO PLACE ANY EVIDENCE IN SUPPORT OF ITS CLAIM. SINCE THE ASSESS EE FAILED TO PRODUCE THE REQUISITE EVIDENCE IN SUPPORT OF ITS CL AIM, THE DISALLOWANCE OF RS. 10 LAKHS IS REASONABLE AND THE SAME IS CONFIRMED. 25. THE NEXT GROUND IN ITA NO. 486/HYD/2013 IS WITH REGARD TO DISALLOWANCE OF RS. 25 LAKHS MADE ON ESTI MATE BASIS. THE AO DISALLOWED RS. 25 LAKHS ON THE GROUN D THAT THE VOUCHERS ARE SELF MADE AND PAYMENTS ARE NOT VERIFIA BLE. THE CIT(A) CONFIRMED THE DISALLOWANCE. BEFORE US ALSO THE ASSESSEE IS NOT ABLE TO PLACE ANY EVIDENCE IN SUPPO RT OF ITS CLAIM. SINCE THE ASSESSEE FAILED TO PRODUCE THE RE QUISITE EVIDENCE IN SUPPORT OF ITS CLAIM, THE DISALLOWANCE OF RS. 25 LAKHS IS REASONABLE, AS THERE IS EVERY CHANCE OF IN FLATING EXPENDITURE BY WAY OF SELF-MADE VOUCHERS, AND THE S AME IS CONFIRMED. ITA NO. 468/HYD/2013 & ORS. M/S. V.V.R. HOUSING PVT. LTD. =========================== 14 26. IN THE RESULT, ALL THE APPEALS OF REVENUE ARE ALLOW ED FOR STATISTICAL PURPOSES AND THE APPEALS OF THE ASSESSE E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH MARCH, 2014. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 5 TH MARCH, 2014 TPRAO COPY FORWARDED TO: 1. THE DEPUTY CIT, CIRCLE-3(3), 7 TH FLOOR, 'B' BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 2. THE ASST. CIT, CIRCLE-3(3), HYDERABAD 3. M/S. V.V.R. HOUSING PVT. LTD., C/O. SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYA'S ELEGANCE, ROAD NO. 9, HIMAYA TNAGAR, HYDERABAD-29. 4. THE CIT(A)-IV, HYDERABAD. 5. THE CIT-III, HYDERABAD. 6. THE DR BENCH 'B', ITAT, HYDERABAD