Income tax Officer, Jalgaon V. M/s. Omkar Developers, Jalgaon

ITA 589/PUN/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7705 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 09-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A V IYYAR
• Keywords: Additional evidence
• Section: 40A(3); 131

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / ITA NO. 589 /P U N/201 7 / ASSESSMENT YEAR : 20 12 - 13 THE INCOME TAX OFFICER, WARD 1(1), JALGAON . / APPELLANT VS. M/S. OMKAR DEVELOPERS, PLOT NO.11, VIJAY COLONY, JALGAON 425001 . / RESPONDENT PAN: AACFO6873D / APPELLANT BY : S HRI AJAY MODI / RESPONDENT BY : SHRI A.V. IYYAR / DATE OF HEARING : 1 9 . 0 4 .201 8 / DATE OF PRONOUNCEMENT: 24 . 0 4 .201 8 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY REVENUE IS AGAINST ORDER OF CIT (A) - 2 , NASHIK , DATED 1 5 . 1 2 .20 1 6 RELATING TO ASSESSMENT YEAR 20 12 - 13 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE REVE NUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1 . ON THE FACTS AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.39,20,000/ - MADE ON ACCOUNT OF DISALLOWANCE U/S 40A(3) BY THE ASSESSING OFFICER. ITA NO. 589 /P U N/20 1 7 M/S. OMKAR DEVELOPERS 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE LD. CIT(A) - II, NASHIK BE CANCELLED ON THE ABOVE ISSUE AND THAT OF THE A.O. BE RESTORED. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY, DELETE, AMEND ANY OF THE GROUNDS WITH PRIOR PERMISSION OF THE LD. PR. CIT, AS PE R THE CIRCUMSTANCES OF THE CASE. 4. THE APPELLANT PRAYS TO FILE ANY OF THE ADDITIONAL EVIDENCE, WITH THE PERMISSION OF LD. PR. CIT, APPROPRIATE TO THE GROUNDS TAKEN IN APPEAL. 3. THE ISSUE RAISED IN THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST DELE TION OF ADDITION MADE UNDER SECTION 40A(3) OF THE ACT AT 39,20,000/ - . 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PROMOTERS AND DEVELOPERS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND SITUATED WITHIN TERRITORIAL LIMITS OF JALGAON MUNICIPAL CORPORATION FOR TOTAL CONSIDERATION OF 99,20,000/ - ON 10.08.2011. THE ASSESSEE HAD DEVELOPED THE SAID LAND AND SOLD PLOTS ON THE SAID LAND. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT SUM OF 60 LAKHS WAS PAID VIDE TWO CHEQUES OF 30 LAKHS EACH TO TWO SELL ERS. FURTHER, 19,60,000/ - EACH WAS PAID IN CASH TO THE TWO SELLERS. THE ASSESSING OFFICER ISSUE D SUMMONS UNDER SECTION 131 OF THE ACT TO THE SAID SELLERS AND THEIR STATEMENTS WERE RECORDED ON 25.08.2014. SALVI BROTHERS CONFIRMED THEIR SIGNATURES AND W HEN QUESTIONED, WHETHER BALANCE SALE CONSIDERATION OF 19,60,000/ - WAS DEMANDED BY THEM IN CASH AND WHETHER THEY HAD ANY OBJECTION TO RECEIVE ENTIRE CONSIDERATION IN CHEQUE, THEY REPLIED THAT THEY HAD NOT INSISTED FOR PAYMENT IN CASH AND THEY ALSO HAD NO OBJECTION FOR ENTIRE PAYMENT TO RECEIVE BY CHEQUE. THE ASSESSING OFFICER THUS, DIS - REGARDED EXPLANATION OF ASSESSEE THAT SELLERS HAD INSISTED UPON PAYMENT IN CASH AND DISALLOWED THE SAID AMOUNT OF 39,20,000/ - , IN VIEW OF PROVISIONS OF SECTION 40A(3) OF THE ACT. ITA NO. 589 /P U N/20 1 7 M/S. OMKAR DEVELOPERS 3 5. BEFORE THE CIT(A), THE CONTENTION OF ASSESSEE WAS THAT THE PAYMENT OF 60 LAKHS WAS MADE BY BANK CHEQUES PRIOR TO THE DATE OF SALE DEED AND CASH PAYMENT OF 39,20,000/ - WAS MADE BEFORE THE SUB - REGISTRAR ON THE DATE OF PURCHASE DEED THUS, T HE CASH PAYMENTS WERE CERTAINLY GENUINE. THE ASSESSEE ALSO FILED LETTER DATED 12.03.2012, WHICH WAS DULY SIGNED BY SELLERS CONFIRMING THE FACT THAT THEY HAD INSISTED UPON CASH PAYMENTS SINCE THEY HAD NO FAITH IN THE PARTNERS OF ASSESSEE FIRM. THE CIT(A) ALSO CONSIDERED RECORDED STATEMENTS OF SELLERS BEFORE THE ASSESSING OFFICER AND HELD THAT THE CONTENTION OF SELLERS COULD NOT BE ACCEPTED WHEN THEY HAD CONFIRMED THAT THE IMPUGNED LETTER WAS DULY SIGNED BY THEM. THE CIT(A) ALSO NOTED THAT THE DATE ON THE SAID LETTER I.E. 12.03.2012 WAS MUCH LATER THAN THE DATE OF PURCHASE DEED I.E. 10.08.2011. THE CIT(A) REVERSING THE ORDER OF ASSESSING OFFICER DELETED THE ADDITION MADE UNDER SECTION 40A(3) OF THE ACT AT 39,20,000/ - . ANOTHER POINT WHICH WAS NOTED BY TH E CIT(A) WAS THAT THOUGH ACTUAL PAYMENT WAS 39,20,000/ - BUT THE ASSESSING OFFICER BY AN ERROR HAD MADE ADDITION OF 39,29,000/ - , WHICH WAS NOT JUSTIFIED. 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF ASSESSI NG OFFICER AND POINTED OUT THAT WHEN THERE WAS NO INSISTENCE BY THE SELLERS FOR CASH PAYMENTS, THERE WAS NO MERIT IN THE PLEA OF ASSESSEE. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HOWEVER, POINTED OUT THAT TIME AND AGAIN IT HAS BEEN STRES SED THAT IT IS CASH PAYMENT BUT IN ACTUAL FACT THE PAYMENT WAS MADE THROUGH BEARER CHEQUE S . OUR ATTENTION WAS DRAWN TO THE BANK STATEMENT WHICH IS PLACED AT PAGE 21 OF PAPER BOOK, WHEREIN ON 03.08.2011, TWO CHEQUES OF 30 LAKHS EACH ISSUED IN THE NAME OF DAGDU VITTHAL SALAWI AND BADRINARAYAN VITTHAL SALAWI WERE DEBITED AND ITA NO. 589 /P U N/20 1 7 M/S. OMKAR DEVELOPERS 4 ENCASHED. FURTHER, ON 11.08.2011, TWO BEARER CHEQUES IN THE NAME OF SAID TWO PERSONS OF 19,60,000/ - EACH WERE DEBITED TO THE BANK ACCOUNT OF ASSE SSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ALSO DREW ATTENTION TO THE DECLARATION PLACED IN MARATHI AT PAGE 22 OF PAPER BOOK, WHICH WHEN SIGNED BY DAGDU VITTHAL SALAWI ALSO BORE DATE AS OF 12.03.2012. ENGLISH TRANSLATION OF THE SAME IS PLACED AT PAGE 23 OF PAPER BOOK. HE THUS, STRESSED THAT THERE WAS NO MERIT IN MAKING ANY DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AGAINST INVOKING OF PROVISIONS OF SECTION 40A(3) OF THE ACT. UNDER THE SAID PROVISIONS OF THE ACT, IT IS PROVIDED THAT IN CASE ANY PAYMENT IS MADE OTHERWISE THAN BY CHEQUE OR CROSSED DEMAND DRAFT ABOVE 20 ,000/ - , THEN SUCH EXPENDITURE IS NOT TO BE ALLOWED IN THE HANDS OF ASSESSEE. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD MADE INVESTMENT IN PURCHASE OF AGRICULTURAL LAND, WHICH WAS ITS BUSINESS ASSET. THE TOTAL CONSIDERATION OF SAID PROPERTY WAS 99,20,000/ - . THE ASSESSEE HAD PURCHASED THE SAID PROPERTY FROM TWO CO - OWNERS I.E. DAGDU VITTHAL SALAWI AND BADRINARAYAN VITTHAL SALAWI. INITIAL PAYMENT OF 30 LAKHS EACH WAS PAID B Y CHEQUE TO THE TWO PARTIES AND THERE IS NO DISPUTE WITH REGARD TO THE SAME. THE BALANCE PAYMENT OF 19,60,000/ - EACH WAS ALLEGED TO BE PAID IN CASH BY THE ASSESSING OFFICER. THE CASE OF ASSESSEE IS TWO - FOLD THAT; FIRST THE PAYMENT HAS BEEN MADE BEFORE REGISTERING AUTHORITY ON THE DATE OF REGISTRATION OF DOCUMENT I.E. ON 11.08.2011. FURTHER, THE SAID PAYMENT HAS BEEN MADE BY WAY OF BEARER CHEQUES BEFORE REGISTERING AUTHORITY. ANOTHER ASPECT OF THE SAME IS THAT THE SAID PAYMENT WAS MADE AT THE INSTANCE OF SELLERS AS THEY WERE RELUCTANT TO GET THE DOCUMENT REGISTERED TILL THE AMOUNT WAS RECEIVED IN TOTALITY. IN SUPPORT ITA NO. 589 /P U N/20 1 7 M/S. OMKAR DEVELOPERS 5 THEREOF, THE ASSESSEE HAS FURNISHED DECLARATION SIGNED BY BOTH THE PARTIES ON WHICH ALONG WITH SIGNATURE DATE MENTIONED WAS 12.03.2012. IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE PAYMENT HAS BEEN (A) MADE BEFORE REGISTERING AUTHORITY; (B) MADE BY WAY OF BEARING CHEQUES, SINCE THE ENTRIES IN THE BANK STATEMENT REFLECTS THE NAMES OF TWO PARTIES AND ALSO BECAUSE OF C OMPELLING CIRCUMSTANCES OF THE SELLERS ASKING FOR SUCH PAYMENT, THEN WE HOLD THAT THERE IS NO MERIT IN INVOKING PROVISIONS OF SECTION 40A(3) OF THE ACT TO SUCH TRANSACTION S . ACCORDINGLY, WE HOLD SO. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUNDS O F APPEAL RAISED BY THE REVENUE. 9 . IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF APRIL , 201 8 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 24 TH APRIL , 201 8 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 2 , NASHIK ; 4. THE PR. CIT - 2 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE