REGENCY BUILDHOME LLP, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR

ITA 621/JPR/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2139 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-05-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P P MEENA ACIT
• Section: 40A(3); 234B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH JESK LH0 KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH. C. SHARMA, AM & SHRI VIJAY PA L RAO, JM VK;DJ VIHY LA- @ ITA NO. 621/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2013-14 REGENCY BUILDHOME LLP, 6-D, CORPORATE TOWER A-2, NEAR JAWAHAR CIRCLE, JLN, MARG, JAIPUR-302017. CUKE VS. THE ACIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AANFR 6135 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MUKESH SONI (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI P.P. MEENA (ACIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 30/04/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 20/06/2019 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 22.02.2018 OF THE LD. CIT(A)-2, JAIPUR FOR THE ASSE SSMENT YEAR 2013-14. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX (APP EALS)-2, JAIPUR, DATED 22.02.2018 IS PERVERSE, ARBITRARY AND BAD IN LAW. ITA NO. 621/JP/2018 REGENCY BUILDHOME LLP VS. ACIT 2 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. CIT(APPEALS)-2, JAIPUR, HAS ERRED IN UPHOLDING THE ADDITION OF RS. 10,00,000/- MADE BY THE LD. AO U/S 40A(3) OF TH E ACT. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, LD. CIT(APPEALS)-2, JAIPUR, HAS ERRED IN UPHOLDING THE LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. 4. THE APPELLANT CRAVES TO ALTER, AMEND AND MODIFY ANY GROUND OF APPEAL. 2. THE SOLITARY ISSUE ARISES IN THIS APPEAL FOR OUR CONSIDERATION AND ADJUDICATION IS WHETHER IN THE FACTS AND CIRCUMSTAN CES THE ADDITION OF RS. 10,00,000/- MADE BY THE AO U/S 40A(3) OF THE AC T AND UPHELD BY THE LD. CIT(A) IS JUSTIFY. THE ASSESSEE FIRM IS INT O BUSINESS OF REAL ESTATE. DURING THE YEAR UNDER CONSIDERATION THE ASS ESSEE VIDE SALE DEED DATED 31.12.2012 PURCHASE LAND SITUATED AT VILLAGE SHYAMPURA BUHARIYA, MOHANPURA, TEHSHIL- SANGANER, JAIPUR FROM TWO CO-OWNER NAMELY SHRI JAGDISH NARAIN SHARMA AND SHRI OM PRAKA SH JAIN FOR A TOTAL CONSIDERATION OF RS. 66 ,00,000/-. AS PER THE PAYME NT DETAILS GIVEN IN THE SALE DEED THE ASSESSEE HAS PAID RS. 5,00,000/- EACH TO THE SELLER AND THEREFORE, THE TOTAL AMOUNT OF RS. 10,00,000/- WAS PAID IN CASH BY THE ASSESSEE TOWARDS THE PURCHASE CONSIDERATION OUT OF THE TOTAL CONSIDERATION OF RS. 66,00,000/-. THE AO INVOKED TH E PROVISIONS OF SECTION 40A(3) OF THE ACT AND DISALLOWED THE SAID A MOUNT OF RS. 10,00,000/- BEING IN VIOLATION OF THE SAID PROVISIO NS AS WELL AS RULE 6DD ITA NO. 621/JP/2018 REGENCY BUILDHOME LLP VS. ACIT 3 OF THE INCOME TAX RULES. THE ASSESSEE CHALLENGED TH E ACTION OF THE BEFORE THE LD. CIT(A) AND RAISED A DETAILED ARGUMEN TS WITH THE SUPPORT OF VARIOUS DECISIONS HOWEVER, THE LD. CIT(A) WAS NO T IMPRESSED WITH THE CONTENTION OF THE ASSESSEE AND UPHELD THE DISALLOWA NCE MADE BY THE AO. 3. BEFORE US, THE LD. AR OF THE ASSESSEE HAS SUBMIT TED THAT REITERATED ITS CONTENTION AS RAISED BEFORE THE LD. CIT(A):- IT WAS TO BE APPRECIATED THAT THE AGRICULTURAL LAND BOUGHT BY TH E ASSESSEE WAS CO- OWNED BY TWO SELLERS. THE ASSESSEE WAS COMPELLED TO MAKE PAYMENT TO THE SAID SELLERS IN ORDER TO FREEZE THE DEAL. THERE FORE, THE ASSESSEE PAID THE MAJOR AMOUNT OF CONSIDERATION TO THE SELLERS TH ROUGH BANKING CHANNELS WHICH IS EVIDENT FROM THE SALE DEED. HOWEV ER, AT THE TIME WHEN BOTH THE PARTIES ACTUALLY MET TO SHAKE HANDS A ND FINALIZE THE DEAL, THE SELLERS REFUSED TO FINALISE THE DEAL FOR THE AM OUNT WHICH WAS ALREADY TRANSFERRED BY THE ASSESSEE TO THE SELLERS THROUGH BANK. THEREFORE, THE ASSESSEE GOT NO RECOURSE BUT TO MAKE THE PAYMENT OF RS. 10,00,000/- THROUGH CASH AS THE ASSESSEE DOE S NOT HAVE ANY BANK ACCOUNT IN THE AREA IN WHICH LAND IS SITUATED. FURTHER, IT IS HUMBLY SUBMITTED THAT THE SAID PAYMENT WAS MADE BY WITHDRAWING THE CASH FROM THE BANK ACCOUNT OF THE ASSESSEE, WHI CH ITA NO. 621/JP/2018 REGENCY BUILDHOME LLP VS. ACIT 4 SUBSTANTIATES THE FACT THAT THE SAID PAYMENT WAS NO T MADE THROUGH UNDISCLOSED SOURCES OF THE ASSESSEE. THE LD. AR HAS CONTENTED BEFORE YOUR GOOD SELF THAT BANK TRANSFER FOR THE SH ORT AMOUNT COULD NOT HAVE BEEN DONE ON THE SAME DAY AS THE BANK ACCO UNT OF THE ASSESSEE WAS MAINTAINED AT JAIPUR. THEREFORE, IN LI EU OF THE SAID UNAVOIDABLE/EXCEPTIONAL CIRCUMSTANCES THAT EXISTED AT THE TIME OF EXECUTION OF THE SALE DEED, THE ASSESSEE WAS COMPEL LED TO MAKE THE PAYMENT OF BALANCE AMOUNT OF RS. 10,00,000 /- IN CA SH TO THE SELLERS. THE LD. AR SUBMITTED THAT EVEN THE SELLER WAS NOT ALLOWING THE ASSESSEE TO MAKE THE BALANCE PAYMENT THROUGH CH EQUE, AS CHEQUE WOULD HAVE TAKEN SOME DAYS FOR GETTING CLEAR ED AND THE SELLER WANTED THE PAYMENT INSTANTLY. ISSUING OF CHE QUE WOULD HAVE RESULTED IN ELAPSING OF SOME TIME AND THERE WOULD H AVE BEEN A CASE WHEREIN THE SELLER WOULD HAVE CHANGED HER MIND. MOR EOVER, IT WAS HUMBLY SUBMITTED THAT AS THE DEAL FOR THE PURCHASE OF LAND WAS BEING DONE AT SHYAMPURA AND THE ASSESSEE DID NOT HA VE ANY BANK ACCOUNT IN THE SAID AREA, IT WAS NOT POSSIBLE FOR T HE ASSESSEE TO MAKE A DEMAND DRAFT OR MAKE PAYMENT THROUGH BANKING CHANNELS FOR THE REMAINING AMOUNT. IN THIS REGARD, YOUR HONO UR'S ATTENTION IS KINDLY INVITED ON CIRCULAR NO. 220, DATED 31-5-1977 IN WHICH IT HAS ITA NO. 621/JP/2018 REGENCY BUILDHOME LLP VS. ACIT 5 BEEN CLEARLY STATED THAT IF A TRANSACTION IS TAKING PLACE IN AN AREA WHERE THERE IS NO BANK ACCOUNT OF EITHER THE SELLER OR THE PURCHASER AND MOREOVER, IF THERE IS A SITUATION IN WHICH THE SELLER REFUSES TO ACCEPT THE PAYMENT BY WAY OF CROSSED CHEQUE/DRAFT A ND THE PURCHASER'S BUSINESS INTEREST WOULD SUFFER DUE TO S UCH RESISTANCE OF THE SELLER THEN THE PAYMENT MADE IN CASH IN BOTH TH E SITUATIONS WOULD BE CONSIDERED AS EXCEPTIONAL CIRCUMSTANCE(S) AS ENVISAGED UNDER RULE 6DD OF THE IT RULES. MOREOVER, THE LD AR HAS SUBMITTED THAT IT HAS BEEN HELD IN VARIOUS JUDGMENTS THAT THE PROVISIONS OF SECTION 40A(3) OF THE ACT WERE BROUGHT INTO FORCE T O CHECK AND PREVENT THOSE TRANSACTIONS IN WHICH CIRCULATION OF UNACCOUNTED MONEY IS INVOLVED. HOWEVER, TRANSACTIONS WHICH ARE GENUINE IN NATURE AND IN WHICH THE IDENTITY OF THE PAYEE IS NO T IN QUESTION WOULD NOT PER SE FALL UNDER THE AMBIT AND SCOPE OF SECTION 40A(3) OF THE ACT. FURTHER, IT SHOULD BE APPRECIATED THAT THE EXCEPTIONS AND CIRCUMSTANCES MENTIONED IN RULE 6DD OF THE IT RULES ARE NOT EXHAUSTIVE IN NATURE AND THE SAME SHOULD BE CONSIDE RED AND INTERPRETED LIBERALLY. THE LD. AR HAS RELIED UPON T HE FOLLOWING DECISIONS:- SMT. HARSHILA CHORDIA VS. ITO (2007) 298 ITR 349. ITA NO. 621/JP/2018 REGENCY BUILDHOME LLP VS. ACIT 6 ATTAR SINGH GURMUKH SINGH VS. ITO 191 ITR 667. A. DAGA ROYAL ARTS VS. ITO 94 TAXMANN.COM 401. 4. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE HAS NOT SHOWN ANY CIRCUMSTANCES WHICH FALSE IN THE EXCEPTION AS PROVIDED UNDER RULE 6DD(J) OF THE INCOME TAX RULES AND THEREFORE, THE PAYMENT MADE BY THE ASSESSEE IN VIOLATION OF TH E PROVISIONS OF SECTION 40A(3) OF THE ACT IS LIABLE TO BE DISALLOWE D. HE HAS FURTHER CONTENDED THAT WHEN THE ASSESSEE HAS MADE MAJOR PAY MENT THROUGH BANKING CHANNELS AND THE SELLERS WERE HAVIN G BANK ACCOUNTS THEN THE CASE DOES NOT FALL IN THE CATEGOR Y OF EXCEPTION OR BUSINESS EXIGENCY AS CLAIMED BY THE ASSESSEE. HE HA S RELIED UPON THE ORDERS OF THE ORDER OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS PAID THE PURCHASE CONSIDERING PARTLY THROUGH CASH AND PARTLY THROUGH BANKING CHANNELS. THE DETAIL OF PURCHASE CONSIDERATION PAID BY THE ASSESSEE IS GIVEN IN THE SALE DEED AS UNDER:- S.N. CHASH/ CHEQUE AMOUNT BANK NAME AND BRANCH RECEIVER DATE ITA NO. 621/JP/2018 REGENCY BUILDHOME LLP VS. ACIT 7 01. CASH 5,00,000 -------- JAGDISH NARAYAN SHARMA 20.09.11 02. CASH 5,00,000 ------- OMPRAKASH JAIN 20.09.11 03. RTGS 10, 50,00 0 HDFC BANK, TONK, ROAD, JAIPUR. JAGDISH NARAYAN SHARMA 20.09.11 04. RTGS 10,50,00 0 HDFC BANK, TONK, ROAD, JAIPUR. OMPRAKASH JAIN 20.09.11 05 514898 17,50,00 0 HDFC BANK, TONK, ROAD, JAIPUR. JAGDISH NARAYAN SHARMA 07.12.12 06. 514899 17,50,00 0 HDFC BANK, TONK, ROAD, JAIPUR. OMPRAKASH JAIN 07.12.12 THUS IT IS CLEAR THAT AS PER THESE DETAILS GIVEN IN THE SALE DEED, THE ASSESSEE PAID RS. 10,00,000/- (RS. 5,00,000 EACH) T O THE SELLERS ON 20.09.2011 AND ON THE SAME DATE THE AMOUNT OF RS. 1 0,50,000/- EACH WAS ALSO PAID THROUGH RTGS TO THE SELLERS THER EFORE, THE TRANSACTION OF PAYMENT IN CASH AS WELL AS THROUGH R TGS WERE MADE ON THE SAME DATE I.E. 20.09.2011. SUBSEQUENT, THE P AYMENT ON 07.12.2012 IS ALSO THROUGH CHEQUE THEREFORE, IN LIG HT OF THESE FACTS AND SPECIFICALLY WHEN THE CASH WAS PAID ON THE SAME DATE WHEN THE ANOTHER PAYMENT OF RS. 21,00,000/- WAS MADE THROUGH RTGS CLEARLY SHOWS THAT THE SELLERS WERE HAVING ALL BANKING FACI LITIES AND ITA NO. 621/JP/2018 REGENCY BUILDHOME LLP VS. ACIT 8 ACCEPTED THE PAYMENT THROUGH RTGS THEN, THE CONTENT ION OF THE ASSESSEE THAT THE CASH WAS PAID AS PER DEMAND OF TH E SELLER IN THE ABSENCE OF ANY CIRCUMSTANCES OR OTHER MATERIAL TO I NDICATE SUCH DEMAND OF PAYMENT IN CASH IS DEVOID OF ANY SUBSTANC E OR MERIT. THE ENTIRE CASE OF THE ASSESSEE IS BASED ON THE PREMISE S THAT THE ASSESSEE HAS PAID THE SAID AMOUNT OF RS. 10,00,000/ - IN CASH AT THE TIME OF HAND SHAKE AND CONFIRMING TO DEAL WITH THE SELLER HOWEVER, WHEN AT THE SAME TIME THE ASSESSEE HAS TRANSFERRED THE PAYMENT OF RS. 21,00,000/- THROUGH RTGS IN THE ACCOUNT OF THE SELLER THEN IT DOES NOT REFLECT THAT THERE WAS ANY COMPELLING CIRC UMSTANCES UNDER WHICH THE ASSESSEE HAS MADE THIS PAYMENT IN CASH. S INCE, THIS PAYMENT WAS MUCH PRIOR TO THE DATE OF SALE DEED THE REFORE, IT DOES NOT FALL IN THE CATEGORY THAT AT THE LAST MOVEMENT THE ASSESSEE HAD NO OPTION TO MAKE THE PAYMENT IN CASH. IT APPEARS T HAT THE PAYMENT WAS MADE THROUGH RTGS WHEN THE PARTIES HAVE NEGOTIA TED TO DEAL AND AGREED FOR CONSIDERATION. THEREFORE, IN THE FAC TS AND CIRCUMSTANCES OF THE CASE, IT IS APPARENT THAT NO S UCH EXCEPTIONAL CIRCUMSTANCES EXIST AT THE TIME OF THE SAID PAYMENT WHEN THE AMOUNT OF RS. 21,00,000/- WAS PAID ON THE SAME DATE THROUGH RTGS. ITA NO. 621/JP/2018 REGENCY BUILDHOME LLP VS. ACIT 9 6. AS REGARDS THE DECISIONS RELIED UPON BY THE LD. AR OF THE ASSESSEE THERE IS NO QUARREL IF THE ASSESSEE IS ABL E TO DEMONSTRATE THE CIRCUMSTANCES FOR MAKING THE PAYMENT IN CASH TH AT IT WAS BEYOND THE CONTROL OF THE ASSESSEE THEN THE CASE WO ULD FALL IN THE EXCEPTION AS PROVIDED UNDER RULE 6DD(J) OF THE IT R ULES. THEREFORE, WHEN THE ASSESSEE IS NOT ABLE TO MAKE OUT A CASE OF PRESSING CIRCUMSTANCES FOR MAKING THE PAYMENT IN CASH THEN T HE SAID DECISIONS WILL NOT HELP THE CASE OF THE ASSESSEE. A CCORDINGLY, WE DO NOT FIND ANY ERROR OR ILLEGALITY IN THE ORDER OF TH E ORDERS OF THE AUTHORITIES BELOW. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/06/2019. SD/- SD/- JESK LH0 KEKZ FOT; IKY JKO (RAMESH. C. SHARMA) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20/06/2019. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- REGENCY BUILDHOME LLP, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CIRCLE-6, JAIPUR. 3. VK;DJ VK;QDR@ CIT ITA NO. 621/JP/2018 REGENCY BUILDHOME LLP VS. ACIT 10 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 621/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR