M/s Silver Oaks Township Ltd., Bathinda V. DCIT, Ludhiana

ITA 749/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8331 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 25-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO.749/CHD/2014 (ASSESSMENT YEAR : 2006-07) ITA NO.750/CHD/2014 (ASSESSMENT YEAR : 2007-08) ITA NO.464/CHD/2014 (ASSESSMENT YEAR : 2008-09) AND ITA NO.751 /CHD/2014 (ASSESSMENT YEAR : 2009-10) M/S SILVER OAKS TOWNSHIP LTD., VS. THE D.C.I.T., # 34008, ST.NO.6/1, CENTRAL CIRCLE-III, POWER HOUSE ROAD, LUDHIANA. BATHINDA. PAN: AAJCS3445B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 16.02.2016 DATE OF PRONOUNCEMENT : 30.03.2016 O R D E R PER RANO JAIN, A.M . : THIS BUNCH OF FOUR APPEALS FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS O F THE 2 LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-I, LUD HIANA DATED 23.6.2014, 23.6.2014, 27.3.2014 AND 23.6.2014 , RELATING TO ASSESSMENT YEARS 2006-07, 2007-08, 2008 -09 AND 2009-10 RESPECTIVELY. 2. IN ALL THE APPEALS, THE ISSUE IS COMMON AND, THEREFORE, THESE APPEALS WERE HEARD TOGETHER AND AR E BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. THE ADDITIONS CHALLENGED IN ALL THE Y EARS ARE RS.12,10,000/-, RS.15,85,300/-, 2,53,66,000/- AND 1,22,57,417/- RESPECTIVELY. 3. WE WILL FIRST TAKE UP THE APPEAL OF THE ASSESSE E IN ITA NOS.749/CHD/2014. ITA NO.749/CHD/2014 : 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE BEING IN THE BUSINESS OF REAL ESTATE DEVEL OPER HAD PURCHASED LAND DURING THE YEAR AMOUNTING TO RS.1,43,13,750/- OUT OF WHICH PURCHASES TO THE EXTE NT OF RS.60,50,000/- WERE MADE IN CASH. ON BEING CONFRONTED BY THE ASSESSING OFFICER, THE ASSESSEE REPLIED THAT NO BUSINESS HAS BEEN DONE DURING THE YEAR AND ONLY PURCHASES HAD BEEN MADE, THEREFORE, T HE PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ARE NOT APPLICABLE. IT W AS FURTHER SUBMITTED THAT THE PAYMENT TO THE SELLER WE RE 3 MADE ON BANK HOLIDAYS. THE ASSESSING OFFICER REJECTING THE CONTENTION OF THE ASSESSEE, MAD E A DISALLOWANCE OF AN AMOUNT OF RS.12,10,000/- BEING 20% OF RS.60,50,000/- ON ACCOUNT OF CASH PAYMENTS. 5. BEFORE THE LEARNED CIT (APPEALS), THE CONTENTIONS RAISED BEFORE THE ASSESSING OFFICER WER E REITERATED. IT WAS STATED THAT SINCE NO BUSINESS W AS DONE DURING THE YEAR, NO EXPENSES HAVE BEEN CLAIMED, THEREFORE, NO DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT CAN BE MADE. FURTHER, IT WAS ARGUED THAT THE CASH PAYMENT WAS MADE TO THE AGRICULTURISTS FOR PURCHASE OF THEIR LAND, ON ACCOUNT OF BUSINESS EXPEDIENCY BECAU SE THERE WAS NO OTHER OPTION WITH THE ASSESSEE BUT TO MAKE PAYMENT IN CASH AS IT WAS ESSENTIAL TO PURCHASE LAN D FOR RUNNING THE BUSINESS OF THE ASSESSEE. RELIANCE WAS PLACED ON A NUMBER OF JUDGMENTS INCLUDING THAT OF T HE JAIPUR BENCH OF THE I.T.A.T. IN THE CASE OF ACE IN DIA ADOBES LTD. VS. ACIT IN ITA NO.79/JP/2011. HOWEVER , THE LEARNED CIT (APPEALS) DID NOT FIND HIMSELF IN AGREE MENT WITH THE SUBMISSIONS OF THE ASSESSEE. RELYING ON A NUMBER OF JUDGMENTS, HE HELD THAT ONUS WAS UPON THE ASSESSEE TO SUBSTANTIATE ITS CLAIM OF THERE BEING EXCEPTIONAL CIRCUMSTANCES TO MAKE CASH PAYMENT FOR PURCHASE OF LAND. FURTHER, HE STATED THAT SINCE OU T OF A TOTAL AMOUNT OF RS.1,43,13,750/-, PURCHASES TO THE EXTENT 4 OF ONLY RS.60,50,000/- HAVE BEEN MADE IN CASH, WHIC H SHOWS THAT A SUBSTANTIAL CHUNK OF PAYMENT HAS BEEN MADE BY CHEQUE ALSO. IN VIEW OF THIS, HE DISMISSED THE APPEAL OF THE ASSESSEE. 6. AGGRIEVED BY THIS, THE ASSESSEE HAS COME IN APPEAL, RAISING THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX (APPE ALS), LUDHIANA HAS ERRED IN CONFIRMING THE ADDITION OF RS.12,10,000/- U/S 40A(3) OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF PURCHASE OF LAND BY MAKING CASH PAYMENT OF RS. 60,50,000/- TO THE SELLERS. 2. THAT LD. CIT(A) ERRED ON FACTS AND LAW IN CONFIRMI NG THE ADDITION MADE BY THE AO BY INVOKING THE PROVISIONS OF SECTION 40A(3) AS THE ASSESSEE MADE CASH PAYMENTS EXCEEDING RS.20000/- FOR PURCHASE OF LAND HELD AS S TOCK IN TRADE. THE EXPLANATION FURNISHED BY THE ASSESSEE, BASED ON FACTS AND CASE LAWS, DURING THE COURSE OF APPELLATE PROCEEDINGS HAS NOT BEEN REBUTTED BY THE LD. CIT(A). 3. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND AN Y GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEARD OR DISPOSED OFF. 7. THE ASSESSEE HAD ALSO FILED AN ADDITIONAL GROUN D OF APPEAL, HOWEVER, THE LEARNED COUNSEL FOR THE ASS ESSEE WITHDREW THE SAME DURING THE COURSE OF HEARING. 5 8. THE ONLY ISSUE IN THIS APPEAL REMAINS IS THE DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAPE R BOOK PAGES 3 TO 7 TO SHOW THAT DURING THE YEAR, NO BUSINESS HAS BEEN CONDUCTED BY THE ASSESSEE. THE ASSESSEE B EING A REAL ESTATE DEVELOPER, IS IN THE PROCESS OF COLLECT ING LAND BY PURCHASING THE SAME FROM VARIOUS FARMERS. DURIN G THE YEAR UNDER CONSIDERATION, THE LAND COLLECTED HAS BE EN TRANSFERRED TO THE PROJECT IN PROGRESS ACCOUNT AN D NO EXPENSES HAVE BEEN CLAIMED. IT WAS THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT SINCE NO EXPE NSES HAVE BEEN CLAIMED, NO DISALLOWANCE UNDER SECTION 40 A(3) OF THE ACT IS CALLED FOR. FURTHER, IT WAS SUBMITTE D THAT THE GENUINENESS OF TRANSACTIONS CANNOT BE DOUBTED AS TH E LANDS HAVE BEEN PURCHASED AFTER DULY REGISTERING TH E SAME BEFORE THE SUB REGISTRAR ON FULL PAYMENT OF THE CONSIDERATION. THE CASH PAYMENT MADE TO THE FARMER S FOR PURCHASE OF LAND WAS ON ACCOUNT OF BUSINESS EXPEDIE NCY BECAUSE THERE WAS NO OTHER OPTION WITH THE ASSESSEE BUT TO MAKE THE PAYMENT IN CASH. RELIANCE WAS PLACED O N THE JUDGMENT OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURDAS GARG VS. CIT, ITA NO.413 OF 2014, D ATED 16.7.2015, WHICH WAS DELIVERED AFTER CONSIDERING TH E JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO, WHEREBY IT WAS HELD TH AT CASH PAYMENTS MADE BY REAL ESTATE DEVELOPERS CANNOT BE 6 DISALLOWED UNDER SECTION 40A(3) OF THE ACT. FURTHE R, THE SAID JUDGMENT OF PUNJAB & HARYANA HIGH COURT HAS BE EN FOLLOWED BY THE I.T.A.T., CHANDIGARH BENCH IN THE CASE OF DHURI WINE VS. DCIT IN ITA NO.115/CHD/2013, DATED 9.10.2015. 9. THE LEARNED D.R. RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 10. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE ONLY ISSUE TO BE DECIDED BY US IS WHETHER THE C ASH PAYMENT AMOUNTING TO RS.60,50,000/- IS EXIGIBLE TO DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE UNDISPUTED FACTS OF THE CASE ARE T HAT THE ASSESSEE HAS MADE CASH PAYMENT OF RS.60,50,000/- TO SOME AGRICULTURISTS FOR PURCHASE OF LAND. THE ASS ESSEE IS A REAL ESTATE DEVELOPER DURING THE YEAR AND IS IN T HE PROCESS OF ACCUMULATING LAND FROM VARIOUS SOURCES. IT HAS NOT DONE ANY BUSINESS DURING THE YEAR. FROM THE PE RUSAL OF ACCOUNTS FILED BEFORE US, WE SEE THAT NO CLAIM O F ANY EXPENDITURE OR EVEN PURCHASES HAVE BEEN MADE DURING THE YEAR. THE LANDS PURCHASED HAVE BEEN TRANSFERRED TO PROJECT IN PROGRESS ACCOUNT. IN VIEW OF ALL THIS , WE 7 OBSERVE THAT THE PROVISIONS OF SECTION 40A(3) OF TH E ACT CANNOT BE INVOKED. SECTION 40A(3) OF THE ACT READS AS UNDER : 40A(3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAND RUPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE. 11. THE LANGUAGE OF THE SECTION IS VERY CLEAR THAT IN CASES OF EXPENDITURE INCURRED BY THE ASSESSEE IN CA SH, NO DEDUCTION ON ACCOUNT OF THAT EXPENDITURE IS ALLOWED UNDER THIS PROVISION. WE ARE AWARE OF THE PROPOSITION TH AT EVEN IF THE EXPENDITURE IS IN THE NATURE OF PURCHASES, T HE SAME IS PRONE TO DISALLOWANCE UNDER SECTION 40A(3) OF TH E ACT. HOWEVER, WHEN NO CLAIMED OF ANY SUCH EXPENDITURE OR PURCHASES HAS BEEN MADE, HOW CAN A DISALLOWANCE BE MADE. IN VIEW OF THIS, WE DIRECT THE ASSESSING OFF ICER TO DELETE THE DISALLOWANCE. 12. THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.750/CHD/2014 : 13. IT IS RELEVANT TO OBSERVE HERE THAT THE ISSUE RAISED IN THIS APPEAL IS SIMILAR TO THE ISSUE IN IT A NO.749/CHD/2014 AND THE FINDINGS GIVEN IN ITA 8 NO.749/CHD/2014 SHALL APPLY TO THIS CASE ALSO WITH EQUAL FORCE. 14. THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.751/CHD/2014 : & ITA NO.464/CHD/2014 : 15. THE ISSUE IS SAME IN THESE TWO YEARS ALSO. TH E FINDINGS GIVEN BY THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT (APPEALS) ARE ALSO THE SAME. HOWEVER, DURING THE COURSE OF HEARING, IT WAS BROUGHT TO OUR NOTICE BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IN THESE YEAR S, THE ASSESSEE WAS INTO THE BUSINESS OF REAL ESTATE AND T HE PURCHASES FORM PART OF STOCK-IN-TRADE AND NOT A PAR T OF PROJECT IN PROGRESS AS IN EARLIER TWO YEARS. IN VIEW OF THIS, IT WAS STATED THAT NO CLAIMED WAS MADE AND HE NCE, NO DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT CAN BE MADE, DOES NOT HOLD GOOD IN THESE YEARS. THE LEARN ED COUNSEL FOR THE ASSESSEE CONFINED HIS ARGUMENTS TO THE GENUINENESS OF THE TRANSACTION BEING CARRIED OUT O F BUSINESS EXIGENCY. RELIANCE WAS PLACED ON THE JUDG MENT OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURD AS GARG (SUPRA) AND THAT OF I.T.A.T., CHANDIGARH BENCH IN THE CASE OF DHURI WINE (SUPRA). 9 16. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. THE ISSUE IS IDENTICAL TO THE FACTS OF THE CASE OF GURDAS GARG (SUPRA) DECIDED BY THE PUNJAB & HARYANA HIGH C OURT. THIS CASE HAS BEEN VERY APTLY ANALYZED IN FOLLOWING TERMS IN THE ORDER OF THE I.T.A.T., CHANDIGARH BENCH IN T HE CASE OF DHURI WINE (SUPRA) : 10. SINCE HEAVY RELIANCE WAS PLACED ON A LATEST JUDGMENT OF THE HON'BLE JURISDICTIONAL PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURDAS GARG (SUPRA), AFTER PERUSING THE SAID JUDGMENT WE FIND THAT A VERY APT GUIDANCE IS PROVIDED BY THE HON'BLE HIGH COURT IN DECIDING THE ISSUE IN QUESTION. THEREFORE, AT THE VERY FIRS T INSTANCE, WE WOULD ANALYZE THE SAID JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT. IN THIS CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRADING IN PROPERTIES. ADMITTEDLY, CERTAIN PAYMENTS WERE MADE IN CASH IN EXCESS OF RS.20,000/- PER DAY. INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT, THE ASSESSING OFFICER MADE THE DISALLOWANCE. THE LEARNED CIT (APPEALS) IN HIS ORDER GAVE FINDING THAT THE IDENTITY OF THE PAYEES I.E. THE VENDER IN RESPECT OF THE LAND PURCHASED BY THE ASSESSEE WAS ESTABLISHED. THE SALE DEEDS WERE PRODUCED, THE GENUINENESS THEREOF WAS ACCEPTED. THE AMOUNT PAID IN RESPECT OF EACH OF THESE AGREEMENTS WAS CERTIFIED BY THE STAMP REGISTRATION AUTHORITY. IN THIS WAY, THE LEARNED CIT (APPEALS) HELD THAT THE BAR AGAINST THE GRANT OF DEDUCTIONS UNDER SECTION 40A(3) OF THE ACT WAS NOT ATTRACTED. THE TRIBUNAL DID NOT UPSET THESE FINDINGS GIVEN BY 10 THE LEARNED CIT (APPEALS) INCLUDING AS TO THE GENUINENESS AND THE CORRECTNESS OF THE TRANSACTIONS. IN FACT, THE TRIBUNAL NOTED THE CONTENTION ON BEHALF OF THE ASSESSEE THAT THERE WAS A BOOM IN THE REAL ESTATE MARKET, THAT IT WAS NECESSARY, THEREFORE, TO CONCLUDE THE TRANSACTIONS AT THE EARLIEST AND NOT TO POSTPONE THEM, THAT THE ASSESSEE DID NOT KNOW THE VENDORS AND OBVIOUSLY, THEREFORE, INSISTED FOR PAYMENT IN CASH. THE TRIBUNAL DID NOT DOUBT THIS CASE. HOWEVER, THE TRIBUNAL HELD THAT CLAIM FOR DEDUCTION WAS NOT SUSTAINABLE IN VIEW OF SECTION 40A(3) OF THE ACT AS THE PAYMENTS WERE MADE IN CASH OVER RS.20,000/-. THE HON'BLE HIGH COURT WHILE DECIDING THE ISSUE RELIED UPON THE JUDGMENT OF HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SMT.HARSHILA CHORDIA VS. ITO (2008) 298 ITR 349, WHEREBY IT WAS HELD THAT THERE BEING NO DISPUTE ABOUT THE GENUINENESS OF THE TRANSACTION AND THE PAYMENT AND IDENTITY OF THE RECEIVER BEING DISCLOSED, THE DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT CANNOT BE MADE. THE HON'BLE RAJASTHAN HIGH COURT RELIED UPON A CIRCULAR OF THE CBDT DATED 31.5.1977 REPORTED IN (1977) 108 (ST.) 8. FURTHER THE HON'BLE PUNJAB & HARYANA HIGH COURT ALSO MADE A REFERENCE TO A JUDGMENT OF THE HON'BLE APEX COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO (1991) 4SCC 385, WHEREBY IT WAS HELD THAT THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND RULE 6DD OF THE INCOME TAX RULES WERE INTENDED TO REGULATE THE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTIONS. AFTER ANALYZING ALL THESE, THE HON'BLE HIGH COURT HELD THAT THE TRIBUNAL HAS NOT DISBELIEVED THE TRANSACTIONS OR THE GENUINENESS THEREOF, NOR HAS 11 IT DISBELIEVED THE FACT OF PAYMENTS HAVING BEEN MADE, MORE IMPORTANTLY, THE REASONS FURNISHED BY THE ASSESSEE FOR MAKING THE CASH PAYMENTS HAVE NOT BEEN DISBELIEVED. THIS CLEARLY MAKES OUT A CASE OF BUSINESS EXPEDIENCY. IN THIS VIEW, THE HON'BLE HIGH COURT HELD THE PAYMENTS TO BE OUTSIDE THE PURVIEW OF SECTION 40A(3) OF THE ACT. 11. TAKING THE GUIDANCE FROM THE ABOVE SAID JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT, WHICH IS ALSO A VERY RECENT JUDGMENT OF THE HON'BLE HIGH COURT WE NOW ADVERT TO ANALYZE THE CASE OF THE PRESENT ASSESSEE. THE PROPOSITION LAID DOWN BY THE HON'BLE HIGH COURT IS QUITE UNAMBIGUOUS TO THE EFFECT THAT EVEN IF THE CASE OF THE ASSESSEE DOES NOT FALL IN ANY OF THE CLAUSES OF RULE 6DD OF THE INCOME TAX RULES, INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT CAN BE DISPENSED WITH IF THE ASSESSEE IS ABLE T O PROVE THE BUSINESS EXPEDIENCY BECAUSE OF WHICH IT HAVE TO MAKE THE CASH PAYMENTS, THE GENUINENESS OF THE TRANSACTIONS HAVE ALSO TO BE VERIFIED. IN THE PRESENT CASE, DETAILED SUBMISSIONS WITH CORROBORATI VE EVIDENCES WERE FILED AT EVERY STAGE INCLUDING THAT OF THE ASSESSING OFFICER AS WELL AS THE LEARNED CIT (APPEALS). EVEN BEFORE US, THE VOLUMINOUS PAPER BOOK HAS BEEN FILED . THE ELABORATE SUBMISSIONS WERE MADE TO PROVE THAT THE EXPENSES INCURRED IN CASH WERE GENUINE WHICH WERE PAID TO DISTILLERIES THROUGH EXCISE DEPARTMENT FOR PURCHASE OF LIQUOR AN D THERE WERE PRACTICAL EXPEDIENCY BECAUSE OF WHICH TH E PAYMENTS HAVE TO BE MADE IN CASH. THIS IS AN UNDISPUTED FACT THAT THE ASSESSEE FIRM HAS TWELVE PARTNERS, WHO ARE OPERATING BUSINESS THROUGH VENDS LOCATED AT DISTINCT PLACES. EACH PERSON HAS LICENCE IN HIS OWN NAME TO MAKE THE SALES AND 12 PURCHASES AS PER THE TERMS OF THESE LICENCE AGREEMENTS. FURTHER, IT IS QUITE A KNOWN FACT THAT IN THE BUSINESS OF THE LIQUOR, TRANSACTIONS ARE TO BE DONE IN CASH. ALL THESE FACTS HAVE NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER OR EVEN BY THE LEARNED CIT (APPEALS). THIS MAKES OUT A CASE THAT THE ASSESSEE HAS BUSINESS EXPEDIENCY UNDER WHICH IT HAVE TO MAKE PAYMENTS IN CASH. FURTHER, NOT A SINGLE TRANSACTION HAS BEEN QUESTIONED AT ANY STAGE. THE LEARNED CIT (APPEALS) WHILE ADJUDICATING THE CONTENTION OF THE ASSESSEE WITH REGARD TO THE GENUINENESS HIMSELF HAS HELD THAT IT IS NOT SUFFICIENT FOR THE ASSESSEE TO ESTABLISH THAT THE PAYMENTS WERE GENUINE AND THE PARTIES WERE IDENTIFIABLE. HE WAS OF THE VIEW THAT THE ASSESSEE IS FURTHER REQUIRED TO PROVE THAT DUE TO EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES AS PROVIDED UNDER THE RULES, THE PAYMENTS WERE MADE IN CASH. THEREFORE, IT IS NOT A CASE OF THE DEPARTMENT THAT THE PAYMENTS SO MADE IN CASH WERE NOT GENUINE. THE REASONS GIVEN BY THE ASSESSEE AT EVERY STAGE HAVE NOT BEEN DISBELIEVED. SINCE THESE REASONS ARE CORRECT, THEY REALLY MAKE OUT A CASE OF BUSINESS EXPEDIENCY. IN THIS VIEW, RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURDAS GARG (SUPRA), WE HOLD THAT THE PAYMENTS CANNOT BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT. THE ADDITION IS DELETED. 17. THE PROPOSITION, THUS, COMING OUT OF THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IS THAT E VEN IF THE ASSESSEE DOES NOT FALL IN ANY OF THE CLAUSES OF RULE 6DD, BEING THE EXCEPTIONS PROVIDED INVOKING THE 13 PROVISIONS OF SECTION 40A(3) OF THE ACT CAN BE DISP ENSED WITH IF THE ASSESSEE IS ABLE TO PROVE THE BUSINESS EXPEDIENCY OUT OF WHICH IT HAD TO MAKE THE CASH PAY MENTS AND THE GENUINENESS OF THE TRANSACTION HAS ALSO TO BE PROVED. WE OBSERVE THAT NONE OF THE LOWER AUTHORIT IES HAVE QUESTIONED THE GENUINENESS OF THE TRANSACTION. THE ONLY REASON FOR DISALLOWANCE IS THE PROVISIONS OF S ECTION 40A(3) OF THE ACT. THE ASSESSEE HAD ALL ALONG STAT ED THE REASON OF BUSINESS EXIGENCY OUT OF WHICH HE HAD TO MAKE CASH PAYMENTS, WHICH WERE ALSO NOT DOUBTED BY ANY O F THE LOWER AUTHORITIES. FURTHER, WE SEE THAT THE FACTS OF THE CASE ARE EXACTLY SAME AS THAT OF GURDAS GARG (SUPRA ). THEREFORE, WE ARE INCLINED TO HOLD THAT THE SAID CA SH PAYMENTS CANNOT BE DISALLOWED TO THE ASSESSEE. THE ADDITION IS HEREBY DELETED. 18. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY OF MARCH, 2016. SD/- SD/- (BHAVENESH SIANI) (RANO JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH MARCH, 2016 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/THE CIT/THE D R. ASSISTANT REGISTRAR, 14 ITAT, CHANDIGARH