M/s Nicer Green Housing & Infrastructure Developlers Ltd, Ferozepur V. The Income-tax Officer, Ferozepur

ITA 767/ASR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9538 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Question of law
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER ITA NO.767(ASR)/2014 ASSESSMENT YEAR:2011-12 PAN : AACCN5652N M/S. NICER GREEN HOUSING & VS. INCOME TAX OFFICER, INFRASTRUCTURE DEVELOPERS LTD. WARD 3(1), FEROZEP UR. OLD ZIRA GATE, FEROZEPUR CITY. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N. ARORA, ADV. RESPONDENT BY: SH. RAHUL DHAWAN, DR DATE OF HEARING: 20/09/2016 DATE OF PRONOUNCEMENT: 19/10/2016 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A), BATHINDA, DATED 05.06.2014 FOR THE ASSESSME NT YEAR 2011-12. THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEAL. HOWEVER, THE CRUX OF GRIEVANCE OF THE ASSESSEE IS THE ACTION OF THE LD. CIT(A) BY WHICH, HE HAS CONFIRMED THE ADDITION WHICH THE AO HAS MADE UNDER SECTION 40A(3) OF THE INCOME TAX ACT, (IN SHORT, THE ACT), 1961. 2 2. AT THE OUTSET, IT WAS FOUND THAT THE ASSESSEE HA D FILED AN APPLICATION FOR ADJOURNMENT OF THE CASE. HOWEVER, AFTER GOING THROUGH THE FACTS OF THE CASE AND THE RELEVANT MATERIAL ON RECORD, WE WERE OF THE OPINION THAT THE CASE CAN BE DISPOSED OF AND THER EFORE, THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. ARORA, WAS ASKED TO PROC EED WITH THE CASE INSTEAD OF SEEKING ADJOURNMENT. THE LD. COUNSEL AG REED TO IT AND THEREFORE, THE ADJOURNMENT APPLICATION WAS REJECTED AND THE LD. COUNSEL FOR THE ASSESSEE WAS DIRECTED TO PROCEED WITH HIS A RGUMENTS. 3. THE BRIEF FACTS, AS NOTED IN THE ASSESSMENT ORDE R ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRAD ING IN PROPERTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD MADE CASH PAYMENTS FOR PURCHASE OF CER TAIN PROPERTIES, THEREFORE, THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE EXPENDITURE INCURRED IN CASH BE NOT DISALLOWED UNDER THE PROVIS IONS OF SECTION 40A(3) OF THE ACT. THE ASSESSEE SUBMITTED THAT THE SELLERS REQUIRED FUNDS URGENTLY AND THEY INSISTED THAT THEY WILL SELL THEI R LANDS ONLY IF THE PAYMENT IS RECEIVED IN CASH. THE ASSESSEE IN THIS RESPECT FILED COPIES OF PURCHASE DEEDS OF BOTH LANDS. THE ASSESSEE ALSO REL IED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO, (1991) 191 ITR 667 (SC), WHERE THE HONBLE SUPREME COURT HAD HELD THAT WHILE MAKING DISALLOWANCE UNDER SECTION 4 0A(3), ALL THE CIRCUMSTANCES AND OTHER FACTORS ARE TO BE SEEN IN A POSITIVE MANNER. THE 3 ASSESSEE ALSO RELIED UPON CERTAIN OTHER CASE LAWS, WHICH THE AO HAS MENTIONED IN HIS ASSESSMENT ORDER. HOWEVER, THE AO DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND MADE A DISALLOWA NCE U/S 40A(3) OF THE ACT, BY HOLDING AS UNDER: 11. THE PROVISIONS OF SECTION 40A(3) ARE QUASI PENAL IN NATURE. THEY ARE NOT DIRECTLY RELATED TO COMPUTATION OF TH E TOTAL INCOME OF AN ASSESSEE. THEY HAVE BEEN MANDATED ONLY AND ONLY TO BE IN THE NATURE OF PERSUASION SO THAT OLD HABITS ABOUT CASH TRANSACTIONS ARE GRADUALLY CHANGED, IN THE INTEREST OF CREATION OF A MORE TRANSPARENT COMMERCIAL REGIME, SO THAT THE WIDESPREAD PREVALENC E OF UNACCOUNTED BLACK MONEY IS CHECKED. IT WOULD BE AGA INST THE SPIRIT OF LAW IF A VERY STRICT INTERPRETATION WERE NOT ADO PTED OF THIS SUB- SECTION, ON ANY GROUNDS, INCLUDING EQUITY. ONCE IT IS SEEN FROM THE FACTS OF THE CASE THAT A VIOLATION IN TERMS OF SECT ION 40A(3) IS MADE OUT, WHICH IS NOT CARVED OUT IN THE EXCEPTIONS AS I N RULE 6DD, THERE IS NO SCOPE FOR ANY ALLOWANCE TO THE ASSESSEE, ON T HE GROUNDS, INCLUDING THE GROUNDS OF GENUINENESS OF TRANSACTION . HOWEVER, GENUINE THE TRANSACTION MAY BE, ONCE IT IS STRUCK B Y THE PROVISIONS OF SECTION 40A(3), THE SAME HAS O BE DISALLOWED, AND N O RELIEF MAY THEREFORE BE GRANTED TO THE ASSESSEE ON THIS ACCOUN T EITHER. 12. IT IS THEREFORE CONCLUDED THAT THE CASE OR CIRC UMSTANCE OF THE ASSESSEES IMPUGNED TRANSACTION IS NOT FOUND COVERE D IN ANY OF THE INSTANCES CLEARLY DETAILED IN RULE 6DD(1) TO (1). I N DETERMINING EXPEDIENCY, THE AO IS OBLIGED TO REMAIN WITHIN THE PARAMETERS SPECIFIED IN RULE 6DD, AND CANNOT GO BEYOND THE RUL ES ON ANY GROUNDS, INCLUDING THE GROUNDS OF EQUITY. 13. HENCE, THE EXPENDITURE MADE BY WAY OF CASH PAY MENT IN PURCHASE OF STOCK IN TRADE IS DISALLOWED AND ADDITI ON OF RS.59,35,000/- IS MADE ON THIS ACCOUNT, AFTER ALLOW ING THE CASH PAYMENTS OF RS.9,69,260/- MADE TO THE GOVT. ON ACCO UNT OF PURCHASE OF STAMP PAPERS. 4. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND REITERATED THE SUBMISSIONS MADE BEFORE THE AO. HE F URTHER RELIED ON THE DECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF 4 GURDAS GARG VS. CIT, IN ITA NO.413 OF 2014, DATED 1 6.07.2015, WHEREIN UNDER SIMILAR CIRCUMSTANCES, THE HONBLE HIGH COURT HAD ALLOWED THE APPEAL OF THE ASSESSEE AND HAD DELETED THE DISALLOW ANCE UNDER SECTION 40A(3) OF THE ACT. THE LD. CIT(A), HOWEVER, CONFIRM ED THE ADDITION BY HOLDING AS UNDER: 2.6. REGARDING THE SECOND PART OF THE ARGUMENT OF THE A/R OF THE APPELLANT THAT SINCE THE PAYMENT HAS BEEN MADE AT A PLACE WHERE NO BLANK FACILITY IS AVAILABLE, THE CASE OF THE APP ELLANT COVERED BY RULE 6DD(G), 1962. IT IS VERY IMPORTANT TO NOTE THA T THIS ARGUMENT IS RAISED FOR THE FIRST TIME DURING THE COURSE OF ASS ESSMENT APPELLATE PROCEEDINGS BUT IT HAS NOT BEEN CLARIFIED WHERE THE PAYMENT HAS BEEN MADE BY THE APPELLANT. THIS FACT IS VERY IMPOR TANT BECAUSE NORMALLY THE PAYMENT IS MADE IN THE OFFICE OF THE S UB-REGISTRAR AND IN THE PRESENT CASE THE SUB-REGISTRAR OFFICE IS AT DABRA IN GWALIOR AND IT IS NOT POSSIBLE THAT A PLACE WHERE THE OFFIC E OF SUB-REGISTRAR IS SITUATED DOES NOT HAVE THE FACILITY OF A BANK. THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE TO PROVE THE CONTENTION THAT THE PAYMENT HAS BEEN MADE AT A PLACE WHERE NO BANKING FACILITY WAS AVAILABLE DESPITE THE FACT THAT THE ISSUE HAS BEEN RAISED BY WAY OF SPECIFIC GROUND OF APPEAL NO.5. HENCE, THE ARGUMENT OF THE A/R OF THE APPELLANT IS DISMISSED. IN THE RESULT, GROUNDS OF A PPEAL NO. 3 TO 6 ARE DISMISSED. 2.7. THE JUDGMENTS RELIED UPON BY THE A/R OF THE AP PELLANT ARE DISTINGUISHABLE ON FACTS. THE DISALLOWANCE U/S 40A( 3) MADE BY THE AO IS UPHELD RESPECTFULLY FOLLOWING THE ORDER OF TH E JURISDICTION BENCH IN THE CASE OF GURDAS GARG AND MY OWN ORDER I N THE CASE OF RAKESH KUMAR. HENCE, THE GROUNDS OF APPEAL NO. 3 T O 6 ARE DISMISSED. 5. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. P.N. ARORA , AT THE OUTSET INVITED OUR ATTENTION TO THE JUDGMENT OF THE HONBL E PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURDAS GARG VS. CIT, IN I TA NO.413 OF 2014, 5 DATED 16.07.2015 AND SUBMITTED THAT THE HONBLE HIG H COURT UNDER SIMILAR FACTS AND CIRCUMSTANCES HAD DELETED THE DIS ALLOWANCE UNDER SECTION 40A(3) OF THE ACT AND THEREFORE, THE CASE O F THE ASSESSEE WAS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE. HE HAD PLACED A COPY OF THE AFORESAID ORDER OF THE HONBLE HIGH COURT AT PB 1- 10. THE LD. COUNSEL FURTHER RELIED UPON THE DECISION OF THE ITAT, AMRIT SAR BENCH IN THE CASE OF GURDAS GARG VS. ACIT, CIRCLE-1, BATHINDA, IN A S UCCEEDING ASSESSMENT YEAR, WHERE THE TRIBUNAL HAD FOLLOWED THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT AND SIMILARLY RELIANCE WAS LACED ON ANOTHER DECISION OF THE HONBLE PUNJAB & HARYANA HI GH COURT, IN THE CASE OF CIT VS. BRIJ MOHAN SINGH 7 CO., REPORTED IN 209 ITR 753, WHERE THE HONBLE COURT HAS DISMISSED THE APPEAL OF THE R EVENUE. 7. THE LD. DR, ON THE OTHER HAND, SUMITTED THAT THE CASE LAW OF GURDAS GARG DECIDED BY THE HONBLE PUNJAB & HARYANA HIGH COURT, CANNOT BE FOLLOWED IN THE PRESENT CASE, AS THE RE VIEW PETITION IS PENDING IN THE CASE OF GURDAS GARG. IT WAS FURTHER SUBMITTE D THAT THE ASSESSEE IN THE PRESENT CASE COULD NOT ESTABLISH THE CIRCUMSTAN CES UNDER WHICH THE PAYMENTS WERE MADE IN CASH AND THEREFORE, THE A FORESAID CASE LAW IS NOT APPLICABLE. THE LD. DR IN THIS RESPECT FILED A COPY OF AN ARTICLE WHEREIN IT WAS DISCUSSED THAT WHETHER IT WAS PROP ER TO CITE A JUDGMENT AS AUTHORITY WHEN IT WAS BEING REVIEWED. THE LD. D R ALSO RELIED UPON THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF AGGARWAL STEEL TRADERS VS. COMMISSIONER OF INCOME T AX & ANR. REPORTED 6 IN 250 ITR 738 FOR THE PROPOSITION THAT DISALLOWANCE UNDER SECTIO N 40A(3) IS JUSTIFIED EVEN THOUGH THE EXPLANATION OFF ERED BY THE ASSESSEE FOR CASH PAYMENTS WAS COVERED BY EXCEPTIONAL CIRCUMSTAN CES AS PROVIDED IN CIRCULAR NO.220 DATED 31.05.1977. 8. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDE R SUBMITTED THAT THE ITAT, AMRITSAR BENCH, WHILE DECIDING THE CASE OF GURDAS GARG VS. ACIT, CIRCLE-1, BATHINDA, IN ASSESSMENT YEAR 2011-1 2, HAS FOLLOWED THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT , DELIVERED ON 16.07.2015 IN THE CASE OF GURDAS GARG (SUPRA). IT WAS FURTHER SUBMITTED THAT UNLESS THE FINDINGS OF HONBLE COURT ARE REVER SED IN THE REVIEW APPLICATION, THE CASE LAW WILL HAVE TO BE FOLLOWED. 9. WE HAVE HEARD THE RIVAL PARTIES AND HAVE CAREF ULLY GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE HON BLE PUNJAB & HARYANA HIGH COURT IN ITS JUDGMENT DATED 16.07.2015 IN ITA NO. 413 OF 2014 IN THE CASE OF GURDAS GARG VS. CIT(A), BATHIND A, HAD FRAMED THE FOLLOWING QUESTION OF LAW: (1) WHETHER THE TRIBUNAL RIGHTLY HELD THAT THE APPE LLANT WAS NOT ENTITLED TO THE DEDUCTIONS IN RESPECT OF CASH PAYME NTS IN EXCESS OF RS.20,000/- MADE TO THE VENDORS FOR LAND IN VIEW OF SECTION 40A OF THE INCOME TAX ACT, 1961 (FOR SHO RT THE ACT). WHILE ANSWERING THIS QUESTION, THE HONBLE PUNJAB & HARYANA HIGH COURT HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT FINDINGS OF THE HONBLE HIGH COURT ARE CONTAINED FROM PARA 3 ON WARDS. FOR THE SAKE OF CONVENIENCE, THE RELEVANT FINDINGS ARE REPRODUCE D AS UNDER: 7 3. THE APPELLANT IS ENGAGED INTER ALIA IN TRADING IN PROPERTIES IN HIS INDIVIDUAL NAME. AS NOTED IN THE ASSESSMENT ORD ER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE DETAILS OF TH E CLOSING STOCK AS ON 31.03.2009 ALONGWITH DETAILS OF SALES/PURCHASES WERE PLACED ON RECORD. THE CONSIDERATION, WHICH IN RESPECT OF EACH OF THE TRANSACTIONS WAS ADMITTEDLY IN EXCESS OF ?20,000/-, WAS PAID IN CASH. PAYMENT BY DEMAND DRAFT WAS MADE ONLY IN RESP ECT OF ONE OF THE TRANSACTIONS. THESE PAYMENTS IN CASH WERE DISAL LOWED BY THE ASSESSING OFFICER AND THE ORDER IN THIS REGARD WAS UPHELD BY THE TRIBUNAL. THE CIT(APPEALS) HAD ALLOWED THE DEDUCTIO NS. SECTION 40A(3) OF THE ACT READS THUS:- 40A(3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE I N RESPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAW N ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAN D RUPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPEN DITURE. IT IS IMPORTANT TO NOTE THE FOLLOWING PROVISO TO TH E SECTION:- PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER SUB-SECTION(3) AND THIS SUB-SECTIO N WHERE A PAYMENT OR AGGREGATE OF PAYMENT MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDS TWENTY THOUSAND RU PEES, IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCR IBED, HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITI ES AVAILABLE, CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER REL EVANT FACTORS. 4. IT IS IMPORTANT TO NOTE SOME OF THE FINDINGS OF FACT BY THE CIT (APPEALS). THE IDENTITY OF THE PAYEES I.E. THE VEND ORS IN RESPECT OF THE LANDS PURCHASED BY THE APPELLANT, WAS ESTABLISH ED. THE SALE DEEDS WERE PRODUCED. THE GENUINENESS THE ACCEPTED. THE AMOUNT PAID IN RESPECT OF EACH OF THESE AGREEMENTS WAS CER TIFIED BY THE STAMP REGISTRATION AUTHORITY. THE CIT (APPEALS) HEL D THE TRANSACTIONS TO BE GENUINE. ACCORDINGLY, THE CIT HE LD THAT THE BAR AGAINST THE GRANT OF DEDUCTIONS UNDER SECTION 40A(3 ) OF THE ACT WAS NOT ATTRACTED. 5. IT IS IMPORTANT TO NOTE THAT THE TRIBUNAL DID NOT UPSET THESE FINDINGS INCLUDING AS TO THE GENUINENESS AND THE CO RRECTNESS OF THE TRANSACTIONS. IT IS ALSO IMPORTANT TO NOTE THAT THE TRIBUNAL NOTED THE CONTENTION ON BEHALF OF THE APPELLANT THAT THERE WA S A BOOM IN THE REAL ESTATE MARKET; THAT IT WAS NECESSARY, THEREFOR E, TO CONCLUDE THE TRANSACTIONS AT THE EARLIEST AND NOT TO POSTPONE TH EM; THAT THE APPELLANT DID NOT KNOW THE VENDORS AND OBVIOUSLY TH EREFORE, INSISTED 8 FOR PAYMENT IN CASH AND THAT AS A RESULT THEREOF, P AYMENTS HAD TO BE MADE IMMEDIATELY TO SETTLE THE DEALS. THE TRIBUN AL DID NOT DOUBT THIS CASE. THE TRIBUNAL, HOWEVER, HELD THAT THE CLA IM FOR DEDUCTION WAS NOT SUSTAINABLE IN VIEW OF SECTION 40A(3) AS TH E PAYMENTS WHICH WERE OVER 20,000/- WERE MADE IN CASH. THE TR IBUNAL, THEREFORE, DISALLOWED THE SAME ONLY ON A CONSTRUCTI ON OF SECTION 40A(3). THE TRIBUNAL RESTRICTED THE AMBIT OF THE PROVISO TO THE CIRCUMSTANCES MENTIONED IN RULE 6DD OF THE INCOME T AX RULES, 1962. WE FIND IT CONVENIENT TO LET THE ORDER OF THE TRIBUNAL SPEAK FOR ITSELF:- THERE IS NO INTENTION OF THE LEGISLATURE TO MAKE A LIST OF NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE AND OTHE R FACTORS TO BE DRAFTED BY THE ASSESSEE AT THEIR WHIMS AND FANCI ES AND AS SUITS TO THE ASSESSEE. THEREFORE, RULES HAVE BEEN P RESCRIBED WHICH ARE RULE 6DD OF I.T. RULES, 1962 AND NOTHING BEYOND THAT. XXX XXX XXX THE LD. CIT(A) HAS NOT TAKEN THE SAID PROVISO IN TH E RIGHT SPIRIT AND HAS JUST ACCEPTED THE SUBMISSIONS AND ARGUMENTS MADE BY THE ASSESSEE AND HAS DELETED THE ADDITION, WHICH IS AGAINST THE FACTS OF THE CASE AND AGAINST THE PROVI SIONS OF LAW. 6. RULE 6DD(J) IS NOT EXHAUSTIVE OF THE CIRCUMSTANCES IN WHICH THE PROVISO TO SECTION 40A(3) IS APPLICABLE. IT IS ONLY ILLUSTRATIVE. 7. THE RESPONDENT/ASSESSEE'S CASE IS SUPPORTED BY SEVERAL JUDGMENTS. THE RAJASTHAN HIGH COURT IN SMT HARSHILA CHORDIA VS. INCOME TAX OFFICER, (2008) 298 ITR 349 HELD AS UNDER:- 14. ABOUT THIS CLAUSE, MANY DOUBTS WERE RAISED AND ENQUIRIES WERE DIRECTED TO THE BOARD AS TO WHAT SHA LL CONSTITUTE EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCE S WITHIN THE MEANING OF CLAUSE (J). THAT LED TO ISSUANCE OF CIRCULAR BY THE BOARD ON MAY 31, 1977 ([1977] 108 ITR (ST.) 8), WHICH IS PUBLISHED IN TAXMANN, VOL. 1, 1988 EDITION. SIGNIFI CANTLY PARAGRAPH 4 OF THE AFORESAID CIRCULAR SHOWS VERY CL EARLY THAT ALL THE CIRCUMSTANCES IN WHICH THE CONDITIONS LAID DOWN IN RULE 6DD(J) COULD BE APPLICABLE CANNOT BE SPELT OUT . HOWEVER, SOME OF THEM WHICH WILL SEEM TO MEET THE REQUIREMEN TS OF THE SAID RULE ARE AS FOLLOWS: 9 A. THE PURCHASER IS NEW TO THE SELLER; OR B. THE TRANSACTIONS ARE MADE AT A PLACE WHETHER EI THER THE PURCHASER OR THE SELLER DOES NOT HAVE A BANK ACCOUN T; OR C. THE TRANSACTIONS AND PAYMENTS ARE MADE ON A BAN K HOLIDAY; OR D. THE SELLER IS REFUSING TO ACCENT THE PAUMENT BY WAV OF CROSSED CHEQUE/DRAFT AND THE PURCHASER'S BUSINESS INTEREST WOULD SUFFER DUE TO NON-AVAILABILITU OF GOODS OTHERWISE THAN FROM THIS PARTICULAR SELLER: OR E. THE SELLER, ACTING AS A COMMISSION AGENT, IS RE QUIRED TO PAY CASH IN TURN TO PERSONS FROM WHOM HE HAS PURCHA SE THE GOODS; OR F. SPECIFIC DISCOUNT IS GIVEN BY THE SELLER FOR PA YMENT TO BE MADE BY WAY OF CASH. 15. IT WAS FURTHER CLARIFIED IN PARAGRAPH 6 THAT THE ABOVE CIRCUMSTANCES ARE NOT EXHAUSTIVE BUT ILLUSTRATIVE. 16. THEREFORE, IN OUR OPINION, THE TRIBUNAL WAS CL EARLY IN ERROR IN NOT TRAVELLING BEYOND THE CIRCUMSTANCES RE FERRED TO IN PARAGRAPH 4 OF THE CIRCULAR AND TO CONSIDER THE EXP LANATION SUBMITTED BY THE ASSESSEE ON ITS OWN MERIT. 17. SIGNIFICANTLY PARAGRAPH 5 REPRODUCED HEREINBELOW GIVES A CLEAR INDICATION THAT RULE 6DDHI HAS TO BE LIBERALLY CONSTRUED AND ORDINARILU WHERE THE GENUINENESS OF THE TRANSACTION AND THE PAYMENT AND IDENTITU OF THE RECEIVER IS ESTABLISHED, THE REQUIREMENT OF RULE 6DD(II MUST BE DEEMED TO HAVE BEEN SATISFIED. PARAGRAPH 5 OF THE CIRCULAR READS AS UNDER [19771 108 ITR (ST.) 8. 9: 5. IT CAN BE SAID THAT IT WOULD, GENERALLY, SATISFY TH E REQUIREMENTS OF RULE 6DD(J), IF A LETTER TO THE ABO VE EFFECT IS PRODUCED IN RESPECT OF EACH TRANSACTION FALLING WITHIN THE CATEGORIES LISTED ABOVE FROM THE SELLER GIVING FULL PARTICULARS OF HIS ADDRESS, SALES TAX NUMBER/PERMAN ENT ACCOUNT NUMBER, IF ANY, FOR THE PURPOSES OF PROPER IDENTIFICATION TO ENABLE THE INCOME-TAX OFFICER TO SATISFY HIMSELF ABOUT THE GENUINENESS OF THE TRANSACTION. T HE INCOME-TAX OFFICER WILL, HOWEVER, RECORD HIS SATISF ACTION BEFORE ALLOWING THE BENEFIT OF RULE 6DD(J). 10 18. IT APPEARS THAT FULFILMENT OF THE CONDITIONS O F PARAGRAPH 5 OF THE CIRCULAR HAS CLEARLY ESCAPED THE ATTENTION OF THE TRIBUNAL. THE CIRCULAR CLEARLY INDICATES THAT ORDIN ARILY WHERE THE INCOME-TAX OFFICER IS SATISFIED ABOUT THE GENUI NENESS OF THE TRANSACTION AND PAYMENT AND IDENTIFICATION OF T HE CASH PAYMENT IS ESTABLISHED, THE INCOME-TAX OFFICER SHAL L RECORD HIS SATISFACTION ABOUT THE FULFILMENT OF THE CONDITIONS FOR ALLOWING THE BENEFIT OF RULE 6DD(J). APPARENTLY, SECTION 40A (3)WAS INTENDED TO PENALIZE THE TAX EVADER AND NOT THE HON EST TRANSACTIONS AND THAT IS WHY AFTER FRAMING OF RULE 6DD (J), THE BOARD STEPPED IN BY ISSUING THE AFORESAID CIRCULAR. 19. THIS CLARIFICATION, IN OUR OPINION, IS IN CONFO RMITY WITH THE PRINCIPLE ENUNCIATED BY THE SUPREME COURT IN CTO V. SWASTIK ROADWAYS AS NOTICED ABOVE. 20. IN THIS CASE, THERE IS NO DISPUTE ABOUT THE GENUINENESS OF THE TRANSACTIONS AND THE PAYMENT AND IDENTITY OF THE RECEIVER ARE ESTABLISHED. THEREFORE , THE CASE CLEARLY FELL WITHIN THE PARAMETERS OF PA R AGRAPHS 4 AND 5 OF THE AFORESAID CIRCULAR READ TOGETHER. 8. THE RESPONDENT'S CASE IS ALSO SUPPORTED BY THE J UDGMENT OF THE SUPREME COURT IN ATTAR SINGH GURMUKH SINGH VS. ITO. (1991) 4 SCC 385. AFTER REFERRING TO RULE 6DD, THE SUPREME C OURT HELD 7. IN OUR OPINION, THERE IS LITTLE MERIT IN THIS CONTENTION. SECTION 40-A(3) MUST NOT HE READ N ISOLATION OR TO THE EXCL USION OF RULE 6-DD. THE SECTION MUST BE READ ALONG WITH THE RULE. IF REAR :: RE WILL BE CLEAR THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT THE BUSINESS ACTIVITIES. THERE IS NO RESRICTION ON THE ASSESSEE IN HIS TRADING ACTIVITIES 5 (3) ONLY EMPOWERS THE ASSE SSING OFFICER TO DEDUCTION CLAIMED AS EXPENDITURE IN RESPECT OF W HICH PAYMENT IS NOT MADE BY CROSSED CHEQUE OR CROSSED BA NK DRAFT. THE PAYMENT BY CROSSED CHEQUES OR CROSSED BA NK DRAFT IS INSISTED ON TO ENABLE THE ASSESSING AUTHORITY T O ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF THE DISCLOSED SOURCES. THE TERMS OF SECTION40A(3) A RE NOT ABSOLUTE. CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCSLUDED. THE GENUINE AN D BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40-A(3) WAS NO T PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYMENT. RULE 6-DD PROVID ES THAT 11 AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT I N THE CIRCUMSTANCES SPECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF SECTION 40-A(3) AND RULE 6-DD THA T THEY ARE 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. [SEE: MUDIAM OIL COMPANY VS. ITO {1973} 92 ITR 519(AP). IF THE PAYME NT IS MADE BY A CROSSED CHEQUE DRAWN ON A BANK OR A CROSS ED BANK DRAFT THEN IT WILL BE EASIER TO ASCERTAIN, WHE N DEDUCTION IS CLAIMED, WHETHER THE PAYMENT WAS GENUINE AND WHE THER IT WAS OUT OF THE INCOME FROM DISCLOSED SOURCES. IN IN TERPRETING A TAXING STATUTE THE COURT CANNOT BE OBLIVIOUS OF THE PROLIFERATION OF BLACK MONEY WHICH IS UNDER CIRCULATION IN OUR CO UNTRY. ANY RESTRAINT INTENDED TO CURB THE CHANCES AND OPPORTUN ITIES TO USE OR CREATE BLACK MONEY SHOULD NOT BE REGARDED AS CURTAILING THE FREEDOM OF TRADE OR BUSINESS. 9. AT THE COST OF REPETITION, THE TRIBUNAL HAS NOT DISBELIEVED THE TRANSACTIONS OR THE GENUINENESS THEREOF. NOR HA S IT DISBELIEVED THE FACT OF PAYMENTS HAVING BEEN MADE. MORE IMPORTA NT, THE REASONS FURNISHED BY THE APPELLANT FOR HAVING MADE THE CASH PAYMENTS, WHICH WE HAVE ALREADY ADVERTED TO, HAVE NOT BEEN DI SBELIEVED. IN OUR VIEW, ASSUMING THESE REASONS TO BE CORRECT, THE Y CLEARLY MAKE OUT A CASE OF BUSINESS EXPEDIENCY. 10 IN THE CIRCUMSTANCES, THE ORDER OF THE TRIBUNAL IN THIS REGARD IS SET ASIDE. THE PAYMENTS CANNOT BE DISALLO WED UNDER SECTION 40A(3) OF THE ACT. 10. IN THE CASE LAW DECIDED BY THE HONBLE PUNJAB & HARYANA HIGH COURT (SUPRA), THE ASSESSEE WAS ALSO ENGAGED IN TRA DING ACTIVITIES IN PROPERTIES, AS IS THE FACT IN THE PRESENT CASE. THE AUTHORITIES BELOW HAS NOT DOUBTED THE GENUINENESS OF THE TRANSACTION, WHI CH THE ASSESSEE HAD MADE IN CASH. THE CASH PAYMENT HAS BEEN NOTED DOWN BY THE SUB- REGISTRAR IN THE SALE DEEDS. MOREOVER, THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS HAD SUBMITTED BEFORE THE AO THAT THE SELLERS WERE NOT PREPARED TO ACCEPT PAYMENTS OTHER THAN CAS H. IN VIEW OF THE 12 ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESS EE. 11. AS REGARDS THE CONTENTION OF THE LD. DR THAT TH E REVIEW PETITION IS PENDING IN THE CASE OF GURDAS GARG, THEREFORE, THE CASE LAW SHOULD NOT BE FOLLOWED, WE FIND THAT THE LD. DR HAS RELIED UPO N AN ARTICLE NOTED IN THE SOUTH ASIA RIGHT TO INFORMATION ADVOCATES NETW ORK AND THERE IS NO FINDING OF ANY COURT FOR THE PROPOSITION THAT WHERE A REVIEW PETITION WAS PENDING, THE JUDGMENT SHOULD NOT BE FOLLOWED. SIMPL Y BECAUSE THE REVENUE HAS FILED A REVIEW PETITION, DOES NOT MEAN THAT THE JUDGMENT OF THE COURT SHOULD NOT BE FOLLOWED AND THEREFORE, THE CONTENTION OF THE LD. DR TO THIS EFFECT IS REJECTED. 12. AS REGARDS THE JUDGMENT RELIED UPON BY THE LD. DR OF THE HONBLE PUNJAB & HARYANA HIGH COURT, IN THE CASE OF AGGARWA L STEEL TRADERS (SUPRA), WE FIND THAT THAT IN THIS CASE, THE ASSESS EE HAD NOT FURNISHED CONFIRMATORY LETTERS FROM THE CONCERNED PARTIES AS REGARDS CASH PAYMENTS MADE TO THEM, THEREFORE, THE HONBLE HIGH COURT OBSERVED THAT THE DISALLOWANCE U/S 40A(3) WAS JUSTIFIED. BUT IN THE PRESENT CASE, CASH PAYMENTS HAVE BEEN CONFIRMED, AS THE CASH PAYM ENTS HAVE BEEN MENTIONED IN THE SALE DEEDS, WHICH HAVE BEEN EXECUT ED IN THE PRESENCE OF SUB-REGISTRAR AND WHEREIN BOTH THE SELLERS AND PURCHASERS HAD SIGNED IN THE PRESENCE OF SUB-REGISTRAR. THE SIGNAT URE OF SELLERS AND BUYERS ON THE SALE DEEDS WHEREIN THE FACT REGARDI NG CASH PAYMENTS HAS 13 BEEN MENTIONED, IS A SUFFICIENT EVIDENCE OF CONFIRM ATION FROM THE SELLERS AND THEREFORE, THIS CASE LAW IS NOT APPLICABLE TO T HE INSTANT CASE. 13. IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/10/20 16. SD/- SD/- (N.K. CHOUDHRY) (T.S. KAPOOR ) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 19/10/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. NICER GREEN HOSUING & INFRASTRUCT URE DEVELOPERS LTD. FEROZEPUR 2. THE ITO WARD 3(1), FEROZEPUR 3. THE CIT(A), BATHINDA. 4. THE CIT, BATHINDA. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.