Sh. Sher Singh Rana, Solan V. Pr.CIT-1, Chandigarh

ITA 91/CHANDI/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7828 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 16-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Bogus
• Section: 32; 263; 63; 90; 40A(3); 56(2); 73

Judgement Text

आयकर य कर , य य “ब ”, IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’, CHANDIGARH BEFORE SMT.DIVA SINGH, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 91/Chd/2021 (Assessment Year: 2016-17 Sh.Sher Singh Rana, Rana Niwas, Chamba Ghat, Solan, Himachal Pradesh. बनाम Pr. Commissioner of Income Tax-I, Chandigarh. थायी लेखा सं./PAN NO: ARDPR9901R नधा रती क ओर से/Assessee by : Shri Parikshit Aggarwal, CA राज व क ओर से/ Revenue by : Shri Sarabjeet Singh, CIT स ु नवाई क तार ख/Date of Hearing: 10.02.2022 उदघोषणा क तार ख/Date of Pronouncement: 28.02.2022 (Hearing through Webex) आदेश/ORDER Per Vikram Singh Yadav, Accountant Member: This is an ap peal filed b y the asses se e aga inst t he or der of Lear ned Pr incipa l Commissione r of Income Ta x- I , C h an d i g a r h , [ i n s h o r t t h e ‘ L d . P r . C I T’ ] d a t e d 2 6 . 0 3 . 2 0 2 1 p e r t a i ni n g t o a s s e s s m e n t ye a r 2 0 1 6 - 1 7 . 2 . B r i e f l y , t h e f a c t s o f t h e c a s e a r e t h a t t h e a s ses se e h a s f i l e d h i s r e t u r n o f i n c o m e d e c l a r i n g t o t a l i n c o m e of R s . 5 , 1 0 , 3 8 1 / - f r o m h i s l i q u o r t r a d i n g b u s i n e s s . Th e c a se o f t h e a s se s se e w a s s e le c te d f o r c o m p l e t e s c r u t i n y f o r ITA No.91/Chd/2021 A.Y.2016-17 2 e x a m i n a t i o n o f m i s m a t c h i n s a l e s t u r n o v e r r e p o r te d i n a u d i t r e p o r t a n d I TR , a n d l o w i n c o m e f r o m TC S r e ce i p t s ( li q u o r ) . N o t i c e s u / s 1 4 3 ( 2 ) & 1 4 2 ( 1 ) o f t h e A c t w e r e i s s u e d a n d a f t e r i s s u i n g f i n a l s h o w c a u s e n o t i c e d a t e d 2 1 . 1 2 . 2 0 1 8 a nd t a k i n g i n t o c o n s i d e r a t i o n r e p l y s u b m i t t e d b y t h e a s s e s s e e , t h e a s s e s s m e n t w a s c o m p l e t e d a t t o t a l a s s e s s e d i n c o m e of R s . 9 , 0 9 , 8 5 5 / - a s a g a i n s t t he r e t u r ne d i nc o m e o f R s . 5 , 1 0 , 3 8 0 / - . S u b s e q ue n t l y , t h e a s s e s s m e n t r e co r d s w e r e c a l l e d f o r a n d e xa m i n e d b y t h e L d . P r . C I T a n d a s h ow c a u s e n o t i c e u / s 2 6 3 o f t h e A c t w a s is s u e d o n 2 0 . 0 2 . 2 0 2 1 a n d a f t e r c a l l i n g f o r s u b m i s s i o n s f r o m t h e a s s e ss e e , the a s s e s s m e n t o r d e r p a s s e d b y t h e A O u / s 1 4 3 ( 3 ) o f t h e A c t w a s h e l d t o b e e r r o ne o u s i n s o f a r a s p r e j u d i c i a l to t h e i n t e r e s t o f t h e Re ve n ue a n d t h e s a m e w a s s e t a s i d e t o p a s s a f r e s h o r d e r a f te r m a k i n g n e c e s s a r y e n q u i r i e s / i n v e s t i g a t i o n s i n t he l i gh t o f t h e d i s c u ss i o n m a d e i n t h e i m p u g n e d o r d e r a f t e r g i v i n g d u e o p p o r t u n i t y t o t h e a s s e s se e . 3 . A g a i n s t t h e s a i d f i n d i n g s a n d t h e o r de r o f t he Ld . P r . C I T, t h e a s s e ss e e i s i n a p p e a l b e f o r e u s . 4 . D u r i n g t h e c o u r s e o f h e a r i n g , b o t h t h e p a r t i e s ha v e d r a w n o u r r e f e r e n c e t o t h e f i n d i n g s o f t h e L d . P r . CI T a n d ITA No.91/Chd/2021 A.Y.2016-17 3 w e , t he re f o r e , d e e m i t a p p r o p r i a t e t o r e p r o d u c e th e s a m e i n v e r b a ti m a s u n d e r : “4. The facts of the case are that that the assessee has shown sundry creditor for Rs. 1,83,04,731/- in the name of M/s Rana Wines, L-1, Solan which also includes the liability of Rs. 1,11,42,804/- outstanding for the previous year. 4.1 Bogus Liability in 2014-15 (FY) During F.Y. 2015-16, the assessee has shown following transactions with Rana Wines, L-1, Solan – Opening Balance as on 01.04.2015 0 Purchases Rs.2,34,33,281/- Rebate & discount Received Rs.18,43,550/- Net Purchases Rs.2,15,89,731/- Payments Rs.32,85,000/- Closing Balance as on 31.03.2016 Rs.1,83,04,731/- In balance sheet as on 31.03.2016, the assessee has shown Rana Wines L-1, Solan as Sundry Creditor for ks. 183,04,7317-. As the assessee has shown Rana Wines, L-1, Solan as Sundry Creditors for Rs. 1,11,42,8047-as on 31.03.2015 and no such payment was made in the subsequent years. If the claim of the assessee regarding closing balance as on 31-03-2015 is accepted then the account will not balance. The assessee even did not declare any such liability in his return /Balance Sheet for the F.Y. 2015-16. Therefore, it is clear that the assessee has declared bogus liability in his Balance sheet for the F.Y. 2014-15. As the AO has failed to consider this the order issued by the assessing officer is erroneous and prejudicial to the interest of the revenue. 4.2 Payment of Liability in 2015-16 1. Payment of Rs. 72,00,000/- in cash In Balance Sheet as on 31.03.2016, the assessee has shown Rana Wines L-1, Solan as sundry Creditor for Rs. 183,04,731/-. Out of this, the assessee has paid Rs. 72,00,000/- in cash to Rana Wines during F.Y. 2016-17. The assessee in its reply dated 27.12.2018, in para 3 has submitted ITA No.91/Chd/2021 A.Y.2016-17 4 that payment of Rs. 72,00,000/- has been made in cash. The relevant para is reproduced as under:- 3. That there is sundry creditor in the name of M/s Rana Wines whose outstanding shown as on 31.3.2016 was Rs. 1,83,04,731/-. As the assessee has replied in para No. 8 to the annexure dated 4.12.2017 that no work was allotted to the assessee for the next year so the advance of Rs. 1.8 Crore was used for repayment of amount outstanding at the end of year. It is further submitted that the assessee has made repayment of Rs. 72,00,0007- to M/s Rana Wines during the next year i.e. A.Y. 2017-18. The assessee was not able to make the repayment of outstanding liability to M/s Rana Wines after 31.3.2017 due to weak financial position and later on father of the assessee Sh. Kashmir Singh Rana entered into an agreement dated 9.05.2017 to sell his land situated at Mehal Malyana, Tehsil Teera, Distt.Mandi(H.P.) to clear the liability/Debts of assessee with M/s Rana Wines. The copy of agreement is enclosed herewith. The reply of the assessee clearly shows that the assessee has made payment in contravention of Section 40A(3) of the Act. The AO has not examined the case in view of section 40A(3) of the Act. As the AO has failed to consider this the order issued by the assessing officer is erroneous and prejudicial to the interest of the revenue. 2. Payment by sale of Property of father Regarding balance payment of Rs. 1,11,04,731/-, the assessee submitted that his father Sh. Kashmir Singh sold a property for Rs. 1,25,00,000/- to Rana Wines on 09.05.2017 and this liability was discharged. The assessee only filed copy of an Ikrarnama as proof of this transaction. On perusal of this Ikrarnama, it is noted that this Ikrarnama was not registered as required under Transfer of property Act, 1883. Even this Ikrarnama does not bear the required Stamp Duty as required under the Indian Stamp Act, 1899. No copy of registered Deed is found placed on record. Further, the assessee submitted that his father sold property as he was unable to discharge his liability. As per the balance sheet the assessee was having sufficient cash-in-hand as on 31.03.2016 to discharge his liability with the cash-in- hand, but this liability was discharged with sale of property by his father, therefore the cash-in-hand available in the books of account does not appear to be genuine. The only possibility is ITA No.91/Chd/2021 A.Y.2016-17 5 that the liability of Rana Wines was made in cash by the assessee during F.Y. 2015-16 and these payments were in contravention to provisions of section 40A(3) of the l.T.Act, 1961. And to avoid any disallowance, he has submitted fictitious documents (Ikrarnama) before the Assessing Officer claiming that the property of the father has been sold. As the AO has failed to consider this the order issued by the assessing officer is erroneous and prejudicial to the interest of the revenue. The assessee was not allotted licence for the next financial year. When the assessee was confronted that how the huge liability was paid and when it was paid, the assessee filed a copy of "Ikrarnama" showing that land valuing Rs. 1.25 Crore has been transferred to M/s Rana Wines. But the AO has not made any enquiry to prove that the document is genuine document or whether the land was actually transferred in the name of M/s Rana Wines. Further if the contention of the assessee is accepted that liability of sundry creditors has been paid off by transferring the land. It is seen from Ikrarnama that the land is in the name of father and the father of the assessee has paid off the liability of the assessee. Since the father of the assessee has no interest in the business of the assessee, the land so sold to Rana Wines is to be treated as gift in the hands of the assessee under section 56(2) of the Act and the assessee is liable to pay capital gain on sale/transfer of land in lieu of disposal of liability. As the AO has failed to consider this issue, the order issued by the assessing officer is erroneous and prejudicial to the interest of the revenue. 4.3 Confirmation Of Balance Of Rana Wines The AO has also not verified the accounts of Rana Wines, Solan whether they have shown the debtor of Rs. 1,83,04,731/- in their books of account. Though the assessing officer has called for information under section 133(6) of the Act, but no information has been received from M/s Rana Liquor Solan and the AO has accepted the accounts of the assessee without verifying the genuineness of the accounts. As the AO has failed to consider this the order issued by the assessing officer is erroneous and prejudicial to the interest of the revenue. 4.4 Cash-in-Hand as per Balance Sheet In Balance Sheet as on 31.03.2016, the assessee has declared advances at Rs. 1,80,00,000/-. It is ITA No.91/Chd/2021 A.Y.2016-17 6 mentioned in assessment record that this amount represents cash-in-hand which was kept for License Fee of next year but he was not allotted any License for the next year. The licence fee is being paid to Government in the form of draft. Hence no cash in hand is required to be kept. The AO has however failed to consider this aspect and not verified whether the cash-in-hand is genuine or not, the order thus issued by the assessing officer is erroneous and prejudicial to the interest of the revenue. 4.5 Payment of Rs. 9,20,000/- in cash On perusal of Ledger Account of Rana Wines L-1, Solan from Books of Accounts of Sh. Sher Singh, it has come to notice that the assessee has made payment of Rs. 9,20,000/- in cash to Rana Wines. This payment was made in contravention to provisions of section 40A(3) of the I.T.Act. The Assessing Officer has failed to take cognizance of these facts. No addition was made by the Assessing officer on account of provisions of section 40A(3) of the Act. This led to under assessment amounting to Rs. 9,20,000/- in this case. As the AO has failed to consider this the order issued by the assessing officer is erroneous and prejudicial to the interest of the revenue.” 5 . F u r t h e r t he L d . A R s u b m i t t e d t h a t t h e L d . P r . C I T h a s p a s s e d t h e im p u g n e d o r d e r w i t h o u t t a k i n g i n t o c o n s i d e r a t i o n t h e s u b m i s s i o n s w h i c h h a v e b e e n f i l e d b e f o r e h i m a n d o u r r e fe re n c e w a s d r a w n t o t he s u b m i s s i o n s s o f i l e d b y t h e a s s e s s e e b e f o r e t he L d . P r . C I T. , w h i c h r e a d a s u n d e r : “On Merits :- 2) It is submitted that there is nothing wrong with the balance sheet of Sher Singh and Rana Wines for the F.Y2015- 16 and 2016-17. It is submitted that your goodself has wrongly taken the details of sher singh with M/s Rana Wines L-l Solan for the F.Y 2015-16 as opening balance nil. It is submitted that during the F.Y 2015-16 relevant to A.Y 2016-17 M/s Rana Wines has got L-l at Solan( HP) and also L-2 & L-14 at Solan ( HP) . The opening balance of Sher Singh for the F.Y 2015-16 with M/s Rana Wines L-l Solan is shown as Rs. ITA No.91/Chd/2021 A.Y.2016-17 7 1,11,42,804.40/-( Cr.) Similarly the opening balance of Rana Wines L-l for the F.Y 2015-16 with Sher Singh Solan is shown as Rs. 1,11,42,804.40/-( Dr.). The copies of ledger account from the Audit books of account of Sher Singh and M/s Rana Wines L-l are enclosed herewith. Meaning thereby your good office has wrongly taken the figures of Rs. nil as opening balance. The correct transactions of sher singh with M/s Rana wines L-l for the F.Y 2015-16 is as under:- Opening balance as on 01/04/2015 Rs.1,11,42,804.40/- Purchases during the year Rs.1,71, 52,31 3.00/- Total Rs.2,82,95,1 17.40/- Less:- Rebate and discount Rs.2,57, 2700.00/- Less:- Payments Rs.74,17,686.00/- Closing balance as on 31/03/2016 Rs.1,83,04,731.00/- From the above table it is very much clear that there was no bogus liability declared by the assesses in his balance sheet during F.Y 2014-15 and has correctly shown the balance with M/s Rana Wines. Regarding payments of outstanding liability of Rs. 1,83,04,731/- with M/s Rana Wines as on 31/03/2016: It is submitted that the assessee has paid Rs. 72,00,0007- to M/s Ran Wines L-l during the F.Y 2016-17 and remaining liability was discharged by executing an agreement dated 09/05/2017 regarding sale of property of Rs. 1.25 Crore in future date. It is submitted that the agreement of sale of property is a valid agreement with is notarized by notary public appointed by Govt, of India and there is no need to registered the agreement of sale under the transfer of property Act. As far as the copy of registered sale deed is concerned, it is submitted that the sale deed was to be executed upto 31/03/2019 as per terms of the agreement dated 09/05/2017 but the assessee and his father were not granted any further liquor business from the Excise Department of Punjab and Himachal and has suffered monetary loss in the draw/ lottery filed with the Excise Department to fetch liquor contract which he did not get. Due to the weak financial position of the assessee and his father, they did not discharged the liability and executed sale deed in favour of M/s Rana Wines L-lon the stipulated date i.e 31/03/2019 and the balance outstanding credit liability is still pending with M/s Rana Wines. ITA No.91/Chd/2021 A.Y.2016-17 8 Regarding Imprest Account:- It is submitted that the assessee has correctly shown sum of Rs. 7,80,00,000/- being advance in the Loan & Advances and the same is actually the imprest account maintained in the name of the assessee. It is submitted that the assessee is a liquor contractor and required to keep ready cash in the end of March for fetching liquor contract for next year; so the imprest account of Rs. 1,80,00,000/- was maintained in the books in the name of assesse for payment of license fee etc. for next year liquor contact which unfortunately not allotted and the money of imprest account was used for repayments to creditors etc. It is further submitted that there is no column in the Income Tax Return Form to show the entry of imprest account so the assessee has shown the same under the head "Advances" in the Current Assets annexure of the Audited balance sheet. It is further submitted that imprest is also sort of advances so the Chartered Accountant has correctly booked the entry under the head "Advances" in the Current Assets annexure in the balance sheet. The allegation of the department that this amount was used for repayment in cash to discharged the liability of M/s Rana Wine L-l in contravention to Section 40A(3) are absolutely wrong and completely denied. It is further submitted that the imprest account was used by the assessee for purchasing lotteries/draw with the Excise liquor department of Punjab and Himachal in the F.Y 2017-18 for getting liquor contract but not succeeded and suffered huge monetary loss for non-awarded of any liquor contract. Regarding cash payment of Rs. 9,20,000/- to M/s Rana Wines: It is submitted that the assessee was under pressure from M/s Rana Wines L-l Solan regarding huge outstanding in the name of the firm and said firm has forcibly taken cash from the liquor vends of the assessee on the last date of the year and assessee was left with no alternative and was forcibly compelled to make payment of Rs. 9,20,000/- under exceptional circumstances which were not in his control. It is submitted that it is a genuine transactions as both the assessee as well as M/s Rana Wines L-l are permanent Income Tax Assessee and both has shown the transactions in their books of account which are audited by Chartered accountant and paid Income tax thereon. These transactions can be verified from the books of both assessee and M/s Rana Wines. There is thus no contravention to provisions of Section 40A(3) of l.T. Act 1961.” ITA No.91/Chd/2021 A.Y.2016-17 9 6 . I t w a s s u b m i t t e d b y t h e L d . A R t h a t f i r s t l y o n th e i s s u e o f b o g u s l i a b i l i t y f o r f i n a n c i a l y e a r 2 0 1 4 - 1 5 , th e re i s n o b a s i s f o r a r r i v i n g a t s u c h a f i n d i n g b y t he L d . P r .C I T a s s h e h a s f a i l e d t o c on s i d e r t h e e n t r i e s i n t h e l e d ge r a cc o u n t s o s u b m i t t e d b y t h e a s s e s s e e w h e r e i n s he h a s f a i l e d to c o n s i d e r o p e n i n g b a l a n c e o f R s . 1 , 1 1 , 4 2 , 8 0 4 / - w h i c h h a s b e e n t a k e n a s ni l b y t h e L d . P r . C I T, w h e r e a s i f i t l o o k a t l e d g e r a c c o u n t of M / s R a n a W i n e s , L - 1 , S o l a n , t h e sa m e i s c l e a r l y a p p e a r i n g a s o p e n i n g b a l a n c e a n d i t s e e m s th a t t h e L d . P r . C I T h a s c o n s i d e r e d t he sa i d o p e n i n g b a l a n c e a s p a r t o f t h e p u r c h a s e s f i g u r e o f R s . 2 , 3 4 , 3 3 , 2 8 1 / - . I t w a s f u r t h e r s u b m i t t e d t h a t t h e a s se s s e e w a s h a v i n g r e g u l a r p u r ch a s e s f r o m M / s R a n a W i n e s , L - 1 , S o l a n i n t h e e a r l i e r y e a r a s w e l l a s i n t h e y e a r u n d e r c o n s i d e r a t i o n a n d p a y m e n t s h a ve b e e n m a d e d u r i n g t h e y e a r , w h i c h i s a l s o e v i d e n t f r o m the f i g u r e s r e p r o d u ce d b y t h e Ld . P r . C I T. I t w a s s u b m i t t e d t h a t, t h e r e f o re , t he f i n d i n g o f t h e L d . P r . C I T t h a t n o p ay m e n t s h a d b e e n m a d e t o M / s R a n a W i n e s , L - 1 , S o l a n , i s n o t f a c t u a l l y c o r r e c t. I t w a s f u r t h e r s u b m i t t e d t h a t t he y e a r u n d e r c o n s i d e r a t i o n i s f i n a n c i a l y e a r 2 0 1 5 - 1 6 r e l e va n t t o a s s e s s m e n t y e a r 2 0 1 6 - 1 7 a n d t h e l i a b i l i t y t o w a r d s M/ s R a n a W i n e s , L - 1 , S o l a n , w h i c h h a v e be e n a l l e g e d a s b o g u s l i a b i l i t y , p e r t a i n s t o t h e f i n a n c i a l y e a r 2 0 1 4 - 1 5 re l e v a n t t o a s s e s s m e n t ye a r 2 0 1 5 - 1 6 . Th e r e f o r e , a s f a r a s t h e ye a r ITA No.91/Chd/2021 A.Y.2016-17 10 u n d e r c o n s i d e r a t i o n i s c o n c e r n e d , t he r e i s n o b a s i s f o r a r r i v i n g a t t h e f i n d i n g t h a t t h e A O h a s f a i l e d t o co n s i d e r t h e s a i d m a t t e r a n d , t h e r e f o r e , t he or d e r s o p a s se d b y t h e AO c a n n o t b e h e l d a s e r r o n e o u s a n d p r e j u d i c i a l t o t he i n te r e s t o f t h e R e ve n u e . 7 . I t w a s f u r t h e r s u b m i t t e d t h a t r e g a r d i n g t h e d i s ch a r g e o f t h e l i a b i l i t y o f c l o s i n g b a l a n c e o f R s . 1 , 8 3 , 0 4 , 73 1 / - , t h e L d . P r . C I T h a s s t a t e d t h a t t h e a s s e s s e e h a s p a i d R s. 7 2 l a c s i n c a s h t o M / s R a n a W i n e s , L - 1 , S o l a n d u r i n g f i n a n ci a l y e a r 2 0 1 6 - 1 7 a n d , t h e r e f o re , t h e p r o v i s i o n s o f s e c t i o n 40 A ( 3 ) o f t h e A c t a r e a t t r a c t e d . I t w a s su b m i t t e d t h a t t h e r e i s n o d i s p u t e t h a t t h e a s s e s s e e h a s m a d e c a s h p a y m e n t o f R s . 7 2 l a c s t o M / s R a n a W i n e s , L - 1 , S o l a n b u t t h a t p a y m e n t h a s b e e n m a d e i n s u b s e q u e n t f i n a n c i a l y e a r 2 0 1 6 - 1 7 r e l ev a n t to a s s e s s m e n t y e a r 2 0 1 7 - 1 8 a n d , t h e r e f o r e , a s f a r a s th e ye a r u n d e r c o n s i d e r a ti o n i s c o n c e r n e d , t h e s a i d m a t t e r ha s n o b e a r i n g o n t h e a s s e s s m e n t o r d e r s o p a s s e d b y t he A O a n d , t h e r e f o re , t h e o r d e r s o p a s se d b y t h e A O c a n n o t b e h e l d a s e r r o ne o u s a n d pr e j u d i c i a l t o t h e i n t e r e s t o f t h e R ev e n ue . S i m i l a r l y , i t w a s s u b m i t t e d t h a t r e g a r d i n g t h e b a l an c e p a y m e n t o f R s . 1 , 1 1 , 0 4 , 7 3 1 / - i n r e s p e c t o f w h i c h t h e a s s e s se e h a s s u bm i t t e d t h a t t h i s l i a b i l i t y w a s d i s ch a r g e d b y e xe c u t i n g a n a g r e e m e n t d a te d 0 9 . 0 5 . 2 0 1 7 f o r a s u m of R s . 1 . 2 5 c r o r e s , i t a g a i n p e r t a i n s t o f i n a n c i a l y e a r 2 0 1 7 - 1 8 ITA No.91/Chd/2021 A.Y.2016-17 11 r e le v a n t t o a s s e ss m e n t y e a r 2 0 1 8 - 1 9 a n d i t h a s n o be a r i n g f o r t h e a s s e s s m e n t o r d e r p a s s e d f o r t he y e a r u n d e r c o n s i d e r a t i o n . 8 . R e g a r d i n g t h e b a l a n c e c o n f i r m a t i o n f r o m M / s R a n a W i n e s , L - 1 , S o l a n a m o u n t i n g t o R s . 1 , 8 3 , 0 4 , 7 3 1 / - , i t w a s s u b m i t t e d t h a t t h e a s s e s s e e h a s d u l y s u b m i t t e d c o p y o f t h e l e d g e r a c c o u n t o f M / s R a n a W i n e s , L - 1 , S o l a n i n i t s b o o k s o f a c c o u n t s b e f o r e t he A O , w h i c h w a s d u l y v e r i f i e d b y h i m a n d d u r i n g t h e co u r s e o f r e v i s i o na r y p r o c e e d i n g s b ef o r e t h e L d . P r . C I T, t h e c o p y o f t h e l e d g e r a c c o u n t o f t h e a s s e s s e e i n t h e b o o k s o f M / s R a n a W i n e s , L - 1 , S o l a n w e r e s u b m i tt e d a n d w h i c h a l s o f i n d m e n t i o n i n t h e P a p e r B o o k s o s ub m i t t e d b y t h e a s se s s e e a n d a s c a n b e s e e n , t he b a l a n c e s i n th e b o o k s o f t h e a s s e s s e e c o m p a n y a r e t a l l y i n g w i t h t h e b a l a n c e s i n t h e b o o k s o f M / s R a n a W i n e s , L - 1 , S o l a n a n d t h e L d . P r . C I T h a s f a i l e d t o s t a t e h o w t h e o r d e r s o p a s s e d b y t h e A O c a n b e h e l d t o b e e r r o n e o u s a n d p r e j u d i c i a l t o t h e i n t e r e s t o f t h e Re v e n ue . 9 . R e g a r d i n g t he ca s h i n h a n d o f R s . 1 . 8 0 c r o r e s , it w a s s u b m i t t e d t h a t t h e r e i s n o b a s i s f o r a r r i v i n g a t t he f i n d i n g b y t h e L d . P r . C I T t h a t t h e r e w a s n o n e e d f o r t he a ss e s s e e to k e e p c a s h i n h a n d . I t w a s s u b m i t t e d t h a t t h e s a i d fi n d i n g i s c l e a r l y b a s e d o n p r e s u m p t i o n a n d a s s u m p t i o n a n d i t i s th e ITA No.91/Chd/2021 A.Y.2016-17 12 p r e r o g a t i ve o f t h e a s s e s s e e w h e th e r he w a n t s t o k e ep c a s h i n h a n d o r d e p o s i t i n t h e b a n k a c c o u n t a n d t h e s a me d e p e n d s o n t h e b u s i n e s s e x ig e n c i e s a n d ca n n o t b e c h a l l e n ge d b y t h e L d . P r . C I T a n d i n a n y c a s e , t h e fa c t t h a t t h e r e w a s c a s h in h a n d o f t h e a s s e s se e w a s d u l y d i sc l o s e d i n f i n a n c i a l s t a t e m e n t a n d b o o k s o f a c c o u n t w h i c h ha v e b e e n d u l y ve r i f ie d a n d e x a m i n e d b y t h e A O , t h e r e i s n o b a s i s t o h o l d t h a t t h e o r d e r s o p a s se d b y t h e A O i s e r r o ne o u s a nd p r e j u d i c i a l t o t h e i n t e r e s t o f t he Re ve n u e . 1 0 . R e g a r d i n g p a y m e n t o f R s . 9 , 2 0 , 0 0 0 / - i n c a s h t o M/ s R a n a W i n e s , L - 1 , S o l a n d u r i n g t h e y e a r u n d e r c o n s i d e r a t i o n , i t w a s s u b m i t t e d t ha t t h e a s se s se e wa s u n d e r p r e s s u r e f r o m M / s R a n a W i n e s , r e g a r d i n g h u g e ou t s t an d i n g a n d , t h e r e f o r e , le f t w i t h n o a l te r n a t i v e , h e w a s com p e l l e d t o m a k e p a y m e n t of R s . 9 , 2 0 , 0 0 0 / - u n d e r c o n s i d e r a ti o n wh i c h w e r e b e y o n d h is c o n t r o l a n d , t h e r e f o r e , t he r e w a s no c o n t r a v e n t i o n o f t h e p r o v i s i o n s o f s e c t i o n 4 0 A ( 3 ) of t h e A c t . I t w a s s u b m i t t e d t h a t ne c e s s a r y e x p l a n a t i o n w a s s u bm i t t e d b e f o r e t h e L d . P r . C I T a n d h e h a s f a i l e d t o c o n s i d e r t h e s a m e w h i l e p a s s i n g t h e i m p u g n e d o r d e r . W it h o u t p r e j u d i ce , i t w a s s u b m i t t e d t h a t i f a t a l l , t h e o r d e r o f t he A O ha s t o b e s e t a s i d e t he n th e s a m e c a n b e s e t a s i d e f o r th e l im i t e d p u r p o s e o f e x a m i n i n g t h e e x p l a n a t i o n s o s u b m i t t e d by t h e a s s e s se e b e f o r e t h e L d . P r . C I T. ITA No.91/Chd/2021 A.Y.2016-17 13 1 1 . F u r t h e r , t h e L d . A R h a s r e l i e d u p o n t h e C o o r d i na te B e n c h d e c i s i o n in t h e c a s e o f A b h i m a n y u G u p t a V s . Pr . C I T, I TA N o . 7 7 1 /C h d / 2 0 1 7 , d a t e d 0 9 . 0 4 . 2 0 1 8 a n d t h e d e c i si o n o f H o n ' b l e P u n j a b & H a r y a n a H i g h C o u r t i n t h e c a s e o f C I T V s . S o h a n a W o o l l e n M i l l s , 2 9 6 I TR 2 3 8 . 1 2 . P e r c o n t r a , t he L d . C I T D R r e l ie d u p o n t h e f i n di n g s o f t h e L d . P r . C I T a n d o u r r e fe r e n c e w a s d r a w n t o tw o sp e c i f i c f i n d i n g s o f t h e L d . P r . C I T. F i r s t l y , r e g a r d i n g t he b a l a nc e c o n f i r m a t i o n o f M / s R a n a W i n e s , L - 1 , S o l a n a m o u n t i ng t o R s . 1 , 8 3 , 0 4 , 7 3 1 / - , i t w a s s u b m i t t e d t h a t d u r i n g th e c o u r s e o f a s s e s s m e n t p r o c e e d i n g s t h o u g h t h e A O h a s c a l l e d f o r t h e i n f o r m a t i o n u / s 1 3 3 ( 6 ) o f t h e A c t , n o i n f o r m a t i o n ha s b e e n r e ce i v e d f r o m M / s R a n a W i n e s , L - 1 , S o l a n a n d , t h e r ef o r e , t h e A O h a s m e r e l y r e l i e d u p o n t h e s u b m i s s i o n s s o f il e d b y t h e a s se s s e e w i th o u t v e r i f y i n g t h e s a m e i n d e p e n d e n tl y f r o m M / s R a n a W i n e s , L - 1 , S o l a n a n d , t h e r e f o r e , t h e L d . P r . C I T h a s r i g h t l y h e l d t h a t t h e A O h a s a c c e p te d t h e a cc o un t s o f t h e a s se s s e e w i t h o u t v e r i f y i n g t h e ge n u i n e ne s s o f th e a c c o u n t s w i t h M / s R a n a W i n e s , L - 1 , S o l a n . 1 3 . I t w a s f u r t h e r s u b m i t t e d t h a t r e g a r d i n g t h e c a sh p a y m e n t o f R s . 9 , 2 0 , 0 0 0 / - , t h e s a m e i s c l e a r l y e v i d en t f r o m t h e p e r u s a l o f t h e l e d g e r a c c o u n t o f M / s R a n a W i n e s, L - 1 , S o l a n i n t h e b o o k s o f t h e a s s e s se e a n d i n s p i t e o f th a t , t h e r e ITA No.91/Chd/2021 A.Y.2016-17 14 i s n o e x a m i n a t i o n o r v e r i f i c a t i o n w h i c h h a s b e e n u nd e r t a k e n b y t h e A O o r a n y q u e r y w h i c h h a s b e e n r a i s e d b y t h e AO a n d , t h e r e f o r e , a s f a r a s t h e p a y m e n t o f R s . 9 , 2 0 , 0 00 / - i n c a s h , t h e s a m e i s c l e a r l y i n v i o l a t i o n o f s e c t i o n 40 A( 3 ) o f t h e A c t a n d , t h e r e f o r e , t h e L d . P r . C I T w a s r i g h t i n h o ld i n g t h a t t h e A O h a s f a i l e d t o c o n s i d e r t h e s a i d v i o l a t i on a nd t h e o r d e r s o p a s se d b y t h e A O , t h e r e f o r e , i s c l e a r l y e rr o n e o u s a n d p r e j u d i c i a l t o t h e i n te r e s t o f t h e Re ve n u e . 1 4 . W e h a ve h e a r d t h e r i v a l c on t e n t i o n s a n d p u r u s e d t h e m a t e r i a l a v a i l a b l e o n r e c o r d . F i r s t l y , t h e l d P C I T h a s h e l d t h a t t h e a s se s s e e h a s s h o w n b o g u s l i a b i l i t y o f R s 1 , 1 1 , 4 2 , 8 0 4 / - t o w a r d s R a n a W i n e s L - 1 , S o l a n i n hi s b a l a n c e s h e e t f o r t h e f i n a n c i a l ye a r 2 0 1 4 - 1 5 a n d the A O h a s f a i l e d t o c o n s i d e r t h i s m a t t e r a n d t h e r e f o r e , t he or d e r s o p a s s e d b y t h e A s s e s s i n g o f fi c e r f o r t he i m p u g n e d a s s e s s m e n t ye a r i s e r r o n e o u s a n d p r e j u d i c i a l t o t h e i n te r e s t o f t h e Re ve n ue . Th e b a s i s o f a r r i v i n g a t s u c h a f in d i n g b y t h e l d P C I T i s t h a t t h e a s s e s se e h a s s h o w n n i l o p e ni n g b a l a n c e t o w a r d s R a n a W i n e s L - 1 S o l a n i n i t s b o o k s of a c c o u n t s a s o n 1 . 0 4 . 2 0 1 5 a n d h a s n o t m a d e a n y p a y m en t t o w a r d s s u c h l i a b i l i t y i n t h e s u b s e q u e n t y e a r s. I n h i s s u b m i s s i o n s , t h e a s s e s s e e h a s s u b m i t t e d t h a t h e h a s s h o w n o p e n i n g b a l a n c e o f R s 1 , 1 1 , 4 2 , 8 0 4 / - t o w a r d s R a n a W in e s L- 1 , S o l a n i n h i s b a l a n c e s he e t f o r t h e f i n a n c i a l ye ar 2 0 1 5 - 1 6 ITA No.91/Chd/2021 A.Y.2016-17 15 a n d a p p a r e n t l y , t h e l d P C I T h a s w r o n g l y c o n s i d e r e d th e o p e n i n g b a l a n ce a s p a r t o f p u r c h a s e s d u r i n g t h e ye ar . S e c o n d l y , i t h a s b e e n s u b m i t t e d t h a t t h e p a y m e n t s to t h e t u n e o f R s 3 2 , 9 5 , 0 0 0 / - h a v e b e e n m a d e d u r i n g t he y ea r a n d t h e r e f o re , i t i s i n c o r r e c t t o s t a te t h a t n o p a y m e n ts h a v e b e e n m a d e d u r i ng t h e ye a r . W e h a v e g o n e t h r o u g h t h e l e d ge r a c c o u n t o f R a n a W i n e s L - 1 S o l a n a n d f i n d t h a t t h e r e i s a n o p e n i n g b a l a n ce o f R s 1 , 1 1 , 4 2 , 8 0 4 / - , f r e s h p u r c h a s es d u r i n g t h e ye a r a m o u n t i n g t o R s 1 , 2 2 , 9 0 , 4 7 7 / - , r e b at e s a n d d i s c o u n t s a m o u n t i n g t o R s 1 8 ,4 3 , 5 5 0 / - , p a y m e n t s m a de d u r i n g t h e y e a r a m o u n t i n g t o R s 3 2 , 8 5 , 0 0 0 / - a n d t h e c l o s i n g b a l a n c e a m o u n t i n g t o R s 1 , 8 3 , 0 4 , 7 3 1 / - a n d t h e r e f o re , w h e r e t h e l i a b i l i t y c o n t in u e s t o e x i s t in th e b o o k s o f a c c o u n t s a n d t h e r e a r e p a y m e n t s m a d e d u r i n g t h e ye a r u n d e r c o n s i d e r a ti o n , t h e l i a b i l i t y c a n n o t b e s a i d to c e a se to e x i s t d u r i n g t h e y e a r u n de r c o n s id e r a t i o n . I t i s no t t h e c a se o f t h e R e v e n ue e i t he r t h a t i t i s a c a s e o f r e m i s s i on o f l i a b i l i t y d u r i n g t h e ye a r u n d e r c o n s i d e r a t i o n . I n an y c a s e , w h a t t h e l d P C I T h a s a l l e g e d i s t h a t t h e l i a b i l i t y t o w a r d s R a n a W i n e s L - 1 , S o l a n i s a b o g u s l i a b i l i t y w h i c h h as b e e n i n c u r r e d a n d pe r t a i n s t o t h e f i n a n c i a l y e a r 2 0 1 4 -1 5 r e l e v a n t t o a s s e s s m e n t ye a r 2 0 1 5 - 1 6 . Th e r e f o r e , t h e i m p l i c at i o n s , i f a n y , a r i s i n g o u t o f s u c h l i a b i l i ty w h e r e s o c l a im e d b y t h e a s s e s se e , a n d w h i c h t h e A O i s a t l i b e r t y t o e x a m i n e a s p e r ITA No.91/Chd/2021 A.Y.2016-17 16 l a w and where held to be bogus will be relevant for the assessment y e a r 2 0 1 5 - 1 6 a n d n o t f o r t h e i m p u g n e d a s s e s sm e n t y ea r 2 0 1 6 - 1 7 a n d o n th i s a c c o u n t , t h e o r d e r s o p a s s e d b y t h e A O f o r t h e i m p u g n e d a s s e s s m e n t ye a r 2 0 1 6 - 1 7 t h e r e f or e c a n n o t b e h e l d t o b e e r r o n e o u s i n s o f a r a s p r e j u d i c i a l t o t h e i n t e r e s t o f t h e Re v e n ue . 1 5 . N o w , c o m i n g t o d i s c h a r g e o f o u t s t a n d i n g li a b i l it y o f R s . 1 , 8 3 , 0 4 , 7 3 1 / - a s o n c l o s e o f t h e f i n a n c i a l y e a r 2 0 1 5 - 1 6 r e le v a n t t o a s se s s m e n t y e a r 2 0 1 6 - 1 7 , i t i s a n a d m i tt e d p o s i t i o n t h a t t h e s a m e h a s be e n p a r t l y d i s c h a r g e d by w a y o f c a s h p a y m e n t o f R s 7 2 , 0 0 , 0 0 0 / - d u r i n g t h e s ub s e q ue nt f i n a n c i a l y e a r 2 0 1 6 - 1 7 r e le v a n t t o a s s e s s m e n t ye a r 2 0 1 7 - 1 8 . Th e l d P C I T h a s h e l d t h a t t h e a s s e s s e e h a s m a d e t h e p a y m e n t s i n c o n t r a v e n t i o n o f s e c t i o n 4 0 A ( 3 ) a n d s i nc e t h e A O h a s n o t e x a m i n e d t h i s m a t t e r , t he o r d e r s o p a s s ed i s e r r o ne o u s i n s o fa r a s p r e j u d i c i a l t o t h e i n te r e s t o f R e ve n ue . W e f i n d t h a t w h e r e t h e p a y m e n t i t s e l f h a s n o t b e e n m a d e i n t h e f i n a n c i a l y e a r r e le v a n t t o i m p u g n e d a s s e s sm e n t y e a r , b a s i s o f a r r i v i n g a t t h e f i n d i n g b y t h e l d P C I T t h at t h e r e i s a c o n t r a v e n t i o n o f p r o v i s i o n s o f se c t i o n 4 0 A ( 3 ) i s n ot c l e a r f r o m t h e i m p u g n e d o r d e r w h e r e t h e a p p l i c a b i l i t y o f s a id p r o v i s i o n s i t s e l f i s i n d o u b t . T h e i m p l i c a t i o n s , if a n y , i n r e s p e c t o f d i s c h a r g e o f l i a b i l i t y i n c a s h i n t h e s ub s e q ue n t f i n a n c i a l y e a r 2 0 1 6 - 1 7 , a l i a b i l i t y w h i c h h a s b e e n i n c u r r e d ITA No.91/Chd/2021 A.Y.2016-17 17 i n c u r r e n t f i n a n c i a l y e a r w i l l a r i s e u / s 4 0 A ( 3 A ) a nd n o t u n d e r s e c t i o n 4 0 A ( 3 ) , a n d t h e A O w i l l b e a t l i b e r t y t o e x a m i n e t h e s a m e a s p e r l a w f o r t h e a s se s s m e n t y e a r 2 0 1 7 - 1 8 a n d n o t f o r t h e i m p u g n e d a s s e s s m e n t ye a r 2 0 1 6 - 1 7. S i m i l a r i s t h e s i t u a t i o n r e l a t i n g t o d i s c h a r g e o f re m a i n i n g o u t s t a n d i n g l i a b i l i t y b y w a y o f e n te r i n g i n t o a n a gr e e m e n t to s e l l d a te d 9 . 0 5 . 2 0 1 7 w h i c h a g a i n f a l l s i n f i n a n c i a l y e a r 2 0 1 7 - 1 8 r e l e v a n t t o a s s e s s m e n t y e a r 2 0 1 8 - 1 9 a n d t h e i m p l i c a t i o n s , i f a n y w i l l a r i s e i n th e f i n a n c i a l yea r 2 0 1 7 - 1 8 a n d t h e A O i s a t l i b e r t y t o e xa m i n e a s p e r l a w f o r t h e a s s e s s m e n t y e a r 2 0 1 8 - 1 9 a n d n o t f o r t h e i m p u g n e d a s s e s s m e n t ye a r 2 0 1 6 - 1 7 . Th e r e fo r e , w h e r e t he AO ha s n o t e x a m i n e d t h e i m p l i c a t i o n s r e l a t i n g t o d is c h a r g e o f o u t s t a n d i n g l i a b i l i t y w h i c h h a s e v i d e n t l y h a p p e n e d i n t h e s u b s e q ue n t f i n a n c i a l y e a r s , t h e o r d e r s o p a s se d b y t h e A O f o r t h e i m p u g n e d a s s e s s m e n t y e a r 2 0 1 6 - 1 7 c a n n o t b e h e l d t o b e e r r o n e o u s i n s o f a r a s p r e j u d i c i a l t o t h e i n te r e s t o f th e R e v e n u e . 1 6 . R e g a r d i n g c o n f i r m a t i o n o f b a l a n c e i n t h e a c c o u nt o f R a n a W i n e s , S o l a n , t h e l d P C I T h a s s t a t e d t h a t th o ug h t h e a s s e s se e h a s s h o w n o u t s t a n d i n g l i a b i l i t y o f R s 1 , 8 3 , 0 4 , 7 3 1 / - t o w a r d s R a n a W i n e s , S o l a n i n h i s bo o k s o f a c c o u n t s , t h e A O h a s n o t i n d e p e n d e n t l y v e r i f i e d t h e a c c o u n t s o f R a n a W i n e s , S o l a n t o v e r i f y w h e t h e r t h ey h a ve ITA No.91/Chd/2021 A.Y.2016-17 18 s h o w n t h e a s s e s se e a s d e b t o r i n i ts b o o k s o f a c c o u nt s t o t h e t u n e o f R s 1 , 8 3 , 0 4 , 7 3 1 / - . I n t h i s r e g a r d , i t i s n o te d t h a t t h e A O d i d c a l l f o r i n f o r m a t i o n u / s 1 3 3 ( 6 ) f r o m M /s R a na W i n e s t o c o n f i r m t h e b a l a n c e s d u r i n g t h e c o u r s e o f a s s e s sm e n t p r o c e e d i n g s , h o w e ve r , i t i s a l s o a f a c t t h a t a t t h e t i m e o f p a s s i n g o f t h e a ss e s s m e n t o r de r , o n l y t h e l e d ge r a cc o u n t o f R a n a W i n e s i n b o o k s o f t h e a s se s s e e w a s a v a i l a b l e an d t h e c o n f i r m a t i o n f r o m R a n a W i n e s w a s n o t r e ce i ve d a n d du r i n g t h e c o u r se o f r e v i s i o n a r y p r o c e e d i n g s , l e d ge r a c c o un t o f t h e a s s e s se e i n t h e b o o k s o f R a n a w i n e s w a s s u b m i t t e d fo r t h e f i r s t t i m e b e f o r e t h e l d P C I T a n d a s p e r b o t h t h e le d ge r a c c o u n t s , t h e b a l a n c e s i n b o o k s o f t h e a s s e s se e a s w e l l a s i n t h e b o o k s o f R a n a W i n e s a r e t a l l y i n g a n d t h e l d P C I T h a s f a i l e d t o h i g h l i g h t a n y d i s c r e p a n c i e s i n t h e t w o a cc o u n t s . Th e r e f o r e , o n t h i s a c c o u n t , w h e r e t h e r e i s n o d i s p ut e w h i c h h a s b e e n r a i s e d b y t h e l d P C I T r e g a r d i n g t h e p u r c h as e s m a d e b y t he a ss e s s e e f r o m R a n a W i n e s d u r i n g t h e ye ar u n d e r c o n s i d e r a ti o n h a v i n g n o t b e e n e x a m i n e d b y t h e A O a n d a c c o u n t b a l a n c e s i n r e s pe c ti v e b o o k s o f a c c o u n ts a r e a l s o m a t c h i n g a n d n o d i s c r e p a n c y h a s b e e n h i g h l i g h te d , t h e o r d e r s o p a s s e d b y t h e A O c a n n o t b e h e l d t o b e e r ron e o u s i n s o f a r a s p r e j u d i c i a l t o t h e i n t e r e s t o f R e ve n u e . 1 7 . C o m i n g t o c a s h p a y m e n t o f R s 9 , 2 0 , 0 0 0 / - t o R a n a W i n e s d u r i n g t h e y e a r u n d e r c o n si d e r a t i o n , t he l d PC I T h a s ITA No.91/Chd/2021 A.Y.2016-17 19 s t a t e d t h a t t h e a s se s se e h a s m a d e t h e p a y m e n t i n c o n t r a v e n t i o n o f s e c t i o n 4 0 A ( 3 ) a n d t h e A O h a s f a i le d t o e x a m i n e a n d t a k e c o g n i z a n c e o f t h e s a i d f a c t a n d w hi c h h a s r e s u l te d i n u n d e r a s s e s s m e n t t o t h e t u n e o f R s 9 , 2 0 ,0 0 0 / - a n d t h e o r d e r s o p a s s e d b y t he AO w a s h e l d t o be e rr o n e o u s i n s o f a r a s p r e j u d i c i a l t o t h e i nt e r e s t o f Re v e n ue. D u r i n g t h e c o u r s e o f h e a r i n g , t h e l d C I T D R s u b m i t t e d t h a t t h e s a m e i s c l e a r l y e v i d e n t f r o m t h e p e r u s a l o f th e l e dge r a c c o u n t o f M / s R a n a W i n e s , L - 1 , S o l a n i n t he b oo k s o f t h e a s s e s se e a n d i n s p i t e o f t h a t , t h e re i s n o e x a m i n a t io n o r v e r i f i c a t i o n w h i c h h a s b e e n u n de r t a k e n b y t h e A O o r a n y q u e r y w h i c h h a s b e e n r a i se d b y t h e A O a n d , t he r e f o re , a s f a r a s t h e p a y m e n t o f R s . 9 , 2 0 , 0 0 0 / - i n c a s h , t h e s am e i s c l e a r l y i n v i o l a t io n o f s e c t i o n 4 0 A ( 3 ) o f t h e A c t . I n r e s p o n se , t h e l d A R s u b m i t t e d t h a t t he a s s e s se e w a s u n d e r p r es s u r e f r o m M / s R a n a W i n e s , r e g a r d in g h u g e o u t s t a n d i n g a n d, t h e r e f o re , l e f t w i t h n o a l t e r n a t i v e , h e w a s c o m p e l le d t o m a k e p a y m e n t o f R s . 9 , 2 0 , 0 0 0 / - u n d e r c o n s i d e r a t i o n w h i c h w e r e b e y o n d h i s c o n t r o l a n d , t h e r e f o r e , t h e r e w a s n o c o n t r a v e n t i o n o f t h e p r o v i s i o n s o f s e c t i o n 4 0 A ( 3 ) of t h e A c t . I t w a s s u b m i t t e d t h a t ne c e s s a r y e x p l a n a t i o n w a s s u bm i t t e d b e f o r e t h e L d . P r . C I T a n d h e h a s f a i l e d t o c o n s i d e r t h e s a m e w h i l e p a s s i n g t h e i m p u g n e d o r d e r . W it h o u t p r e j u d i ce , i t w a s s u b m i t t e d t h a t i f a t a l l , t h e o r d e r o f t he A O ha s t o b e ITA No.91/Chd/2021 A.Y.2016-17 20 s e t a s i d e t he n th e s a m e c a n b e s e t a s i d e f o r th e l im i t e d p u r p o s e o f e x a m i n i n g t h e e x p l a n a t i o n s o s u b m i t t e d by t h e a s s e s se e b e f o r e t h e L d . P r . C I T. 1 8 . O n p e r u s a l o f t h e l e d ge r a c c o u n t o f R a n a W i n e s S o l a n i n t h e b o o k s o f t h e a s se s se e , i t i s e v i d e n t t h a t t he a s s e ss e e h a s m a d e c a s h p a y m e n t o f R s 9 , 2 0 , 0 0 0 / - t o R a n a W i n es d u r i n g t h e y e a r u n d e r c o n s i de r a ti o n a n d w e f i n d t h at t h e r e i s no query raised or any examination which has been carried out by t h e A O i n t e r m s o f i m p l i c a t i o n s a r i s i n g u / s 4 0 A ( 3 ) o f t h e A c t , t h e p r o v i s i on s o f w h i c h a r e p r i m a f a c i e a t t r a ct e d i n t h e i n s t a n t c a s e un l e s s t he e x p l a n a t i o n s u b m i t t e d b y t he a s s e s se e i n te r m s o f b u s i n e s s e x i ge n c y i s e xa m i n e d a n d a c c e p t e d w h i c h h a s b e e n s u b m i t t e d f o r t h e f i r s t t i me b e f o r e t h e l d P C I T. Th e r e f o r e , t o t h i s e xt e n t , w h e r e t h e im p l i c a t i o n a r i s i n g u / s 4 0 A ( 3 ) h a s n o t b e e n e x a m i n e d b y t h e A O , w e b e l i e v e t h a t t h e o r d e r s o p a s s e d b y t h e A O h a s t o be h e l d t o b e e r r o ne o u s a nd p r e j u d i c i a l t o t h e i n te r e s t o f t he R e ve nu e a n d t h e r e f o r e , t o t h i s l i m i t e d e x te n t , w e u p h e l d t he o r d e r o f t h e l d P C I T a n d t h e o r d e r o f t h e A O h a s t o b e se t as i d e f o r t h e l i m i t e d p u r p o s e o f e x a m i n i n g a s p e r l a w t h e i m pl i c a t i o n s u / s 4 0 A ( 3 ) i n r e s p e c t o f c a s h p a y m e n t s o f R s 9 , 2 0 , 00 0 / - a n d e x p l a n a t i o n s o s u b m i t t e d b y t h e a s s e s s e e i n su pp o r t o f b u s i n e s s e x i g e n c y . ITA No.91/Chd/2021 A.Y.2016-17 21 1 9 . L a s t l y , w h e t h e r t h e a s se s se e i s r e q u i r e d t o k e ep c a s h i n h a n d o r d e p o s i t i n t h e b a n k a c c o u n t , t h e s a m e w il l d e p e n d u p o n t h e b u s i n e s s e x i g e n c y p r e v a i l i n g a t t h e r e le v a n t p o i n t i n t i m e a n d s o l o n g a s t h e r e i s n o di s c r e p a n cy p o i n t e d o u t i n t he b o o k s o f a c c o u n t s w h e r e t h e c a s h i n h a nd h a s b e e n d u l y r e c o r de d a n d p h y s i c a l c a s h - i n h a n d , th e o r d e r s o p a s s e d b y t h e A O c a n n o t b e h e l d t o b e e r ron e o u s i n s o f a r a s p r e j u d i c i a l t o t h e i n t e r e s t o f R e ve n u e . 2 0 . I n t h e r e s u l t , th e a p p e a l o f t he a s se s s e e i s p ar t l y a l l o w e d i n l i g h t of a f o r e s a i d d i r e c ti o n s . O r d e r p r o n o u n c e d o n 2 8 . 0 2 . 2 0 2 2 . Sd/- Sd/- (DIVA SINGH) (VIKRAM SINGH YADAV) /Judicial Member /Accountant Member Dated: 28.02.2022 *रती* आदेश क % त&ल'प अ*े'षत/ Copy of the order forwarded to : 1. अपीलाथ+/ The Appellant 2. %,यथ+/ The Respondent 3. आयकर आय ु -त/ CIT 4. आयकर आय ु -त (अपील)/ The CIT(A) 5. 'वभागीय % त न0ध, आयकर अपील य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File # $ स / By order, सह (ंज / Assistant Registrar ITA No.91/Chd/2021 A.Y.2016-17 22 Draft dictated 16.02.2022 Sr.PS Draft placed before author 17.02.2022 Sr.PS Approved Draft comes to the Sr.PS/PS Sr.PS Order signed and pronounced on File sent to the Bench Clerk Sr.PS Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order. ITA No.91/Chd/2021 A.Y.2016-17 23