M/S VIJAYETA BUILDCON PVT. LTD., JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, JAIPUR

ITA 980/JPR/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4249 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 20-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: S R SHARMA
• Keywords: Gift; Business income; Revision of order; Business expenditure; Income from undisclosed sources; Search and seizure; Period of limitation; Cost of acquisition; Reasonable cause; Block assessment; Revised return; Reassessment proceedings; CHAPTER XIVB
• Section: 271(1)(c); 40A(3); 143(3); 153A; 139(5); 43D; 143(2); 191; 208; 64; 43; 48; 13; 153; 22; 153C; 32; 147; 148; 132; 28; 139

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HES B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 980/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2007-08 M/S VIJAYETA BUILDCON PVT. LTD. B-68, STERLING GROUND FLOOR PRITHVIRAJ ROAD, C-SCHEME, JAIPUR CUKE VS. THE ACIT, CENTRAL CIRCLE-01, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCV3035B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SH. S. R. SHARMA (CA) & SH. RAJNIKANT BHATRA (CA) JKTLO DH VKSJ LS @ REVENUE BY : SH. B. K. GUPTA (CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/10/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 27/10/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- 4, JAIPUR DATED 30.08.2016 WHEREIN THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD CIT(A) IN CONFIRMING THE ADDITION OF RS 4 2,50,000/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE ACT P ERTAINING TO A.Y 2007-08. 2. AT THE OUTSET, IT IS NOTED THAT THERE HAS BEEN A DELAY IN FILING THE PRESENT APPEAL BY 654 DAYS. IN ITS PETITION FOR CO NDONATION OF DELAY, THE ASSESSEE COMPANY HAS SUBMITTED THAT THE ASSESSMENT U/S 153A READ WITH 143(3) WAS COMPLETED ON 25.03.2015 BY ACIT, CENTRAL CIRCLE-1, JAIPUR AGAINST WHICH THE ASSESSEE MOVED AN APPEAL BEFORE T HE LD. CIT(A) ON 17.04.2015. THEREAFTER, THE LD. CIT(A) PASSED THE O RDER ON 30.08.2016 WHICH ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 2 WAS SERVED ON THE ASSESSEE COMPANY ON 05.09.2016. I T WAS FURTHER SUBMITTED THAT THERE WAS A CHANGE IN MANAGEMENT OF THE ASSESSEE COMPANY IN YEAR 2014 WHEREIN SH. HARI MOHAN DANGAYACH AND S MT. KAMLESH DANGAYACH TRANSFERRED THEIR ENTIRE SHAREHOLDING TO SH. AKSHYA GUPTA AND MRS ANJU GUPTA. IT WAS FURTHER SUBMITTED THAT AS PE R THE MUTUAL UNDERSTANDING BETWEEN THE OLD AND NEW MANAGEMENT, I T WAS DECIDED THAT THE SUBJECT TAX MATTER, WHICH PERTAINS TO YEAR PRIO R TO TRANSFER OF OWNERSHIP AND MANAGEMENT OF THE ASSESSEE COMPANY, WOULD BE HA NDLED BY THE ERSTWHILE MANAGEMENT GROUP. IT WAS FURTHER SUBMITTE D THAT SH. JAGDISH NARAIN KHANDELWAL AN EMPLOYEE OF THE ERSTWHILE MANA GEMENT WHO LOOKS AFTER THE INCOME TAX MATTERS COLLECTED THE DULY FIL LED FORM NO. 36 AND OTHER PAPERS FROM THE COUNSEL AND HE HANDED OVER THE SAID PAPERS TO HIS SUBORDINATE ACCOUNTANT SH. NAVELI SHARAN MITTAL TO GET IT SIGNED FROM NEW MANAGEMENT. HOWEVER, SH. NAVELI SHARAN MITTAL AFTER COLLECTING THE PAPERS MISPLACED THE SAME SOMEWHERE IN BUNCH OF PAPERS AND FORGOT ALL ABOUT THE SAME. THE MATTER CAME TO NOTICE OF THE CURRENT MANA GEMENT ON 11.07.2018 WHEN AN ENQUIRY WAS MADE BY THE ASSESSING OFFICER R EGARDING PAYMENT OF OUTSTANDING DEMAND AND THEREAFTER, THE PAPERS WERE SEARCHED INCLUDING THE ORIGINAL APPELLATE ORDER AND DULLY FILLED UP FORM 3 6 AND APPEAL WAS THEREAFTER FILED BEFORE THE TRIBUNAL. IN SUPPORT, THE AFFIDAVI TS OF OUTGOING DIRECTOR SHRI HARI MOHAN DANGAYACH AND PRESENT DIRECTOR SHRI AKSH AY GUPTA ALONG WITH AFFIDAVITS OF SH. JAGDISH NARAIN KHANDELWAL AND SH. NAVELI SHARAN MITTAL WERE PLACED ON RECORD. IT WAS ACCORDINGLY SUBMITTED THAT THE ASSESSEE COMPANY WAS PREVENTED BY SUFFICIENT CAUSE FROM FILING THE A PPEAL WITHIN THE PRESCRIBED PERIOD DUE TO CHANGE OF MANAGEMENT AND G IVEN THAT THERE IS NO MALA FIDE INVOLVED IN DELAYED FILING OF THE APPEAL, IN THE INTEREST OF JUSTICE, THE DELAY IN FILING MAY BE CONDONED AND THE APPEAL MAY BE ADMITTED FOR ADJUDICATION ON MERITS. IN SUPPORT, RELIANCE WAS P LACED ON THE COORDINATE BENCH DECISION IN CASE OF SHRI RAM BHAROSE SHARMA V S ITO (ITA NO. ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 3 1066/JP/2016 DATED 14.06.2018) WHEREIN DELAY OF 636 DAYS WAS CONDONED. FURTHER, RELIANCE WAS PLACED ON THE HONBLE SUPREME COURT DECISION IN CASE OF SENIOR BHOSALE ESTATE (HUF) VS ACIT (CIVIL APPEA L NO. 6671-6676 OF 2010 DATED 7.11.2019) WHEREIN DELAY IN FILING APPEAL BY 1754 WAS CONDONED. 3. PER CONTRA, THE LD. CIT/DR SUBMITTED THAT THERE IS A SUBSTANTIAL DELAY OF 703 DAYS AS COMPUTED BY THE ASSESSEE COMPANY, IT IS THEREFORE IMPORTANT THAT THE ASSESSEE SHOULD COME FORWARD AND EXPLAIN E ACH AND EVERY DAY OF DELAY WHICH HAS HAPPENED IN FILING THE PRESENT APPE AL. IT WAS FURTHER SUBMITTED THAT THE AFFIDAVITS SO FILED BY THE FORME R DIRECTOR, THE EMPLOYEE AND ACCOUNTANT OF THE ERSTWHILE MANAGEMENT AS WELL AS AFFIDAVIT OF THE CURRENT DIRECTOR ARE SELF-SERVING DOCUMENT AND CANN OT THUS PROVIDE ANY ASSISTANCE TO THE ASSESSEE COMPANY IN EXPLAINING TH E DELAY IN FILING THE PRESENT APPEAL. HE ACCORDINGLY OPPOSED CONDONING T HE DELAY IN FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT THER E HAS BEEN A DELAY IN FILING THE PRESENT APPEAL AND THE PERIOD OF DELAY AS COMPU TED BY THE REGISTRY COMES TO 654 DAYS. THERE IS ALSO NO DISPUTE THAT UN DER SECTION 253(5) OF THE ACT, THE TRIBUNAL MAY ADMIT AN APPEAL FILED BEYOND THE PERIOD OF LIMITATION WHERE IT IS SATISFIED THAT THERE WAS SUFFICIENT CAU SE ON THE PART OF THE ASSESSEE FOR NOT PRESENTING THE APPEAL WITHIN THE P RESCRIBED TIME. THE EXPLANATION OF THE ASSESSEE THEREFORE BECOMES RELEV ANT TO DETERMINE WHETHER THE SAME REFLECTS SUFFICIENT CAUSE ON ITS P ART IN NOT PRESENTING THE PRESENT APPEAL WITHIN THE PRESCRIBED TIME. IN THE I NSTANT CASE, IT HAS BEEN STATED IN THE AFFIDAVITS SO SUBMITTED THAT THERE HA S BEEN A CHANGE IN THE MANAGEMENT OF THE COMPANY AND THE PRESENT TAX MATTE R PERTAINING TO THE PERIOD PRIOR TO CHANGE OF MANAGEMENT, IT WAS DECIDE D THAT THE SAME WOULD ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 4 BE HANDLED BY THE ERSTWHILE MANAGEMENT, HOWEVER, DU E TO CHANGE OF MANAGEMENT AND LACK OF DILIGENCE ON PART OF ERSHWHI LE EMPLOYEES, THE APPEAL COULD NOT BE FILED. IT HAS BEEN FURTHER STA TED THAT THE MATTER CAME TO LIGHT OF THE PRESENT MANAGEMENT ON 11.07.2018 WHEN AN ENQUIRY WAS MADE BY THE ASSESSING OFFICER FOR PAYMENT OF OUTSTANDING DEMAND AND THEREAFTER, THE APPEAL PAPERS WERE PREPARED AND APPEAL WAS SUBM ITTED BEFORE THE REGISTRY ON 20.08.2018 THOUGH WITH A DELAY OF 654 D AYS. WE THEREFORE FIND THAT THERE IS NO CULPABLE NEGLIGENCE OR MALAFIDE ON THE PART OF THE ASSESSEE COMPANY IN DELAYED FILING OF THE PRESENT APPEAL AND AS SOON AS IT CAME TO KNOW OF THE OLD TAX MATTER PERTAINING TO THE PERIOD PRIOR TO CHANGE OF THE MANAGEMENT, IT TOOK STEPS AND FILED THE PRESENT APP EAL. THEREFORE, IN THE FACTUAL MATRIX OF THE PRESENT CASE, WE FIND THAT TH ERE EXISTS SUFFICIENT AND REASONABLE CAUSE FOR CONDONING THE DELAY IN FILING THE PRESENT APPEAL AND AS HELD BY THE HONBLE SUPREME COURT, WHERE SUBSTANTIA L JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OTHER, THE C AUSE OF SUBSTANTIAL JUSTICE DESERVED TO BE PREFERRED. THEREFORE, IN EXERCISE OF POWERS UNDER SECTION 253(5) OF THE ACT, WE HEREBY CONDONE THE DELAY IN F ILING THE PRESENT APPEAL AS WE ARE SATISFIED THAT THERE WAS SUFFICIENT CAUSE FOR NOT PRESENTING THE APPEAL WITHIN THE PRESCRIBED TIME AND THE APPEAL IS HEREBY ADMITTED FOR ADJUDICATION ON MERITS. 5. THE ASSESSEE COMPANY HAS SUBMITTED AN APPLICATIO N PRAYING FOR RAISING THE FOLLOWING ADDITIONAL GROUND OF APPEAL W HICH READS AS UNDER:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. ASSESSING OFFICER HAS GROSSLY WRONG AND ERRED IN LA W IN MAKING ADDITION OF RS. 42,50,000/- UNDER SECTION 40A(3) OF THE I. T. ACT, 1961 IN ASSESSMENT MADE UNDER SECTION 153A R.W.S. 143(3) OF THE I.T. ACT, 1961 IN AS MUCH AS NO INCRIMINATING MATERIAL WAS FO UND DURING THE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 5 COURSE OF SEARCH WHICH COULD SUGGEST ANY UNDISCLOSE D INCOME SO AS TO INITIATE PROCEEDINGS U/S 153A OF THE ACT. 6. IT WAS SUBMITTED BY THE LD AR THAT THE ADDITION AL GROUND IS PURELY A LEGAL GROUND WHICH WAS INADVERTENTLY NOT TAKEN AT T HE TIME OF FILING THE ORIGINAL APPEAL. HOWEVER, NO NEW FACTS ARE REQUIRED TO BE EXAMINED OR BROUGHT ON RECORD AND BEING A LEGAL GROUND, THE SAM E MAY KINDLY BE ADMITTED FOR ADJUDICATION. IN SUPPORT, THE RELIANCE WAS PLACED ON THE HONBLE SUPREME COURT DECISION IN CASE OF NTPC LTD. VS. CIT 229 ITR 38 AND JUTE CORPORATION OF INDIA LTD. VS CIT 187 ITR 688. 7. PER CONTRA, THE LD. CIT/DR OPPOSED THE PRAYER O F THE ASSESSEE COMPANY FOR ADMITTING THE ADDITIONAL GROUND OF APPE AL. IT WAS SUBMITTED THAT THE ASSESSEE HAD AMPLE OPPORTUNITY TO RAISE THE GRO UND OF APPEAL BEFORE THE LD. CIT(A). HOWEVER, HAVING FAILED TO TAKE SAID GRO UND OF APPEAL BEFORE THE LD. CIT(A) OR ADVANCING ANY CONTENTIONS IN THIS BEH ALF BEFORE THE LOWER AUTHORITIES, THE ASSESSEE CANNOT BE ALLOWED TO RAIS E THIS GROUND OF APPEAL FOR THE FIRST TIME BEFORE THE TRIBUNAL. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT SEARCH AND SEIZUR E OPERATIONS U/S 132(1) WERE CARRIED ON 25.04.2012 AT VARIOUS PREMISES OF D ANGAYACH GROUP AND ASSESSEE COMPANY WAS ALSO COVERED IN THE SAID SEARC H OPERATIONS. SUBSEQUENTLY, NOTICE U/S 153A WAS ISSUED ON 27.12.2 012 AND IN RESPONSE, THE ASSESSEE COMPANY FURNISHED ITS RETURN OF INCOME ON 15.01.2013 DECLARING TOTAL INCOME AT NIL AND REITERATING THE I NCOME AS PER THE RETURN OF INCOME ORIGINALLY FILED U/S 139 ON 08.02.2008. THER EAFTER, THE NOTICE U/S 143(2) WAS ISSUED ON 08.08.2013 AND ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SECTION 153A DATED 25.03.2015. DURING THE COURSE OF ASSESSMENT ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 6 PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE COMPANY HAS PURCHASED CERTAIN PIECES OF LAND VIDE SIX SEPARATE REGISTERED SALE DEEDS AND THE SALE CONSIDERATION HAS BEEN DISCHARGED PARTLY I N CASH. THEREAFTER, A SHOW CAUSE WAS ISSUED U/S 40A(3) AND AFTER CONSIDERING T HE SUBMISSION OF THE ASSESSEE, 25% OF TOTAL EXPENDITURE INCURRED IN CASH AMOUNTING TO RS. 42,50,000/- WAS DISALLOWED INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. WE THEREFORE FIND THAT THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED WITHOUT ANY REFERENCE TO ANY INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN CASE OF THE ASSESSEE AND THUS, NO FRES H FACTS ARE REQUIRED TO BE EXAMINED NOR ANY FINDINGS ON FACTS ARE REQUIRED TO BE RECORDED IN THE INSTANT CASE. GIVEN THE EXISTING FACTS AS EMANATING FROM T HE ASSESSMENT ORDER, THE ADDITIONAL GROUND OF APPEAL WHERE THE ASSESSEE HAS CHALLENGED THE IMPUGNED ASSESSMENT ORDER FOR WANT OF ANY INCRIMINA TING MATERIAL IS THEREFORE PURELY A LEGAL GROUND OF APPEAL AND EVEN THOUGH THE SAME HAS NOT BEEN TAKEN BEFORE THE LD CIT(A), IT CAN BE TAKEN UP BEFORE THE TRIBUNAL FOR THE FIRST TIME AS HELD BY THE COURTS FROM TIME TO T IME AND IS HEREBY ADMITTED FOR ADJUDICATION. 9. WE NOW REFER TO THE CONTENTIONS ADVANCED BY THE LD AR ON MERITS OF THE ADDITIONAL GROUND OF APPEAL. DURING THE COURSE OF HEARING, THE LD. AR SUBMITTED THAT THE ASSESSEE COMPANY GOT INCORPORATE D ON 13-07-2006 AND IS ENGAGED IN THE BUSINESS OF REAL ESTATE. IT DID NOT HAVE ANY SALE/RECEIPTS/INCOME DURING THE YEAR. THE COMPANY P URCHASED FEW PARCELS OF AGRICULTURAL LAND DURING THE YEAR WHICH IS SHOWN AS STOCK-IN-TRADE AND ALL EXPENSES INCURRED DURING THE YEAR HAS BEEN ADDED IN STOCK IN TRADE. THE ASSESSEE COMPANY FILED ITS ORIGINAL RETURN OF INCOM E U/S 139 ON 08-02-2008 DECLARING TOTAL INCOME AT NIL. A SEARCH ACTION THER EAFTER HAD TAKEN PLACE AT VARIOUS PREMISES OF DANGAYACH GROUP ON 25-04-2012 A ND ASSESSEE COMPANY WAS ALSO COVERED THEREIN. IT WAS SUBMITTED THAT NO DOCUMENT/LOOSE PAPER ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 7 WAS FOUND /SEIZED DURING THE COURSE OF SEARCH AT TH E BUSINESS PREMISES OF THE ASSESSEE COMPANY INDICATING ANY ON-MONEY RECEIP T/INVESTMENT/ADVANCES MADE AND ANY UNEXPLAINED/OVERSTATED EXPENDITURE ETC . IN ITS BOOKS OF ACCOUNT PERTAINING TO THE YEAR UNDER APPEAL THUS TH E MODE AND MANNER OF THE ADDITIONS MADE IN THE ORDERS PASSED U/S 153A DE SERVES TO BE HELD BAD IN LAW. IT WAS SUBMITTED THAT THE READING OF PROVISION S OF SECTION 153A WOULD REVEAL THAT THE TIME LIMIT FOR ISSUANCE OF NOTICE U /S 143 (2) STOOD EXPIRED FOR THE YEAR UNDER APPEAL AND THEREFORE, NO ASSESSMENT WAS PENDING AT THE TIME WHEN SEARCH WAS CONDUCTED IN THIS CASE AND THEREFOR E ADDITIONS, IF ANY, TO BE MADE VIA ASSESSMENT U/S 153A WOULD BE RESTRICTED TO INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH. IN OTH ER WORDS, NO ROUTINE ADDITIONS WOULD BE PERMITTED TO BE MADE HAVING NO N EXUS WITH ANY INCRIMINATING DOCUMENTS FOUND DURING THE SEARCH. I N SUPPORT, THE RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS:- ALL CARGO GLOBAL LOGISTIC LTD. VS. DCIT 137 ITD 287 (MUM)(SB) CIT VS KABUL CHAWLA (2016) 380 ITR 573 (DELHI) JAI STEEL (INDIA) VS ACIT 259 CTR (RAJ) 281 IT WAS FURTHER SUBMITTED THAT THE HONBLE SUPREME C OURT HAS ALSO DISMISSED THE SLP FILED BY THE REVENUE IN CASE OF MEETA GUTGU TIA VS. PR. CIT (96 TAXMANN.COM 468). 10. PER CONTRA, THE LD. CIT/DR SUBMITTED THAT IN CA SE OF MEETA GUTGUTIA, THOUGH SLP OF THE DEPARTMENT HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT, HOWEVER, MERELY DISMISSAL OF THE SLP CANNOT BE READ AS AFFIRMATION OF THE VIEW TAKEN OF THE HONBLE DELHI HIGH COURT. IT WAS FURTHER SUBMITTED THAT THERE ARE TWO SUBSEQUENT SLPS WHICH HAVE BEEN ADMIT TED BY THE HONBLE SUPREME COURT ON SIMILAR MATTERS AND THEREFORE, THE DEPARTMENT IS NOT ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 8 ACCEPTING THE POSITION TAKEN IN CASE OF MEETA GUTGU TIA AND OTHER DECISIONS CITED BY THE LD. AR. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUS ED THE MATERIAL AVAILABLE ON RECORD. A SEARCH AND SEIZURE ACTION WAS CARRIED OUT IN CASE OF THE ASSESSEES GROUP ON 25.04.2012. THE ORIGINAL RETURN OF INCOME WAS FILED U/S 139 ON 08.02.2008 AND THE LAST DAY OF ISSUING NOTIC E SECTION 143(2) HAD THUS EXPIRED ON 30.09.2008 BEFORE THE DATE OF SEARCH AND THE ASSESSMENT PROCEEDINGS THEREFORE WERE NOT PENDING AS ON 25.04. 2012 I.E. THE DATE OF SEARCH. AS PER SECTION 153A OF THE ACT, ONCE A SEAR CH AND SEIZURE ACTION IS CARRIED OUT, THE AO HAS TO ASSESS OR REASSESS THE T OTAL INCOME OF THE ASSESSEE IN RESPECT OF 6 YEARS IMMEDIATELY PRECEDIN G THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH A SEARCH IS CONDUCTED OR REQUISITION IS MADE. IN CASE THE ASSESSMENT IS PENDING ON THE DATE OF SEARCH, THE SAME SHALL BE ABATED AS PER PROVISO TO SECTION 153A(1) O F THE ACT AND THE AO IS FREE TO ASSESS THE INCOME OF THE ASSESSEE AS REGULA R ASSESSMENT. HOWEVER, IN CASE OF COMPLETED ASSESSMENT AND NOT ABATED DUE TO INITIATION OF SEARCH U/S 132 OR MAKING OF REQUISITION U/S 132A, THE AO H AS TO REASSESS THE TOTAL INCOME OF THE ASSESSEE AND THEREFORE, THE ASSESSMEN T ALREADY COMPLETED CAN BE TINKERED WITH OR DISTRUSTED WHERE ANY INCRIM INATING MATERIAL IS FOUND AND SEIZED DURING THE COURSE OF SEARCH OR REQUISITI ON AS CASE MAY BE INDICATING UNDISCLOSED INCOME OF THE ASSESSEE. THER EFORE, THE SCOPE AND JURISDICTION OF THE AO TO REASSESS THE TOTAL INCOME OF THE ASSESSEE U/S 153A IS LIMITED ONLY TO THE EXTENT OF THE INCOME DISCLOS ED BY THE INCRIMINATING MATERIAL FOUND AND SEIZED DURING THE SEARCH AND SEI ZURE ACTION. AS WE HAVE NOTED ABOVE, THE ASSESSING OFFICER HAS REASSESSED T HE INCOME OF THE ASSESSEE BY MAKING THE DISALLOWANCE U/S 40(A)(3) WI THOUT MAKING ANY REFERENCE TO ANY INCRIMINATING MATERIAL FOUND DURIN G THE COURSE OF SEARCH. THERE IS NO FINDING OF THE ASSESSING OFFICER OR ANY OTHER MATERIAL BROUGHT ON ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 9 RECORD THAT THE SIX REGISTERED SALE DEEDS WERE FOUN D AND SEIZED DURING THE COURSE OF SEARCH OR THE TRANSACTIONS SO REPRESENTED BY SUCH SALE DEEDS WERE NOT RECORDED IN THE BOOKS OF ACCOUNTS AS ON THE DAT E OF SEARCH. ONCE THESE TRANSACTIONS ARE DULY RECORDED IN THE BOOKS OF ACCO UNTS AND BASIS THE SAME, THE RETURN OF INCOME HAS BEEN FURNISHED BEFORE THE DATE OF SEARCH, THE SAID TRANSACTIONS WERE DULY DISCLOSED TO THE DEPARTMENT AND THUS, DOESNT REPRESENT ANY UNDISCLOSED TRANSACTIONS SO AS TO CON STITUTE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF SEARCH IN CASE OF THE ASSESSEE. THEREFORE, THE DISALLOWANCE/ADDITION MADE BY THE AO AND REASSESSMENT COMPLETED U/S 153A IS UNDISPUTEDLY NOT BASED ON ANY INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH AND SEI ZURE ACTION U/S 132 OF THE ACT. ONCE, THE ASSESSING OFFICER HAS COMPLETED THE REASSESSMENT U/S 153A WITHOUT ANY REFERENCE TO THE INCRIMINATING MATERIAL FOUND, THEN NO ADDITION CAN BE MADE TO THE RETURNED INCOME OF THE ASSESSEE. 12. THE HONBLE DELHI HIGH COURT IN CASE OF CIT V. KABUL CHAWLA (SUPRA) WHILE CONSIDERING AN IDENTICAL ISSUE HAS HE LD AS UNDER:- 37. ON A CONSPECTUS OF SECTION 153A(1) OF THE ACT, READ WITH THE PROVISOS THERETO, AND IN THE LIGHT OF THE LAW EXPLAINED IN T HE AFOREMENTIONED DECISIONS, THE LEGAL POSITION THAT EMERGES IS AS UN DER: I. ONCE A SEARCH TAKES PLACE UNDER SECTION 132 OF THE ACT, NOTICE UNDER SECTION 153 A(1) WILL HAVE TO BE MANDAT ORILY ISSUED TO THE PERSON SEARCHED REQUIRING HIM TO FILE RETURNS FOR SIX AYS IMMEDIATELY PRECEDING THE PREVIOUS YEAR RELEVANT TO THE AY IN WHICH THE S EARCH TAKES PLACE. II. ASSESSMENTS AND REASSESSMENTS PENDING ON THE DATE O F THE SEARCH SHALL ABATE. TH E TOTAL INCOME FOR SUCH AYS WILL HAVE TO BE COMPUTE D BY THE AOS AS A FRESH EXERCISE. III. THE AO WILL EXERCISE NORMAL ASSESSMENT POWERS IN RE SPECT OF THE SIX YEARS PREVIOUS TO THE RELEVANT AY IN WHICH THE SEAR CH TAKES PLACE. THE AO HAS THE POWER TO ASSE SS AND REASSESS THE 'TOTAL INCOME' OF THE AFOREMENTIONED SIX YEARS IN SEPARATE ASSESSMENT ORD ERS FOR EACH OF THE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 10 SIX YEARS. IN OTHER WORDS THERE WILL BE ONLY ONE AS SESSMENT ORDER IN RESPECT OF EACH OF THE SIX AYS 'IN WHICH BOTH THE D ISCLOSED AND THE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX'. IV. ALTHOUGH SECTION 153 A DOES NOT SAY THAT ADDITIONS SHOULD BE STRICTLY MADE ON THE BASIS OF EVIDENCE FOUND IN THE COURSE O F THE SEARCH, OR OTHER POST- SEARCH MATERIAL OR INFORMATION AVAILABLE WITH THE A O WHICH CA N BE RELATED TO THE EVIDENCE FOUND, IT DOES NOT MEA N THAT THE ASSESSMENT 'CAN BE ARBITRARY OR MADE WITHOUT ANY RE LEVANCE OR NEXUS WITH THE SEIZED MATERIAL. OBVIOUSLY AN ASSESSMENT H AS TO BE MADE UNDER THIS SECTION ONLY ON THE BASIS OF SEIZED MATE RIAL.' V. IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE MADE. THE WORD 'ASSESS' IN SECTION 153 A IS RELATABLE TO ABATED PROCEEDINGS (I.E. THOSE PENDING ON THE DATE OF SEARCH) AND THE WORD 'REASSESS' TO COMPLETED ASSESSMENT PROCEEDINGS. VI. INSOFAR AS PENDING ASSESSMENTS ARE CONCERNED, THE J URISDICTION TO MAKE THE ORIGINAL ASSESSMENT AND THE ASSESSMENT UNDER SE CTION 153A MERGES INTO ONE. ONLY ONE ASSESSMENT SHALL BE MADE SEPA RATELY FOR EACH AY ON THE BASIS OF THE FINDINGS OF THE SEARCH AND ANY OTH ER MATERIAL EXISTING OR BROUGHT ON THE RECORD OF THE AO. VII. COMPLETED ASSESSMENTS CAN BE INTERFERED WITH BY THE AO WHILE MAKING THE ASSESSMENT UNDER SECTION 153 A ONLY ON THE BAS IS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF SEARCH OR REQUISITION OF DOCUMENTS OR UNDISCLOSED INCOME OR P ROPERTY DISCOVERED IN THE COURSE OF SEARCH WHICH WERE NOT PRODUCED OR NOT ALREADY DISCLOSED OR MADE KNOWN IN THE COURSE OF ORIGINAL A SSESSMENT. 39. THE QUESTION FRAMED BY THE COURT IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 13. A SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE JURISDICTIONAL HIGH COURT IN CASE OF JAI STEEL INDIA V ACIT (SUPRA) AS HELD IN PARA 22 TO 30 AS UNDER:- 22. IN THE FIRM OPINION OF THIS COURT FROM A PLAIN READING OF THE PROVISION ALONG WITH THE PURPOSE AND PURPORT OF THE SAID PROV ISION, WHICH IS INTRICATELY ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 11 LINKED WITH SEARCH AND REQUISITION UNDER SECTIONS 1 32 AND 132A OF THE ACT, IT IS APPARENT THAT: (A ) THE ASSESSMENTS OR REASSESSMENTS, WHICH STAND ABATE D IN TERMS OF II PROVISO TO SECTION 153A OF THE ACT, THE AO ACTS UND ER HIS ORIGINAL JURISDICTION, FOR WHICH, ASSESSMENTS HAVE TO BE MAD E; (B ) REGARDING OTHER CASES, THE ADDITION TO THE I NCOME THAT HAS ALREADY BEEN ASSESSED, THE ASSESSMENT WILL BE MADE ON THE BASIS OF INCRIMINATING MATERIAL AND (C ) IN ABSENCE OF ANY INCRIMINATING MATERIAL, THE COMPL ETED ASSESSMENT CAN BE REITERATED AND THE ABATED ASSESSMENT OR REASSESS MENT CAN BE MADE. THOUGH SUCH A CLAIM BY THE ASSESSEE FOR THE FIRST T IME UNDER SECTION 153A OF THE ACT IS NOT COMPLETED, THE CASE IN HAND, HAS TO BE CONSIDERED AT BEST SIMILAR TO A CASE WHERE IN SPITE OF A SEARC H AND/OR REQUISITION, NOTHING INCRIMINATING IS FOUND. IN SUCH A CASE THOU GH SECTION 153A OF THE ACT WOULD BE TRIGGERED AND ASSESSMENT OR REASSE SSMENT TO ASCERTAIN THE TOTAL INCOME OF THE PERSON IS REQUIRED TO BE DO NE, HOWEVER, THE SAME WOULD IN THAT CASE NOT RESULT IN ANY ADDITION AND T HE ASSESSMENTS PASSED EARLIER MAY HAVE TO BE REITERATED. 23. THE RELIANCE PLACED BY THE COUNSEL FOR THE APPELLA NT ON THE CASE OF ANIL KUMAR BHATIA (SUPRA) ALSO DOES NOT HELP THE CASE OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE SAID JUDGMENT READS AS UNDE R: '19. UNDER THE PROVISIONS OF SECTION 153A, AS WE HA VE ALREADY NOTICED, THE ASSESSING OFFICER IS BOUND TO ISSUE NOTICE TO T HE ASSESSEE TO FURNISH RETURNS FOR EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE SEARCH OR REQUISITION WAS MADE. ANOTHE R SIGNIFICANT FEATURE OF THIS SECTION IS THAT THE ASSESSING OFFICER IS EM POWERED TO ASSESS OR REASSESS THE 'TOTAL INCOME' OF THE AFORESAID YEARS. THIS IS A SIGNIFICANT DEPARTURE FROM THE EARLIER BLOCK ASSESSMENT SCHEME IN WHICH THE BLOCK ASSESSMENT ROPED IN ONLY THE UNDISCLOSED INCOME AND THE REGULAR ASSESSMENT PROCEEDINGS WERE PRESERVED, RESULTING IN MULTIPLE ASSESSMENTS. UNDER SECTION 153A, HOWEVER, THE ASSES SING OFFICER HAS BEEN GIVEN THE POWER TO ASSESS OR REASSESS THE 'TOT AL INCOME' OF THE SIX ASSESSMENT YEARS IN QUESTION IN SEPARATE ASSESSMENT ORDERS. THIS MEANS THAT THERE CAN BE ONLY ONE ASSESSMENT ORDER IN RESP ECT OF EACH OF THE SIX ASSESSMENT YEARS, IN WHICH BOTH THE DISCLOSED AND T HE UNDISCLOSED INCOME WOULD BE BROUGHT TO TAX. ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 12 20. A QUESTION MAY ARISE AS TO HOW THIS IS SOUGHT T O BE ACHIEVED WHERE AN ASSESSMENT ORDER HAD ALREADY BEEN PASSED IN RESP ECT OF ALL OR ANY OF THOSE SIX ASSESSMENT YEARS, EITHER UNDER SECTION 14 3(1)(A) OR SECTION 143(3) OF THE ACT. IF SUCH AN ORDER IS ALREADY IN E XISTENCE, HAVING OBVIOUSLY BEEN PASSED PRIOR TO THE INITIATION OF TH E SEARCH/REQUISITION, THE ASSESSING OFFICER IS EMPOWERED TO REOPEN THOSE PROC EEDINGS AND REASSESS THE TOTAL INCOME, TAKING NOTE TO THE UNDIS CLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH. FOR THIS PURPOSE, THE FETTERS IMPOSED UPON THE ASSESSING OFFICER BY THE STRICT PROCEDURE TO AS SUME JURISDICTION TO REOPEN THE ASSESSMENT UNDER SECTIONS 147 AND 148, H AVE BEEN REMOVED BY THE NON OBSTANTE CLAUSE WITH WHICH SUB-SECTION ( 1) OF SECTION 153A OPENS. THE TIME-LIMIT WITHIN WHICH THE NOTICE UNDER SECTION 148 CAN BE ISSUED, AS PROVIDED IN SECTION 149 HAS ALSO BEEN MA DE INAPPLICABLE BY THE NON OBSTANTE CLAUSE. SECTION 151 WHICH REQUIRES SANCTION TO BE OBTAINED BY THE ASSESSING OFFICER BY ISSUE OF NOTIC E TO REOPEN THE ASSESSMENT UNDER SECTION 148 HAS ALSO BEEN EXCLUDED IN A CASE COVERED BY SECTION 153A. THE TIME-LIMIT PRESCRIBED FOR COMP LETION OF AN ASSESSMENT OR REASSESSMENT BY SECTION 153 HAS ALSO BEEN DONE AWAY WITH IN A CASE COVERED BY SECTION 153A. WITH ALL TH E STOPS HAVING BEEN PULLED OUT, THE ASSESSING OFFICER UNDER SECTION 153 A HAS BEEN ENTRUSTED WITH THE DUTY OF BRINGING TO TAX THE TOTAL INCOME O F AN ASSESSEE WHOSE CASE IS COVERED BY SECTION 153A, BY EVEN MAKING REA SSESSMENTS WITHOUT ANY FETTERS, IF NEED BE. 21. NOW THERE CAN BE CASES WHERE AT THE TIME WHEN T HE SEARCH IS INITIATED OR REQUISITION IS MADE, THE ASSESSMENT OR REASSESSMENT PROCEEDINGS RELATING TO ANY ASSESSMENT YEAR FALLING WITHIN THE PERIOD OF THE SIX ASSESSMENT YEARS MENTIONED ABOVE, MAY BE PE NDING. IN SUCH A CASE, THE SECOND PROVISO TO SUB-SECTION (1) OF SECT ION 153A SAYS THAT SUCH PROCEEDINGS 'SHALL ABATE'. THE REASON IS NOT F AR TO SEEK. UNDER SECTION 153A, THERE IS NO ROOM FOR MULTIPLE ASSESSM ENT ORDERS IN RESPECT OF ANY OF THE SIX ASSESSMENT YEARS UNDER CONSIDERAT ION. THAT IS BECAUSE THE ASSESSING OFFICER HAS TO DETERMINE NOT MERELY T HE UNDISCLOSED INCOME OF THE ASSESSEE, BUT ALSO THE 'TOTAL INCOME' OF THE ASSESSEE IN WHOSE CASE A SEARCH OR REQUISITION HAS BEEN INITIAT ED. OBVIOUSLY THERE CANNOT BE SEVERAL ORDERS FOR THE SAME ASSESSMENT YE AR DETERMINING THE TOTAL INCOME OF THE ASSESSEE. IN ORDER TO ENSURE TH IS STATE OF AFFAIRS NAMELY, THAT IN RESPECT OF THE SIX ASSESSMENT YEARS PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE YEAR IN WHICH THE S EARCH TOOK PLACE THERE IS ONLY ONE DETERMINATION OF THE TOTAL INCOME , IT HAS BEEN PROVIDED IN THE SECOND PROVISO OF SUB-SECTION (1) OF SECTION 153A THAT ANY PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT OF THE A SSESSEE WHICH ARE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 13 PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING REQUISITION 'SHALL ABATE'. ONCE THOSE PROCEEDINGS ABATE, THE DE CKS ARE CLEARED, FOR THE ASSESSING OFFICER TO PASS ASSESSMENT ORDERS FOR EACH OF THOSE SIX YEARS DETERMINING THE TOTAL INCOME OF THE ASSESSEE WHICH WOULD INCLUDE BOTH THE INCOME DECLARED IN THE RETURNS, IF ANY, FU RNISHED BY THE ASSESSEE AS WELL AS THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH OR REQUISITION. THE POSITION THUS EMERGING I S THAT THE SEARCH IS INITIATED OR REQUISITION IS MADE, THEY WILL ABATE M AKING WAY FOR THE ASSESSING OFFICER TO DETERMINE THE TOTAL INCOME OF THE ASSESSEE IN WHICH THE UNDISCLOSED INCOME WOULD ALSO BE INCLUDED, BUT IN CASE WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDINGS HAVE ALREADY BEEN COMPLETED AND ASSESSMENT ORDERS HAVE BEEN PASSED DETERMINING THE ASSESSEE'S TOTAL INCOME AND SUCH ORDERS SUBSISTING AT THE TIME WHEN THE SEARCH OR THE REQUISITION IS MADE, THERE IS NO QUESTION OF AN Y ABATEMENT SINCE NO PROCEEDINGS ARE PENDING. IN THIS LATTER SITUATION, THE ASSESSING OFFICER WILL REOPEN THE ASSESSMENTS OR REASSESSMENTS ALREAD Y MADE (WITHOUT HAVING THE NEED TO FOLLOW THE STRICT PROVISIONS OR COMPLYING WITH THE STRICT CONDITIONS OF SECTIONS 147, 148 AND 151) AND DETERMINE THE TOTAL INCOME OF THE ASSESSEE. SUCH DETERMINATION IN THE O RDERS PASSED UNDER SECTION 153A WOULD BE SIMILAR TO THE ORDERS PASSED IN ANY REASSESSMENT, WHERE THE TOTAL INCOME DETERMINED IN THE ORIGINAL A SSESSMENT ORDER AND THE INCOME THAT ESCAPED ASSESSMENT ARE CLUBBED TOGE THER AND ASSESSED AS THE TOTAL INCOME. IN SUCH A CASE, TO REITERATE, THERE IS NO QUESTION OF ANY ABATEMENT OF THE EARLIER PROCEEDINGS FOR THE SI MPLE REASON THAT NO PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT WERE PEN DING SINCE THEY HAD ALREADY CULMINATED IN ASSESSMENT OR REASSESSMEN T ORDERS WHEN THE SEARCH WAS INITIATED OR THE REQUISITION WAS MADE.' (EMPHASIS SUPPLIED) 24. THE SAID JUDGMENT ALSO IN NO UNCERTAIN TERMS HOLDS THAT THE REASSESSMENT OF THE TOTAL INCOME OF THE COMPLETED A SSESSMENTS HAVE TO BE MADE TAKING NOTE OF THE UNDISCLOSED INCOME, IF ANY, UNEARTHED DURING THE SEARCH AND THE INCOME THAT ESCAPED ASSESSMENTS ARE REQUIRED TO BE CLUBBED TOGETHER WITH THE TOTAL INCOME DETERMINED IN THE OR IGINAL ASSESSMENT AND ASSESSED AS THE TOTAL INCOME. THE OBSERVATIONS MADE IN THE JUDGMENT CONTRASTING THE PROVISIONS OF DETERMINATION OF UNDI SCLOSED INCOME UNDER CHAPTER XIVB WITH DETERMINATION OF TOTAL INCOME UND ER SECTIONS 153A TO 153C OF THE ACT HAVE TO BE READ IN THE CONTEXT OF S ECOND PROVISO ONLY, WHICH DEALS WITH THE PENDING ASSESSMENT/REASSESSMENT PROC EEDINGS. THE FURTHER OBSERVATIONS MADE IN THE CONTEXT OF DE NOVO ASSESSM ENT PROCEEDINGS ALSO HAVE TO BE READ IN CONTEXT THAT IRRESPECTIVE OF THE FACT WHETHER ANY INCRIMINATING MATERIAL IS FOUND DURING THE COURSE O F SEARCH, THE NOTICE AND CONSEQUENTIAL ASSESSMENT UNDER SECTION 153A HAVE TO BE UNDERTAKEN. ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 14 25. THE ARGUMENT OF THE LEARNED COUNSEL THAT THE AO IS ALSO FREE TO DISTURB INCOME, EXPENDITURE OR DEDUCTION DE HORS THE INCRIM INATING MATERIAL, WHILE MAKING ASSESSMENT UNDER SECTION 153A OF THE ACT IS ALSO NOT BORNE OUT FROM THE SCHEME OF THE SAID PROVISION WHICH AS NOTICED A BOVE IS ESSENTIALLY IN CONTEXT OF SEARCH AND/OR REQUISITION. THE PROVISION S OF SECTIONS 153A TO 153C CANNOT BE INTERPRETED TO BE A FURTHER INNINGS FOR T HE AO AND/OR ASSESSEE BEYOND PROVISIONS OF SECTIONS 139 (RETURN OF INCOME ), 139(5) (REVISED RETURN OF INCOME), 147 (INCOME ESCAPING ASSESSMENT) AND 26 3 (REVISION OF ORDERS) OF THE ACT. 26. THE PLEA RAISED ON BEHALF OF THE ASSESSEE THAT AS THE FIRST PROVISO PROVIDES FOR ASSESSMENT OR REASSESSMENT OF THE TOTA L INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN THE SIX ASSESSM ENT YEARS, IS MERELY READING THE SAID PROVISION IN ISOLATION AND NOT IN THE CONTEXT OF THE ENTIRE SECTION. THE WORDS 'ASSESS' OR 'REASSESS' HAVE BEEN USED AT MORE THAN ONE PLACE IN THE SECTION AND A HARMONIOUS CONSTRUCTION OF THE ENTIRE PROVISION WOULD LEAD TO AN IRRESISTIBLE CONCLUSION THAT THE W ORD 'ASSESS' HAS BEEN USED IN THE CONTEXT OF AN ABATED PROCEEDINGS AND REASSES S HAS BEEN USED FOR COMPLETED ASSESSMENT PROCEEDINGS, WHICH WOULD NOT A BATE AS THEY ARE NOT PENDING ON THE DATE OF INITIATION OF THE SEARCH OR MAKING OF REQUISITION AND WHICH WOULD ALSO NECESSARILY SUPPORT THE INTERPRETA TION THAT FOR THE COMPLETED ASSESSMENTS, THE SAME CAN BE TINKERED ONL Y BASED ON THE INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH OR REQUISITION OF DOCUMENTS. 27. THE ALLAHABAD HIGH COURT IN SMT. SHAILA AGARWAL'S (SUPRA) HAS HELD AS UNDER: '19. THE SECOND PROVISO TO SECTION 153A OF THE ACT, REFERS TO ABATEMENT OF THE PENDING ASSESSMENT OR RE-ASSESSMENT PROCEEDI NGS. THE WORD 'PENDING' DOES NOT OPERATE ANY SUCH INTERPRETATION, THAT WHEREVER THE APPEAL AGAINST SUCH ASSESSMENT OR REASSESSMENT IS P ENDING, THE SAME ALONG WITH ASSESSMENT OR REASSESSMENT PROCEEDINGS I S LIABLE TO BE ABATED. THE PRINCIPLES OF INTERPRETATION OF TAXING STATUTES DO NOT PERMIT THE COURT TO INTERPRET THE SECOND PROVISO TO SECTIO N 153A IN A MANNER THAT WHERE THE ASSESSMENT OR REASSESSMENT PROCEEDIN GS ARE COMPLETE, AND THE MATTER IS PENDING IN APPEAL IN THE TRIBUNAL , THE ENTIRE PROCEEDINGS WILL ABATE. 20. THERE IS ANOTHER ASPECT TO THE MATTER, NAMELY T HAT THE ABATEMENT OF ANY PROCEEDINGS HAS SERIOUS CAUSES AND EFFECT IN AS MUCH AS THE ABATEMENT OF THE PROCEEDINGS, TAKES AWAY ALL THE CO NSEQUENCES THAT ARISE THEREAFTER. IN THE PRESENT CASE AFTER DEDUCTI NG BOGUS GIFTS IN THE REGULAR ASSESSMENT PROCEEDINGS, THE PROCEEDINGS FOR PENALTY WERE DRAWN UNDER SECTION 271(1)(C) OF THE ACT. THE MATERIAL FO UND IN THE SEARCH MAY ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 15 BE A GROUND FOR NOTICE AND ASSESSMENT UNDER SECTION 153A OF THE ACT BUT THAT WOULD NOT EFFACE OR TERMINATE ALL THE CONS EQUENCE, WHICH HAS ARISEN OUT OF THE REGULAR ASSESSMENT OR REASSESSMEN T RESULTING INTO THE DEMAND OR PROCEEDINGS OF PENALTY.' (EMPHASIS SUPPLI ED) THE SAID JUDGMENT WHICH ESSENTIALLY DEALS WITH SECO ND PROVISO TO SECTION 153A OF THE ACT ALSO SUPPORTS THE CONCLUSION, WHICH WE HAVE REACHED HEREINBEFORE. 28. IT HAS BEEN OBSERVED BY THE HON'BLE SUPREME COURT IN K.P. VARGHESE V. ITO [1981] 131 ITR 597/7 TAXMAN 13 THAT 'IT IS WELL RECOGNIZED RULE OF CONSTRUCTION THAT A STATUTORY PROVISION MUS T BE SO CONSTRUED, IF POSSIBLE THAT ABSURDITY AND MISCHIEF MAY BE AVOIDED .' 29. THE ARGUMENT OF THE COUNSEL FOR THE APPELLANT IF T AKEN TO ITS LOGICAL END WOULD MEAN THAT EVEN IN CASES WHERE THE APPEAL ARIS ING OUT OF THE COMPLETED ASSESSMENT HAS BEEN DECIDED BY THE CIT(A) , ITAT AND THE HIGH COURT, ON A NOTICE ISSUED UNDER SECTION 153A OF THE ACT, THE AO WOULD HAVE POWER TO UNDO WHAT HAS BEEN CONCLUDED UP TO THE HIG H COURT. ANY INTERPRETATION WHICH LEADS TO SUCH CONCLUSION HAS T O BE REPELLED AND/OR AVOIDED AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VARGHESE (SUPRA). 30. CONSEQUENTLY, IT IS HELD THAT IT IS NOT OPEN FOR T HE ASSESSEE TO SEEK DEDUCTION OR CLAIM EXPENDITURE WHICH HAS NOT BEEN C LAIMED IN THE ORIGINAL ASSESSMENT, WHICH ASSESSMENT ALREADY STANDS COMPLET ED, ONLY BECAUSE A ASSESSMENT UNDER SECTION 153A OF THE ACT IN PURSUAN CE OF SEARCH OR REQUISITION IS REQUIRED TO BE MADE. 14. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE WHERE THE REASSESSMENT CO MPLETED U/S 153A WITHOUT ANY REFERENCE TO THE INCRIMINATING MATERIAL , FOLLOWING THE BINDING PRECEDENTS AS CITED ABOVE INCLUDING THAT OF THE JUR ISDICTIONAL HIGH COURT, THE ADDITION MADE BY THE AO U/S 40(A)(3) IS NOT SUSTAIN ABLE AND THE SAME IS HEREBY DELETED. IN THE RESULT, THE ADDITIONAL GROUN D OF APPEAL IS ALLOWED. 15. NOW COMING TO THE ORIGINAL GROUND OF APPEAL TAK EN BY THE ASSESSEE COMPANY WHICH READS AS UNDER: ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 16 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS WRONG, UNJUST AND HAS ERRED IN LAW IN CONFIRMING INVOKING OF PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT, 1961 BY THE ASSESSING OFFICER IN RESPECT TO PAYMENT OF RS. 2,12,50,000/- MADE BY THE APPELLANT IN CASH FOR PURCHASE OF AGRICULTURAL LAND HOLD AS STOCK-IN- TRADE RESULTING IN DISALLOWANCE AND CONSEQUENT OF A DDITION OF RS. 42,50,000/- BEING 20% OF SAID AMOUNT OF RS. 2,12,50 ,000/- TO THE INCOME OF THE APPELLANT. 16. IN THIS REGARD, THE LD. AR SUBMITTED THAT THE A SSESSEE COMPANY DURING THE YEAR PURCHASED VIDE SIX SEPARATE REGISTERED SAL E DEEDS, FOLLOWING PARCELS OF LAND: DATE AREA AMOUNT 13-09-2006 2.63 HECTARE 3,00,00,000/- 27-09-2006 0.69 HECTARE 1,08,00,000/- 11-10-2006 0.78 HECTARE 87,90,000/- 11-10-2006 1.04 HECTARE 1,15,10,000/- 30-10-2006 0.79 HECTARE 89,00,000/- 01-02-2007 0.63 HECTARE 71,00,000/- 17. IT WAS SUBMITTED THAT THE ASSESSEE COMPANY OUT OF ABOVE TOTAL SIX PURCHASES OF LAND MADE CASH PAYMENTS IN PART IN FOL LOWING FIVE PURCHASES OF LAND: DATE TOTAL AMOUNT PAID TO WHOM PAID AMOUNT PAID IN CASH 13-09-2006 3,00,00,000/- JANGAL RAM, BADRI NARAYAN, BANNA LAL AND TIJA 1,00,00,000/- 27-09-2006 1,08,00,000/- BIRDHI CHAND 38,00,000/- ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 17 11-10-2006 87,90,000/- M/S N.R. BUILDCOM PVT. LTD. 27,90,000/- 11-10-2006 1,15,10,000/- M/S N.R. BUILDCOM PVT. LTD . 25,10,000/- 30-10-2006 89,00,000/- SITARAM NIL 01-02-2007 71,00,000/- GOVINDI BAI 21,50,000/- 2,12,50,000/- 18. IT WAS SUBMITTED THAT THE A.O. ISSUED A SHOW C AUSE NOTICE ASKING THE ASSESSEE COMPANY TO EXPLAIN WHY THE CASH PAYMENTS S HOULD NOT BE DISALLOWED FOR VIOLATION OF PROVISIONS OF SECTION 4 0A (3) OF I.T. ACT, 1961. THE ASSESSEE COMPANY FURNISHED ITS EXPLANATION WHICH IS REPRODUCED IN PARA 5.4 OF ASSESSMENT ORDER. THE A.O. HOWEVER HELD THE EXPL ANATION AS UNACCEPTABLE FOR THE FOLLOWING REASONS: (I) THE LEGISLATURE HAS LAID DOWN OUT A FEW CONDITIONS, IN RULE 6DD OF INCOME-TAX RULES, UNDER WHICH NO DISALLOWANCE CAN B E MADE U/S 40A(3), BUT THE ASSESSEE HAS NOT PUT FORWARD ANY OF SUCH CONDIT ION IN ITS SUBMISSION. (II) THE ASSESSEE HAS SUBMITTED THAT LAND HAS BEEN PURCH ASED FROM FARMERS WHO DEMAND PAYMENT IN CASH, BUT NO ANY SUCH EVIDENCE HAS BEEN FURNISHED BY THE ASSESSEE IN SUPPORT OF ITS SUBMISS ION. (III) OUT OF TOTAL CASH PAYMENTS, RS. 53 LACS HAVE BEEN P AID IN CASH TO ONE COMPANY M/S. N.R. BUILDCOM PVT. LTD. WHILE THE ASSE SSEE IS SUBMITTING THAT CASH PAYMENTS HAVE BEEN MADE TO FARMERS ON THEIR DE MAND. (IV) IN THE CASE OF SHRI BIRDHI CHAND, PART PAYMENT HAS BEEN MADE BY CHEQUE AND PART PAYMENT HAS BEEN MADE IN CASH. LIKE WISE, IN THE CASE OF SMT. GOVINDI BAI ALSO, PART PAYMENT HAS BEEN MADE B Y CHEQUE AND PART PAYMENT HAS BEEN MADE IN CASH. HENCE, THE SUBMISSIO N REGARDING CASH DEMANDS OF THE FARMERS CANNOT BE ACCEPTED. ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 18 (V) THE ASSESSEE HAS MADE EXPENDITURE IN CASH WHICH HAS BECOME THE PART OF ITS STOCK-IN-TRADE WHICH WILL ULTIMATELY BE USED BY THE ASSESSEE TO EARN INCOME. (VI) THE FACTS OF THE CASE LAWS NARRATED BY THE ASSESSEE ARE DIFFERENT FROM THE FACTS OF THIS CASE. THE A.O. ACCORDINGLY HELD THAT ASSESSEE HAS CONTRAV ENED PROVISIONS OF SECTION 40A(3) AND THERE IS NO ESCAPE THROUGH RULE 6DD THEREFORE HE DISALLOWED 20% PART OF TOTAL EXPENDITURE (RS. 2,12, 50,000) INCURRED IN CASH AMOUNTING TO RS. 42,50,000/- AND ADDED THE SAME TO TOTAL INCOME IN THE HANDS OF THE ASSESSEE COMPANY. THE ADDITION SO MAD E HAS BEEN CONFIRMED BY THE LD CIT(A) AND AGAINST THE SAID FINDINGS, THE ASSESSEE COMPANY IS IN APPEAL. 19. IN THE ABOVE BACKGROUND, IT WAS SUBMITTED BY TH E LD AR THAT THE PROFITS AND GAINS OF ANY BUSINESS OR PROFESSION WHICH WAS C ARRIED ON BY THE ASSESSEE AT ANY TIME DURING THE PREVIOUS YEAR IS CHARGEABLE TO INCOME TAX U/S 28 OF ACT AND SAME IS TO BE COMPUTED IN ACCORDANCE WITH P ROVISIONS CONTAINED IN SECTION 30 TO 43D AS PER PROVISIONS OF SECTION 29. THUS FOR COMPUTATION OF INCOME UNDER THE HEAD BUSINESS, THE FOREMOST REQU IREMENT IS THAT THERE SHOULD BE BUSINESS WHICH WAS CARRIED ON BY ASSESSEE AT ANY TIME DURING THE PREVIOUS YEAR AND THERE SHOULD BE INCOME (WHICH INC LUDES LOSS) THEREFROM. THE INCOME IS RESULT OF RECEIPTS OF BUSINESS AND OT HER RECEIPTS AS PER SECTION 28, DEDUCTED THEREFROM THE OUTGOINGS PERMISSIBLE EX PENDITURES/DEDUCTIONS IN ACCORDANCE WITH PROVISIONS OF SECTION 30 TO 43D. IN CASE THERE IS NO RECEIPT CHARGEABLE U/S 28 OF I.T. ACT, 1961 NOTHING CAN BE ASSESSED UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION AND PRO VISIONS OF SECTION 30 TO 43D CANNOT BE INVOKED. IT IS CLEAR FROM THE FACTS A PPEARING FROM COPY OF ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 19 AUDITED ACCOUNTS SUBMITTED HEREWITH THAT ASSESSEE I N THIS PREVIOUS YEAR NEITHER HAS ANY RECEIPT OF BUSINESS ASSESSABLE U/S 28 OF THE ACT, AND SO HAS NOT CLAIMED ANY EXPENDITURE THE PURCHASE COST OF AGRICULTURAL LAND (TREATED AS STOCK-IN-TRADE AT CLOSE OF YEAR) IN THE YEAR UND ER CONSIDERATION BUT THE ENTIRE EXPENDITURE OF SAID STOCK-IN-TRADE WAS CAR RIED FORWARD TO NEXT ACCOUNTING YEAR AS OPENING STOCK. THIS POSITION OF FACTS HAS BEEN ACCEPTED BY LD. A.O. IN ASSESSMENT ORDER AS NO SUCH RECEIPTS OF BUSINESS HAS BEEN ASSESSED IN ASSESSMENT ORDER. IN ORDER TO INVOKE PR OVISIONS OF SECTION 40A(3), THE AMOUNT OF EXPENDITURE INCURRED IN CAS H MUST BE CLAIMED AS EXPENDITURE EITHER WHILE WORKING GROSS PROFIT OR WH ILE WORKING NET PROFIT. IT IS WHERE A CLAIM FOR ALLOWANCE OF EXPENDITURE IS MADE IN COMPUTING BUSINESS INCOME OF THE YEAR THEN THERE COULD BE ANY DISALLOW ANCE OUT OF THE EXPENDITURE. THERE CANNOT BE DISALLOWANCE OF EXPEND ITURE ONLY WITHOUT ANY CLAIM OF ALLOWANCE OF EXPENDITURE HAVING BEEN MADE. THE LEGAL VIEW IS FULLY SUPPORTED WITH THE JUDGEMENT IN CASE OF SARAL MOTOR S & GENERAL FINANCE LTD. VS. ACIT CIR-2, MEERUT (2009) 121 ITD 50 (DELHI) AN D DECISION OF ITAT, JAIPUR BENCH, JAIPUR IN CASE OF SALASAR OVERSEAS P. LTD. VS. ACIT. IT IS THUS SUBMITTED THAT LD. A.O. HAS WRONGLY INVOKED PROVISI ONS OF SECTION 40A (3) IN CASE OF ASSESSEE COMPANY. 20. IT WAS FURTHER SUBMITTED THAT THE OBJECT OF THE PROVISIONS OF SECTION 40A(3) IS TO CHECK EVASION OF TAXES SO THAT THE PAY MENT IS MADE FROM THE DISCLOSED SOURCES. BOTH THE PAYER AND THE PAYEE WOU LD BE SHOWING IN THE RESPECTIVE ACCOUNT THE PAYMENTS MADE AND RECEIVED. IT PRESUPPOSES THAT THE TRANSACTIONS MUST BE GENUINE TRANSACTIONS [GIRDHARI LAL GOENKA V. CIT (1989) 179 ITR 122, 127 [(CAL)]. IN OTHER WORDS, THE OBJEC T OF ENACTING SECTION 40A (3) IS TO ENSURE THAT PAYMENTS IN RESPECT OF WHICH DEDUCTIONS ARE CLAIMED BY THE TAXPAYERS ARE GENUINELY MADE AND ACCOMMODATION PAYMENTS ARE NOT CLAIMED AS DEDUCTIONS [LATE SMT. JYOTHI CHELLARAM V . CIT, (1988) 173 ITR 358, 363 (A.P.)]. IN THE CASE OF ASSESSEE WHO IS A COLONIZER, IT HAS TO ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 20 PURCHASE LAND FROM FARMERS WHO ARE GROUP OF PERSONS BEING RELATIVES OR FAMILY MEMBERS WHEREIN SOME PEOPLE HAVE BANK ACCOUN T AND OTHERS DO NOT HAVE BANK ACCOUNT. THE GROUP OF PERSONS SIGN SALE D EEDS SIMULTANEOUSLY AND THEREFORE ALL PERSON DEMANDS PAYMENTS IN CASH AND C OLONIZER/DEVELOPER HAS NO CHOICE BUT TO ACCEPT THEIR DEMAND IF LAND HOLDIN GS ARE TO BE ACQUIRED. THE FARMERS ARE ILLITERATE AND DO NOT SIGN SALE DEEDS O F LAND SOLD AND PRESENT THEM FOR REGISTRATION UNLESS RECEIVE PAYMENT IN CAS H DUE TO FEAR THAT THEY WILL BE DEPRIVED FROM THEIR LAND HOLDING SOON AFTER SIGN ING SALE DEED AND LATER ON ACCOUNT PAYEE CHEQUE OR DRAFT MAY NOT BE GOT ENCASH ED AND, THEREFORE, THEY DO NOT AGREE TO SALE THEIR LAND HOLDINGS WITHOUT RE CEIVING PAYMENT IN CASH. THE COLONIZER/DEVELOPER ONCE STARTS ACQUIRING LAND HOLDINGS IN A PARTICULAR AREA, HE HAS TO ACQUIRE ALL ADJACENT LANDS NECESSAR ILY AS WITHOUT THAT A TOWNSHIP COLONY PROJECT CANNOT BE BROUGHT INTO EXIS TENCE AND IN SUCH CONSTRAINED CIRCUMSTANCES, HE IS NOT IN A POSITION TO ENFORCE THE TERM OF PAYMENT BY CROSSED ACCOUNT PAYEE CHEQUE OR DRAFTS. THE PAYMENTS IN CASH MADE BY ASSESSEE COMPANY HAVE BEEN ACCEPTED AS GENU INE BY LD. A.O. AND SAID PAYMENTS FOR PURCHASE OF AGRICULTURAL LAND FRO M FARMERS HAVE BEEN MADE FROM EXPLAINED SOURCES OF FUNDS WHICH ARE SHOW N IN BALANCE SHEET OF COMPANY DULY AUDITED BY AUDITORS UNDER COMPANIES AC T, 1956. THUS GENUINENESS OF PAYMENTS WERE ESTABLISHED AND INTENT ION OF PROVISIONS OF SECTION 40A (3) HAVE NOT BEEN DEFEATED AND, THEREFO RE PROVISIONS OF SECTION 40A(3) CANNOT BE INVOKED IN THE CASE OF ASSESSEE. T HE RELIANCE IS PLACED ON THE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN CASE OF KANTILAL PURSHOTTAM & CO. VS. CIT (1985) 155 ITR 519 (RAJ.). IN CIT VS. C HAUDHARY & CO. (1996) 217 ITR 431, 433 (ALL), IT WAS HELD THAT WHERE THE SELLER HAS INSISTED ON CASH PAYMENT AND THE PAYMENT WAS GENUINE DISCLOSING THE IDENTITY OF SELLER, THE PROVISIONS OF SECTION 40A (3) CANNOT BE INVOKED. TH E SIMILAR VIEWS HAVE BEEN HELD BY VARIOUS HIGH COURTS AND VARIOUS BENCHES OF THE TRIBUNAL INCLUDING THE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 21 JAIPUR BENCH WHICH SUPPORTS THE CASE OF ASSESSEE. I N VIEW OF THE ABOVE LEGAL POSITION, THE PROVISIONS OF SECTION 40A(3) CANNOT B E INVOKED. 21. IT WAS FURTHER SUBMITTED THAT ON EXACTLY SAME I SSUE HAVING SAME FACTS THE JAIPUR BENCH IN CASE OF ACE INDIA ABODES LTD. V S. ACIT, CC-2, JAIPUR (ITA NO. 79/JP/2011 ORDER DATED 4-8-11), DECIDED THE ISS UE IN FAVOUR OF ASSESSEE ON BOTH OF ABOVE COUNTS AND HELD AS UNDER :- IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, WE H OLD THAT SINCE ASSESSEE HAS NOT CLAIMED ANY EXPENDITURE, THEREFORE , NO DISALLOWANCE CAN BE MADE DURING THE YEAR UNDER CONSIDERATION. IN THIS CASE ALSO IT HAS BEEN HELD THAT WHERE PAYM ENT HAS BEEN MADE IN VILLAGES, THE PROVISIONS OF SECTION 40A(3) CANNO T BE APPLIED. AS THE FACTS OF THE CASE AND POSITION OF LAW ARE SA ME IN THE CASE OF ASSESSEE COMPANY, THE ISSUE RAISED IN GROUND OF APPEAL IS FU LLY COVERED IN ITS FAVOUR FROM SAID DECISION IN CASE OF ACE INDIA ABODES LTD. AND SO GROUND DESERVES TO BE DECIDED IN FAVOUR OF ASSESSEE COMPANY. IT IS, THEREFORE, PRAYED THAT ADDITION OF RS. 42,50,000/- MADE U/S 40A(3) IN THE HANDS OF ASSESSEE COMPANY MAY KINDLY BE DELETED. 22. IT WAS FURTHER SUBMITTED THAT SECTION 40A(3) DO ES NOT IN BLANKET MANNER MANDATE DISALLOWANCE IN RESPECT OF ALL SITUA TIONS WHERE CASH PAYMENT HAS BEEN MADE. IT IS SUBMITTED THAT THE CAS H PAYMENTS WERE MADE ON THE SPECIFIC CONDITION PUT UP BY THE SELLER. IT IS FURTHER SUBMITTED THAT THE LANDS WERE PURCHASED THROUGH REGISTERED SALE DEEDS, IDENTITY OF THE SELLERS AND GENUINENESS OF THE TRANSACTIONS IS FULLY ESTABL ISHED AND THE AO HAS NOT RAISED ANY DOUBT OVER THE GENUINENESS OF THE PAYMEN TS AND IT WAS ACCORDINGLY SUBMITTED THAT WHERE THE GENUINENESS OF THE PAYMENTS WHICH ARE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 22 AS PER THE REGISTERED SALE DEEDS ARE NOT DOUBTED BY THE AO, NO DISALLOWANCE COULD BE MADE. IN SUPPORT, RELIANCE IS PLACED ON TH E DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN CASE OF GURDAS GAR G VS. CIT [2015] 63 TAXMANN.COM 289. IT WAS SUBMITTED THAT THE PROVISI ONS OF SECTION 40A(3) HAVE BEEN ENACTED AS ONE OF THE MEASURES FOR COUNTE RING EVASION OF TAX. THE PROVISIONS WERE ENACTED TO ENABLE THE ASSESSING AUT HORITY TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS O UT OF THE INCOME FROM UNDISCLOSED SOURCES. GENUINE AND BONA FIDE TRANSACT IONS ARE TAKEN OUT OF THE SWEEP OF SECTION 40A(3). 23. IT WAS SUBMITTED THAT IN THE PRESENT CASE, THE ASSESSEE COMPANY HAS NOT MADE USE OF BLACK MONEY FOR PURCHASE OF LAND IN CASH. IT WAS JUST ON THE INSISTENCE OF THE SELLERS, CASH WAS WITHDRAWN FROM BANK AND THE PAYMENT WAS MADE IN CASH KEEPING IN MIND THE BUSINESS EXIGE NCIES. THIS FACT IS CLEAR FROM PERUSAL OF ASSESSMENT ORDER AND FROM BANK STAT EMENTS OF THE ASSESSEE FIRM. THE ASSESSEE COMPANY HAS WITHDRAWN CASH FROM BANK ON VERY SAME DAY OR PREVIOUS DAY BEFORE THE DATE OF PAYMENT MADE IN CASH. FOR READY REFERENCE, THE DETAILS OF CASH WITHDRAWN FROM BANK AND PAYMENTS MADE TO SELLERS ARE AS FOLLOW:- DATE OF AMT. PAID AMOUNT NAME OF SELLER DATE OF WITHDRAWAL MADE FROM BANK AMOUNT WITHDRAWN 13-09-2006 1,00,00,000/- JANGAL RAM, BADRI NARAYAN, BANNA LAL AND MR. TIJA 11.09.2006 1,00,00,000/- 27-09-2006 38,00,000/- BIRDHI CHAND 26-09-2006 38,00,000/- 11-10-2006 27,90,000/- N.R. BUILDCOM P . LTD. 11-10-2006 55,00,000/- ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 23 11-10-2006 25,10,000/- M/S N.R. BUILDCOM P. LTD. 01-02-2007 21,50,000/- GOVIND BAI 31-01-2007 22,00,000 TOTAL 2,12,50,000 2,15,00,000/- 24. IT WAS FURTHER SUBMITTED THAT AFTER INTRODUCTI ON OF SECTION 40A(3), CERTAIN EXCEPTIONS WERE ALLOWED TO BE PROVIDED BY W AY OF DELEGATED LEGISLATIONS. ACCORDINGLY, RULE 6DD WAS NOTIFIED IN THE YEAR 1969 SETTING OUT THE EXCEPTIONS. THE HONBLE JURISDICTIONAL RAJASTHA N HIGH COURT IN THE CASE OF HARSHILA CHORDIA VS. ITO 298 ITR 349 HAS HELD THAT LIST OF EXCEPTIONS PROVIDED UNDER RULE 6DD IS NOT EXHAUSTIVE. MEANING THEREBY THAT MORE COULD BE READ INTO IT, IF THE SAME DOES NOT VIOLATE THE R EASON FOR WHICH SECTION 40A(3) WAS INTRODUCED. THUS, THE CONTENTION OF AO A ND LD. CIT(A) THAT THE APPELLANT WAS UNABLE TO SPECIFY UNDER WHICH CLAUSE OF RULE 6DD ITS CASE FALL IS NOT CORRECT. 25. LASTLY, RELIANCE WAS PLACED ON THE HONBLE SUP REME COURT DECISION IN CASE OF ATTAR SINGH GURMUKH SINGH VS ITO REPORTED I N 59 TAXMANN.COM 11 AND THE DECISION OF THE COORDINATE BENCH IN CASE OF M/S DAGA ROYAL ARTS, JAIPUR VS. ITO WARD-2(2), JAIPUR (ITA NO. 1065/JP/2016 DATED 15.05.2018). 26. PER CONTRA, THE LD. CIT/DR SUBMITTED THAT THE A SSESSEE COMPANY HAS PURCHASED LAND FROM FARMERS AND IT HAS BEEN CONTEND ED THE FARMERS HAVE DEMAND PAYMENT IN CASH. HOWEVER, IN SUPPORT OF THE SAID CLAIM, NO EVIDENCES HAVE BEEN FURNISHED BY THE ASSESSEE AT TH E ASSESSMENT STAGE OR EVEN DURING THE APPELLATE PROCEEDINGS. IT WAS ACCOR DINGLY SUBMITTED THAT THESE ARE MERELY CONTENTIONS WHICH ARE NOT SUPPORTE D BY ANY EVIDENCE AND THE CONTENTION WHICH REMAIN UNSUBSTANTIATED CANNOT BE ACCEPTED. FURTHER, ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 24 REFERRING TO THE INDIVIDUAL TRANSACTIONS, IT WAS SU BMITTED THAT TWO TRANSACTIONS HAVE BEEN EXECUTED WITH M/S N. R. BUILDCOM PVT. LTD AND THEREAFTER, THE CONTENTION REGARDING DEMAND OF PAYMENT IN CASH BY T HE FARMERS CANNOT BE APPLIED IN THESE TWO TRANSACTIONS. IT WAS FURTHER S UBMITTED THAT THE PAYMENTS HAVE BEEN MADE ON DAYS WHICH WERE WORKING DAYS AND THERE WERE NO BANKING HOLIDAYS OR STRIKE ON THOSE DAYS, THEREFORE , ASSESSEES CASE IS ALSO NOT FALLING UNDER RULE 6DD. FURTHER, REFERRING TO T HE BANK STATEMENT FURNISHED BY THE ASSESSEE COMPANY, IT WAS SUBMITTED THAT THERE ARE TWO TRANSACTIONS ON 11 TH OCT, 2006 AND 31 ST JAN, 2007 WHEREIN THE PAYMENTS HAVE BEEN SHOWN TO BE MADE TO MR. SANTOSH. IT WAS SUBMI TTED THAT IT IS NOT CLEAR WHOSE MR. SANTOSH IS AND WHAT LINKAGE, HE HAS WITH ASSESSEE COMPANY OR WITH THE TRANSACTIONS UNDER CONSIDERATION. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF AO AS WELL AS LD. CIT(A) AND SUBMIT TED THAT THERE IS NO INFIRMITY IN THE SAID ORDERS WHERE THE DISALLOWANCE HAS BEEN MADE ON ACCOUNT OF CASH PAYMENT INVOKING PROVISIONS OF SECT ION 40A(3) AND THE SAME MAY ACCORDINGLY BE CONFIRMED. 27. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FIRST CONTENTION WHICH HAS BEEN ADVANCED BY THE LD AR IS THAT THE PROVISIONS OF SECTION 40A(3) CANNOT BE INVOKED IN ABSENCE OF ANY CLAIM OF THE EXPENDITURE IN THE PROFIT/LOSS ACC OUNT AS THE EXPENDITURE INCURRED ON PURCHASE OF LAND HAS BEEN CARRIED FORWA RD AS STOCK-IN-TRADE TO THE SUBSEQUENT YEAR. WE FIND THAT THE SAID ISSUE I S NO MORE RES INTEGRA AND IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF ATTAR SINGH GURMUKH SINGH (SUPRA) CONFIRMING THE DECISION OF THE RAJASTHAN HIGH COURT IN CASE OF KAN TI LAL PURSHOTTAM & CO. V. CIT [1985] 155 ITR 519 (RAJ) AND FAKRI AUTOM OBILES V. CIT [1986] 160 ITR 504 (RAJ) AND THE RELEVANT FINDINGS READ AS UN DER: ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 25 8. AS TO THE SECOND QUESTION, IT MAY BE STATED THA T THE WORD 'EXPENDITURE' HAS NOT BEEN DEFINED IN THE ACT. IT I S A WORD OF WIDE IMPORT. SECTION 40A(3) REFERS TO THE EXPENDITURE IN CURRED BY THE ASSESSEE IN RESPECT OF WHICH PAYMENT IS MADE. IT ME ANS ALL OUTGOINGS ARE BROUGHT UNDER THE WORD 'EXPENDITURE' FOR THE PU RPOSE OF THE SECTION. THE EXPENDITURE FOR PURCHASING THE STOCK-I N-TRADE IS ONE OF SUCH OUTGOINGS. THE VALUE OF THE STOCK-IN-TRADE HAS TO BE TAKEN INTO ACCOUNT WHILE DETERMINING THE GROSS PROFITS UNDER S ECTION 28 OF THE ACT ON PRINCIPLES OF COMMERCIAL ACCOUNTING. THE PAYMENT S MADE FOR PURCHASES WOULD ALSO BE COVERED BY THE WORD 'EXPEND ITURE' AND SUCH PAYMENTS CAN BE DISALLOWED IF THEY ARE MADE IN CASH IN THE SUMS EXCEEDING THE AMOUNT SPECIFIED UNDER SECTION 40A(3) . WE HAVE EARLIER OBSERVED THAT RULE 6DD HAS TO BE READ ALONG WITH SE CTION 40A(3). THE RULE ALSO CONTEMPLATES PAYMENTS MADE FOR STOCK-IN-T RADE AND RAW MATERIALS. THIS RULE IS IN ACCORDANCE WITH THE TERM S OF SECTION 40A(3). THE RULE PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENTS OF PAYMENT BY CROSSED CHEQUE OR A CROS SED BANK DRAFT WHERE THE PURCHASES ARE MADE OF CERTAIN AGRICULTURA L OR HORTICULTURAL COMMODITIES OR FROM A VILLAGE WHERE THERE IS NO BAN KING FACILITY. SECTION 40A(3) IS, THEREFORE, ATTRACTED TO PAYMENTS MADE FOR ACQUIRING STOCK-IN-TRADE AND OTHER MATERIALS. THIS IS ALSO TH E VIEW TAKEN BY SEVERAL HIGH COURTS. - SAJOWANLAL JAISWAL V. CIT [1 976] 103 ITR 706 (ORI.), U.P. HARDWARE STORE V. CIT [1976] 104 ITR 6 64 (ALL.), RATON UDYOG V. 1TO [1977] 109 ITR 1 (AIL), PH. TEXTILES V . CIT [1980] 121 ITR 237 (KER.), CIT V. KISHAN CHAND MAHESHWARI DASS [1980] 121 ITR 232 (PUNJ. & HAR.), KANTI LAL PURSHOTTAM & CO. V. C IT [1985] 155 ITR 519 (RAJ.), CIT V. NEW LIGHT TIN MFG. CO. [1980] 12 1 ITR 229 (PUNJ. & HAR.), FAKRI AUTOMOBILES V. CIT [1986] 160 ITR 504 (RAJ.), VENKATA SATYANARAYANA TIMBER DEPOT V. CIT [1987] 165 ITR 25 3 (AP), ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 26 AND AKASH FILMS V. CIT [1991] 190 ITR 32 (KAR.). TH E DECISIONS OF THE HIGH COURTS OF ANDHRA PRADESH, ORISSA, ALLAHABAD, K ERALA, KARNATAKA, PUNJAB & HARYANA, RAJASTHAN AND PATNA ARE TO THE EF FECT THAT THE PAYMENTS MADE FOR PURCHASING STOCK-IN-TRADE OR RAW MATERIALS SHOULD ALSO BE REGARDED AS EXPENDITURE FOR THE PURPOSE OF SECTION 40A(3). THE ONLY DISCORDANT NOTE STRUCK ON THIS ASPECT IS BY TH E GAUHATI HIGH COURT IN CIT V. HARDWARE EXCHANGE [1991] 190 ITR 61. THE GAUHATI HIGH COURT HAS OBSERVED THAT SECTION 40A(3) APPLIES ONLY TO PAYMENTS MADE ON ACCOUNT OF 'EXPENDITURE INCURRED' AND THE PAYMEN T MADE FOR PURCHASE OF STOCK-IN-TRADE CANNOT BE TERMED AS 'EXP ENDITURE INCURRED' SINCE MONEY DOES NOT GO IRRETRIEVABLY IN SUCH CASES . WE ARE UNABLE TO AGREE WITH THE VIEW TAKEN BY THE GAUHATI HIGH COURT . 28. NOW, COMING TO OTHER CONTENTIONS OF THE LD AR WHICH ARE CENTRED AROUND THE INTENTION OF THE LEGISLATURE BEHIND INTR ODUCTION OF SECTION 40A(3), GENUINE AND BONAFIDE TRANSACTIONS NOT COVERED WITHI N THE SWEEP OF SECTION 40A(3) AND EXCEPTIONS PROVIDED IN RULE 6DD ARE NOT EXHAUSTIVE AND VARIOUS AUTHORITIES QUOTED IN SUPPORT THEREOF, THIS BENCH H AD AN OCCASION TO EXAMINE THE SAME AT LENGTH IN CASE OF M/S A ROYAL DAGA ARTS VS ITO WARD-2(2), JAIPUR (SUPRA) IN LIGHT OF DECISION OF THE HONBLE SUPREME COURT IN CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO AND THE DECISIONS OF VARIOUS HIGH COURTS INCLUDING THE DECISIONS OF THE JURISDICTIONAL HIGH COURT AND THE RELEVANT FINDINGS READS AS UNDER: 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IT WOULD BE RELEVANT TO REFER TO THE PROVISIONS OF SECTION 40A(3) OF THE ACT WHICH READS AS UNDER: (3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON I N A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 27 DRAFT EXCEEDS TWENTY THOUSAND RUPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE. (3A) WHERE AN ALLOWANCE HAS BEEN MADE IN THE ASSESS MENT FOR ANY YEAR IN RESPECT OF ANY LIABILITY INCURRED BY THE ASSESSEE F OR ANY EXPENDITURE AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR (HEREINAFTER REFERRED TO AS SUBSEQUENT YEAR) THE ASSESSEE MAKES PAYMENT IN RESP ECT THEREOF, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, THE PAYMENT SO MADE SHALL BE DEEMED TO BE TH E PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE T O INCOME-TAX AS INCOME OF THE SUBSEQUENT YEAR IF THE PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, EXCEEDS TWENTY THOUSAND RUPEES: PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR P ROFESSION UNDER SUB- SECTION (3) AND THIS SUB-SECTION WHERE A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACC OUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDS TWENTY THOUSAND RUPEES, IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED, HAVING REGARD TO THE NATURE AND EXTENT OF BANKING F ACILITIES AVAILABLE, CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER REL EVANT FACTORS : PROVIDED FURTHER THAT IN THE CASE OF PAYMENT MADE FOR PLYING, HIRING OR LEASING GOODS CARRIAGES, THE PROVISIONS OF SUB-SECT IONS (3) AND (3A) SHALL HAVE EFFECT AS IF FOR THE WORDS 'TWENTY THOUSAND RU PEES', THE WORDS 'THIRTY- FIVE THOUSAND RUPEES' HAD BEEN SUBSTITUTED. (4) NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE OR IN ANY CONTRACT, WHERE ANY PAYMENT IN R ESPECT OF ANY EXPENDITURE HAS TO BE MADE BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT IN ORDER THAT SUCH EXPENDITURE MAY NOT BE DISALLOWED AS A DEDUCTION UNDER SUB-SECTION (3), THEN THE PAYMENT M AY BE MADE BY SUCH ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 28 CHEQUE OR DRAFT; AND WHERE THE PAYMENT IS SO MADE O R TENDERED, NO PERSON SHALL BE ALLOWED TO RAISE, IN ANY SUIT OR OTHER PRO CEEDING, A PLEA BASED ON THE GROUND THAT THE PAYMENT WAS NOT MADE OR TENDERED IN CASH OR IN ANY OTHER MANNER. 19. THE AFORESAID PROVISIONS HAVE TO BE CONSIDERED AND INTERPRETED IN LIGHT OF VARIOUS AUTHORITIES WHICH HAVE BEEN QUOTED AT TH E BAR AND RELIED UPON BY THE LD AR AND LD DR IN SUPPORT OF THEIR RESPECTIVE CONTENTIONS. 20. IN CASE OF ATTAR SINGH GURMUKH SINGH V. ITO (SU PRA), THE MATTER WHICH CAME UP FOR CONSIDERATION BEFORE THE HONBLE SUPREME COURT, THE FACTS OF THE CASE WERE THAT ASSESSEE HAD MADE PAYMENT IN CASH EXCEEDING A SUM OF RS. 2,500/- FOR PURCHASE OF CERTAIN STOCK-IN-TRA DE. PAYMENTS WERE NOT ALLOWED AS DEDUCTIONS IN THE COMPUTATION OF INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSIONS AS THE SAME W ERE HELD TO BE IN CONTRAVENTION OF SECTION 40A(3) READ WITH THAT 6DD OF THE INCOME RULES. IN THAT FACTUAL BACKGROUND, THE QUESTION REGARDING VAL IDITY OF SECTION 40A(3) AND APPLICABILITY OF THE SAID PROVISIONS TO PAYMENT MADE FOR ACQUIRING STOCK- IN-TRADE CAME UP FOR CONSIDERATION BEFORE THE HONB LE SUPREME COURT. 21. THE HONBLE SUPREME COURT REFERRING TO THE PROV ISIONS OF SECTION 40A(3) AND RULE 6DD AND IN PARTICULAR, RULE 6DD(J), AS EXISTED AT RELEVANT POINT IN TIME, HAS HELD AS UNDER:- 6. AS TO THE VALIDITY OF SECTION 40A(3), IT WAS U RGED THAT IF THE PRICE OF THE PURCHASED MATERIAL IS NOT ALLOWED TO BE ADJUSTE D AGAINST THE SALE PRICE OF THE MATERIAL SOLD FOR WANT OF PROOF OF PAYMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT, THEN THE INCOME-TAX LEVIED WILL NOT BE ON THE INCOME BUT IT WILL BE ON AN ASSUMED INCOME. IT IS SAID THAT TH E PROVISION AUTHORIZING LEVY ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 29 TAX ON AN ASSUMED INCOME WOULD BE A RESTRICTION ON THE RIGHT TO CARRY ON THE BUSINESS, BESIDES BEING ARBITRARY. 7. IN OUR OPINION, THERE IS LITTLE MERIT IN THIS CO NTENTION. SECTION 40A(3) MUST NOT BE READ IN ISOLATION OR TO THE EXCLUSION O F RULE 6DD. THE SECTION MUST BE READ ALONG WITH THE RULE. IF READ TOGETHER, IT WILL BE CLEAR THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT THE BUSINES S ACTIVITIES. THERE IS NO RESTRICTION ON THE ASSESSEE IN HIS TRADING ACTIVITI ES. SECTION 40A(3) ONLY EMPOWERS THE ASSESSING OFFICER TO DISALLOW THE DEDU CTION CLAIMED AS EXPENDITURE IN RESPECT OF WHICH PAYMENT IS NOT MADE BY CROSSED CHEQUE OR CROSSED BANK DRAFT. THE PAYMENT BY CROSSED CHEQUE O R CROSSED BANK DRAFT IS INSISTED ON TO ENABLE THE ASSESSING AUTHORITY TO AS CERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF THE IN COME FROM DISCLOSED SOURCES. THE TERMS OF SECTION 40A(3) ARE NOT ABSOLU TE. CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. THE GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OU T OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO T HE SATISFACTION OF THE ASSESSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A(3) WAS NOT 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 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PA YMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT IN THE CIRCUMSTANCES S PECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF SECTION 40A (3) AND RULE 6DD THAT THEY ARE INTENDED TO REGULATE THE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLAC K-MONEY FOR BUSINESS TRANSACTIONS. MUDIAM OIL CO. V. ITO [1973] 92 ITR 519 (AP). IF THE PAYMENT IS MADE BY A CROSSED CHEQUE ON A BANK OR A CROSSED BANK DRAFT, THEN IT WILL BE EASIER TO ASCERTAIN, WHEN DEDUCTION IS CLAIMED, WHETHER THE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 30 PAYMENT WAS GENUINE AND WHETHER IT WAS OUT OF THE I NCOME FROM DISCLOSED SOURCES. IN INTERPRETING A TAXING STATUTE THE COURT CANNOT BE OBLIVIOUS OF THE PROLIFERATION OF BLACK-MONEY WHICH IS UNDER CIRCULA TION IN OUR COUNTRY. ANY RESTRAINT INTENDED TO CURB THE CHANCES AND OPPORTUN ITIES TO USE OR CREATE BLACK-MONEY SHOULD NOT BE REGARDED AS CURTAILING TH E FREEDOM OF TRADE OR BUSINESS. 22. FURTHER, THE HONBLE SUPREME COURT UPHELD THE APPLICABILITY OF SECTION 40A(3) TO PAYMENT MADE FOR ACQUIRING STOCK-IN-TRADE AND RAW MATERIALS AND ALSO AFFIRMED THE DECISION OF HONBLE RAJASTHAN HIG H COURT IN CASE OF FAKRI AUTOMOBILES V. CIT [1986] 160 ITR 504 (RAJ) TO THE EFFECT THAT THE PAYMENTS MADE FOR PURCHASING STOCK-IN-TRADE OR RAW MATERIAL SHOULD ALSO BE REGARDED AS EXPENDITURE FOR THE PURPOSES OF SECTION 40A(3) O F THE ACT. 23. THE HONBLE SUPREME COURT HAS THEREFORE UPHELD THE CONSTITUTIONAL VALIDITY OF SECTION 40A(3) OF THE ACT AND HAS HELD THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT THE BUSINESS ACTIVITIES AND RE STRAINT SO PROVIDED ARE ONLY INTENDED TO CURB THE CHANCES AND OPPORTUNITIES TO U SE OR CREATE BLACK MONEY AND THE SAME SHOULD NOT BE REGARDED AS CURTAILING T HE FREEDOM OF TRADE OR BUSINESS. THE HONBLE SUPREME COURT HAS THUS LAID GREAT EMPHASIS ON THE INTENTION BEHIND INTRODUCTION OF THESE PROVISIONS A ND IT WOULD THEREFORE BE RELEVANT TO EXAMINE WHETHER IN THE PRESENT CASE, TH ERE IS ANY VIOLATION OF SUCH INTENTION AND IF ULTIMATELY, IT IS DETERMINED THAT SUCH INTENTION HAS BEEN VIOLATED, THEN CERTAINLY, THE ASSESSEE DESERVES THE DISALLOWANCE OF THE EXPENDITURE SO CLAIMED. 24. THE HONBLE SUPREME COURT REFERRING TO THE PRO VISIONS OF SECTION 40A(3) AS EXISTED AT RELEVANT POINT IN TIME WHICH T ALKS ABOUT CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS A ND RULE 6DD(J) WHICH ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 31 PROVIDES FOR THE EXCEPTIONAL OR UNAVOIDABLE CIRCUMS TANCES AND THE FACT THAT THE PAYMENT IN THE MANNER AFORESAID WAS NOT PRACTIC AL OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE AND FURNISHING THE NECESSARY EVIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER AS TO THE GEN UINENESS OF THE PAYMENTS AND THE IDENTITY OF THE PAYEE HAS HELD THAT: THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE. CONS IDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLU DED. THE GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWE EP 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 MA NNER PRESCRIBED IN SECTION 40A(3) WAS NOT PRACTICABLE OR WOULD HAVE CA USED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO ID ENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYMENT. RULE 6DD PROVIDES THAT A N ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSS ED CHEQUE OR CROSSED BANK DRAFT IN THE CIRCUMSTANCES SPECIFIED UNDER THE RULE. 25. HERE, IT IS RELEVANT TO NOTE THAT THERE HAS BE EN NO CHANGE IN THE PROVISIONS OF SECTION 40A(3) IN SO FAR AS CONSIDERA TIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE CONCERNED , AS EXISTED AT RELEVANT POINT IN TIME AND AS CONSIDERED BY THE HONBLE SUPR EME COURT AND THE PROVISIONS OF SECTION 40A(3) AS EXIST NOW AND RELEV ANT FOR THE IMPUNGED ASSESSMENT YEAR I.E. AY 2013-14. HOWEVER, RULE 6DD( J) HAS BEEN AMENDED AND BY NOTIFICATION DATED 10.10.2008, IT NOW PROVID ES FOR AN EXCEPTION ONLY IN A SCENARIO WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDA Y OR STRIKE. A QUESTION WHICH ARISES FOR CONSIDERATION IS WHETHER THE LEGAL PROPOSITION SO LAID DOWN BY THE HONBLE SUPREME COURT REGARDING CONSIDERATIO N OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS HAS BEEN DILU TED BY WAY OF DELEGATED ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 32 LEGISLATION IN FORM OF INCOME TAX RULES WHEN THE PA RENT LEGISLATION IN FORM OF SECTION 40A(3) TO WHICH SUCH DELEGATED LEGISLATION IS SUBSERVIENT HAS BEEN RETAINED IN ITS ENTIRETY. ALTERNATIVELY, CAN IT BE SAID THAT WHAT HAS BEEN PRESCRIBED AS EXCEPTIONAL CIRCUMSTANCES IN RULE 6DD AS AMENDED ARE EXHAUSTIVE ENOUGH AND WHICH VISUALIZES ALL KINDS AN D NATURE OF BUSINESS EXPEDIENCY IN ALL POSSIBLE SITUATIONS. 26. IF WE LOOK AT THE LEGISLATIVE HISTORY OF SECTIO N 40A(3) AND RULE 6DD, WE FIND THAT INITIALLY, SECTION 40A(3) PROVIDES FOR DI SALLOWANCE OF 100% OF THE EXPENDITURE UNLESS THE MATTER FALLS UNDER EXCEPTION AS PROVIDED IN RULE 6DD(J) LATER ON, SECTION 40A(3) HAS BEEN AMENDED T O PROVIDE FOR DISALLOWANCE OF 20% OF THE EXPENDITURE INCURRED IN CASH AND RULE 6DD(J) WAS OMITTED. THEREAFTER, BY VIRTUE OF ANOTHER AMEND MENT, DISALLOWANCE UNDER SECTION 40A(3) WAS INCREASED FROM 20% TO 100% , HOWEVER, RULE 6DD(J) WAS NOT REINTRODUCED IN ORIGINAL FORM TO PRO VIDE FOR EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES RATHER IT WAS RESTRICTED TO PAYMENT BY WAY OF SALARY TO EMPLOYEES AND THEREAFTER, BY VIRTUE OF LA STEST AMENDMENT IN YEAR 2008 TO PAYMENTS MADE ON A DAY ON WHICH THE BANKS W ERE CLOSED ON ACCOUNT OF HOLIDAY OR STRIKE. 27. WE DO NOT BELIEVE THAT BY VIRTUE OF THESE AMEND MENTS, THE LEGAL PROPOSITION SO LAID DOWN BY THE HONBLE SUPREME COU RT REGARDING CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELE VANT FACTORS HAS BEEN DILUTED IN ANY WAY. AT THE SAME TIME, WE ALSO BELI EVE THAT RULE 6DD AS AMENDED ARE NOT EXHAUSTIVE ENOUGH AND WHICH VISUALI ZES ALL KINDS AND NATURE OF BUSINESS EXPEDIENCY IN ALL POSSIBLE SITUA TIONS AND IT IS FOR THE APPROPRIATE AUTHORITY TO EXAMINE AND PROVIDE FOR A MECHANISM AS ORIGINALLY ENVISAGED WHICH PROVIDES FOR EXCEPTIONAL OR UNAVOID ABLE CIRCUMSTANCES TO ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 33 THE SATISFACTION OF THE ASSESSING OFFICER WHEREBY G ENUINE BUSINESS EXPENDITURE SHOULD NOT SUFFER DISALLOWANCE. 28. FURTHER, THE COURTS HAVE HELD FROM TIME TO TIME THAT THE RULES MUST BE INTERPRETED IN A MANNER SO AS TO ADVANCE AND NOT TO FRUSTRATE THE OBJECT OF THE LEGISLATURE. THE INTENTION OF THE LEGISLATURE I S MANIFESTLY CLEAR AND WHICH IS TO CURB THE CHANCES AND OPPORTUNITIES TO USE OR CREATE BLACK MONEY AND TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHE R IT WAS OUT OF THE INCOME FROM DISCLOSED SOURCES. AND SECTION 40A(3) C ONTINUES TO PROVIDE THAT NO DISALLOWANCE SHALL BE MADE IN SUCH CASES AND UND ER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED HAVING REGARD TO THE NATURE AN D EXTENT OF THE BANKING FACILITIES AVAILABLE, CONSIDERATION OF BUSINESS EXP EDIENCY AND OTHER RELEVANT FACTORS. IN OUR VIEW, GIVEN THAT THERE HAS BEEN NO CHANGE IN THE PROVISIONS OF SECTION 40A(3) IN SO FAR AS CONSIDERATION OF BUS INESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE CONCERNED, THE SAME CONTINUES TO BE RELEVANT FACTORS WHICH NEEDS TO BE CONSIDERED AND TAKEN INTO ACCOUNT WHILE DETERMINING THE EXCEPTIONS TO THE DISALLOWANCE AS CONTEMPLATED UNDE R SECTION 40A(3) OF THE ACT SO LONG AS THE INTENTION OF THE LEGISLATURE IS NOT VIOLATED. WE FIND THAT OUR SAID VIEW FIND RESONANCE IN DECISIONS OF VARIOU S AUTHORITIES, WHICH WE HAVE DISCUSSED BELOW AND THUS SEEMS FORTIFIED BY TH E SAID DECISIONS. 29. WE REFER TO THE DECISION OF THE HONBLE RAJASTH AN HIGH COURT IN CASE OF SMT. HARSHILA CHORDIA VS. ITO (SUPRA), WHERE THE FA CTS OF CASE WERE THAT THE ASSESSEE HAD MADE CERTAIN CASH PAYMENTS TOWARDS PUR CHASE OF SCOOTER/MOPEDS WHICH EXCEEDED RS. 10,000/- IN EACH CASE TO THE PRINCIPAL AGENT INSTEAD OF MAKING PAYMENT THROUGH THE CROSS C HEQUES OR BANK DRAFT. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SEC TION 40A(3) AND HELD THAT THEY WERE NO EXCEPTIONAL CIRCUMSTANCES FALLING UNDE R RULE 6DD WHICH COULD AVOID CONSEQUENCES OF THE PROVISIONS OF SECTION 40A (3) OF THE ACT. THE LD. ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 34 CIT(A) HELD THAT SUCH EXCEPTIONAL CIRCUMSTANCES DID EXIST. HOWEVER, THE FINDINGS OF THE LD. CIT(A) WERE REVERSED BY THE TRI BUNAL AND THE MATTER CAME UP FOR CONSIDERATION BEFORE THE HONBLE HIGH COURT. 30. THE HONBLE HIGH COURT OBSERVED THAT THE PRINCI PAL REASON WHICH WEIGHED WITH THE TRIBUNAL IN DISCARDING THE EXPLANA TION FURNISHED BY THE ASSESSEE WAS THAT THE CASE OF THE ASSESSEE DID NOT FALL IN ANY OF THE CLAUSES ENUMERATED IN THE CIRCULAR ISSUED BY THE CBDT ABOUT THE EXPLANATORY NOTE APPENDED TO CLAUSE (J) WAS TO OPERATE AS IT WAS EXI STING AT THE RELEVANT TIME AND ENUMERATED CIRCUMSTANCES IN THE CIRCULAR WAS EX HAUSTIVE OF EXCEPTIONAL CIRCUMSTANCES. THE HONBLE HIGH COURT OBSERVED THAT THE TRIBUNAL HAS ERRONEOUSLY ASSUMED THAT ENUMERATION OF INSTANCES I N THE CIRCULAR IN WHICH THE PROVISIONS OF CLAUSE (J) UNDER RULE 6DD WOULD O PERATE TO BE EXHAUSTIVE OF SUCH CIRCUMSTANCES AND HAD NOT BEEN PROPERLY UNDERS TOOD ITS IMPLICATION. IT WAS FURTHER OBSERVED BY THE HONBLE HIGH COURT THAT PRIMARY OBJECT OF ENACTING SECTION 40A(3) IN ITS ORIGINAL INCARNATION WAS TWO-FOLD, FIRSTLY, PUTTING A CHECK ON TRADING TRANSACTIONS WITH A MIND TO EVADE THE LIABILITY TO TAX ON INCOME EARNED OUT SUCH TRANSACTION AND, SECO NDLY, TO INCULCATE THE BANKING HABITS AMONGST THE BUSINESS COMMUNITY. THE CONSEQUENCE WHICH WAS PROVIDED WAS TO DISALLOW OF DEDUCTION OF SUCH P AYMENTS/EXPENSES WHICH WERE NOT THROUGH BANK EITHER BY CROSSED CHEQUES OR BY DEMAND DRAFT OR BY PAY ORDER. IT WAS FURTHER HELD BY THE HONBLE HIGH COURT THAT: APPARENTLY, THIS PROVISION WAS DIRECTLY RELATED TO CURB THE EVASION OF TAX AND INCULCATING THE BANKING HABITS. THEREFORE, THE CONSEQUENCES, WHICH WERE TO BEFALL ON ACCOUNT OF NON-OBSERVATION OF SUB-SECT ION (3) OF SECTION 40A MUST HAVE NEXUS TO THE FAILURE OF SUCH OBJECT. THER EFORE THE GENUINENESS OF THE TRANSACTIONS AND IT BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERATION WHICH HAS BEEN OVERLOOKED BY THE TRIBUNAL. ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 35 31. IT WAS ACCORDINGLY HELD BY THE HONBLE HIGH COU RT THAT IT IS THE RELEVANT CONSIDERATION FOR THE ASSESSING AUTHORITY UNDER THE INCOME TAX ACT THAT BEFORE INVOKING THE PROVISIONS OF SECTION 40A(3) IN LIGHT OF RULE 6DD AS CLARIFIED BY CIRCULAR OF THE CBDT THAT WHETHER THE FAILURE ON THE PART OF THE ASSESSEE IN ADHERING TO REQUIREMENT OF PROVISIONS O F SECTION 40A(3) HAS ANY SUCH NEXUS WHICH DEFEATS THE OBJECT OF PROVISION SO AS TO INVITE SUCH A CONSEQUENCE. THIS IS PARTICULARLY SO, BECAUSE THE C ONSEQUENCE PROVIDED U/S 40A(3) FOR FAILURE TO MAKE PAYMENTS THROUGH BANK IS NOT ABSOLUTE IN TERMS NOR AUTOMATIC BUT EXCEPTIONS HAVE BEEN PROVIDED AND LEVERAGE HAS BEEN LEFT FOR LITTLE FLEXING BY MAKING A GENERAL PROVISION IN THE FORM OF CLAUSE (J) IN RULE 6DD. THEREAFTER, THE HONBLE HIGH COURT REFERS TO T HE CLAUSE 6DD(J) AND THE CIRCULAR DATED 31 ST MAY, 1977 ISSUED BY THE BOARD IN THE CONTEXT OF WH AT SHALL CONSTITUTE EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCE S WITHIN THE MEANING OF SECTION CLAUSE (J). THE HONBLE HIGH COURT OBSERVED THAT THE CIRCULAR IN PARAGRAPH 5 GIVES A CLEAR INDICATION THAT RULE 6DD( J) HAS TO BE LIBERALLY CONSTRUED AND ORDINARILY WHERE THE GENUINENESS OF THE TRANSACTION AND THE PAYMENT AND THE IDENTITY OF THE RECEIVER IS ESTABLI SHED, THE REQUIREMENT OF RULE 6DD(J) MUST BE DEEMED TO HAVE BEEN SATISFIED. THE HONBLE HIGH COURT OBSERVED THAT APPARENTLY SECTION 40A(3) WAS INTENDE D TO PENALIZE THE TAX EVADER AND NOT THE HONEST TRANSACTIONS AND THAT IS WHY AFTER FRAMING OF RULE 6DD(J), THE BOARD STEPPED IN BY ISSUING THE AFORESA ID CIRCULAR AND THIS CLARIFICATION, IN OUR OPINION, IS IN CONFORMITY WIT H THE PRINCIPLE ENUNCIATED BY THE SUPREME COURT IN CTO VS. SWASTIK ROADWAYS REPOR TED IN [2004] 2 RC 539; [2004] 3 SCC 640. 32. THE LEGAL PROPOSITION THAT ARISES FROM THE ABOV E DECISION OF THE HONBLE RAJASTHAN HIGH COURT IS THAT THE CONSEQUENCES, WHIC H WERE TO BEFALL ON ACCOUNT OF NON-OBSERVATION OF SUB-SECTION (3) OF SE CTION 40A MUST HAVE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 36 NEXUS TO THE FAILURE OF SUCH OBJECT. THEREFORE THE GENUINENESS OF THE TRANSACTIONS AND IT BEING FREE FROM VICE OF ANY DEV ICE OF EVASION OF TAX IS RELEVANT CONSIDERATION AND WHICH SHOULD BE EXAMINED BEFORE INVOKING THE RIGOURS OF SECTION 40A(3) OF THE ACT. 33. IN CASE OF ANUPAM TELE SERVICES V. INCOME TAX O FFICER, THE MATTER WHICH CAME UP FOR CONSIDERATION BEFORE THE HONBLE GUJARAT HIGH COURT, THE FACTS OF THE CASE WERE THAT THE ASSESSEE WHO IS INV OLVED IN THE BUSINESS OF DISTRIBUTION MOBILE AND RECHARGE VOUCHERS OF TATA T ELE SERVICES LTD HAD MADE PAYMENT OF RS. 33,10,194/- TO TATA TELE SERVIC ES LTD., BY CASH ON DIFFERENT DATES. THE ASSESSEE HAD MADE SUCH PAYMENT THROUGH ACCOUNT PAYEE CHEQUES TILL 22 ND AUG, 2005, WHEN A CIRCULAR WAS ISSUED BY TATA TELE SERVICES LTD., REQUIRING THE APPELLANT TO DEPOSIT C ASH AT THE COMPANYS OFFICE AT SURAT. IN THAT FACTUAL BACKGROUND , THE HONBLE HIGH COURT HELD AS UNDER:- 17. RULE 6DD OF THE IT RULES, 1962 PROVIDES FOR SITUATI ONS UNDER WHICH DISALLOWANCE UNDER S. 40A(3) SHALL NOT BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR P ROFESSION UNDER THE SAID SECTION. AMONGST THE VARIOUS CLAUSES, CL. (J) WHICH IS RELEVANT, READ AS UNDER: (J) WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR S TRIKE; 18. IT COULD BE APPRECIATED THAT S. 40A AND IN PART ICULAR SUB-CL. (3) THEREOF AIMS AT CURBING THE POSSIBILITY OF ON-MONEY TRANSACTIONS BY INSISTING THAT ALL PAYMENTS WHERE EXPENDITURE IN EXCESS OF A CERTAIN SUM (IN THE PRESENT CASE TWENTY THOUSAND RUPEES) MUST BE MADE B Y WAY OF ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT. 19. AS HELD BY THE APEX COURT IN CASE OF ATTAR SING H GURMUKH SINGH (SUPRA). '..IN OUR OPINION, THERE IS LITTLE MERIT I N THIS CONTENTION. SEC. ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 37 40A(3) MUST NOT BE READ IN ISOLATION OR TO THE EXCL USION OF R. 6DD. THE SECTION MUST BE READ ALONG WITH THE RULE. IF READ T OGETHER, IT WILL BE CLEAR THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT TH E BUSINESS ACTIVITIES. THERE IS NO RESTRICTION ON THE ASSESSEE IN HIS TRAD ING ACTIVITIES. SEC. 40A(3) ONLY EMPOWERS THE A.O. TO DISALLOW THE DEDUCTION CL AIMED AS EXPENDITURE IN RESPECT OF WHICH PAYMENT IS NOT MADE BY CROSSED CHEQUE OR CROSSED BANK DRAFT. THE PAYMENT BY CROSSED CHEQUE OR CROSSED BAN K DRAFT IS INSISTED ON TO ENABLE THE ASSESSING AUTHORITY TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF THE INCOME FROM UN DISCLOSED SOURCES, THE TERMS OF S. 40A(3) ARE NOT ABSOLUTE. CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. GENUIN E AND 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 A.O. THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN S. 40 A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYE E. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED TH E CASH PAYMENT. RULE 6DD PROVIDES THAT 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 S. 40A(3) AND R. 6DD THAT THEY ARE INTENDED TO REGULATE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTIONS: 20. IT WAS BECAUSE OF THESE CONSIDERATIONS THAT THI S COURT IN CASE OF HYNOUP FOODS (P.) LTD. (SUPRA) OBSERVED THAT THE GE NUINENESS OF THE PAYMENT AND THE IDENTIFY OF THE PAYEE ARE THE FIRST AND FOREMOST REQUIREMENTS TO INVOKE THE EXCEPTIONS CARVED OUT IN R. 6DD(J) OF THE IT RULES,1962. ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 38 21. IN THE PRESENT CASE, NEITHER THE GENUINENESS OF THE PAYMENT NOR THE IDENTITY OF THE PAYEE WERE IN ANY CASE DOUBTED. THE SE WERE THE CONCLUSIONS ON FACTS DRAWN BY THE CIT(A). THE TRIBUNAL ALSO DID NOT DISTURB SUCH FACTS BUT RELIED SOLELY ON R. 6DD(J) OF THE RULES TO HOLD THAT SINCE THE CASE OF THE ASSESSEE DID NOT FALL UNDER THE SAID EXCLUSION CLAU SE NOR WAS COVERED UNDER ANY OF THE CLAUSES OF R. 6DD, CONSEQUENCES ENVISAGE D IN S. 40A(3) OF THE ACT MUST FOLLOW. 22. IN OUR OPINION, THE TRIBUNAL COMMITTED AN ERROR IN COMING TO SUCH A CONCLUSION. WE WOULD BASE OUR CONCLUSIONS ON THE FO LLOWING REASONS: (A) THE PARAMOUNT CONSIDERATION OF SECTION 40A(3) IS TO CURB AND REDUCE THE POSSIBILITIES OF BLACK MONEY TRANSACTION S. AS HELD BY THE SUPREME COURT IN ATTAR SINGH GURMUKH SINGH (SUPRA), SECTION 40A(3) OF THE ACT DOES NOT ELIMINATE CONSIDERATIONS OF BUSINE SS EXPEDIENCIES. (B) IN THE PRESENT CASE, THE APPELLANT ASSESSEE W AS COMPELLED TO MAKE CASH PAYMENTS ON ACCOUNT OF PECULIAR SITUATION. SUC H SITUATION WAS AS FOLLOW- (I) THE PRINCIPAL COMPANY, TO WHICH THE ASSESSEE WAS A DISTRIBUTOR, INSISTED THAT CHEQUE PAYMENT FROM A CO-OPERATIVE BA NK WOULD NOT DO, SINCE THE REALIZATION TAKES A LONGER TIME; (II) THE ASSESSEE WAS, THEREFORE, REQUIRED TO MAKE CASH PAYMENTS ONLY; (III) TATA TELE SERVICES LTD. ASSURED THE ASSESSEE THAT SUCH AMOUNT SHALL BE DEPOSITED IN THEIR BANK ACCOUNT ON BEHALF OF THE ASSESSEE; (IV) IT IS NOT DISPUTED THAT THE TATA TELE SERVICES LTD. DID NOT ACT ON SUCH PROMISE; ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 39 (V) IF THE ASSESSEE HAD NOT MADE CASH PAYMENT AND RELIED ON CHEQUE PAYMENTS ALONE, IT WOULD HAVE RECEIVED THE RECHARGE VOUCHERS DELAYED BY 4/5 DAYS AND THEREBY SEVERELY AFFECTING ITS BUSINES S OPERATIONS. WE WOULD FIND THAT THE PAYMENTS BETWEEN THE ASSESSE E AND THE TATA TELE SERVICES LTD. WERE GENUINE. THE TATA TELE SERVICES LTD. HAD INSISTED THAT SUCH PAYMENTS BE MADE IN CASH, WHICH TATA TELE SERV ICES LTD. IN TURN ASSURED AND DEPOSITED THE AMOUNT IN A BANK ACCOUNT. IN THE FACTS OF THE PRESENT CASE, RIGORS OF S. 40A(3) OF THE ACT MUST B E LIFTED. 23. WE NOTICE THAT THE DIVISION BENCH OF THE RAJAS THAN HIGH COURT IN CASE OF SMT. HARSHILA CHORDIA VS. ITO (2007) 208 CT R (RAJ) HAD OBSERVED THAT THE EXCEPTIONS CONTAINED IN R. 6DD ARE NOT EXH AUSTIVE AND THAT THE SAID RULE MUST BE INTERPRETED LIBERALLY. 34. IN CASE OF M/S AJMER FOOD PRODUCTS PVT. LTD., A JMER VS. JCIT (SUPRA), A SIMILAR ISSUE HAS COME UP BEFORE THE CO-ORDINATE BENCH AND SPEAKING THROUGH ONE OF US, IT WAS HELD AS UNDER: 4.5 THE GENUINENESS OF THE TRANSACTION AS WELL AS THE IDENTITY OF THE PAYEE ARE NOT DISPUTED. FURTHER, THE APPELLANT HAS EXPLAI NED THE BUSINESS EXPEDIENCY OF MAKING THE CASH PAYMENTS TO BOTH THE PARTIES WHICH HAS NOT BEEN CONTROVERTED BY THE REVENUE. FOLLOWING THE DEC ISION OF GUJARAT HIGH COURT IN CASE OF ANUPAM TELE SERVICES (SUPRA) AND R AJASTHAN HIGH COURT IN CASE OF HARSHILA CHORDIA (SUPRA), THE ADDITION OF R S. 45,738/- UNDER SECTION 40A(3) IS DELETED. 35. IN CASE OF GURDAS GARG VS. CIT(A), BATHINDA (SU PRA), THE MATTER WHICH CAME UP FOR CONSIDERATION BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT, THE FACTS OF THE CASE ARE PARI MATERIA TO THE INSTA NT CASE AND THE RATIO OF THE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 40 SAID DECISION CLEARLY APPLIES IN THE INSTANT CASE. IN THAT CASE, THE FACTS OF THE CASE WERE THAT THE ASSESSEE WAS ENGAGED IN TRADING IN PROPERTIES AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERV ED THAT THERE ARE TRANSACTIONS WHERE THE PAYMENTS HAVE BEEN MADE IN E XCESS OF RS. 20,000/- IN CASH WHICH WERE DISALLOWED U/S 40A(3) OF THE ACT . THE HONBLE HIGH COURT HELD THAT RULE 6DD(J) IS NOT EXHAUSTIVE OF THE CIRC UMSTANCES IN WHICH THE PROVISO TO SECTION 40A(3) IS APPLICABLE AND IT ONLY ILLUSTRATIVE. THE HONBLE HIGH COURT REFERS TO THE DECISION OF THE HONBLE RA JASTHAN HIGH COURT IN CASE OF SMT. HARSHILA CHORDIA V. ITO (SUPRA) AND THE DEC ISION OF HONBLE SUPREME COURT IN CASE OF ATTAR SINGH GURMUKH SINGH V. ITO ( SUPRA). THE HIGH COURT FURTHER OBSERVED THAT THE LD. CIT(A) HAS GIVEN A FI NDING THAT THE IDENTITY OF THE PAYEE I.E. VENDORS IN RESPECT OF LAND PURCHASE BY THE APPELLANT WAS ESTABLISHED, THE SALE DEEDS WERE PRODUCED, THE GENU INENESS THEREOF WAS ACCEPTED AND THE AMOUNT PAID IN RESPECT OF EACH OF THESE AGREEMENT WAS SATISFIED BEFORE THE STAMP REGISTRATION AUTHORITY A ND THE TRANSACTIONS WERE HELD TO BE GENUINE AND THE BAR AGAINST THE GRANT OF DEDUCTIONS U/S 40A(3) OF THE ACT WAS NOT ATTRACTED. THE HONBLE HIGH COURT F URTHER OBSERVED THAT THE TRIBUNAL DID NOT UPSET THESE FINDINGS INCLUDING AS TO THE GENUINENESS AND THE CORRECTNESS OF THE TRANSACTIONS AND IT IS ALSO IMPO RTANT TO NOTE THAT THE TRIBUNAL NOTED THE CONTENTION ON BEHALF OF THE APPE LLANT THAT THERE WAS A BOOM IN THE REAL ESTATE MARKET AND THEREFORE IT WAS NECESSARY, THEREFORE, TO CONCLUDE THE TRANSACTIONS AT THE EARLIEST AND NOT T O POSTPONE THEM; THAT THE APPELLANT DID NOT KNOW THE VENDORS AND OBVIOUSLY TH EREFORE, INSISTED FOR PAYMENT IN CASH AND THAT AS A RESULT THEREOF, PAYME NTS HAD TO BE MADE IMMEDIATELY TO SETTLE THE DEALS. THE TRIBUNAL DID N OT DOUBT THIS CASE. THE TRIBUNAL, HOWEVER, HELD THAT THE CLAIM FOR DEDUCTIO N WAS NOT SUSTAINABLE. IN VIEW OF SECTION 40A(3) AS THE PAYMENTS WHICH WERE O VER RS. 20,000/- WERE MADE IN CASH. THE HONBLE HIGH COURT ACCORDINGLY OB SERVED THAT THE TRIBUNAL HAS NOT DISBELIEVED THE TRANSACTIONS OR TH E GENUINENESS THEREOF NOR ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 41 HAS IT DISBELIEVED THE FACT THAT PAYMENTS HAVING BE EN MADE. MORE IMPORTANTLY, THE REASONS FURNISHED BY THE APPELLANT FOR HAVING MADE THE CASH PAYMENTS, WHICH WE HAVE ALREADY ADVERTED TO, HAVE N OT BEEN DISBELIEVED. IN OUR VIEW, ASSUMING THESE REASONS TO BE CORRECT, THE Y CLEARLY MAKE OUT A CASE OF BUSINESS EXPEDIENCY. 36. THE CO-ORDINATE BENCH IN CASE OF M/S DHURI WINE VS DCIT (ITA NO. 1155/CHD/2013 & OTHERS DATED 09.10.2015) HAS HELD T HAT THE PROPOSITION SO LAID DOWN BY THE HONBLE HIGH COURT IN CASE OF GURD AS GARG (SUPRA) 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 DISP ENSED WITH IF THE ASSESSEE IS ABLE TO PROVE THE BUSINESS EXPEDIENCY BECAUSE OF WHICH IT HAS TO MAKE THE CASH PAYMENTS, THE GENUINENESS OF THE TRANSACTIONS HAVE ALSO TO BE VERIFIED. 37. THE CO-ORDINATE BENCH IN CASE OF RAKESH KUMAR V S. ACIT (ITA NO. 102(ASR)/2014 DATED 09.03.2016) RELYING ON THE DECI SION OF HONBLE PUNJAB AND HARYANA HIGH COURT IN CASE OF GURDAS GARG (SUPR A) HAS HELD THAT THE GENUINENESS OF THE PAYMENT HAS NOT BEEN DOUBTED AS THE ASSESSING OFFICER HIMSELF HAS HELD THAT SALE DEEDS OF PROPERTIES WERE REGISTERED WITH THE REVENUE DEPARTMENT OF THE GOVERNMENT. THEREFORE, FO LLOWING THE DECISION OF HONBLE PUNJAB AND HARYANA HIGH COURT, THE PAYMENT FOR PURCHASE OF LAND WAS ALLOWED. 38. WE FURTHER NOTE THAT IN CASE OF M/S ACE INDIA A BODES LIMITED (DB APPEAL NO. 45/2012 DATED 11.09.2017), A SIMILAR ISS UE HAS COME UP BEFORE THE HONBLE RAJASTHAN HIGH COURT REGARDING PAYMENT FOR PURCHASE OF LAND FROM VARIOUS AGRICULTURIST FOR WHICH THE ASSESSEE H AS PAID CONSIDERATION IN CASH AND SHOWN THE LAND AS ITS STOCK-IN-TRADE. THE HONBLE RAJASTHAN HIGH ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 42 COURT REFERRING TO THE INTENT BEHIND INTRODUCTION O F SECTION 40A(3) AND CATENA OF DECISIONS RIGHT FROM ATTAR SINGH GURMUKH SINGH, SMT. HARSHILA CHORDIA, GURDAS GARG, ANUPAM TELE SERVICES REFERRED SUPRA HA S DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 39. THE ISSUE WHICH IS BEING DISPUTED BEFORE US HAS TO BE CONSIDERED AND DECIDED IN LIGHT OF FACTS ON RECORD AND THE LEGAL P OSITION WHICH EMERGES FROM THE ABOVE REFERRED DECISIONS. THE FACTS OF THE CAS E ARE THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE FIRM HAS PURCHASE D 26 PIECES OF PLOT OF LAND IN THE MONTH OF APRIL AND MAY, 2012 FROM VARIO US PERSONS FOR A TOTAL CONSIDERATION OF RS. 2,46,28,425/-, OUT OF WHICH PA YMENT AMOUNTING TO RS. 1,71,67,000/- WERE MADE IN CASH TO VARIOUS PERSONS, PAYMENT AMOUNTING TO RS. 59,48,920/- WERE MADE IN CHEQUE TO VARIOUS PERS ONS, AND RS. 8,15,700/- AND RS. 6,84,296/- WERE PAID IN CASH TOW ARDS STAMP DUTY AND COURT FEE RESPECTIVELY. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE SUBMITTED COPIES OF THE SALE DEED, THE PAR TICULARS OF WHICH FIND MENTION ON PAGE 7 AND 8 OF THE ASSESSMENT ORDER. O N PERUSAL OF THE SAID DETAILS, IT IS OBSERVED THAT THE SAID DETAILS CONTA INS THE NAME OF THE SELLER, DATE OF SALE DEED, PLOT NO., PURCHASE VALUE, STAMP DUTY, COURT FEE AND MODE OF PAYMENT CASH/CHEQUE. THEREFORE, AS FAR AS THE IDENTITY OF THE PERSONS FROM WHOM THE PURCHASES HAVE BEEN MADE AND GENUINEN ESS OF THE TRANSACTIONS OF PURCHASE OF VARIOUS PLOTS OF LAND A ND PAYMENT IN CASH IS CONCERNED, THE SAME IS EVIDENCED BY THE REGISTERED SALE DEEDS AND THERE IS NO DISPUTE WHICH HAS BEEN RAISED BY THE REVENUE EIT HER DURING THE ASSESSMENT PROCEEDINGS OR BEFORE US. THE IDENTITY OF THE SELLERS AND GENUINENESS OF THE TRANSACTIONS IS THEREFORE FULLY ESTABLISHED IN THE INSTANT CASE. 40. FROM PERUSAL OF THE ASSESSMENT ORDER, IT IS FUR THER NOTED THAT THE AO, ON PERUSAL OF THE DETAILS OF THE PROPERTIES PURCHAS ED, AS PER COPIES OF THE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 43 SALE DEED FURNISHED, HELD THAT THE ASSESSEE HAD MAD E CASH PAYMENTS REGULARLY AND NO SPECIFIC CIRCUMSTANCES HAVE BEEN B ROUGHT TO HIS KNOWLEDGE THAT THE CASH PAYMENTS WERE MADE DUE TO SOME UNAVOI DABLE CIRCUMSTANCES. IT WAS HELD BY THE AO THAT MAXIMUM CASH PAYMENTS WE RE MADE TO PERSONS RESIDING IN JAIPUR CITY AND IN SINGLE FAMILY, REPEA TED CASH PAYMENTS WERE MADE WHICH ITSELF SHOWS THAT THERE WERE NO UNAVOIDA BLE CIRCUMSTANCES TO MAKE CASH PAYMENTS TO THE SELLERS. WHAT IS THEREFO RE RELEVANT TO NOTE THAT THE AO HAS APPRECIATED THE NECESSITY OF DETERMINING THE UNAVOIDABLE CIRCUMSTANCES WHICH COULD HAVE LED THE ASSESSEE TO MAKE CASH PAYMENTS. DURING THE COURSE OF ASSESSEMENT PROCEEDINGS, IT WA S SUBMITTED BY THE ASSESSEE THAT THE PAYMENT FOR PURCHASE OF LAND HAS BEEN MADE IN CASH BECAUSE THE SELLERS WERE NEW TO THE ASSESSEE AND RE FUSED TO ACCEPT THE CASH. IT WAS SUBMITTED THAT THE DELAY IN MAKING THE CASH PAYMENT, IT COULD HAVE LOST THE LAND DEALS. IN THIS REGARD, THE LD AR SUBMITTED BEFORE US THAT THE ASSESSEE HAD PURCHASED THE LANDS BOTH THROUGH C ASH AND CHEQUES. BASED ON THE REQUIREMENT OF THE SELLER, ASSESSEE HA D SELECTED THE MODE OF PAYMENT. FOR THE SELLERS, WHO HAD INSISTED THE PAYM ENTS IN CASH, ASSESSEE HAD WITHDRAWN THE CASH FROM BANK ON THE SAME DATE O F REGISTRY AND MADE THE PAYMENTS TO SELLER ACCORDINGLY. THE WITHDRAWALS FROM BANK AND PAYMENTS TO SELLER HAVE BEEN TABULATED BELOW AS PER DATES BELOW:- DATE BANK GRAND TOTAL CUMULATIVE BALANCE UTILIZATION NET BALANCE ICICI BANK YES BANK DATE AMOUNT 18,00,000 5-APR-12 14,50,000 3,50,00 18,00,000 18,00,000 5, 07,00 9-APR-12 - 9,00,000 9,00,000 27,00,000 9-APR-12 21, 93,000 3,34,000 11-APR-12 - 2,00,000 2,00,000 29,00,000 11-APR-12 3 ,73,000 3,34,000 ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 44 12-APR-12 - - - 29,00,000 - - 3,34,000 13-APR-12 - - - 29,00,000 - - 11,97,100 19-APR-12 - 30,00,000 30,00,000 59,00,000 23-APR-12 21,36,900 11,57,000 24-APR-12 30,00,000 25,00,000 55,00,000 1,14,00,000 24-APR-12 55,40,100 11,57,000 25-APR-12 - - - 1,14,00,000 - - 11,57,000 30-APR-12 - - - 1,14,00,000 - - 11,57,000 4-MAY-12 - - - 1,14,00,000 - - 11,57,000 7-MAY-12 - - - 1,14,00,000 - - 11,57,000 8-MAY-12 19,00,000 23,00,000 42,00,000 1,56,00,000 8-MAY-12 38,55,000 15,02,000 12-MAY-12 - - - 1,56,00,000 - - 15,02,000 14-MAY-12 - - - 1,56,00,000 - - 15,02,000 15-MAY-12 - - - 1,56,00,000 - - 15,02,000 16-MAY-12 - 15,00,000 15,00,000 1,71,00,000 - - 30, 02,000 17-MAY-12 - 15,00,000 15,00,000 1,86,00,000 17-MAY- 12 30,69,000 14,33,000 TOTAL 63,50,000 1,42,50,000 1,86,00,000 1,71,67,0 00 41. IT WAS SUBMITTED BY THE LD AR THAT IN ORDER TO SECURE THE DEAL, ASSESSEE HAD NO OTHER OPTION BUT TO MAKE THE PAYMEN T IN CASH. CASH PAYMENTS WERE MADE FROM THE DISCLOSED SOURCES BEING THE AMOUNT WITHDRAWN FROM BANK. IT WAS FOR SHEER INSISTENCE OF THE SELLER THAT THE PAYMENTS WERE MADE IN CASH. HAD THE ASSESSEE DENIED THE CASH PAYMENT LOOKING TO THE PROVISIONS OF SECTIONS 40A(3), THE D EAL COULD NOT HAVE BEEN FINALIZED. IN SUCH CIRCUMSTANCES, IN THE BUSINESS I NTEREST AND TO COMPLETE THE DEAL, THE ASSESSEE HAD CHOSEN TO MAKE THE PAYMENTS IN CASH FORTIFIED THROUGH REGISTERED SALE DEED. THE PAYMENT HAS BEEN MADE OUT OF THE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 45 EXPLAINED SOURCES, THROUGH THE REGISTERED DOCUMENT AND AS A DISCLOSED TRANSACTION. 42. WE FIND FORCE IN THE CONTENTIONS SO RAISED BY T HE LD AR. THE TRANSACTIONS HAVE BEEN EXECUTED BY THE ASSESSEE WIT HIN A SPAN OF ONE AND HALF MONTH AND THERE ARE TRANSACTIONS WHERE THE PAY MENT HAS BEEN MADE THROUGH CHEQUE AND THERE ARE TRANSACTIONS WHERE THE PAYMENT HAS BEEN MADE THROUGH CASH. THE SAID CONTENTIONS ARE SUPPOR TED BY THE FACT THAT ON THE SAME DAY, THERE ARE CASH AND CHEQUE PAYMENTS AS EVIDENCED FROM THE DETAILS OF THE TRANSACTIONS APPEARING AT PAGE 7 AND 8 OF THE ASSESSMENT ORDER. IT IS THEREFORE CLEAR THAT THE ASSESSEE WAS HAVING SUFFICIENT BANK BALANCE AND ONLY AT THE INSISTENCE OF THE SPECIFIC SELLERS, THE ASSESSEE HAS WITHDRAWN CASH AND MADE PAYMENT TO THEM AND WHEREVE R, THE SELLER HAS INSISTED ON CHEQUE PAYMENTS, THE PAYMENT HAS BEEN M ADE BY CHEQUE. THIS MAKES OUT A CASE THAT THE ASSESSEE HAS BUSINESS EXP EDIENCY UNDER WHICH IT HAS TO MAKE PAYMENT IN CASH AND IN ABSENCE OF WHICH , THE TRANSACTIONS COULD NOT BE COMPLETED. THE SECOND PROVISO TO SECTI ON 40A(3) REFERS TO THE NATURE AND EXTENT OF BANKING FACILITY, CONSIDERATIO N OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS WHICH MEANS THAT THE OB JECT OF THE LEGISLATURE IS NOT TO MAKE DISALLOWANCE OF CASH PAYMENTS WHICH HAV E TO BE COMPULSORY MADE BY THE ASSESSEE ON ACCOUNT OF BUSINESS EXPEDIE NCY. FURTHER, THE SOURCE OF CASH PAYMENTS IS CLEARLY IDENTIFIABLE IN FORM OF THE WITHDRAWALS FROM THE ASSESSEES BANK ACCOUNTS AND THE SAID DETA ILS WERE SUBMITTED BEFORE THE LOWER AUTHORITIES AND HAVE NOT BEEN DISP UTED BY THEM. IT IS NOT THE CASE OF THE REVENUE EITHER THAT UNACCOUNTED OR UNDISCLOSED INCOME OF THE ASSESSEE HAS BEEN UTILISED IN MAKING THE CASH P AYMENTS. 43. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF T HE CASE AND RESPECTFULLY FOLLOWING THE LEGAL PROPOSITION LAID DOWN BY THE VA RIOUS COURTS AND COORDINATE BENCHES REFERRED SUPRA, WE ARE OF THE VI EW THAT THE IDENTITY OF ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 46 THE PERSONS FROM WHOM THE VARIOUS PLOTS OF LAND HAV E BEEN PURCHASED AND SOURCE OF CASH PAYMENTS AS WITHDRAWALS FROM THE ASS ESSEES BANK ACCOUNT HAS BEEN ESTABLISHED. THE GENUINENESS OF THE TRANSA CTION HAS BEEN ESTABLISHED AS EVIDENCED BY THE REGISTERED SALE DEE DS AND LASTLY, THE TEST OF BUSINESS EXPEDIENCY HAS BEEN MET IN THE INSTANT CAS E. FURTHER, AS HELD BY THE HONBLE RAJASTHAN HIGH COURT IN CASE OF HARSHIL A CHORDIA (SUPRA), THE CONSEQUENCES, WHICH WERE TO BEFALL ON ACCOUNT OF NO N-OBSERVATION OF SUB- SECTION (3) OF SECTION 40A MUST HAVE NEXUS TO THE F AILURE OF SUCH OBJECT. THEREFORE THE GENUINENESS OF THE TRANSACTIONS AND I T BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERAT ION. THE INTENT AND THE PURPOSE FOR WHICH SECTION 40A(3) HAS BEEN BROUGHT O N THE STATUTE BOOKS HAS BEEN CLEARLY SATISFIED IN THE INSTANT CASE. THEREFO RE, BEING A CASE OF GENUINE BUSINESS TRANSACTION, NO DISALLOWANCE IS CALLED FOR BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. 29. IN THE INSTANT CASE, WE FIND THAT THE IDENTITY OF THE PERSONS FROM WHOM THE PURCHASE OF VARIOUS LAND PARCELS HAVE BEEN MADE BY THE ASSESSEE HAS BEEN ESTABLISHED AND THE SOURCE OF CASH PAYMENTS IS CLEARLY IDENTIFIABLE IN FORM OF THE WITHDRAWALS FROM THE ASSESSEE'S BANK AC COUNTS AND THE SAID DETAILS WERE SUBMITTED BEFORE THE LOWER AUTHORITIES AND HA VE NOT BEEN DISPUTED BY THEM. IT IS NOT THE CASE OF THE REVENUE EITHER THAT UNACCOUNTED OR UNDISCLOSED INCOME OF THE ASSESSEE HAS BEEN UTIL ISED IN MAKING THE CASH PAYMENTS. THE GENUINENESS OF THE TRANSACTION HAS BE EN ESTABLISHED AS EVIDENCED BY REGISTERED SALE DEEDS WHEREIN THE PAYM ENTS THROUGH CHEQUE AS WELL AS CASH HAS BEEN DULY MENTIONED AND LASTLY, TH E TEST OF BUSINESS EXPEDIENCY HAS BEEN MET AS THE INITIAL PAYMENTS AS INSISTED BY THE SELLERS MOST OF WHOM ARE FARMERS HAVE BEEN MADE IN CASH TO SECURE THE TRANSACTION. FURTHER, AS HELD BY THE HON'BLE RAJASTHAN HIGH COUR T IN CASE OF SMT. HARSHILA CHORDIA (SUPRA), THE CONSEQUENCES, WHICH WERE TO BE FALL ON ACCOUNT OF NON- OBSERVATION OF SUB-SECTION (3) OF SECTION 40A MUST HAVE NEXUS TO THE FAILURE ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 47 OF SUCH OBJECT. THEREFORE THE GENUINENESS OF THE TR ANSACTIONS AND IT BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS R ELEVANT CONSIDERATION FOR WHICH SECTION 40A(3) HAS BEEN BROUGHT ON THE STATUT E BOOKS AND WHICH HAS BEEN SATISFIED IN THE INSTANT CASE. SIMILAR VIEW HA S BEEN TAKEN BY THE HON'BLE RAJASTHAN HIGH COURT IN CASE OF CIT VS SOLUTIONS RE PORTED IN 80 TAXMANN.COM 246 WHEREIN IT WAS HELD AS UNDER: 11. THE APPELLATE AUTHORITIES HAVE RELIED UPON THE JUDGMENT RENDERED IN THE CASE OF ATTAR SINGH GURMUKH SINGH V. ITO [19 91] 191 ITR 667/59 TAXMAN 11 (SC), WHERE THE HON'BLE APEX COURT HAS OBSERVED AS UNDER (PAGE 673) : 'THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE. CONS IDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OU T 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 40A(3) WAS NOT PRA CTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED TH E CASH PAYMENT. RULE 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSSED CHEQUE OR CROSS ED BANK DRAFT IN THE CIRCUMSTANCES SPECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF SECTION 40A(3) AND RULE 6DD THAT THEY ARE INTENDED TO REGULATE BUSINESS TRANSACTIONS AND TO PREVENT THE U SE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTIONS.' 12. THE AFORESAID OBSERVATION DOES APPLY IN THE INS TANT CASE. THE ASSESSING OFFICER ON THE FACTS NOTICED HAS BEEN UNA BLE TO MAKE OUT A CASE OF INVOLVEMENT OF UNACCOUNTED MONEY. ITA NO. 980/JP/2018 M/S VIJAYETA BUILDCON PVT. LTD. VS. ACIT 48 13.IT IS ALSO A FINDING OF FACT RECORDED BY THE COM MISSIONER OF INCOME- TAX (APPEALS) THAT COPIES OF THE LEDGER ACCOUNTS WE RE PRODUCED BEFORE THE ASSESSING OFFICER WHO HAS NOT FOUND ANY DISCREP ANCY IN SUCH BOOKS OF ACCOUNT AND NO UNACCOUNTED TRANSACTION HAS BEEN REPORTED/NOTICED BY THE ASSESSING OFFICER. 30. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF T HE CASE AND RESPECTFULLY FOLLOWING THE LEGAL PROPOSITION LAID DOWN BY THE VA RIOUS COURTS INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT AND THE COORDINATE BENCHES REFERRED SUPRA, NO DISALLOWANCE IS CALLED FOR UNDER SECTION 40A(3) OF THE ACT AND THE SAME IS DIRECTED TO BE DELETED. IN THE RESULT, THE GROUND O F THE ASSESSEES APPEAL IS ALLOWED. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/10/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/10/2020 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S VIJAYETA BUILDCON PVT. LTD., JAI PUR 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CENTRAL CIRCLE-01, JAIPUR 3. VK;DJ VK;QDR@ CIT 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. 980/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR