The DCIT, Central Circle-2(1), Ahmedabad V. RJD Buildcon Limited, Ahmedabad

ITSSA 171/AHD/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5734 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P VAISHNAV
• Assessee Lawyers: S N DIVATIA
• Keywords: Document seized; Documents seized
• Section: 40A(3); 143(3); 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER (SS) ./ I.T(SS).A. NO.171/AHD/2017 ( / ASSESSMENT YEAR : 2011-12) THE DY.CIT CENTRAL CIRCLE-2(1) AHMEDABAD / VS. RJD BUILDCON LIMITED 202 DARSHAK COMPLEX OPPOSITE SHREY HOSPITAL NAVRANGPURA AHMEDABAD 380 014 ./ ./ PAN/GIR NO. : AADCR 8254 K ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI O.P. VAISHNAV, CIT-DR / RESPONDENT BY : SHRI S.N. DIVATIA, AR / DATE OF HEARING 31/10/2018 !'# / DATE OF PRONOUNCEMENT 03/12/2018 / O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER : THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF T HE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-7, AHMEDABAD [CIT(A) IN SHORT] DATED 25/01/2017 PASSED FOR ASSESSMENT YE AR (AY) 2011-12. 2. THE REVENUE HAS TAKEN FIVE GROUNDS OF APPEAL, BU T ITS GRIEVANCES REVOLVE AROUND TWO ISSUES, NAMELY: IT(SS)A NO.171 /AHD/2017 THE DCIT VS. AJD BUILDCON LTD. ASST.YEAR 2011-12 - 2 - (A) THE DETERMINATION OF INCOME U/S.153A OF THE IN COME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') REQUIRES TO BE MADE WITHOUT ANY RESTRICTION I.E. WITHOUT THE ASSISTANCE OF ANY SEIZ ED MATERIAL. (B) THE CIT(A) HAS ERRED IN DELETING THE DISALLOWA NCE OF RS.2,86,20,701/- WHICH WAS DISALLOWED BY THE ASSESS ING OFFICER WITH THE AID OF SECTION 40A(3) OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH U/ S.132 OF THE ACT WAS CARRIED OUT IN THE GROUP CASES OF MASTER GROUP ON 0 3/01/2013. THE ASSESSEE WAS ALSO COVERED UNDER THE SEARCH ACTION. HENCE, I N ORDER TO GIVE LOGICAL END TO THE SEARCH PROCEEDINGS, A NOTICE U/S.153A OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RESPONSE TO SUCH NOTICE, T HE ASSESSEE FILED ITS RETURN OF INCOME ON 05/05/2014. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT ASSESSEE HAS PURCHASED LANDS AND MADE PAYMENT IN CASH TO THIRTEEN VENDORS. ACCORDING TO THE ASSESSING OF FICER, IF ASSESSEE HAS INCURRED EXPENDITURE AND MADE PAYMENT IN CASH EXCE EDING THE LIMIT PRESCRIBED UNDER SECTION 40A(3) OF THE ACT, THEN DISALLOWANCE OF SUCH EXPENDITURE WOULD BE MADE. HE THUS WORKED OUT SUCH PAYMENT OF RS.2,8 6,20,701/- AND ADDED THAT AMOUNT. 4. DISSATISFIED WITH THE ADDITION, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). IT RAISED TWO FOLD OF CONTENTIO NS. IN THE FIRST FOLD OF CONTENTION, ON THE STRENGTH OF HONBLE GUJARAT HIG H COURT DECISION IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. SAUMYA CONSTRUCTION P.LTD. REPORTED IN 387 ITR 529, IT WAS CONTENDED THAT INC OME U/S.153A OF THE ACT IS TO BE DETERMINED ON THE BASIS OF MATERIAL FOUND DUR ING THE COURSE OF SEARCH OR A IT(SS)A NO.171 /AHD/2017 THE DCIT VS. AJD BUILDCON LTD. ASST.YEAR 2011-12 - 3 - REQUISITION WAS MADE U/S.132A OF THE ACT. IN THE P RESENT CASE, NO MATERIAL WAS FOUND DURING THE COURSE OF SEARCH ON THE BASIS OF W HICH DISALLOWANCE U/S.40A(3) OF THE ACT COULD BE MADE. IN THE SECON D FOLD OF CONTENTION, IT WAS SUBMITTED THAT SUB-SECTION(3) TO SECTION 40A OF THE ACT CONTEMPLATES THAT WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPEC T OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY OTH ERWISE THAT BY AN A/C.PAYEE CHEQUE DRAWN ON A BANK OR AN A/C. PAYE E BANK DRAFT EXCEEDS TWENTY THOUSAND RUPEES, NO DEDUCTIONS SHALL BE ALLO WED IN RESPECT OF SUCH EXPENDITURE. IT WAS POINTED OUT THAT PAYMENT SHOUL D NOT EXCEED RS.20,000/- IN A DAY. THE ASSESSEE HAS NOT PAID ANYONE MORE THAN RS.20,000/- IN A DAY, THEREFORE NO DISALLOWANCE COULD BE MADE. LEARNED F IRST APPELLATE AUTHORITY HAS ACCEPTED BOTH THE CONTENTIONS AND DELETED THE ADDIT ION. IT IS WORTH TO NOTE THE FINDING RECORDED BY THE LD.CIT(A) WHICH READS AS UN DER: 6. GROUND OF APPEAL NO 2 IS AGAINST THE ADDITION O F RS.2,86,20,701/- ON ACCOUNT OF CASH PAYMENTS MADE TO FARMERS. DURING ASSESSMENT PR OCEEDINGS, THE A.O NOTED THAT THE APPELLANT HAD PURCHASED LANDS BY MAKING CASH PA YMENTS TO FARMERS. HE HELD THAT THE SAME WAS AGAINST THE PROVISIONS OF SECTION 40A( 3) OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE APPELLANT. THE APPELLANT 'S SUBMISSIONS HAVE BEEN REPRODUCED IN PARA 4.1 ABOVE, FT HAS BEEN CONTENDED THAT NOT ONLY WAS THE ADDITION NOT SUSTAINABLE SINCE NO PAYMENT IN A SINGLE DAY EX CEEDED RS.20,000/-, BUT ALSO BECAUSE THE SAME WAS A BUSINESS EXPEDIENCY SINCE TH E LAND SELLERS DID NOT HAVE BANK ACCOUNTS. IT HAS ALSO BEEN STATED THAT THE ASSESSME NT COMPLETED U/S 143(3) RWS 153A WAS LEGALLY INVALID. 6.1 A CAREFUL PERUSAL OF THE VARIOUS CASE LAWS RELI ED UPON BY THE APPELLANT SHOWS THAT IT HAS BEEN CLEARLY HELD BY VARIOUS COURTS, INCLUDI NG THE JURISDICTIONAL HIGH COURT IN THE CASE OF SAUMYA CONSTRUCTION CITED SUPRA, THAT A DDITIONS CAN BE MADE U/S 153A ONLY IN THOSE CASES WHERE DURING THE COURSE OF SEAR CH, INCRIMINATING DOCUMENTS OR BOOKS OF ACCOUNTS HAVE BEEN FOUND AND SEIZED AND HA S TO BE BASED ON SUCH EVIDENCES AND DOCUMENTS. IT IS SEEN FROM THE IMPUGNED ORDER T HAT THOUGH A LOOSE PAPER FILE WAS IT(SS)A NO.171 /AHD/2017 THE DCIT VS. AJD BUILDCON LTD. ASST.YEAR 2011-12 - 4 - SEIZED FROM THE APPELLANT'S PREMISES DURING THE SEA RCH PROCEEDINGS, THE ADDITION HAS BEEN MADE ON THE BASIS OF BOOKS OF ACCOUNTS CALLED FOR AND EXAMINED DURING THE ASSESSMENT PROCEEDINGS AND NO REFERENCE HAS BEEN MA DE BY THE A.O TO SEIZED DOCUMENTS OR MATERIAL WHILE MAKING THE IMPUGNED ADD ITION. 6.1.2 NOTWITHSTANDING THE ABOVE, EVEN ON MERITS, I T IS SEEN FROM THE SUBMISSIONS MADE BY THE APPELLANT DURING APPELLATE PROCEEDINGS THAT NONE OF THE PAYMENTS IN CASH ON A SINGLE DAY EXCEEDED THE LIMIT OF RS.20,00 0/-. IN FACT, EVEN THE A.O HAS NOTED THIS FACT IN HIS ORDER. FURTHER, IT IS SEEN THAT TH E TOTAL PAYMENT FOR PURCHASE OF LAND DURING THE YEAR UNDER CONSIDERATION BY THE APPELLAN T, IS RS.13,43,40,451/-, OUT OF WHICH RS. 2,86,20,701/- HAS BEEN MADE IN CASH. THUS , THE APPELLANT'S ARGUMENT THAT THE CASH PAYMENTS WERE MADE OUT OF BUSINESS EXPEDIE NCY IN SOME CASES, STANDS TO REASON. THE APPELLANT'S CASE IS ALSO COVERED BY THE CASE LAWS THAT HAVE BEEN RELIED ON BY IT. 6.1.3 CONSIDERING THE FACTS AS DISCUSSED ABOVE, I A M OF THE VIEW THAT THE A.O WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 2,86,20,701 /- U/S 40A(3) OF THE ACT, AND THE SAME IS DELETED. GROUND OF APPEAL NO 2 IS ALLOWED. 5. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE H AVE GONE THROUGH THE RECORD CAREFULLY. WE DEEM IT PERTINENT TO TAKE NOT E OF SUB-CLAUSE(3) TO SECTION 40A OF THE ACT AS WAS APPLICABLE IN AY 2011-12, WHI CH READS AS UNDER:- (3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN R ESPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN DAY OT HERWISE THAT BY A ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDS TWENTY THOUSAND RUPEES NO DEDUCTIONS SHALL BE ALLOWED IN R ESPECT OF SUCH EXPENDITURE. 6. A PERUSAL OF THE ABOVE CLAUSE WOULD INDICATE THA T DISALLOWANCE OUT OF EXPENDITURE COULD BE MADE IF PAYMENT OR AGGREGATE O F PAYMENTS MADE TO A PERSON IN A DAY EXCEEDS TWENTY THOUSAND RUPEES. L D. FIRST APPELLATE AUTHORITY HAS EXAMINED THIS ASPECT AND RECORDED A CATEGORICAL FINDING OF FACT THAT PAYMENTS MADE BY THE ASSESSEE ON A SINGLE DAY DID N OT EXCEED TWENTY THOUSAND IT(SS)A NO.171 /AHD/2017 THE DCIT VS. AJD BUILDCON LTD. ASST.YEAR 2011-12 - 5 - RUPEES TO A PERSON, IF THAT BE SO, THEN HOW DISALLO WANCE U/S.40A(3) OF THE ACT COULD BE MADE. THUS, FOR THE TIME BEING, IF WE DO NOT TAKE COGNIZANCE OF THE FIRST FOLD OF SUBMISSION THAT ADDITION OUGHT TO BE MADE ON THE BASIS OF SEIZED MATERIAL, THEN ALSO, OTHERWISE ON MERIT THIS ADDITI ON COULD NOT BE MADE. LD. FIRST APPELLATE AUTHORITY HAS RIGHTLY APPRECIATED T HE FACTS AND CIRCUMSTANCES AND NO INTERFERENCE IS CALLED FOR IN THE ORDER OF THE L D.CIT(A). 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 3 RD DECEMBER, 2018 AT AHMEDABAD. SD/- SD/- (AMARJIT SINGH ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 03/ 12 /2018 &.., .(../ T.C. NAIR, SR. PS !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-7, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD IT(SS)A NO.171 /AHD/2017 THE DCIT VS. AJD BUILDCON LTD. ASST.YEAR 2011-12 - 6 - 1. DATE OF DICTATION ..28.11.2018 (DICTATION-PAD 10 - PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..29.11.2018 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.3.12.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 3.12.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER