The Dy. CIT Central-1, Bhopal V. M/s. Regal Samarth Krishna Builders, Bhopal

ITSSA 195/Ind/2019

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0526 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-07-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 04-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Loose papers
• Section: 131; 132; 40A(3); 143(3); 133A; 195; 13

Judgement Text

Page 1 of 13 आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A No. 195 & 196/Ind/2019 Assessment Year : 2013-14 & 2014-15 DCIT, Central-I, Bhopal बनाम/ Vs. M/s Regal Samarth Krishna Builders, Near Batra Hospital, 13-A, Zone-I, M.P. Nagar, Bhopal (Revenue /Appellant) (Assessee / Respondent) PAN: AANFR 7283 B Assessee by Shri Kunal Agrawal, AR Revenue by Shri P.K. Mishra, CIT DR Date of Hearing 01.08.2023 Date of Pronouncement 26.10.2023 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by a consolidated appeal-order dated 07.06.2019 passed by learned Commissioner of Income-Tax (Appeals)-3, Bhopal [“CIT(A)”], which in turn arises out of a consolidated assessment-order dated 08.12.2016 passed by learned DCIT (Central-I), Bhopal [“AO”] u/s 153A/ 143(3) of Income-tax Act, 1961 [“the Act”], the Revenue has filed these appeals for Assessment-Year [“AY”] 2013-14 & 2014-15. 2. Heard the learned Representatives of both sides at length and case- records perused. M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 2 of 13 3. Brief facts leading to present appeals are such that a search u/s 132 was conducted by Income-tax Department on one “Regal Homes Group” including assessee on 12.08.2014. Surveys u/s 133A were also conducted on connected entities. Pursuant to same, assessments were framed u/s 153A read with section 143(3) for AY 2012-13 to 2014-15 and u/s 143(3) for AY 2015-16 wherein certain additions were made. The present appeals, however, pertain to two years only, namely AY 2013-14 & AY 2014-15 wherein the assessee contested additions in first-appeal before CIT(A) and succeeded substantially. Now, the revenue has come in next appeal before us assailing the relief granted by CIT(A). 4. Since both of these appeals emanate from common orders of lower- authorities, we have heard them together at the request of parties and proceed to dispose of by this common order. 5. The grounds raised in these appeals are as under: AY 2013-14: 1) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 4,93,20,770/- and Rs. 40,00,000/- made by the AO on account of unexplained investment. 2) On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 11,43,100/- made by the AO on account of violation of the provision of section 40A(3) of Income-tax Act, 1961. AY 2014-15: 1) “On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 88,66,325/- and Rs. 98,43,660/- made by the AO on account of violation of the provision of section 40A(3) of Income- tax Act, 1961.” Ground No. 1 of AY 2013-14: 6. In this ground, the revenue claims that the CIT(A) has erred in deleting addition of Rs. 4,93,20,770/- and Rs. 40,00,000/- made by AO on account of unexplained investment. M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 3 of 13 7. The AO has dealt this issue in Para No. 8 of assessment-order. He has noted that during survey upon one of the connected entity M/s Envo Promoters & Developers Pvt. Ltd. (“M/s Envo”), a document inventorised as Page No. 1 to 8 of LPI-1 was impounded which contained working of a “Triveni Height” project of assessee-firm; the details of amounts paid for purchase of a land admeasuring 2.23 acres situated at Khasra No. 100/2/2, Village-Nishatpura, Bhopal for “Triveni Height” project; and the A/c of partners of assessee indicating contributions/payments made by them. The AO has scanned all these papers in assessment-order. When the AO show- caused assessee to explain these papers, the assessee submitted that these papers were loose and dumb papers and do not have any relevance with financials of assessee. However, the AO rejected assessee’s submissions by observing that the papers contained systematic details of total cost of land alongwith respective shares/contributions of partners; there are details of cheque and cash portions; certain amounts mentioned in the documents tallied with the amounts of registries of land done; and the details mathematically tallied with each other. He also noted that the assessee-firm was having these persons as partners, namely (i) Shri K.L. Sharma, (ii) Shri Surendra Singh Yadav (assessee), (iii) Shri Rajeev Majumdar, and (iv) Shri B.S. Yadav, from time to time. In Para 9.5(vi) he noted that during the course of search Shri K.L. Sharma, one of the partners of assessee-firm, was confronted with the impugned documents and his statements were recorded wherein he admitted that those papers related to “Triveni Height” project of assessee. He further admitted his share in assessee-firm and accepted his capital contribution in cash which was not entered in books of account. The AO noted that Shri K.L. Sharma also admitted to have paid his share of cash portion out of undisclosed income and therefore offered undisclosed investment of Rs. 1,08,31,251/- in AY 2012-13. The AO has re-produced statements of Shri K.L. Sharma. The AO has also made observations on capital contribution made by Shri B.S. Yadav, another partner of assessee- firm. Ultimately, on the basis of impounded documents, the AO gained an M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 4 of 13 understanding that land was actually purchased for Rs. 7,94,20,770/- (excluding registry expenses) whereas the cost recorded in books of account was Rs. 3,01,00,000/- (excluding registry expenses) only. Thus, the AO concluded that the difference of Rs. 4,93,20,770/- was undisclosed investment made in cash by partners of firm, in which Shri Surendra Singh Yadav and Shri B.S. Yadav must have made undisclosed investments of Rs. 3,69,90,578/- and Rs. 1,23,30,192/- respectively. Accordingly, The AO made addition of Rs. 3,69,90,578/- and Rs. 1,23,30,192/- on substantive basis in the hands of Shri Surendra Singh Yadav and Shri B.S. Yadav respectively alongwith a protective addition of Rs. 4,93,20,770/- in the hands of assessee. That apart, the AO also noted that a cash payment of Rs. 40,00,000/- was made by assessee-firm from its own unaccounted sources. Therefore, he also made a substantive addition of Rs. 40,00,000/- in the hands of assessee. In nutshell, the AO made two additions, one protective addition of Rs. 4,93,20,770/- and other substantive addition of Rs. 40,00,000/-, on account of unexplained investment. 8. During first appeal, the CIT(A) deleted the protective addition of Rs. 4,93,20,770/- in Para No. 6.3.2 of appeal-order on the basis that substantive additions had been deleted on merit in first-appeals of Surendra Singh Yadav and Shri B.S. Yadav. Further, vide Para No. 6.3.3 to 6.3.6 of appeal-order, he also deleted the substantive addition of Rs. 40,00,000/- on merit by broadly repeating/narrating the same findings as were made for deleting substantive additions in the hands of Surendra Singh Yadav and Shri B.S. Yadav. 9. Before us, Ld. DR for revenue supported the assessment-order and urged to uphold the additions made by AO. Per contra, Ld. AR for assessee heavily relied upon the order of first-appeal and prayed to uphold the deletions done by CIT(A). M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 5 of 13 10. At the same time, Ld. Representatives of both sides also agreed that the revenue has filed next appeal to this very Bench in the case of ‘Surendra Singh Yadav’ registered as ITA No. 116/Ind/2019 and challenged the substantive addition of Rs. 3,69,90,578/- deleted by CIT(A) in the case of ‘Surendra Singh Yadav’. The ITA No. 116/Ind/2019 has been separately heard by this Bench. Since the factual position and pleadings in this case remain same as in Surendra Singh Yadav’s case, the decision taken by ITAT in Surendra Singh Yadav’s case would hold good in present case also. 11. We have considered submissions of both sides. We find that both sides are ad idem that the factual matrix and deciding factors for both of the additions in present case (protective addition of Rs. 4,93,20,770/- and substantive addition of Rs. 40,00,000/-) remain same as in ITA No. 116/Ind/2019 of Surendra Singh Yadav. In that case, by an order of even date, we have upheld the deletion of addition of Rs. 3,69,90,578/- done by CIT(A). The final operative order of order is re-produced below for the sake of immediate reference: “12. We have considered rival submissions of both sides and perused the orders of lower-authorities. On a careful consideration, we firstly find that the assessee has purchased the impugned land vide sale-deed dated 31.03.2012 which fact cannot be disputed by anyone. On a careful reading of clauses of sales-deed to which our attention has been drawn by Ld. AR, we find that the consideration of Rs. 3,01,00,000/-, mode of payments and the last date of payment as on 31.03.2012 are duly mentioned therein. Further, in the sale- deed, the joint-sellers have clearly accepted to have received their respective shares of full consideration and also averred that they shall not claim any consideration from assessee after 31.03.2012. It is also a point worth mentioning that the consideration of Rs. 3,01,00,000/- mentioned in the sale- deed is well accepted by sub-registrar of stamps and it is not the case of revenue that the consideration so mentioned/paid does not correspond the valuation done by stamps authorities. From these facts/evidences on record, one can safely and easily find that the deal of land and payment of entire consideration got completed by 31.03.2012. That means, there cannot be any payment to sellers after 31.03.2012. This is also a practicality that the on- money payment, if any, is made before registration and not after registration of sale-deed. Therefore, the AO’s addition in AY 2013-14 with the presumption that the assessee made cash payment during previous year 2012-13, after registration of sale-deed on 31.03.2012, falls short of any merit. In so far as the contents of the impounded documents are concerned, the assessee has very categorically explained that even cheque-entries mentioned therein are M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 6 of 13 not realistic entries of actual cheque payments recorded in anybody’s books. The CIT(A) has also noted that the notings in the impounded documents with the captions “cost of boundary”, “DD Nagar Nigam”, etc. indicate that those documents contain the estimated ‘cost of project’ and the AO has wrongly attributed them to the ‘cost of land’ purchased from sellers. It is further on record that the ADIT (Inv), Bhopal carried out independent enquiries from sellers of land by summoning them u/s 131 wherein the sellers have categorically denied to have received any consideration beyond what was recorded in sale-deed. This clear denial by sellers in independent verification done by revenue, is clearly something which dislodges the revenue’s allegation of on-money payments by assessee. Lastly, one of the basis of escalating on-moneys payments adopted by AO is such that Shri K.L. Sharma, one partner of M/s Regal, accepted payment of cash portion and also disclosed income in return of AY 2012-13. But the assessee has, not only before CIT(A) but also before us, strongly claimed that Shri K.L. Sharma has not declared any amount of undisclosed income in his return, copy of his return is also filed for evidence. Therefore, the reasoning of Shri K.L. Sharma’s disclosure of undisclosed income, given by AO, is also dislodged by assessee. Thus, it is very much clear, after due consideration of all these facts/evidences, that the revenue is not having any case to prove the alleged on-money payments by assessee. We find that the Ld. CIT(A) has also considered all facts/evidences rightly and thereafter deleted the addition made by AO. Therefore, there is nothing to interfere with the order of CIT(A) qua this issue. We therefore uphold the deletion made by CIT(A). This ground is therefore dismissed.” 12. Applying the same view, we uphold the deletions of protective addition of Rs. 4,93,20,770/- and substantive addition of Rs. 40,00,000/- made by CIT(A) in present matter. This ground is therefore dismissed. Ground No. 2 of AY 2013-14 and solitary Ground No. 1 of AY 2014-15: 13. In these grounds, the revenue claims that the CIT(A) has erred in deleting additions made by AO u/s 40A(3) i.e. Rs. 11,43,100/- in AY 2013- 14, Rs. 88,66,325/- in AY 2014-15 and Rs. 98,43,660/- in AY 2014-15. 14. The AO has dealt the additions of Rs. 11,43,100/- in AY 2013-14 and Rs. 88,66,325/- in AY 2014-15 in Para No. 9 / Page 14 to 42 of assessment- order and addition of Rs. 98,43,660/- in AY 2014-15 in Para No. 10 of assessment-order. The basis of addition is certain loose-papers/cash-book found and impounded from 6/4, Chittor Complex Zone-1, Bhopal identified as “RO-2”. The loose-papers/cash-book were inventorised as various pages M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 7 of 13 of LPI-2, BI-11, BI-14, BI-15, BI-16, BI-20. The AO has made lists/charts of transactions mentioned in the impounded papers and alleged them as cash- payments of expenses having been made by assessee in violation of section 40A(3). When the AO show-caused assessee seeking explanation, the assessee made submissions which the AO rejected. Ultimately, the AO arrived at a final conclusion that the assessee has made cash payments exceeding Rs. 20,000/- in violation of section 40A(3); accordingly he made disallowances in different years; we are concerned with the disallowance of Rs. 11,43,100/- in AY 2013-14 and Rs. 88,66,325/- & Rs. 98,43,660/- in AY 2014-15. 15. The CIT(A) has dealt the aforesaid all disallowances commonly in Para No. 6.4 of appeal-order and deleted fully. The revenue is aggrieved by CIT(A)’s order. 16. Before us, Ld. DR for revenue strongly supported the order of AO and objected to CIT(A)’s order. He submitted that the AO has compiled details of cash-payments from various loose-papers seized/impounded by authorities and thereafter made addition. On the contrary, the CIT(A) has recorded assessee’s stand qua those payments and given relief, therefore the CIT(A)’s order cannot be said to be a reasoned order. Ld. DR prayed to reverse CIT(A)’s order and uphold disallowance made by AO. 17. Per contra, Ld. AR for assessee made a serious attack on the action and approach of AO. For this firstly, he carried us to section 40A(3) which prescribed thus at the relevant time: “(3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure.” Ld. AR submitted that section 40A(3) triggers only when the assessee has claimed a deduction of any expenditure and the payment has been made in M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 8 of 13 cash exceeding Rs. 20,000/-. But in the present case, the assessee has not claimed any deduction of the amounts noted/jotted in loose-papers and yet the AO has invoked section 40A(3). To demonstrate this, Ld. AR firstly submitted that the accounts of assessee of the relevant years were duly audited and the auditors have checked all transactions recorded in books of account with supporting evidences/bills/vouchers but did not find any cash-payment exceeding Rs. 20,000/- in violation of section 40A(3); therefore there is no adverse reporting in Form No. 3CD (audit-report). Same way, during assessment proceedings, the books of account of assessee consisting of cash-book, ledger, bills, vouchers and bank statements were duly produced before AO and the AO scrutinized them. But the AO could not and did not find any payment made by assessee in violation of section 40A(3). Ld. AR submitted that when auditor’s examination and AO’s own scrutiny of books do not reveal any payment attracting section 40A(3), how can there be disallowance u/s 40A(3)? Ld. AR submitted that the AO has simply made an arithmetical listing of transactions jotted/noted in loose- papers and mechanically made disallowance whereas (i) some payments were made through cheques or related to other entities of assessee-group and stand already recorded in respective books of those entities (it happened so because the “RO-2” premise from where the documents were impounded, was a common premise of assessee and other group-entities of assessee); (ii) many transactions noted in loose-papers were in the nature of cash handed over on imprest for mitigating various petty expenses of business below Rs. 20,000/- for daily needs of business; (iii) some loose-papers belonged to a contractor named “Prithvi Singh Yadav” engaged by assessee/ group-entities of assessee who had kept his personal papers at the premise; and (iv) moreover many of the payments were in the nature of general outflows and not expenses at all, etc. Ld. AR illustrated some of the notings/jottings contained in the loose-papers, extracted by AO in assessment-order. For instance, there are several entries in the chart prepared by AO on Page No. 18-27 of assessment-order with captions “Cash office” and on Page No. 42- M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 9 of 13 44 of assessment-order captioned as “Triveni Staff pay”, “Sir took from site”, “Sir ko diye”, “Dau ko diye for salary”, “Dau ko diye”, “Stamp paper”, “Anil Baghel Names”, etc. Ld. AR also filed a “Written-Synopsis” after hearing, vide Inward Entry No. 755 dated 16.08.2023 as per direction given by Bench, giving a detailed note on each transaction. Thus, Ld. AR strongly contended that the AO has made a listing of such entries, without giving even first- thought to nature of transactions, and made disallowance u/s 40A(3). Then, Ld. AR carried us to the order of CIT(A), Para No. 6.4.2 to 6.4.8, to demonstrate that the CIT(A) has noted detailed and conclusive findings qua all loose-papers, one by one, and after due consideration, deleted additions. Therefore, the order of CIT(A) is a proper and well-reasoned order, the same must be upheld without any interference. 18. We have considered rival submissions of both sides and perused the orders of lower authorities. First of all, we extract below the portion of order of first-appeal where the CIT(A) has given factual findings qua the loose- papers: “6.4.2 I have considered the facts of the case, plea raised by the appellant and findings of the AO. This is an undisputed fact various expenses have been made by the appellant in cash. The AO while framing assessment order observed that the appellant has violated provisions of section 40A(3) of the Act and therefore, payments made in cash above Rs. 20,000/- has been disallowed by the AO. However, the appellant on the other side has strongly contended that loose paper no 33 & back of LPI-2 which was found and seized from RO-2 i.e. at 6/4 Chittor Complex, Zone-1, MP Nagar, Bhopal which is a common premises of Regal Samarth Krishna builders, and M/s ENVO Promoters and developers and other group concerns of the appellant. The alleged loose papers belongings to “M/S ENVO Construction company” which is a partnership firm having its PAN No AADFE7365B being assessed with AO of the appellant and the transactions noted/jotted down on these loose paper are fully recorded in regular books of accounts of M/S ENVO Construction Company. The impunged loose paper reveals the demonstrated bills of tiles and their payments through cheques. The cheque no. mentioned in these loose sheets have been issued from Krishna Mercantile Co.-Op. Bank having account no. CD 2018 which was disclosed in the books of account and audited balance sheet of ENVO Construction Co. the appellant with regard to noting/jotting of cash payment has submitted that the cash reflected in these loose sheets noted as cash office pertains to advances against purchase of tiles received from the customers and directly endorsed to Arihant Tiles dealers. These expenses have not been debited in books of ENVO Constructions co. as certain M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 10 of 13 customers who demanded to fix the tiles as per their liking and choice hence they asked to use a specific tiles in their flat for which the cost of that specific tiles were directly remitted to the dealer and the same has not been claimed as expenditure in the books of ENVO Construction Co. In support appellant has filed copy of ledger of M/s Arihant Tiles in the books of M/s Envo Construction Company along with bank account statement. 6.4.3 The appellant has also submitted that page no 22, 24, 25, 28, 29, 30, 31 & 32 of LPI-2 were also found from RO-2 which pertains to appellant firm. The notings/jottings found on these loose papers demonstrate cash which was given to the employee/staff on imprest for mitigating the various petty expenditures which were below than Rs. 20,000/- for incurring their daily needs of business. Further, all the expenditure have been recorded in the audited books of account of the appellant. another loose paper i.e. page no 8 of LPI-2 was found and seized which according to the appellant belongs to Prathvi Singh Yadav who is a separate Individual being a petty contractor of Envo Promoters and Developers Pvt Ltd. The impugned loose jottings found and seized from the office premises of the Envo Promoters and Developers Pvt Ltd. Appellant has also stated that Shri Prathavi Singh Yadav who was a petty contractor engaged in the plotting project of Krishna campus belonging to Envo Promtors and Developers, kept his personal record which was to be maintained by the office employee in his personal capacity to which nothing was in concerned with the appellant. In support appellant has filed copy of affidavit of Shri Prathvi Singh Yadav. The appellant has also filed copy of affidavit of employee/staff, who made the noting in impugned loose paper. 6.4.4 Another loose paper BI-15 was found and seized from RO-2 which according to the appellant belongs to M/S Yadav Stone Crushers which is a partnership firm. The rough noting recorded in these bound volumes are being the nature of receipts from transportation done by M/S Yadav Stone Crushers. The transactions mentioned there in are being duly recorded in the audited books of accounts of the alleged firm. Appellant in support has filed copy of List of sundry Debtors of M/S Yadav Stone Crushers for FY 2013-2014 & 2014-2015, Affidavit from M/S Yadav Stone Crushers and Audit Report of M/S Yadav Stone Crushers for FY 2013-2014 & 2014-2015. 6.4.5 Another loose papers BI-11, BI-14 & BI-16 were also found and seized from RO-2 which according to the appellant pertains to appellant. The appellant in order to explain transactions on the said paper submitted that the transactions incurred through these loose sheets are in the nature of imprest given to employee/staff of the firms for making further distribution against the petty jobs/labour payments and all the transactions are fully recorded in books of accounts. The appellant further submitted that the appellant being a contractor, requirement of petty payments to the different sites and different job in a day and to meet out such type of the requirements it would be incumbent upon the appellant to make imprest to their employee/staff who distribute the same to the worker/labour deputed at various jobs. The sum provided through imprest to employee/staff are being recorded in books of accounts and details of expenditures incurred out of the imprest in petty form of cash are fully recorded in ledger accounts and cash book. M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 11 of 13 6.4.6 A cash book, BI-20 was found and seized from RO-2. The cash books was prepared to maintain transaction of various firms/concerns of the group consisting of M/s Regal Samarth Krishna Builder, M/s ENVO Promoters and Developers and M/s Yadav Stone Crusher and partner & promoters of the group. The noting/jottings demonstrated payment and receipt and to maintain chest account of cash to meet petty expenses. The appellant further submitted that the notings represents common entries of the group and are fully recorded in regular books of accounts of the concern. The notings also represents imprest given to employees/staff/promoter/partner of the group for making distribution against petty jobs/labour payments. In support appellant has filed copy of Imprest account and cash book of M/s ENVO Promoters and Developers, M/s Yadav Stone Crusher and M/s Regal Samarth Krishna Bulders. 6.4.7 After considering the entire facts inter alia written submissions filed I find a strong force in the contention of the appellant that appellant is being involved in the field of building & construction. Therefore, imprest were made to different employees/staff including Shri Anil Baghel and Shri Santram. The AO vide para 9.11(ii) has alleged that various payment in cash has been made to Shri Anil Baghel, who is a contractor. However, the AO failed to prove his allegation with supportive corroborative evidence suggesting cash payments to contractor, Shri Anil Baghel. On perusal of copies of cash payment vouchers to Shri Anil Baghel, on various instances payments have been made for ‘Labour payment’, ‘Road work’, ‘structure work’, ‘basement work’, ‘plaster work’. If the cash payments were made to contractor, the same would not be in narration of labour payment, road work, structure work etc. Further, the AO vide para 9.11(i) has also stated that name of Shri Prithvi Singh Yadav is mentioned on loose paper no 8 of LPI-2, is a contractor engaged in contract work with the assessee firm and has reproduced copy of ledger account of Shri Prithvi Singh Yadav. On perusal of copy of ledger account of Shri Prithvi Singh Yadav it was observed that the appellant did not make any transaction Shri Prithvi Singh Yadav during FY 2013-14. The AO further submitted that not even a single payment has been recorded in books of the appellant regarding transactions with Shri Prithvi Singh Yadav. The appellant on contrary has submitted that Shri Prithvi Singh Yadav is a contractor working with M/s ENVO Construction Company and not with appellant. Shri Prithvi Singh Yadav has done construction work on plot sold by M/s ENVO Construction Co and not by the appellant. An affidavit from Shri Prithvi Singh Yadav has also been filed by the appellant in this regard which was also filed before the AO. Hon’ble Gauhati High Court in case of Hanutram Ramprasad Vs. CIT, Assam (1978) 114 ITR Page 19, held that “The affidavit was a valid piece of evidence and the Appellate Assistant Commissioner did not commit any illegality in receiving the affidavit in evidence and acting on it”. 6.4.8 On perusal of brief detail of BI-20, on page no 42 to 44 of the assessment order, it was observed that payments were made to Manish Ji (accountant of the appellant), advocate, staff, to different individuals being employee/staff/partners/promoters and also for purchase of stamp.” M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 12 of 13 19. On perusal of same, we find merit in the contention of Ld. AR that the CIT(A) has given specific and cogent findings on the nature of notings/ jottings in loose-papers and thereafter deleted the addition. On the contrary, the AO has simply made listing of notings/jottings in loose-papers and made additions. We agree that the disallowance of section 40A(3) is attracted only for the expenses for which the assessee has claimed deduction and cash payment had exceeded the prescribed limit of Rs. 20,000/-. In the present case, the CIT(A) has come to findings on the loose-papers that (i) there were payments through cheques or related to other entities of assessee-group which stood recorded in respective books of those entities; or (ii) transactions noted in loose-papers were in the nature of imprest payments made to different persons for petty expenses of business below Rs. 20,000/-; or (iii) some loose-papers belonged to contractor engaged by assessee/group- entities of assessee and not to assessee, or (iv) there were transactions in the nature of general outflows not in the nature of expenditure, etc. With such cogent findings made in his order, re-produced in foregoing paragraph, the CIT(A) has come to a definite conclusion that the disallowance u/s 40A(3) is not attracted in assessee’s hands; accordingly he has deleted the disallowance made by AO. During hearing, though Ld. DR for revenue has supported the order of AO and opposed the order of CIT(A), yet could not rebut the findings made by CIT(A). Therefore, we do not find any strong reason to interfere with the findings/observations/conclusions made by M/s. Regal Samarth Krishna Builders, Bhopal IT(SS)A Nos.195 & 196/Ind/2019 A.Ys.:2013-14 & 2014-15 Page 13 of 13 CIT(A). Consequently, we uphold his order. The grounds raised by revenue are, therefore, dismissed. 20. Resultantly, both of the appeals of revenue are dismissed. Order pronounced in the open court on 26.10.2023. Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Ǒदनांक /Dated : 26.10.2023. CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore