M/s. Vaishali Builders & Colonizers, JODHPUR V. ACIT, JODHPUR

MA 26/JODH/2012

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0881 (ITAT-JODHPUR)
• Duration Of Justice: 8 month(s) 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-08-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGALCIT
• Keywords: Depreciation; Rectification of order; Opportunity of being heard; Additional evidence
• Section: 40A(3); 143(3); 12

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. M.A. NO. 26/JODH/2012 (ARISING OUT OF ITA NO. 391/JODH/2011 (A.Y. 2008-09) M/S. VAISHALI BUILDERS & COLONIZERS VS ACIT, D-164, SHASTRI NAGAR, RANGE-1, JODHPUR. JODHPUR. PAN NO. AAFFV5706K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI. DEPARTMENT BY : DR. DEEPAK SEHGAL-CIT- DR. DATE OF HEARING : 26/08/2013. DATE OF PRONOUNCEMENT : 30/08/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS MISCELLANEOUS APPLICATION (M.A.) HAS BEEN FIL ED BY THE APPELLANT / ASSESSEE IN RELATION TO TRIBUNAL ORDER (T.O.) DATED 25.07.2012 PASSED IN ITA NO. 391/JODH/2011 FOR A.Y. 2008-09. 2 2. THE APPLICANT HAS MADE A FOLLOWING PETITION, FOR GETTING THE TRIBUNAL ORDER MODIFIED / RECTIFIED TO THAT EXTENT UNDER THE PROVISIONS OF SECTION 254(2) OF THE INCOME TAX ACT 1961 (THE ACT FOR SHORT). THIS PETITION READS AS UNDER :- 1. GROUND NO. 1 & 2 : RELATING TO INVALIDITY OF THE IMPUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (ADDITIONAL CIT, RANGE -1, JODHPUR) HAS BEE N DECIDED BY THE HON'BLE TRIBUNAL BY PLACING RELIANCE ON ALLEGED COPY OF ORDER U/S 127(1) DT. 25.8.2010 ALLE GEDLY ISSUED BY THE CIT-1, JODHPUR IN FAOVUR OF THE ADDIT IONAL CIT, RANGE-1, JODHPUR (PAGE 5 PARA 4 OF ORDER OF ITAT). 1.1 IT IS PERTINENT TO POINT OUT THAT THE COPY O F THE SAID ORDER U/S 127(1) DT. 25.8.2010 WAS NEVER SUPPLIED TO THE ASSESSEE AT ANY STAGE OF THE ASSESSMENT PROCEEDINGS. NO REFE RENCE TO THE SAID ORDER U/S 127 HAS BEEN GIVEN IN THE IMPUGN ED ASSESSMENT ORDER. 1.2 THAT OBJECTION AS TO INHERENT LACK OF JURISDICT ION IN FAVOUR OF THE ADDITIONAL CIT, RANGE-1 JODHPUR WAS RAISED O N BEHALF OF THE ASSESSEE BEFORE THE CIT(A) ALSO. ELABORATE W RITTEN SUBMISSIONS WERE SUBMITTED BEFORE THE CIT(A) ON THI S POINT. THE CIT(A) SENT COPY OF THOSE ELABORATE SUBMISSIONS TO THE ASSESSING AUTHORITY. THE ASSESSING AUTHORITY SUBMIT TED HIS REMAND REPORT BEFORE THE CIT(A) VIDE LETTER DT. 24. 8.2011. THE ASSESSING OFFICER AT THIS STAGE OF APPELLATE PR OCEEDINGS 3 ALSO DID NOT REFER OR PRODUCE THE COPY OF ALLEGED O RDER U/S 127 BEFORE THE CIT(A). THE ORDER PASSED BY THE CIT( A) DOES NOT CONTAIN ANY REFERENCE OF THE AFORESAID ALLEGED ORDER U/S 127. 1.3 THE AFORESAID FACTS CLEARLY REVEALED THAT O RDER U/S 127 ALLEGED TO HAVE BEEN PASSED ON 25.8.2010 BY THE CIT IN FAVOUR OF ADDITIONAL CIT, RANGE-1, JODHPUR WAS IN F ACT NEVER PASSED TILL THE ORDER WAS PASSED BY THE CIT(A) ON 13.10.2011. 1.4 THAT THE DR DID NOT SUBMIT COPY OF THE SAID ORDER U/S 127 DURING THE COURSE OF HEARING OF THE APPEAL BEFO RE THE HON'BLE TRIBUNAL NOR COPY THEREOF WAS SUPPLIED BY T HE TRIBUNAL TO THE APPELLANT. IT IS NOT KNOWN AS TO WHEN AND HOW THE DR SUBMITTED COPY OF ALLEGED ORDER U/S 127 BEFORE THE TRIBUNAL. THE TRIBUNAL HAS COMMITTED AN APPARENT MISTAKE OF LAW OF PLACING RELIANCE ON THE SAID ORDE R U/S 127 WITHOUT PROVIDING ANY OPPORTUNITY TO THE APPELLANT AND WITHOUT COMPLYING WITH THE PROVISIONS RELATING TO S UBMISSION OF ADDITIONAL EVIDENCE BEFORE THE TRIBUNAL AND IN C OMPLETE OVERSIGHT OF RULE 29 OF THE INCOME TAX (APPELLATE T RIBUNAL) RULES 1963. 1.5 THE LD. TRIBUNAL HAS ALSO ERRED IN NOT FOLL OWING THE DECISION OF HON'BLE ITAT, JODHPUR BENCH, IN THE CASE OF ARHAM INTERNATIONAL V/S JCIT REPORTED IN 40 TAXWORLD (JD) 133, WHERE ON IDENTICAL FACTS, THE HO N'BLE JODHPUR TRIBUNAL HAD QUASHED THE ASSESSMENT MADE U/ S 4 143(3) BECAUSE THE JCIT WHO MADE THE ASSESSMENT DID NOT ISSUE NOTICE U/S 143(2) WITHIN THE PERIOD OF LIMIT ATION OF TIME PRESCRIBED UNDER THE SAID PROVISION AND IT WAS HELD THAT NO COGNIZANCE CAN BE TAKEN OF THE NOTICE U/S 143(2) IS SUED BY THE ACIT, AS THE ORDER WAS MADE BY THE JCIT. THE FACTS OF THAT CASE DECIDED BY THE TRIBUNAL ARE SIMILAR TO THE FACTS OF THE PRESENT CASE. THE LD. TRIBUNAL HAS COMPLETELY IGNORED THE AFORESAID BINDING DECISION O F THE COORDINATE BENCH WITHOUT GIVING ANY REASON WHATSOEV ER. THE IMPUGNED ORDER PASSED BY THE TRIBUNAL THUS, SUFFERS FROM APPARENT MISTAKE OF (I) PLACING RELIANCE ON ALLEGED ORDER U/S 127 WITHOUT PROVIDING ANY OPPORTUNITY TO THE ASSESS EE AND WITHOUT ENSURING COMPLIANCE OF RULE 29 OF ITAT RULE S; (II) NOT FOLLOWING THE ORDER OF JODHPUR ITAT IN RELATION TO A SIMILAR POINT AND NO REASONS WERE GIVEN IN THE ORDE R FOR NOT FOLLOWING THE SAID DECISION. 2. AS REGARDS GROUND NO. 3 TO 5 THE LD. TRIBUNAL HA S CONFIRMED THE DISALLOWANCE OF RS. 1,12,00,000/- MAD E U/S 40A(3) BY THE AO AND CONFIRMED BY THE CIT(A). IT IS AN UNDISPUTED FACT THAT PAYMENT FOR PURCHASE OF AGRICU LTURAL LAND TOTALING TO RS. 1,12,00,000/- WAS MADE BY THE ASSESSEE IN SEVERAL INSTALLMENTS AND THE PAYMENT DID NOT EXC EED RS. 20,000/- IN A DAY. THE AO OBSERVED THAT THE PAYMENT FOR PURCHASE OF AGRICULTURAL LAND HAS BEEN STAGGERED OV ER A PERIOD OF TIME WITH A VIEW TO AVOID THE APPLICABILI TY OF SECTION 40A(3). THE AO DID NOT DOUBT THE CORRECTNESS OF THE FACT THAT PAYMENT FOR PURCHASE OF LAND MADE BY THE APPELLANT ON EACH 5 DAY TO THE CONCERNED SELLER WAS NOT MORE THAN RS. 2 0,000/- ON ANY DAY. THE AO HAS ONLY OBSERVED THAT THE TOTAL AMOUNT OF PURCHASE PRICE OF AGRICULTURAL LAND HAS BEEN CRE DITED IN THE ACCOUNT OF THE SUPPLIER IN WHICH PAYMENT OF LESS TH AN RS. 20,000/- IN A DAY HAVE BEEN SHOWN AS PAID. HE ACCOR DINGLY, DISALLOWED RS. 1,12,00,000/- BY INVOKING SECTION 40 A(3). IT IS PERTINENT TO MENTION THAT THE CORRECTNESS OF THE BO OKS OF ACCOUNTS AND PAYMENT IN DAILY INSTALLMENT OF LESS T HAN 20,000/- WAS NOT DISPUTED BY THE AO. THE AO DID NOT INVOKE THE PROVISIONS OF SECTION 145(3) NOR CHALLENGED THE CORRECTNESS, COMPLETENESS AND REGULARITY OF THE BOO KS OF ACCOUNTS AND ENTRIES IN THE SAID BOOKS OF ACCOUNTS. 2.1 THE CIT(A) ALSO DID NOT REJECT THE BOOKS OF ACCOUNTS NOR INVOKED SECTION 145(3) OF THE ACT. THUS, THE F ACT THAT DAILY PAYMENT MADE FOR PURCHASE OF AGRICULTURAL LAN D WAS LESS THAN RS. 20,000/- STANDS ESTABLISHED AND NEVER DISPUTED BY THE LD. AUTHORITIES BELOW. THEY INVOKED THE PROV ISIONS OF SECTION 40A(3) AS THE BILL OR THE AGGREGATE PURCHAS E PRICE OF THE LAND EXCEEDED RS. 20,000/-. 2.2 THE LD. TRIBUNAL ON PAGE 25 OF ITS ORDER HA S GIVEN A FINDING THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE HAVE BEEN MANIPULATED IN SUCH A WAY WHICH SUITS T HE CONVENIENCE OF THE ASSESSEE. ON PAGE 28 THE TRIBUNA L HAS AGAIN GIVEN A FINDING THAT THE ASSESSEE DELIBERATEL Y AND CONSCIOUSLY SPLIT UP THE PAYMENTS IN PART SO AS TO CIRCUMVENT THE PROVISIONS OF LAW. THUS, THE TRIBUNAL HAS FOR T HE FIRST TIME GIVEN THE FINDING OF 'MANIPULATION OF THE BOOKS OF ACCOUNTS', 6 WHICH WAS NEVER THE FINDING BY THE AO OR THE CIT(A) . SUCH FINDINGS HAVE BEEN GIVEN BY THE TRIBUNAL WITHOUT BR INING ANY EVIDENCE WHATSOEVER IN THE RECORDS AND ALSO WITH OUT PROVIDING ANY OPPORTUNITY TO THE APPELLANT. 2.3 THE GENUINENESS OF THE TRANSACTION OF PURCH ASE OF AGRICULTURAL LAND AND THE IDENTITY OF THE PAYEE HAS NOT BEEN DOUBTED BY THE AO OR THE CIT(A). THE GENUINENE SS OF THE TRANSACTION OF PURCHASE OF LAND BY THE ASSESSEE IS SUPPORTED BY DOCUMENTARY EVIDENCE AND IS ALSO SUPPORTED BY RECORDS OF THE VARIOUS CONCERNING GOVERNMENT SUCH AS REVENUE DEPARTMENT, DEPARTMENT DEALING WITH CONV ERSION OF AGRICULTURAL LAND INTO URBAN LAND AND OTHER CONC ERNING DEPARTMENTS. THE FACT THAT PAYMENT WAS MADE IN INSTALLMENTS OF LESS THAN RS. 20,000/-PER DAY IS AL SO SUPPORTED BY ENTRIES IN THE REGULAR BOOKS OF ACCOUN TS. ENTRIES IN THE REGULAR BOOKS OF ACCOUNTS CONSTITUTE S EVIDENCE ADMISSIBLE IN LAW AS PER SECTION 34 OF THE INDIAN E VIDENCE ACT. THE ENTRIES CANNOT BE TREATED AS MANIPULATED I N THE ABSENCE OF ANY LEGALLY ADMISSIBLE EVIDENCE TO SHOW THAT THE APPARENT IS NOT REAL. THE FINDING GIVEN BY THE TRIB UNAL OF ALLEGED MANIPULATION IS THUS, AN APPARENT MISTAKE O F LAW, AS SUCH FINDINGS WAS GIVEN WITHOUT GRANTING ANY OPPORT UNITY AND WITHOUT BRINGING ON RECORD ANY LEGALLY ADMISSIBLE E VIDENCE. THE ORDER PASSED BY THE TRIBUNAL THUS, SUFFERS FROM THIS GLARING MISTAKE ALSO. 7 3. IT IS AN UNDISPUTED FACT THAT PAYMENT IN QUESTIO N WAS MADE IN INSTALLMENTS AND SUCH PAYMENT NEVER EXCEEDE D RS. 20,000/-ON ONE SINGLE DAY. THE AMENDED PROVISION OF SECTION 40A(3) WERE BROUGHT TO THE NOTICE OF THE LD. TRIBUN AL WHICH SHOWS THAT FROM AY 2009-10 THE AGGREGATE PAYMENTS M ADE TO A PERSON IN A DAY (ON ONE SINGLE DAY) WILL BE DI SALLOWED IF SUCH DAILY AGGREGATE PAYMENT EXCEED RS. 20,000/-. T HE AMENDED PROVISIONS WERE REPRODUCED IN PARA 2.4 ON P AGE 10 OF THE WRITTEN SUBMISSIONS. IT WILL BE RELEVANT HER E TO REPRODUCE HEREUNDER PARA 13.2 TO 13.4 OF DEPARTMENT AL CIRCULAR NO. 1 OF 2009 DT. 27TH MARCH 2009 IN WHICH THE SCOPE AND EFFECT OF THE SUBSTITUTION OF SECTION 40A (3) BY THE FINANCE ACT 2008 W.E.F. 1.4.2009 HAS BEEN EXPLAINED AS UNDER : '13.2 SUB-SECTION (3) OF SECTION 40A IS AN ANTI TAX EVASION MEASURE. BY REQUIRING PAYMENTS TO BE MADE BY AN ACCOUNT PAYEE INSTRUMENT, IT IS POSSIBLE TO V ERIFY THE GENUINENESS OF THE TRANSACTION. THEREBY THE RIS K OF EVASION IS SUBSTANTIALLY MITIGATED. FIELD FORMATION S HAVE REPORTED THAT ASSESSEE TEND TO CIRCUMVENT THE PROVISIONS OF SUB -SECTION (3) OF SECTION 40A BY SP LITTING A PARTICULAR HIGH VALUE PAYMENT TO ONE PERSON INTO SEVERAL CASH PAYMENTS, EACH BELOW RS. 20,000. THIS SPLITTING IS ALSO RESORTED TO FOR PAYMENTS MADE IN THE COURSE OF A SINGLE DAY. THE COURTS HAVE APPROVED SU CH SPLITTING BY INTERPRETING THE WORDS 'IN A SUM' USED IN THE SECTION TO MEAN A SINGLE SUM THEREBY APPLYING T HE LIMIT TO EACH TRANSACTION. THIS INTERPRETATION IS A GAINST 8 THE LEGISLATIVE INTENT AND HAS, CONSEQUENTLY, ADVER SELY AFFECTED THE EFFICACY OF THIS ANTI-ABUSE PROVISION. 13.3 THEREFORE, THE PROVISIONS OF SUB-SECTION (3) O F SECTION 40A HAVE BEEN AMENDED PROVIDING THAT THE PROVISIONS OF SUBSECTION (3) OF SECTION 40A SHALL ALSO BE ATTRACT ED WHERE THE AGGREGATE OF PAYMENTS MADE TO A SINGLE PARTY OT HERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDS TWENTY THOUSAND RU PEES IN A DAY. 13.4 APPLICABILITY - THIS AMENDMENT HAS BEEN MADE APPLICABLE WITH EFFECT FROM 1ST APRIL, 2009 AND SHA LL ACCORDINGLY APPLY FOR THE ASSESSMENT YEAR 2009-10 A ND SUBSEQUENT ASSESSMENT YEAR.' 3.1 IT MAY BE APT TO REFER TO THE AMENDMENT MADE IN S.40A(3) OF THE INCOME TAX ACT, 1961 BY THE FINANCE ACT 2008 AND THE PROVISIONS BEFORE AMENDMENT AND POST AMENDMENT ARE REPRODUCED HEREUNDER FOR THE SAKE OF READY REFERENCE :- POST AMENDMENT - '40A(3) - WHERE THE ASSESSEE INCUR S ANY EXPENDITURE IN RESPECT OF WHICH A PAYMENT OR AGGREG ATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT, EXCEEDS TWENTY THOUSAND RUPEES, NO DEDU CTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE.' 9 PRIOR TO AMENDMENT - SUB-SECTION (3) PRIOR TO SUBST ITUTION BY FINANCE ACT, 2008, W.E.F. 1.4.2009 TO THE EXTENT RE LEVANT, READ AS FOLLOWS : '(3)(A) WHERE THE ASSESSEE INCURS ANY EXPENDITURE I N RESPECT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING TWENTY THOUSAND RUPEES 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.' THE PROVISIONS OF S.40A(3) WERE AMENDED BY THE FINA NCE ACT, 2008 TO PROHIBIT EVEN AGGREGATE PAYMENTS MADE TO A PERSON IN A DAY EXCEEDING THE PRESCRIBED LIMIT, HOW EVER THE LEGISLATURE CONSCIOUSLY DID NOT PROVIDE FOR AGGREGA TION OF PAYMENTS MADE TO A PERSON ON DIFFERENT DATES AND TH E PAYMENTS MADE BY THE APPELLANT FOR PURCHASE OF AGRI CULTURAL LAND BELOW RS. 20,000/-ON DIFFERENT DATES ARE NOT E VEN HIT BY THE AMENDED PROVISIONS OF SECTION 40A(3). THUS, THE DISALLOWANCE MADE U/S 40A(3) IS CLEARLY CONTRARY TO THE PLAIN AND LITERAL INTERPRETATION OF SECTION 40A(3) OF THE ACT AND CANNOT BE SUSTAINED ON ANY VALID OR JUSTIFIABLE REA SONS. IT MAY BE RELEVANT TO MENTION THAT THE AMENDED PROVISI ONS ARE APPLICABLE W.E.F. 1.4.2009 AND THE SAME HAVE NO APP LICATION FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IN THE CASE OF THE APPELLANT. HOWEVER, THE AMENDMENT TO SECTION 40 A(3) STRIKINGLY BRINGS TO THE FORE THAT AGGREGATION OF P AYMENTS MADE TO A PERSON IN A SINGLE DAY IS PERMISSIBLE FOR MAKING DISALLOWANCE AFTER AMENDMENT, HOWEVER, AGGREGATION OF 10 PAYMENTS MADE TO A PERSON ON DIFFERENT DATES IS NOT PERMISSIBLE FOR MAKING DISALLOWANCE EVEN AFTER AMEN DMENT. THERE IS THUS NO PROHIBITION TO MAKE PAYMENT IN INS TALLMENTS ON DIFFERENT DATES EXCEEDING THE PRESCRIBED LIMIT U /S 40A(3) EVEN AFTER AMENDMENT. 3.2 THE ORDER PASSED BY THE HON'BLE TRIBUNAL IN COM PLETE OVERSIGHT OF THE AFORESAID CLEAR INTERPRETATION OF THE PLAIN LANGUAGE OF SECTION 40A(3) IS ALSO AN APPARENT MIST AKE OF LAW, WHICH NEEDS RECTIFICATION U/S 254(2) AND CONSE QUENTLY, THE IMPUGNED ORDER' PASSED BY THE HON'BLE TRIBUNAL DESERVES TO BE RECALLED. 3.3 YOUR KIND ATTENTION IS INVITED TOWARDS FEW DECI SIONS WHERE IT WAS HELD THAT STATUTORY LIMIT PRESCRIBED U /S 40A(3) APPLIES TO PAYMENT TO A PARTY AT A TIME AND NOT TO THE AGGREGATE OF THE PAYMENTS MADE TO A PARTY IN THE CO URSE OF THE DAY AS RECORDED IN THE CASH BOOK. A. CIT V/S ALOO SUPPLY COMPANY (1980) 121 ITR 680 (ORISSA). SLP SUBMITTED BY THE DEPARTMENT AGAINST T HIS JUDGMENT WAS DISMISSED BY THE HON'BLE SUPREME COURT , AS REPORTED IN 1983 143 ITR 67 (ST.) AS UNDER : 'THEIR LORDSHIP P.NO. BHAGWATI AND SABYASACHI MUKHA RJI JJ. DISMISSED A SPECIAL LEAVE PETITION BY THE DEPAR TMENT AGAINST THE JUDGMENT DATED 18.12.1979 OF THE ORISSA HIGH COURT IN SJ.C NO. 80 OF 1976 REPORTED IN (1980) 212 ITR 680 WHEREBY THE HIGH COURT ON A REFERENCE HELD THAT THE 11 STATUTORY LIMIT OF RS. 2,500 PRESCRIBED IN S. 40A(3 ) OF THE IT. ACT, 1961, FOR PAYMENTS OTHERWISE THAN BY CHEQUE OR DRAFT APPLIED TO PAYMENTS MADE TO A PARTY AT A TIME AND N OT TO THE AGGREGATE OF PAYMENTS TO THE PARTY DURING THE COURS E OF THE DAY AS RECORDED IN THE ASSESSEE'S CASH BOOK: CIT V. ALOO SUPPLY CO. S.L.P. (CIVIL) NO. 5169 OF 1981.' B. CIT V/S TRIVENIPRASAD PANNALAL. 228 ITR 68 0 (M.P.). 'THE WORDS USED ARE 'IN A SUM', I.E., SINGLE SUM HA S BEEN USED. THEREFORE, IRRESPECTIVE OF ANY NUMBER OF TRAN SACTIONS, WHERE THE AMOUNT DOES NOT EXCEED RS. 2,500 IN EACH TRANSACTION, THE RIGOURS OF SECTION 40A(3) WILL NOT APPLY. THIS IS A TECHNICAL LACUNA IN THE PROVISION FOR WHICH WE CANNOT SUPPLY THE OMISSION AND PUT THE PROVISION IN A PROP ER FORM SO THAT THIS KIND OF LOOPHOLE MAY NOT BE LEFT. THIS VI EW HAS BEEN TAKEN IN THE CASE OF CIT V/S ALOO SUPPLY CO. (1980) 121 ITR 680 (ORISSA) AND (1983) 143 ITR (ST.) 67.' C. CIT V/S KOTHARI SANITATION AND TILES LTD. (2006) 282 ITR 117 (MAD.) 'SECTION 40A(3) OF THE INCOME-TAX ACT, 1961, ONLY S AYS THAT THE AMOUNT EXCEEDING THE PRESCRIBED LIMIT SHOULD NO T BE PAID EXCEPT BY WAY OF CHEQUE DRAWN ON A BANK OR BY A CRO SS BANK DRAFT AND, IF IT EXCEEDS THAT AMOUNT, THEN 20 PER CENT, OF THE EXPENDITURE SHALL NOT BE ALLOWED AS DEDUCTION. IT DOES NOT SAY THAT THE AGGREGATE OF THE AMOUNTS SHOULD NO T EXCEED THE LIMIT. THE WORDS USED ARE 'IN A SUM' I.E., A SI NGLE SUM. 12 THEREFORE, IRRESPECTIVE OF ANY NUMBER OF TRANSACTIO NS, WHERE THE AMOUNT DOES NOT EXCEED THE LIMIT, THE RIGOUR OF SECTION 40A(3) WILL NOT APPLY. THE AMOUNT SHOULD NOT EXCEED RS. 20,000/-. THAT APART, PRACTICALITY OF THE PAYMENT H AS ALSO TO BE JUDGED FROM THE POINT OF VIEW OF A BUSINESSMAN.' THE PRINCIPLES EMERGING FROM THE AFORESAID DECISION S AND THE CIRCULAR RECOGNIZING THE FACT THAT VARIOUS COURTS H AVE ACCORDED APPROVAL TO THE PRACTICE OF SPLITTING UP O F PAYMENTS FULLY SUPPORTS THE CASE OF THE ASSESSEE, AS AGGREGA TE PAYMENT MADE ON ONE SINGLE DAY TO THE PAYEE NEVER EXCEEDED RS. 20,000/-. SUCH CLEAR PROVISION OF SECT ION 40A(3) HAS NOT BEEN TAKEN INTO CONSIDERATION BY THE HON'BLE TRIBUNAL WHILE DECIDING THE AFORESAID ISSUE, WHICH NEEDS RECTIFICATION U/S 253(2). 4. THE APPELLANT RELIED UPON SEVERAL JUDGMEN TS IN THE WRITTEN SUBMISSIONS SUBMITTED BEFORE THE HON'BLE TRIBUNAL INCLUDING THE JUDGMENT OF HON'BLE RAJASTHAN HIGH CO URT (155 ITR 519 AT PAGE 18 OF WS, 298 ITR 249 AT PAGE 19 OF WS), ITAT JODHPUR AND JAIPUR (66 DTR 9, 38 ITD 1 DEALING WITH PAYMENT MADE FOR PURCHASE OF AGRICULTURAL LAND T O FARMERS) AND JUDGMENT OF HON'BLE APEX COURT (191 ITR 667 PAG E 14 OF WS) AND SEVERAL OTHER JUDGMENTS, WHICH HAVE EITH ER BEEN COMPLETELY IGNORED OR HAVE NOT BEEN PROPERLY UNDERS TOOD. THE DECISION OF ITAT, JODHPUR ON THE QUESTION RELAT ING TO LACK OF JURISDICTION IN THE CASE OF ARHAM INTERNATI ONAL (PAGE 7 OF WS) HAS ALSO BEEN COMPLETELY IGNORED. NON- CONSIDERATION OF BINDING JUDGMENTS ALSO SUPPORTS OU R PRAYER 13 FOR RECTIFICATION. 5. YOUR KIND ATTENTION IS INVITED TOWARDS THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF HONDA SIEL POW ER PRODUCTS LTD. VS CIT (2007) 295 ITR 466 (SC). THE E XTRACTS FROM HEAD NOTE ARE REPRODUCED BELOW : 'THE PURPOSE BEHIND THE ENACTMENT OF SECTION 254(2) OF THE INCOME-TAX ACT, 1961, DEALING WITH THE POWER OF THE APPELLATE TRIBUNAL TO AMEND ANY ORDER PASSED BY IT UNDER SUB-SECTION (1), IF ANY MISTAKE APPARENT FROM THE R ECORD IS BROUGHT TO ITS NOTICE, IS BASED ON THE FUNDAMENTAL PRINCIPLE THAT NO PARTY APPEARING BEFORE THE APPELLATE TRIBUN AL, BE IT AN ASSESSEE OR THE DEPARTMENT, SHOULD SUFFER ON ACC OUNT OF ANY MISTAKE COMMITTED BY THE TRIBUNAL. THIS FUNDAME NTAL PRINCIPLE HAS NOTHING TO DO WITH THE INHERENT POWER S OF THE TRIBUNAL. IF PREJUDICE HAS RESULTED TO THE PARTY, W HICH PREJUDICE IS ATTRIBUTABLE TO THE TRIBUNAL'S MISTAKE , ERROR OR OMISSION, AND WHICH ERROR IS A MANIFEST ERROR, THEN THE TRIBUNAL WOULD BE JUSTIFIED IN RECTIFYING ITS MISTA KE....... 'RULE OF PRECEDENT' IS AN IMPORTANT ASPECT OF LEGAL CERTAINTY IN THE RULE OF LAW. THAT PRINCIPLE IS NOT OBLITERAT ED BY SECTION 254(2). HELD, REVERSING THE DECISION OF THE HIGH COURT, THA T IN ALLOWING THE RECTIFICATION APPLICATION THE TRIBUNAL GAVE A FINDING THAT THE EARLIER DECISION OF A CO-ORDINATE BENCH WAS CITED BEFORE IT BUT THROUGH OVERSIGHT IT HAD MISSED THE 14 JUDGMENT WHICH DISMISSING THE APPEAL FILED BY THE A SSESSEE ON THE QUESTION OF ADMISSIBILITY / ALLOWABILITY OF THE CLAIM OF THE ASSESSEE FOR ENHANCED DEPRECIATION UNDER SECTIO N 43A. ONE OF THE IMPORTANT REASONS FOR GIVING THE POWER O F RECTIFICATION TO THE TRIBUNAL UNDER SECTION 254(2) WAS TO SEE THAT NO PREJUDICE WAS CAUSED TO EITHER OF THE PARTI ES APPEARING BEFORE IT. THE RULE OF PRECEDENT WAS AN I MPORTANT ASPECT OF CERTAINTY IN THE RULE OF LAW, AND PREJUDI CE HAD RESULTED TO THE ASSESSEE SINCE THE PRECEDENT HAD NO T BEEN CONSIDERED BY THE TRIBUNAL. THE TRIBUNAL WAS JUSTIF IED IN RECTIFYING THE MISTAKE ON RECORD.' IN VIEW OF THE AFORESAID FACTS AND SUBMISSIONS, IT IS CRYSTAL CLEAR THAT THE ORDER PASSED BY THE HON'BLE TRIBUNAL SUFFERS FROM VARIOUS APPARENT MISTAKES OF FACTS AND LAW. TH E ORDER SO PASSED MAY KINDLY THEREFORE, BE RECALLED AND A F RESH ORDER MAY BE PASSED AFTER PROVIDING ADEQUATE AND REASONABLE OPPORTUNITY TO THE APPELLANT. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFUL LY PERUSED THE ENTIRE RECORD INCLUDING THE TRIBUNAL ORDER IN QUEST ION. 4. IT WAS POINTED OUT BY LD. A.R. SHRI AMIT KOTHARI THAT NON- PRODUCTION OF A COPY OF THE TRANSFER ORDER PASSED U /S 127 OF THE ACT, OR TO ANY OTHER AUTHORITY IN THE KNOWLEDGE OF THE ASSE SSEE AND CONSIDERATION OF THE SAME BY THE BENCH WOULD AMOUNT TO A MISTAKE APPARENT FROM RECORD. HE FURTHER ARGUED THAT NON CO NSIDERATION OF THE 15 AMENDED PROVISIONS OF SECTION 40A(3) BROUGHT ABOUT BY THE FINANCE ACT, 2008, W.E.F. 1.4.2009 HAS RESULTED INTO AN APP ARENT MISTAKE ON RECORD. 5. ON THE OTHER HAND THE LD. CIT(DR) CONFRONTED THE ABOVE SUBMISSIONS OF THE LD. A.R. STATING THAT THE TRIBUN AL ORDER DOES NOT SUFFER WITH ANY SUCH APPARENT MISTAKE ON RECORD AS HAS BEEN EXHORTED BY LD. A.R. 6. THE FACTS OF THE ISSUE REGARDING TRANSFER OF JUR ISDICTION U/S 127 OF THE ACT HAVE BEEN CONSIDERED AND WE HAVE FOUND THAT THIS MAY NOT BE SUCH A MISTAKE AS CAN BE RECTIFIED. WE CANNOT DISC ERN THE FACTS THAT THIS DOCUMENT WAS NEVER CONFRONTED TO THE ASSESSEE. RATHER THE BENCH HAS APPARENTLY CONSIDERED THE SAME AND HAS TAKEN A PLAUSIBLE VIEW. THE FACT OF EXISTENCE AND PRODUCTION OF THE ORDER U /S 127 OF THE ACT COULD NOT BE ESTABLISHED THROUGH SWORN AFFIDAVIT OF THE ASSESSEE, AS PER LAW, DESPITE OPPORTUNITY TO THAT EXTENT BEING GIVEN . 7. HOWEVER, THE ORDER OF THE TRIBUNAL SUFFERS FROM A MISTAKE REGARDING DEALING WITH THE ISSUE OF PAYMENT IN CASH EXCEEDING RS. 20,000/- ON ONE SINGLE DAY, THE ASSESSMENT YEAR UND ER CONSIDERATION IS 2008-09 AND PRIOR TO AMENDMENT OF SEC. 40A(3) W.E.F . 1.4.2009 BY THE 16 FINANCE ACT, 2008, THE SUB SECTION READ AS (3)(A): WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING TWENTY THOUSAND RUPEES OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR AN ACCOUNT PAYEE BANK DRA FT, EXCEEDS TWENTY THOUSAND RUPEES, NO DEDUCTION SHALL BE ALLOW ED IN RESPECT OF SUCH EXPENDITURE.. HOWEVER, POST AMENDMENT THIS PR OVISIONS READS AS 40A(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 R UPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPEN DITURE. 8. THE BENCH WHILE DECIDING SIMILAR ISSUE HAS INADV ERTENTLY, CONSIDERED THE POST AMENDMENT PROVISIONS WHICH, IN FACT, WAS NOT APPLICABLE IN THE A.Y. 2008-09. 9. THE LEGAL POSITION IN RESPECT OF RECTIFICATION U/S 254(2) CAN BE DETAILED AND DISCUSSED HERE :- SECTION 254(2) OF INCOME TAX ACT, 1961. RECTIFICATION OF MISTAKES APPARENT FROM THE RECORD S SECTION 254 : READS AS UNDER :- 17 254(1) - THE APPELLATE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINK FIT. 254(2) - THE APPELLATE TRIBUNAL MAY, AT ANY TIME WITHIN FOUR YEARS FROM THE DATE OF THE ORDER; WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD, AMEND ANY ORDER PASSED BY IT UNDER SUB-SECTION (1), AND SHALL MAKE SUCH AMENDMENT IF THE MISTAKE IS BROUGHT TO ITS NOTICE BY THE ASSESSEE OR THE ASSESSING OFFICER: PROVISO (1) & PROVISO (2) THE WORDS AND EXPRESSIONS USED IN SECTION 254(2) AR E UNAMBIGUOUS BEING PLAIN AND WITHOUT ANY INTRICACIES . ANY ORDER CAN BE AMENDED BY THE APPELLATE TRIBUNAL WITH A VIEW TO RECTIFY ANY MISTAKE APPARENT FROM THE RECOR D. IN THIS SECTION THE WORD AMENDMENT MEANS AND IMPLIES THE MODIFICATION OF THE ORDER. WHEN AN ORDER OF AMENDME NT IS PASSED THE ORIGINAL ORDER IS NOT EFFECTED, IT SURVI VES EXCEPT FOR THE AMENDMENT. WHEN AN ORDER IS RECALLED IT STA NDS OBLITERATED IN ITS ENTIRETY. RECALLING OF THE ORDER IS NOT PERMISSIBLE UNDER SECTION 254(2) BECAUSE WHEN AN OR DER IS RECALLED IT HAS TO BE NECESSARILY RE-ADJUDICATED ON THE ENTIRE SUBJECT-MATTER OF APPEAL. [KARAN & CO. VS. I TAT (2002) 253 ITR 131 (DEL.)]. 18 NOW THE QUESTION ARISES AS TO WHAT CONSTITUTES A MISTAKE WHICH CAN ONLY BE RECTIFIED U/S 254(2). NUMEROUS J UDICIAL PRONOUNCEMENTS HAVE BEEN RENDERED ON THIS ASPECT. T HERE ARE VIVID REASONS AND CONDITIONS THE EXISTENCE OF W HICH HAS BEEN HELD AS A RECTIFIABLE MISTAKE AND IN THIS MAKE EVEN THE TOTAL RECALL OF THE ORDER HAS BEEN TREATED AS RECTIFICATION OF A MISTAKE. BEFORE DWELLING ON THIS ISSUE WE WOULD LIKE TO DISCUSS AS TO WHEN THIS MODIFICATION OF THE ORDER WITH A VIEW TO RECTIFY THIS MISTAKE CAN BE CA RRIED OUT. AT ANY TIME WITHIN FOUR YEARS FROM THE DATE OF THE ORDER. IF SUCH A MISTAKE IS NOTICED THE APPELLATE T RIBUNAL MAY RECTIFY IT, BUT IF IT IS MISTAKE AND THE BROUGHT T O ITS NOTICE BY THE ASSESSEE OR THE ASSESSING OFFICER IT SHALL MAKE SUCH AMENDMENT. A MISTAKE MEANS TO TAKE OR UNDERSTAND WRONGLY OR INACCURATELY; TO MAKE AN ERROR IN INTERPRETING; IT IS AN ERROR, A FAULT, A MISUNDERSTANDING, A MISCONCEPTION . THE LITERAL MEANING OF THIS WORD HAS A SPECIAL SIGNIFIC ANCE IN THE TAXATION LAWS. IT MAY NOT BE AN ARITHMETICAL OR CLERICAL ERROR ALONE THAT COMES WITHIN ITS PURVIEW. BUT, IT COMPREHENDS AN ERROR WHICH AFTER A JUDICIOUS PROBE INTO THE RECORD FROM WHICH IT IS SUPPOSED TO EMANATE ARE DISCERNED. THEREFORE, THE WORD IS INHERENTLY CARRIE S INDEFINITE SCOPE. THE MEANING OF APPARENT HAS ALSO BEEN THE SUBJECT OF JUDICIOUS ADJUDICATION. THE PLAIN ME ANING OF THE WORD APPARENT IS THAT IT MUST BE SOMETHING WHICH APPEAR TO BE SO EX FACIE AND IS INCAPABLE OF ARGUME NT OR 19 DEBATE. IT IS THAT LAPSE OR INACCURACY WHICH IS APP ARENT FROM THE RECORD. THE RECORD MEANS THE RECORD AVAILABLE BEFORE THE APPELLATE TRIBUNAL. THE APPELLATE TRIBUN AL HAS NOT INHERENT POWER TO REHEAR ON MERITS EXPARTE FOR IT IS PERMITTED. UNDER SECTION 254(2). THE ORDER PASSED B Y THE APPELLATE TRIBUNAL UNDER SECTION 254(1) IS THE EFFE CTIVE ORDER SO FAR AS THE APPEAL IS CONCERNED. ANY ORDER PASSED U/S 254(2), EITHER ALLOWING THE AMENDMENT SOUGHT OR REFERRING TO AMEND GETS MERGED WITH THE ORIGINAL OR DER PASSED. THE ORDER AS AMENDED OR REMAINING UNAMENDED IS THE EFFECTIVE ORDER FOR ALL PRACTICAL PURPOSES. THE SAME CONTINUES TO BE AN ORDER UNDER SECTION 254(2). AN O RDER PASSED U/S 254(2) DOES NOT HAVE EXISTENCE DE HORS T HE ORDER U/S 254(1) OF THE ACT. GENERALLY, WHEN PREJUDICE IS CAUSED FROM AN ORDER OF THE APPELLATE TRIBUNAL DUE TO ITS MISTAKE, ERROR OR OMISSION, THEN IT IS ITS DUTY TO SET IT RIGHT. NOW WE WILL DISCUSS AS TO WHAT ARE THE APPARENT MISTAKE FROM THE RECORD WHICH HAVE BEEN SO HELD . T HE BASIS EPILOGUE IS THAT THE APPELLATE TRIBUNAL (AT) HAS JURISDICTION ONLY TO RECTIFY MISTAKES APPARENT FROM RECORD THAT ARE BROUGHT TO ITS NOTICE. IT CANNOT REVIEW IT S EARLIER ORDER. IT CANNOT GO INTO THE MERITS OF APPEAL AGAIN AND COME TO A FINDING THAT THE ORDER WAS SOUND EVEN ON THE BASIS OF THE MATERIALS SOUGHT TO BE RELIED, PRESUMA BLY BECAUSE IT WOULD AMOUNT TO REVIEW. THE APPELLATE TR IBUNAL 20 HAS NO STATUTORY POWER TO REVIEW, TO RE-EXAMINE AND GIVE A SECOND VIEW ON THE MATTER WITH A VIEW TO ALTER OR R EVERSE THE VIEW ALREADY TAKEN BY IT. HOWEVER, IT HAS INCID ENTAL OR ANCILLARY POWERS WHICH CAN BE EXERCISED BY IT. MIS TAKE IS AN ORDINARY WORD, BUT IN TAXATION LAWS, IT HAS A SP ECIAL SIGNIFICANCE. IT IS NOT AN ARITHMETICAL OR CLERICAL ERROR ALONE THAT COMES WITHIN ITS PURVIEW. IT COMPREHENDS ERROR S WHICH AFTER A JUDICIOUS PROBE INTO THE RECORD FROM WHICH IT IS SUPPOSED TO EMANATE, ARE DISCERNED. THIS WORD IS INHERENTLY INDEFINITE IN SCOPE, AS WHAT MAY BE A MI STAKE FOR ONE MAY NOT BE ONE FOR ANOTHER. IT IS SOMETHING WHICH A DULY AND JUDICIOUSLY INSTRUCTED MIND CAN FIND OUT FROM THE RECORD. WHEN APPELLATE TRIBUNAL FAILS INADVERTENTLY, TO NOTICE ANY QUESTION RAISED BEFORE IT OR MISCONCEIVE MATERIAL FACTS WHICH GOES TO THE VERY ROOT OF THE M ATTER, IT MUST CORRECT THAT MISTAKE EX BEBITO JUSTITIAE. SIMI LAR VIEW HAS BEEN EXPRESSED BY HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS RAMESH CHAND MODI (2001) 249 ITR 323 (RAJASTHAN). WHEN PREJUDICE RESULTS FROM AN ORDER ATTRIBUTABLE TO APPELLATE TRIBUNALS MISTAKES / ERR OR / OR OMISSION, THEN IT IS ITS DUTY TO SET IT RIGHT. NON CONSIDERATION OF A DECISION OF A CO-ORDINATE BENCH IS SUCH CATEGORY OF A MISTAKE. THE DECISION OF HONBLE APEX COURT RENDERED IN THE CASE OF HONDA SIEL POWER PRODUCTS L TD. VS. CIT (2007) 295 ITR 466 (SC). LIKEWISE NON CONSIDERA TION OR OMISSION TO NOTICE A DECISION OF JURISDICTIONAL HIG H COURT OR 21 OF THE HONBLE SUPREME COURT IS A MISTAKE APPAREN T FROM RECORD ACIT VS. SAURASHTRA KUTCH STOCK EXCHANGE LTD . (2008) 305 ITR 227 (SC). WHEN THERE IS AN OMISSION TO DEAL WITH AN IMPORTANT CONTENTION AFFECTING THE MAINTAIN ABILITY OR MERITS OF AN APPEAL IT MUST BE DEEMED AS A MISTA KE APPARENT FROM RECORD EMPOWERING TO APPELLATE TRIBUN AL TO REOPEN THE APPEAL AND TO RECTIFY THE SAME IF IT IS SATISFIED. LAXMI ELECTRONIC CORPORATION LIMITED VS. CIT (1991) 188 ITR 398 (ALL). FURTHER, RELYING ON AN INFORMATION RECEIVED AFTER COMPLETION OF HEARING WHICH WAS NOT DISCLOSED TO TH E ASSESSEE IS AN APPARENT MISTAKE. THE APPELLATE TRIB UNAL WOULD BE JUSTIFIED IN RECALLING ITS ORDER ON THE RE LEVANT POINT AND DIRECTING THE APPEAL TO BE PLACED FOR HEA RING IN DUE COURSE. THIS HAS BEEN HELD BY THE HONBLE RAJAS THAN HIGH COURT WHILE DECIDING THE CASE OF CIT VS. S.S. GUPTA (2002) 257 ITR 440 (RAJ.). THE TIME LIMIT OF FOUR YEARS PROVIDED IN SECTION 254(2) MUST BE ADHERED TO AND ANY APPLICATION FOR RECTIFICATION FILED BEYOND THE PERMISSIBLE TIME HAS TO BE SUMMARILY DISMISSED, AS IT HAS TO BE HELD AS TIME B ARRED. THE CASE OF SHREE AYYANAR SPINNING & WEAVING MILLS LTD. VS. CIT (2008) 301 ITR 434 (SC) IS RENDERED IN THIS REGARD. 10. ADVERTING TO THE FACTS OF THIS CASE, WE ARE CON VINCED THAT A MISTAKE APPARENT FROM RECORD HAS CREPT INTO THE TRI BUNAL ORDER. WHILE 22 DECIDING GROUND NO. 3 TO 5 OF THE ASSESSEES APPEAL , THE TRIBUNAL HAS CONFIRMED DISALLOWANCE OF RS. 1.12 CRORES MADE U/S 40A(3) AS WAS DONE BY THE A.O. AND THE LD. CIT(A). UNDISPUTEDLY THE AS SESSEE HAD PURCHASED A PIECE OF AGRICULTURAL LAND AND HAD PAID TOTAL CONSIDERATION OF RS. 1,12,00,000/- IN SEVERAL INSTALLMENTS AND AN Y OF THE PAYMENT DID NOT EXCEED RS. 20,000/- IN ONE DAY. THE A.O. HAS NO T DISPUTED THE CORRECTNESS OF THE BOOKS OF ACCOUNTS AND PAYMENT IN DAILY INSTALLMENTS OF LESS THAN RS. 20,000/-. THE A.O. HAS NEITHER IN VOKED THE PROVISIONS OF SECTION 145(3) NOR HAS CHALLENGED THE CORRECTNES S COMPLETENESS AND REGULARITY OF THE BOOKS OF ACCOUNTS AND EVEN ANY EN TRIES INCORPORATED IN THEM. THE CIT(A) HAS ALSO NOT CHANGED THE ACTION OF THE A.O. BOTH OF THEM HAVE INVOKED SECTION 40A(3) BECAUSE THE BILL O R THE AGGREGATE PURCHASE PRICE OF THE LAND EXCEEDED RS. 20,000/-. L IKEWISE THE GENUINENESS OF THE TRANSACTIONS OF PURCHASE OF LAND BY THE ASSESSEE AND THE IDENTITY OF THE PAYEE HAS NOT BEEN DOUBTED BY THEM. RATHER, THE GENUINENESS OF THE TRANSACTION OF PURCHASE OF L AND BY THE ASSESSEE IS SUPPORTED BY DOCUMENTARY EVIDENCE AND IS ALSO S UPPORTED BY RECORDS. THE FACT OF PAYMENT HAVING BEEN MADE IN IN STALLMENTS OF LESS THAN RS. 20,000/- PER DAY IS ALSO SUPPORTED BY THE ENTRIES IN THE REGULAR BOOKS OF ACCOUNT AND THIS IS AN ADMISSIBLE EVIDENCE U/S 34 OF THE INDIAN EVIDENCE ACT. THESE ENTRIES CANNOT BE DI SREGARDED IN THE 23 ABSENCE OF ANY PLAUSIBLE EVIDENCE. THE FINDING OF M ANIPULATION OF RECORDS IS THUS A MISCONCEPTION OF FACT BY THE AP PELLATE TRIBUNAL. IN CASE THE PRE AMENDMENT PROVISION OF SECTION 40A(3) ARE APPLIED THERE IS NO CONTRAVENTION THEREOF HAVING BEEN DONE BY THE ASSESSEE. BUT, IF THE POST AMENDMENT PROVISION OF SECTION 40A(3) ARE APPLIED, THEN THERE CAN BE CONTRAVENTION OF THE PROVISION OF SECT ION 40A(3). SINCE, ADMITTEDLY TO THE FACTS OF THIS CASE, THE PROVISION PRIOR TO AMENDMENT WOULD APPLY, A MISTAKE OF APPLICATION OF LAW HAS CR EPT IN THE TRIBUNAL ORDER WHEN THE LAW OF SECTION 254(2) IS APPLIED TO THESE FACTUAL AND LEGAL MISTAKES, WE CAN SAFELY CONCLUDE THAT THE FIN DING OF TRIBUNAL IN THIS REGARD IS THE RESULT OF AN APPARENT MISTAKE WH ICH IS RECTIFIABLE. THE DECISIONS RELIED ON BY LD. A.R. AND INCORPORATE D BY US, AS ABOVE, SUBSTANTIATE OUR THIS FINDING. THEREFORE, WE RECTIF Y/MODIFY THE TRIBUNAL ORDER TO THAT EXTENT. NOW THE RELEVANT PAR AS OF THE TRIBUNAL ORDER SHALL READ AS UNDER :- PARA 11 OF THE ORDER WOULD BE READ AS UNDER: AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE FA CTS AND CIRCUMSTANCES OF THE CASE, WE HAVE FOUND THAT THE AUTHORITIES HAD PROCEEDED ON A WRONG PREMISE. THEY DID NOT NOTICE AND DID NOT APPLY THE LAW OF PROVISIONS OF SECTION 40A(3) WHICH WAS APPLICABLE TO A.Y. 2008-09 . THE 24 FACTS OF THIS CASE ARE UNDISPUTED THAT NONE OF A SI NGLE PAYMENT IN CASH OTHERWISE THAN AN ACCOUNT PAYEE CHEQUE/DRAFT EXCEEDED THE PRESCRIBED LIMIT OF RS. 2 0,000/. THE LAW OF THE LAND IN THE RELEVANT YEAR READ AS UN DER: '(3)(A) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING TWENTY THOUSAND RUPEES 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.' THIS PROVISION WAS AMENDED BY THE FINANCE ACT, 200 8 TO PROHIBIT EVEN AGGREGATE PAYMENTS MADE TO A PERSON I N A DAY EXCEEDING THE PRESCRIBED LIMIT, HOWEVER THE LEGISLATURE CONSCIOUSLY DID NOT PROVIDE FOR THE AGG REGATION OF PAYMENTS MADE TO A PERSON ON DIFFERENT DATES AND THE PAYMENTS MADE BY ANY ASSESSEE FOR THE PURCHASE OF AGRICULTURAL LAND BELOW RS. 20,000/- ON DIFFERENT D ATES ARE NOT HIT EVEN BY THE AMENDED PROVISIONS OF SECTION 40A(3) OF THE ACT. THE AUTHORITIES BELOW HAVE, INADVERTEN TLY, APPLIED THE AMENDED PROVISIONS, WHICH CAME INTO EFF ECT FROM 1.4.2009 FOR A.Y. 2009-10. THE YEAR UNDER CONSIDERATION IS A.Y. 2008-09 AND TO THIS YEAR THE AMENDED PROVISIONS WOULD NOT APPLY. THE AMENDED PROVISIONS OF SECTION 40A(3) READ AS UNDER: POST AMENDMENT - '40A(3) - WHERE THE ASSESSEE 25 INCURS ANY EXPENDITURE IN RESPECT OF WHICH A PAYMEN T 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.' IT WOULD BE APT TO REFER TO THE FOLLOWING DECISIONS WHICH CLEARLY SPELL OUT THE PLAIN MEANING OF THE PROVISIONS OF SE CTION 40A(3) PRIOR TO ITS AMENDMENT. THESE DECISIONS ARE: A. CIT V/S ALOO SUPPLY COMPANY (1980) 121 ITR 680 (ORISSA). SLP SUBMITTED BY THE DEPARTMENT AGAINST T HIS JUDGMENT WAS DISMISSED BY THE HON'BLE SUPREME COURT , AS REPORTED IN 1983 143 ITR 67 (ST.) AS UNDER : 'THEIR LORDSHIP P.NO. BHAGWATI AND SABYASACHI MUKHA RJI JJ. DISMISSED A SPECIAL LEAVE PETITION BY THE DEPAR TMENT AGAINST THE JUDGMENT DATED 18.12.1979 OF THE ORISSA HIGH COURT IN SJ.C NO. 80 OF 1976 REPORTED IN (1980) 212 ITR 680 WHEREBY THE HIGH COURT ON A REFERENCE HELD THAT THE STATUTORY LIMIT OF RS. 2,500 PRESCRIBED IN S. 40A(3 ) OF THE IT. ACT, 1961, FOR PAYMENTS OTHERWISE THAN BY CHEQUE OR DRAFT APPLIED TO PAYMENTS MADE TO A PARTY AT A TIME AND N OT TO THE AGGREGATE OF PAYMENTS TO THE PARTY DURING THE COURS E OF THE DAY AS RECORDED IN THE ASSESSEE'S CASH BOOK: CIT V. ALOO SUPPLY CO. S.L.P. (CIVIL) NO. 5169 OF 1981.' 26 B. CIT V/S TRIVENI PRASAD PANNALAL. 228 ITR 6 80 (M.P.). 'THE WORDS USED ARE 'IN A SUM', I.E., SINGLE SUM HA S BEEN USED. THEREFORE, IRRESPECTIVE OF ANY NUMBER OF TRAN SACTIONS, WHERE THE AMOUNT DOES NOT EXCEED RS. 2,500 IN EACH TRANSACTION, THE RIGOURS OF SECTION 40A(3) WILL NOT APPLY. THIS IS A TECHNICAL LACUNA IN THE PROVISION FOR WHICH WE CANNOT SUPPLY THE OMISSION AND PUT THE PROVISION IN A PROP ER FORM SO THAT THIS KIND OF LOOPHOLE MAY NOT BE LEFT. THIS VI EW HAS BEEN TAKEN IN THE CASE OF CIT V/S ALOO SUPPLY CO. (1980) 121 ITR 680 (ORISSA) AND (1983) 143 ITR (ST.) 67.' C. CIT V/S KOTHARI SANITATION AND TILES LTD. (2006) 282 ITR 117 (MAD.) 'SECTION 40A(3) OF THE INCOME-TAX ACT, 1961, ONLY S AYS THAT THE AMOUNT EXCEEDING THE PRESCRIBED LIMIT SHOULD NO T BE PAID EXCEPT BY WAY OF CHEQUE DRAWN ON A BANK OR BY A CRO SS BANK DRAFT AND, IF IT EXCEEDS THAT AMOUNT, THEN 20 PER CENT, OF THE EXPENDITURE SHALL NOT BE ALLOWED AS DEDUCTION. IT DOES NOT SAY THAT THE AGGREGATE OF THE AMOUNTS SHOULD NO T EXCEED THE LIMIT. THE WORDS USED ARE 'IN A SUM' I.E., A SI NGLE SUM. THEREFORE, IRRESPECTIVE OF ANY NUMBER OF TRANSACTIO NS, WHERE THE AMOUNT DOES NOT EXCEED THE LIMIT, THE RIGOUR OF SECTION 40A(3) WILL NOT APPLY. THE AMOUNT SHOULD NOT EXCEED RS. 20,000/-. THAT APART, PRACTICALITY OF THE PAYMENT H AS ALSO TO BE JUDGED FROM THE POINT OF VIEW OF A BUSINESSMAN.' 27 12. THUS, AS PER THE EXISTING LEGAL PROVISIONS NO DISALLOWANCE U/S 40A(3) IS CALLED FOR. ACCORDINGLY, WE DELETE TH E ADDITION OF RS. 1,12,00,000/- MADE ON ACCOUNT OF DISALLOWANCE MADE U/S 40A(3) OF THE ACT AND ALLOW THIS ISSUE IN FAVOUR OF THE ASSES SEE. THE APPARENT MISTAKE WHICH HAD CREPT IN THE ORDER IS, THEREFORE, RECTIFIED U/S 254(2) OF THE ACT. 13. IN THE RESULT, THE M.A. STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH AUGUST, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR