M/s. Ideal Ashiyana Private Limited, Indore V. Assistant Commissioner of Income Tax- 2(1), Indore

MA 7/Ind/2023

AI Insights

The case revolves around a dispute concerning the disallowance of a cash payment of Rs. 1,39,72,500 made by Ideal Ashiyana Private Limited for the purchase of land, which was held as stock-in-trade. The Assessing Officer (AO) initially disallowed this payment under section 40A(3) of the Income-tax Act, 1961, due to its cash nature. The CIT(A) later reversed this decision, accepting the assessee's new reasoning that the cash payment was insisted upon by the seller, a farmer. However, the ITAT reinstated the AO's decision, finding no credible evidence to support the assessee's claims. The assessee's subsequent M/A sought to rectify what they claimed were misconceptions in the ITAT's order, but this was dismissed as the ITAT found no merit in the reassessment of the facts presented.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130354 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-08-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-05-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 27-02-2023
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: TDS
• Section: 40A(3); 254(2); 13

Judgement Text

Page 1 of 10 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 MA No. 07/Ind/2023 (Arising out of ITA No. 528/Ind/2018) Assessment Year: 2013-14 Ideal Ashiyana Private Limited, Indore बनाम/ Vs. ACIT, 2(1), Indore. (Assessee /Applicant) (Revenue /Respondent) PAN: AADCI0029F Assessee by Shri Pankaj Shah, CA and Shri Soumya Bumb, CA Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 12.05.2023 Date of Pronouncement 09.08.2023 आदेश/O R D E R Per B.M. Biyani, A.M.: This Misc. Application [“M/A”] u/s 254(2) of Income-tax Act, 1961 is preferred by assessee seeking rectification of the Order dated 15.12.2022 of ITAT, Indore Bench in ITA No.528/Ind/2018 for assessment-year 2013- 14 by which the revenue’s appeal was partly allowed. M/s.Ideal Ashiyana P.Ltd. v. ACIT, 2(1), Indore, MA No.07/Ind/2023 Assessment year 2013-14 Page 2 of 10 2. Heard the learned Representatives of both sides at length and case- records perused. 3. Brief facts are such that during assessment-proceeding, the AO found that the assessee has made purchase of land (held as stock-in-trade) and made cash-payment of Rs. 1,39,72,500/- in violation of section 40A(3) which attracted disallowance. When the AO show-caused, the assessee submitted that the cash-payment was made through an agent, accordingly the same was covered by exception in sub-rule (k) of Rule 6DD and no disallowance was attracted. But the AO did not find assessee’s explanation as correct and being unconvinced, made a disallowance of Rs. 1,39,72,500/- while completing assessment. During first-appeal, the CIT(A) accepted a newer reasoning given by assessee that the cash payment had to be made on insistence by the seller of land. Accordingly, the CIT(A), relying upon certain judicial rulings, reversed the decision of AO and deleted disallowance. On further appeal, the ITAT upheld the AO’s action vide Para No. 18 of impugned order. 4. Now, by means of this M/A, the assessee is claiming that there are factual errors/misconceptions in Para No. 18 of the impugned order. For the sake of immediate understanding, we re-produce below the said Para No. 18 in entirety while highlighting the lines/sentences where the assessee is claiming errors/misconceptions: “18. We have carefully considered the rival submission of both sides and the material available before us. We observe that the assessee has purchased a M/s.Ideal Ashiyana P.Ltd. v. ACIT, 2(1), Indore, MA No.07/Ind/2023 Assessment year 2013-14 Page 3 of 10 land; the cost of land has been claimed as a business-deduction; the purchase consideration has been paid in cash; and therefore the situation attracts the provision of section 40A(3) of Income-tax Act, 1961. There is no dispute on these points by either side. Now, what remains to be decided is a very short- point i.e. whether the assessee has any valid reason to come out of section 40A(3) or not? On a careful consideration of assessment-order, we observe that the before Ld. AO, the assessee attempted to take benefit of clause (k) of Rule 6DD which provides that the disallowance u/s 40A(3) shall not be attracted if the cash-payment is made through an agent. Accordingly, the assessee submitted to Ld. AO that the impugned cash-payment was made through an agent. But when the Ld. AO tested this claim of assessee, he found clear-cut shortcomings i.e. (i) the assessee did not submit any detail of agent, even the name of agent was not submitted, and (ii) the assessee has not paid any brokerage for purchase- transaction; although during the year the assessee had incurred brokerage of Rs. 58,27,008/- but that brokerage, as accepted by assessee itself in own reply dated 23.03.2016, was for sale-transactions and not for any kind of purchase-transaction; the assessee has not deducted any kind of TDS out of brokerage for purchase-transaction. With such concrete findings, the Ld. AO concluded “Thus it is clear that there is no such agent because had there been such an agent he would have some identity and assessee would have paid some commission for its assistance in cash purchase. Also assessee in that case would have deducted TDS on this amount. Assessee has also not given any specific details like name, address and PAN of such an agent. Therefore assessee’s argument is hereby rejected and an addition of Rs. 1,39,72,500/- being made in the total income of assessee”. Then came the next stage of first-appeal before Ld. CIT(A). We observe that before Ld. CIT(A), the assessee took an altogether new and different stand i.e. the seller of land was a farmer and insisted on cash-payment, therefore based on decided rulings the section 40A(3) was not applicable. At the same time, the assessee also submitted an affidavit of one Shri Amit Kumar Ghungarwal to the effect that he was engaged as an agent in the transaction for which he received brokerage from the seller of land. The assessee also submitted that it was in the process of producing Shri Amit Kumar Ghungarwal before Ld. AO and have his statements recorded before Ld. AO but the Ld. AO passed assessment-order. We do not find any credence in these submissions of assessee. We fail to understand as to how the assessee can have an agent who did not charge any brokerage from assessee in a property-transaction. This claim of assessee is very ridiculous and just to dislodge the findings made by Ld. AO in assessment-order. Further, the claim of assessee that he was in the process of producing Amit Kumar Ghungarwal but the AO passed assessment-order is also not having any worth for the reason that the assessee even did not supply the name of agent to Ld. AO. It is simply an effort of assessee to blame the Ld. AO and thereby upset the assessment-order. Furthermore, the claim of assessee that the seller was a farmer and insisted on cash-payment, is a newer theory taken by assessee for the first time before Ld. CIT(A) just to take benefit of decided rulings when the assessee realized that its claim of agent was not going to be successful. It is also noteworthy that the assessee has not produced any iota of evidence to Ld. CIT(A) or even before us to prove that the seller in fact insisted on cash M/s.Ideal Ashiyana P.Ltd. v. ACIT, 2(1), Indore, MA No.07/Ind/2023 Assessment year 2013-14 Page 4 of 10 payment. On a careful analysis of operative part of the order passed by Ld. CIT(A) [Para No. 5.2 of his order as reproduced above], we also observe that the Ld. CIT(A) has not uttered any voice on the original claim of clause (k) of Rule 6DD raised by assessee before Ld. AO. The Ld. CIT(A) has simply considered the newer stand of assessee, cited the judicial rulings thereon and deleted the disallowance. In fact, the Ld. CIT(A) has not taken pains to consider (i) that the assessee made a different claim before Ld. AO which was turned down by Ld. AO; and (ii) that the assessee has not given any evidence in support of newer stand taken for the first time before him. That brings us to conclude that the assessee miserably failed to prove on facts as to how the section 40A(3) is not applicable to it. We do not have quarrel with the decisions cited by Ld. AR but since we do not find credence / strength in the claims of assessee on facts, we do not hesitate in concluding that the assessee has failed to prove the circumstances to come out of the clutches of section 40A(3). Therefore, we are of the view that the disallowance u/s 40A(3) is attracted in this case. We, therefore, uphold the action of Ld. AO and so also the disallowance made by him. Thus, the revenue succeeds in Ground No. 3.” 5. Ld. AR has made written-submissions in the application qua each of the above errors/misconceptions claimed by assessee. The content of submissions made by Ld. AR is much repetitive. Therefore, we would like to narrate the crux of his submissions which is as follows: (i) It is submitted that with regard to the issues and findings of ITAT, there was no discussion during the course of hearing and that the findings are based on assessment- proceedings without discussing and considering the fact that there were remand-proceedings in the case as the counsel of assessee was absent during assessment-proceeding due to health-problem of his father; (ii) It is submitted that “the Affidavit of Agent Amit Ghungarwal was available before the AO in remand proceedings on which he has not adversely commented. It contained all the details of Name, address of such agent.” That the affidavit of agent as well as the fact that the seller demanded cash payment, were before AO (in remand proceeding) and CIT(A) and the AO has not given any adverse comment in remand-report; (iii) It is submitted that the AO (in M/s.Ideal Ashiyana P.Ltd. v. ACIT, 2(1), Indore, MA No.07/Ind/2023 Assessment year 2013-14 Page 5 of 10 remand proceeding) as well as CIT(A) have not cross-examined the deponent of affidavit (i.e. agent) and in absence of cross-examination, the statement given by agent has to be accepted; (iv) It is submitted that the brokerage is always paid by seller and the respondent was a buyer, hence there was no question of brokerage payment by assessee. The fact of brokerage payment by the seller is clearly borne out of the affidavit of agent; (v) It is submitted that no representation could be made during assessment-proceeding due to absence of counsel but the fact that the seller demanded cash payment was submitted before AO in remand proceeding which has not been adversely commented by AO. That the CIT(A) has accepted the claim of assessee that cash payment was demanded by seller, therefore it cannot be regarded as a new theory. Further, in ordinary course, no buyer would make cash- payment in property transaction unless it is a stipulated condition; (vi) Lastly, it is submitted that the decisions relied upon by assessee have not been considered. 6. Ld. DR for the revenue supported the impugned order. He submitted that the Bench has extensively dealt the impugned issue of disallowance u/s 40A(3) in as many as Para No. 12 to 18. He submitted that the Bench has considered the AO’s findings, CIT(A)’s findings and the representation made by representatives of both sides and having considered entire material, passed a well-reasoned order in Para No. 18. He submitted that there is no mistake in the order much less any apparent mistake and the assessee is making a futile attempt to get the order reviewed through this M/A which is M/s.Ideal Ashiyana P.Ltd. v. ACIT, 2(1), Indore, MA No.07/Ind/2023 Assessment year 2013-14 Page 6 of 10 neither possible in the scheme of section 254(2) nor required on facts. Ld. DR prayed that this M/A must fail and it has to be dismissed. 7. We have considered rival submissions of both sides and perused the impugned order. Firstly, we find that the ITAT has dealt the issue of disallowance at length in Para No. 12 to 18 of the order and in those paragraphs, the assessment-order has been re-produced, the assessee’s submission during first appeal have been re-produced, the CIT(A)’s order has been re-produced, the submission made by DR and AR including the case-law relied upon by Ld. AR have been aptly narrated and after consideration of all those, finally concrete findings and conclusion were arrived at in Para No. 18. Therefore, the claim projected by assessee that the findings are based merely on mere assessment-proceedings is not correct. Then, the AR’s submission that the ITAT has passed order without considering remand-proceeding is also not correct because in the very same Para No. 18, the ITAT has made a clear-cut discussion on the affidavit of agent filed by assessee during first-appeal/remand-proceeding. Going further to Ld. AR’s contention that in the remand-report the AO has not given any adverse comment on the affidavit of agent and also on the claim of assessee making cash-payment on demand of seller, we find that this contention is also meritless for the simple reason that the AO has objected against the very admission of additional evidences, therefore there was no necessity for the AO to give any comment on merits of evidences. But in that situation, when the CIT(A) ultimately relied upon the additional evidences M/s.Ideal Ashiyana P.Ltd. v. ACIT, 2(1), Indore, MA No.07/Ind/2023 Assessment year 2013-14 Page 7 of 10 negating AO’s objection against admissibility, it was for the CIT(A) to be judicious and take an appropriate call on the claims made in those evidences. It was for the CIT(A) to look into the assessment-order; examine the claim made by assessee before AO and the claim made before him, ascertain the variations in the claims which could have been done with a very simple scrutiny; and how far the new claim of assessee i.e. the cash payment on the demand of seller was correct. It was further incumbent on CIT(A) to examine and mention in his order as to which of the evidences substantiated the assessee’s newer claim that the cash-payment was made on demand by seller. But the CIT(A), without doing all these, simply relied upon newer claim of assessee and granted relief. That’s why the ITAT has categorically noted the variations in claims made by assessee at different stages and also that there was no evidence to establish the newer claim of assessee. 8. So far as Ld. AR’s contention that the assessee could not make representation before AO during assessment-proceeding owing to illness of father is concerned, it is noteworthy that in Para No. 5 of assessment-order, which is reproduced by ITAT in Para No. 13 of impugned order, the AO has categorically noted that the assessee filed a reply in response to order-sheet entry dated 21.03.2016 and claimed that as per rule 6DD cash payment made through agent should not been seen in purview of section 40A(3). Then the AO has considered such reply of assessee, tested the same, categorically mentioned that “reply of assessee is not acceptable because it M/s.Ideal Ashiyana P.Ltd. v. ACIT, 2(1), Indore, MA No.07/Ind/2023 Assessment year 2013-14 Page 8 of 10 has not furnished any details of agent nor even the name of agent ...”. Thus, the assessee has made a submission before AO at least qua this issue in assessment-proceeding. Therefore, the very claim of assessee that there could not have been representation before AO, is far from truth for this issue. 9. At this juncture, we may also narrate some of the submissions made by Ld. AR in written-submission filed before us in present proceeding. Ld. AR has himself mentioned that the agent’s details were before AO in remand proceeding. This is what is exactly stated by AO in assessment-order that the assessee had not furnished any details of agent not even the name of agent in the reply filed during assessment-proceeding. Then, the Ld. AR has mentioned that the fact that the farmer (i.e. seller) demanded the cash was before AO in remand proceeding. This is a clear-cut admission that the insistence of seller for cash payment was a new point raised for the first time during first-appellate proceeding. Then, the Ld. AR has also mentioned that no person would make cash payment in the ordinary course unless it is stipulated in terms. This is not only a vague submission for the sake of submission but also a clear pointer of self-admission by Ld. AR that the assessee is not having any evidence to prove that the payment was made on insistence by seller. 10. Reverting back to Para No. 18 of ITAT’s order, it is crystal clear from the said para that the ITAT has made a detailed noting as to how the matter progressed before AO and CIT(A); how the assessee made divergent claims at M/s.Ideal Ashiyana P.Ltd. v. ACIT, 2(1), Indore, MA No.07/Ind/2023 Assessment year 2013-14 Page 9 of 10 two stages; how the order of CIT(A) was suffering from infirmities; and how the assessee had miserably failed to prove that section 40A(3) was not applicable to it. Regarding the contention raised by Ld. AR that the case laws cited during hearing were not considered, in Para No. 17 of order, a list of all case laws is given and in Para No. 18, it is also mentioned “We do not have quarrel with the decisions cited by Ld. AR but since we do not find credence / strength in the claims of assessee on facts, we do not hesitate in concluding that the assessee has failed to prove the circumstances to come out of the clutches of section 40A(3)”. 11. Thus, the ITAT has given its decision in Para No. 18 of order. Now, in the garb of present application of rectification, the assessee wants to re-argue its case before us. The provisions of section 254(2), as rightly contended by Ld. DR, do not provide for re-argument and review of the earlier order of ITAT. The scope and ambit of section is 254(2) is very limited and it permits only rectification of mistakes apparent from record but to review or recall the order is not permissible. It is not within the scope of an application for rectification to re-argue the case and avail of a further chance where there is no mistake apparent on the facts of record. There may be error of judgement in the order of the ITAT but that does not give any power to ITAT to rectify the same. If there is an error of judgement, the remedy lies elsewhere which the aggrieved party may avail. The ITAT while passing the impugned order considered the entire material referred to by representatives of parties including the orders of lower-authorities and M/s.Ideal Ashiyana P.Ltd. v. ACIT, 2(1), Indore, MA No.07/Ind/2023 Assessment year 2013-14 Page 10 of 10 arrived at a reasonable conclusion. That conclusion is final and the ITAT has no authority to review its decision. In our opinion, the assessee's counsel herein wants to review of earlier order of the ITAT which ITAT cannot do. Accordingly on the set of facts and circumstances of case, we do not find any merit in the arguments of Ld. AR. Consequently, this M/A is devoid of any merit and dismissed therefore. 11. Resultantly, this M/A is dismissed. Order pronounced in the open court on 09.08.2023. sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Ǒदनांक /Dated :09/08/2023 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 Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore