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2020 (11) TMI 480 - AT - Income TaxAddition u/s 40A - sum paid in cash in respect of purchase of the two immoveable properties - HELD THAT:- The genuineness and the bonafide of both the transactions have been established as evidenced by sale deeds and assessee’s books of accounts wherein the transaction particulars have been duly reflected. In terms of business expediency, the assessee has explained that the seller Smt Teeja Devi is a resident of village Chosla which has no banking facility and therefore, she doesn’t had an occasion to open any bank account in absence of any bank and in fact, she doesn’t have any bank account opened and maintained in her name as on the date of execution of the sale deed and therefore, in such circumstances, the assessee had no option but to discharge the sale consideration in cash. A/R has submitted the affidavit of the assessee as well as a confirmation issued by the Sarpanch which remain uncontroverted before us - where the seller resides in a village which doesn’t have a banking facility and therefore, the seller doesn’t have a bank account in her name and both the parties agree to execute a sale deed for sale and purchase of land and the consideration is discharged in cash, it is clearly a case of business expediency which has necessitated the assessee who wants to acquire the said piece of land to discharge the sale consideration in cash due to lack of formal banking facility and in absence of any bank account in name of the seller. Sale deed has been executed on 18.8.2013 and the payment has been made on the said date which happens to be Sunday and thus a bank holiday again necessitating the payment in cash coupled with the fact that the seller doesn’t have a bank account - in respect of second sale transaction, the test of business expediency has been met as the initial/advance payment of ₹ 1 lac as insisted by the seller has only been made in cash to secure the transaction and rest all payments have been made through cheque. As held in case of Smt. Harshila Chordia[2006 (11) TMI 117 - RAJASTHAN HIGH COURT] the consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration for which section 40A(3) has been brought on the statute books and which has been satisfied in the instant case. As relying on THE SOLUTION [2016 (5) TMI 287 - RAJASTHAN HIGH COURT] no disallowance is called for under section 40A(3) of the Act and the same is directed to be deleted. In the result, the ground of the assessee’s appeal is allowed. Unsecured loans taken by the assessee - Non responses to notices issued - HELD THAT:- Where the assessee is in the financing business and there are loan transactions to the tune of ₹ 13.64 crores in respect of which necessary details and other confirmations have been filed and the notices have been responded, then merely because 4 persons having transactions worth ₹ 9 lacs, having received the notices, choosen not to respond to the said notices cannot be held against the assessee. It is not the case of the Revenue either that the confirmations of these parties so furnished during the course of assessment proceedings are either false or have been forged. Once these confirmations have been accepted and the transactions have been executed by the assessee as part of its normal financing business through banking channel and the transactions carry the necessary attributes of a loan transaction where the AO has taken into consideration the confirmation and other details submitted by the assessee, no adverse view can be taken against the assessee as the onus cannot be shifted back to the assessee in absence of any adverse findings on record in terms of documentation so submitted by the assessee. Given that these are existing income tax assessees, there is nothing on record that the AO has taken any further steps in terms of issuing summons u/s 131 or reaching out to jurisdictional officers for verifying their tax records, etc. As relying on UMBRELLA PROJECTS PVT. LTD. [2018 (4) TMI 379 - ITAT DELHI]addition so made by the AO and confirmed by the ld CIT(A) is hereby set-aside and the ground of appeal is allowed in favour of the assessee.
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