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2019 (5) TMI 195 - HC - Income TaxDisallowance u/s 40A(3) - cash expenditure incurred for purchase of lands - applicability of Section 40A(3) if the lands in question were purchased by him for personal purpose as Capital Assets - no separate deduction in respect of the purchase of two lands in question was claimed in the computation of total income - no enquiry by AO with regard to the applicability of Rule 6DD - HELD THAT:- Merely because the lands in question were purchased as Goods or Stock-in-Trade during the course of business is not sold during the year itself and is included in the closing stock, such contingency does not take it out from the definition of expenditure incurred by the Assessee, as employed u/s 40A(3). Therefore, the said submission raised by the Assessee does not hold any water which is liable to be rejected and the same is accordingly rejected. No discussion by any of the authorities neither the detailed circumstances in which such cash payment was made by the Assessee who wanted to produce the confirmation letters from the dealers of the lands and for the reasons not known to them it was not allowed to do so nor the finding of the Appellate Authority, showing non application of mind to the exceptional circumstances of Rule 6DD and why the same do not apply to the transaction of the purchase of lands in question. Apparently there was no reason for the Assessing Authority for not affording an opportunity to the Assessee to produce not only the confirmation letter from the sellers but also to examine the sellers themselves, by which the Assessee could have established the exemptions of Rule 6DD. Miscarriage of justice might have resulted in cutting short of the assessment procedures by the Assessing Authority. Appellate Authority have just put their imprimatur without discussing any details. Such lack of diligent assessment exercise by the fact finding bodies opens all the doors for the flow of the work in the constitutional Courts, which is not desirable. It is settled legal position that the fact finding arrived at by the final fact finding body is binding on the High Court, while considering the Substantial Questions of Law u/s 260A. Appeal filed by the Assessee is allowed for statistical purposes, without answering the Substantial Questions of Law raised by remanding the case back to the Assessing Authority to examine the issue of applicability of Rule 6DD in the facts and circumstances of the present case.
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