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2021 (9) TMI 773 - HC - Income TaxDisallowance u/s 40(A)(3) - cash payments were made to the vendors beyond the threshold limit - CIT(A) did not agree with the assessee and confirmed the disallowance - HELD THAT - For assessment year 2007-08 tribunal tested the correctness of the decision of the CIT(A). The assessee was a builder and developer and the lands purchased by the assessee were in the nature of stock-in-trade and certain purchases were made in cash and such purchases by cash would be hit by Section 40A(3) of the Act unless otherwise exempted under Rule 6DD of the Rules. Tribunal noted that the assessee was a business man and the cash payments were done for the purchase of lands and also took note that in majority of land dealings land owners would insist upon payment of money in cash. Furthermore the Tribunal also noted that the payments were duly recorded in the sale deed that the same has been registered by the Sub-Registrar and that the amount had been taken into consideration for the purpose of calculating stamp duty and registration.Thus we find on facts that there is no question of law much less substantial question of law arising in the relevant appeals. For the assessment year 2008-09 - we are of the view that it is not a case where the CIT(A) passed a cryptic order nor the order passed by the Assessing Officer is without application of mind. The assessee has to be blamed for the same because of not giving a proper explanation/reply to the query raised by the Assessing Officer. In any event we do not propose to non suit the assessee on the ground that certain details were not furnished in proper form. The assessee would state that certain of the vendors who did not have bank accounts could not come out of the village to open up the bank account and after insistence they had opened the bank accounts and in certain cases advance was paid to the vendors so as to enable them to keep up various other commitments to which they had been fastened.In the light of the order of remand passed by us for the assessment year 2008-09 with regard to disallowance u/s 40A(3) stand allowed. While vacating the remarks made by the Tribunal as against the CIT(A) and the Assessing Officer we remand the matter to the Assessing Officer to consider the genuineness of the stand taken by the assessee in so far as the payments made afford an opportunity of personal hearing to the authorized representative of the assessee and redo the assessment only to the extent indicated in accordance with law Disallowance of land development expenses - Non rejection of books of accounts - HELD THAT - On appeal before the CIT(A) the assessee had elaborately made submissions and primarily contended that the Assessing Officer did not reject the books of accounts of the assessee that the accounts were duly certified by a Chartered Accountant and that there was no debit entry etc. After taking note of the factual position the CIT(A) held that the disallowance was not justified. CIT(A) noted that the assessee produced vouchers which contained the details of the names amounts and signatures and merely because the addresses were not given the vouchers could not be treated as bogus vouchers. CIT(A) agreed with the assessee that the debit vouchers were not created for claiming any expenditure but they actually vouched the expenses incurred by the assessee. Furthermore the CIT(A) noted that the Assessing Officer had checked only the vouchers for the period from 25.3.2007 to 31.3.2007 on a test check basis and not for the whole year. In addition the CIT(A) observed that the Assessing Officer had not brought out any material on record to establish that the vouchers were bogus. CIT(A) noted was that in spite of the so called high expenditure incurred for land development the assessee was able to show the net profit rate of 16.01% which by any standard was very reasonable. Thus the Tribunal set aside the disallowance made by the Assessing Officer. The finding rendered by the CIT(A) was tested for its correctness by the Tribunal which re-appreciated the facts and concurred with the CIT(A). Therefore we find no good ground to interfere with the said factual finding. We also find that there are no questions of law much less substantial questions of law arising in these appeals. Initiation of proceedings under Section 153A - presence of incriminating materials for the assessment years 2008-09 and 2011-12 to 2013-14 or not? - HELD THAT - Tribunal examined the correctness of the order passed by the CIT(A) who proceeded entirely on the merits of the matter and therefore the assessee was granted relief by the CIT(A) solely for the reason that there was no incriminating material. But the CIT(A) having been satisfied on facts held that no addition needed be made. So far as the order of the Tribunal for the assessment year 2011-12 Mr.T.R.Senthilkumar learned Senior Standing Counsel appearing for the appellant/Revenue is right in his submission that the Tribunal granted relief to the assessee for the reason that no incriminating material had been found in the course of search and confirmed the order passed by the CIT(A). CIT(A) examined the merits of the matter and found that there was no justification for various disallowances. Therefore the Tribunal probably missed out this factual position presumably because a batch of cases were before the Tribunal and in all probabilities both the assessee and the Revenue might not have placed full break up details in a convenient format. The relief granted to the assessee is on facts and on merits of the disallowances made and not on the ground that no incriminating material was available. In one of the cases the correctness of this decision was tested by the Tribunal and the view taken by the CIT(A) has been affirmed. Since the entire dispute revolves on the factual matrix we are not expected to substitute our opinion in an appeal under Section 260A of the Act. Thus we hold that there is no question of law much less substantial question of law arising for consideration on this issue. Addition on account of escapement of sales - Whether ITAT was justified in deleting the addition in respect of the receipts from Kannagapattu land purchased from Smt.D.Sangupathi and M/s.SSD Homes Estate Developers P limited later transferred to the assessee as advances which ought to have been accounted for sales but has been classified under advances? - HELD THAT - On perusal of the order passed by the CIT(A) dated 03.4.2018 it is seen that the CIT(A) considered the factual aspects in a detailed manner and deleted the additions. This finding has been affirmed by the Tribunal after re-appreciating the facts. We find no substantial question of law arising for consideration.
1. ISSUES PRESENTED and CONSIDERED The judgment addresses several core legal questions, including:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Disallowance under Section 40A(3)
Issue 2: Land Development Expenses
Issue 3: Incriminating Materials for Section 153A Proceedings
Issue 4: Addition on Account of Escapement of Sales
3. SIGNIFICANT HOLDINGS
Final Determinations:
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