TMI Blog2015 (7) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction has not been disputed by the authorities and even the books of account of the assessee came to be accepted. In our view, the department has also not provided sufficient opportunity to the assessee with regard to her establishing that business exigency required payment in cash, in as much as the department if it was not satisfied by the explanation given by the assessee, ought to have issued a show cause notice to her to explain the same. Thus on account of petitioner not having been afforded adequate opportunity to show cause before a final decision was taken, the matter requires to be remanded back to the assessing officer for deciding the case afresh in accordance with law and after giving an opportunity to the appellant-asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the ITAT (for short 'Tribunal'), Bangalore, which was also dismissed on 27.02.2009 Aggrieved by the same, this appeal has been filed and appeal came to be ADMITTED on the following questions of law: i. Whether on the facts and in the circumstances of the case is the Tribunal justified in holding that the amounts paid towards the acquisition of capital asset and later converted into stock-in-trade would attract the provisions of Section 40A(3) of the Income-tax Act, 1961? ii. Whether on the facts and in the circumstances of the case is the Tribunal justified in law in holding that despite the payments having been made for the purchase of the capital asset yet it retained the character of business expenditure the moment the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri A.Shankar, learned counsel appearing of the appellant is of two fold. Firstly, it is contended that the land was purchased as capital asset and hence the provisions of Section 40A(3) of the Act would not be attracted even though during the year in question itself the land so purchased had been converted from capital asset to stock-in-trade. It was next submitted that even if the purchase of land was treated as business transaction then too, under the second proviso of Section 40A(3) of the Act, the same would be exempted as payments made in cash was on account of business exigency and identity of the seller was duly certified and it was acknowledged by the sellers that they had received payments in cash and their respective PAN numbers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of Section 40A(3) of the Act would not be attracted. Learned counsel for the appellant has further contended that though appellant had disclosed the fact that the purchase of plots in question was for capital asset and during the course of the year it was converted as stock-in-trade, which was reflected in the books of account of the appellant, the denial of the benefit by the assessing officer was wholly unreasonable and illegal as even after accepting the books of accounts where purchase has been shown as capital asset, the property has been treated as stock-in-trade. According to the appellant what is to be considered is that for what purpose i.e. as a capital asset or for business purpose, the property was being purchased and once ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the appellant has not demonstrated any business exigency because of which payment had to be made in cash and according to him other relevant factors could be considered only after the assessee would demonstrate that business exigency required payment to be made by cash and not by cheque. He also contended that the purpose for which the land was purchased was for business as the appellant had herself disclosed that she was in the business of sale and development of land. Learned counsel submitted that in the return filed by the assessee, the purchase of all three plots was shown as stock-in trade and then showing it as a capital asset at the time of purchase and thereafter converting into stock-in-trade was done in the books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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