9911796707
TMI Blog2014 (3) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... officer to modify the assessment order after giving an opportunity of being heard to the assessee. As no demand was raised in the order passed u/s 263 of the Act, the assessee was under a bonafide belief that the proceedings would attain finality only in the event of assessment order being modified. Therefore, when the assessment was completed u/s 143(3) r.w.s. 263 of the Act vide order dated 25.01.2012, the assessee preferred an appeal against the said assessment order before the CIT(A) within the statutory time limit. When the appeal was heard on 02.09.2013, the CIT(A) expressed a view that she cannot decide the issue in appeal as the assessing officer completed the assessment as per the directions of the CIT u/s 263 of the Act. Accordingly, the CIT(A) dismissed the assessee's appeal. Only after the appeal was dismissed by the CIT(A), the assessee after consultation with his local consultants could visualize that remedy would lie in the form of an appeal before the ITAT, Visakhapatnam against the order dated 10.12.2011 of the Commissioner of Income Tax, Vijayawada u/s 263 of the Act. Therefore, the assessee took necessary steps in filing the appeal before the ITAT Visakhapatnam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the objection was raised about the delay in filing the appeals. It is undoubtedly true that the explanation given in the affidavit for delay in lodging the appeals is not very substantial, but, in my judgment, taking into consideration the fact that the revisional authority had acted without jurisdiction, was enough for the Tribunal to condone the delay and entertain the appeals. It is true that the Tribunal could not entertain the appeals beyond the period of limitation as a matter of course, but equally the Tribunal would not defeat the ends of justice merely because the parties failed to resort to proper procedure in filing the appeals. In my judgment, the Tribunal ought to have condoned the delay in filing the appeals in the facts and circumstances of the case. Once it is found that the appeals against the order of the revisional authority should have been entertained and it is further found that the order of the revisional authority was wholly without jurisdiction, then the sequitur is that the appeals filed against the revisional authority must be allowed. Shri Jetly did not seriously dispute that if the appeals were maintainable and were entertained, the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess is to develop residential plots by purchasing agricultural lands. After purchasing agricultural lands, necessary approvals from the concerned authorities for conversion of lands into residential lay out, development etc. are undertaken by them and the plots are sold to various parties. The land purchased is an agricultural land from the farmers and the agreements entered into are Sale Agreements with General Power of Attorney. The cost of development of land such as lay out charges, marketing and other conversions are entirely taken up by the assessee. In order to take up such activity for developing the land, the land owner has to permit the assessee to take up development and conversion activity. The agreements and other documents are signed by the land owners. The only interest of the firm is gain derived from the conversion of land after incorporating the development expenses and other incidental expenses like commission for the progress, etc. Development of the agricultural land into housing plots takes considerable time and resources and also requires various approvals from various statutory authorities. In the due course of development of land, the agricultural activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith their village back ground, it is very difficult to convince them for banking transactions. As the payment in cash for acquisition of land is a common phenomena in the field of real estate and many of the operators in this line of activity deal in cash, the assessee firm had no other choice but make payments to the farmers in the form of cash only. It was submitted that the transactions have been done with a bonafide belief and the payment in cheque creates a hurdle for business. It was submitted that as all the transactions are recorded in the books of accounts and the identity of the parties is established and business expediency made the firm to make the payments in cash no disallowance should be made u/s 40A(3) of the Act. 7. The CIT after considering the submissions of the assessee was however not convinced with the same. He noted that on a verification of material on record, it was seen that the assessee made cash payments in instalments over a long period of time which reveals that the relationship between the assessee and the seller is not of one or two days. He noted that the purchases were also made through a sale agreement cum GPA and such documents contains a clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that there is no reason why the assessee should make payments in cash rather through cheque, that too, where payments were made well before the land transaction had taken place. He therefore concluded that the payments in question were not made out of sheer necessity and there was no practical difficulty or unavoidable circumstances which warranted cash payments in violation of section 40A(3) of the Act. He noted that the assessee is not new either to the business or his sellers or to the provisions of income-tax Act. Therefore, it is difficult to believe that the payments in question were made due to urgency, seller being new and in extenuating circumstances. The CIT dwelling upon some instances of purchase of agricultural land where payments have been made in cash noted that these payments were accounted for in the assessee's books through the current account of partner Shri D. Srinivasa Rao by means of journal entries. Though entire payment was made out of assessee's books the property was registered in the name of partner Sri Srinivasa Rao. Entire land cost was brought into books as stock in trade during the year under consideration itself and as such, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on Sundays and holidays should be excluded while invoking the provisions of section 40A(3) of the Act. 10. The Ld. D.R. while conceding that the issue is covered by the decision of the coordinate bench in the assessee's own case in ITA No.324/Vizag/2012 dated 11.12.2013, at the same time supported the order of the CIT. 11. We have heard the parties and perused the materials on record. On a perusal of the order of the CIT, it is very much clear that he has not raised any doubt with regard to the genuineness of the transaction. It is also a fact that he also has found the fact that payments have been made to agriculturists who are identifiable. Only reason for which he has directed for disallowance of the expenditure claimed u/s 40A(3) of the Act is due to nonfulfillment of conditions laid down under rule 6DD(j) of the I.T. rules. It is to be noted that, similar cash payments towards purchase of agricultural land was also made in the financial year 2007-08 relevant to the assessment year 2008-09. Disallowances made u/s 40A(3) of the Act by the assessing officer was confirmed by the CIT(A). When the matter came up before the coordinate bench of this Tribunal in ITA No.324/Vizag/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall verify this aspect and decide the issue accordingly. The ratio laid down in the decisions relied upon by the ld D.R. do not apply to the facts of the present case. In the circumstances, grounds raised by the assessee are partly allowed. 12. Facts being identical and issue being materially the same respectfully following the order of the coordinate bench as aforesaid, we direct the assessing officer to verify the cash payments made by the assessee and exclude the payments made on Sundays and public holidays from the purview of section 40A(3) of the Act. 13. In the result, the assessee's appeal is considered to be allowed for statistical purposes. ITA No.614/Vizag/2013: 14. This appeal arises out of the consequential order passed in pursuance to order of the CIT u/s 263 of the Act. Briefly, the facts are as a consequence of the order passed u/s 263 of the Act directing the assessing officer to make disallowance u/s 40A(3) of the Act, the assessing officer passed an assessment order u/s 143(3) r.w.s. 263 of the Act on 25.01.2012 disallowing the amount of Rs. 95,84,583/- by invoking the provisions of section 40A(3) of the Act. Against the aforesaid assessment order, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
