TMI Blog2018 (6) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... i relating to assessment year 2013-14 on the following grounds:- 1. On the facts and circumstances of the case, tile order passed by the learned Commissioner of Income Tax (Appeals) is bad both in the eyes of law and on facts. 2(i) On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in passing the order without giving assessee an opportunity of being heard in violation of principle of natural justice. (ii) That the non appearance before the CIT(A) was an account of reasons beyond the control of the assessee. 3. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the disallowance of ₹ 1 ,54,97,974/- made by AO an account of cash payments invoking the provision of section 40A(3) of the Act. 4. On the facts and circumstances of the case the learned CIT(A) has erred both on facts and in law in confirming the disallowance despite the fact that the reason for cash payment was an account of one of the reasons provided in exceptional circumstances for these payments under Rule 6DD of the Act. 5. On the facts and circumstances of the case the learned CIT(A) has err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turn of income or not disclosing the full income. Thus the act of the assessee by making payment in cash cannot be assumed to be bonafide, even though it is in blatant violation of the provisions of section 40A(3) of the Income Tax Act. Accordingly, an amount of ₹ 1,54,97,974/- was disallowed under section 40A(3) of the Act and income of the assessee was assesseed at ₹ 1,54,97,970/- u/s. 143(4) of the Act vide order dated 30.03.2016. Against the assessment order, the assessee appealed before the Ld. CIT(A), who vide his impugned exparte order 22.09.2017 has dismissed the appeal of the assessee by observing that there was sufficient application of mind by AO while framing the assessment and the factual findings regarding violation of clause (j) of Rule 6DD have not been controverted by the assessee during appeal proceedings and in view of the continued non-compliance and non-prosecution of appeal by the assessee, he upheld the assessment order. Aggrieved with the impugned order dated 22.09.2017, Assessee is in appeal before the Tribunal. 3. Ld. Counsel of the assessee has filed a Paper Book containing pages 1-68 having the copy of acknowledgement return of income alon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AP, Hyderabad (2014) 49 taxmann.com 263 (Andhra Pradesh) - Hon ble High Court of Punjab and Haryana decision in the case of Gurdas Garg vs. CIT(A), Bathinda (2015) 63 taxmann.com 289 (P H). - ITAT, Jaipur decision passed in ITA No. 5170/Del/2014 in the case of ITO vs. Shyam Apparels Pvt. Ltd. and Viceversa. - ITAT, Delhi decision dated 31.8.2016 passed in ITA No. 504/2016 in the case of ACIT, Faridabad vs. M/s Marigold Merchandies (P) Ltd. - ITAT, Delhi decision in the case of Galaxy Dwellers P ltd. vs. CIT 2017 (11) TMI 112. - Hon ble Rajasthan High Court decision in the case of CIT vs. ACE India Abodes Ltd. 2017 (11) TMI 620. - Hon ble Rajasthan High Court decision in the case of Smt. Harshila Chordia vs. ITO 2006 (11) TMI 117. 4. On the other hand, Ld. Sr. DR relied upon the orders of the authorities below. He submitted that assessee company has purchased various land. From the sale deed it is revealed that that substantial cash amount has been utilized for purchase of inventory. Total cash amount that has been paid for the purchase of inventory of ₹ 1,54,97,974/-. He further submitted that that payments in cash to persons who are holding land in and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23) 2 Dhankot 26K 8M ( Sale Deed at PB Pg. 26- 33) ₹ 33,33,000/- (PB Pg. 30) and dated 05.08.2012 is appearing at PB Pg. 30 - 3 Dhankot 26K 8M (PB Pg. 34- 56,62,600/- (PB Pg. 40) date 14,15,600 (PB Pg. 42) 44) 05.08.2012 is appearing at PB Pg. 38 4 Dhankot 1K 0M 3.5S (Pb. Pg. 45-52) 1,28,691/- (PB Pg. 49) date 5.08.2012 is appearing at PB Pg. 49. 32,174/- (PB Pg. 51) 5 Dhankot 0K 6M 4S (PB Pg. 5359) 1,00,000 (PB Pg. 55) Total 1,29,84,421/- 25,12,953/- 5.1 After perusing the aforesaid table, we note that the assessee company has made advance payment of ₹ 1,29,84,421/- for the purchase of various lands to the farmers as a token money for the execution of the deal on Sunday i.e. the day which was public holiday for Banks. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son for payment in cash with respect to the aforesaid deals. ln response to the same, the assessee filed its detailed reply dated 14.03.2016 (PB Pg. 60-65, the Copy of which is reproduced in the Assessment Order itself) and submitted that: I. The fact that advance payment is made on Sunday i.e. on 05.08.2012 is mentioned in registry itself. II. Assessee company has also explained the reason for making payment in cash at the time of registry. iii. Genuineness of the payments made by the assessee was not doubted by the AO. iv. Business expediency was not challenged by the AO. No adverse commented by the AO. 5.5 We observe that during the assessment proceedings, the assessee also submitted the copy of sale deeds (PB Page 13- 59) as well as affidavit from the Real Estate broker (PB Page 66-68). The AO however not being satisfied by all the claims and arguments advanced by the assessee made a disallowance of ₹ 1,54,97,974/- by invoking provisions of Section 40(A)(3). Aggrieved with the same, the assessee went into appeal before the Ld. CIT(A), who vide his impugned order sustained the addition made by the AO. 5.6 In view of the aforesaid facts, it is crystal clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, once an assessee furnishes the circumstances under which the payment in the manner prescribed in Section 40A (3) was not practicable or would have caused genuine problems, the proviso, and thereby the Rule 6DD, get attracted. The Parliament did not intend that payment of ₹ 2,500/-; or more, must be made only through the crossed cheque. This is evident from the proviso to Section 40A(3), Rule 6DD, and the circulars issued from time to time. Clause 6(j)(2) of Rule 6DD take in their fold, all the circumstances, under which an assessee faces in the course of his business. Paragraph 3(vi) of the circular of the CBDT has further widened the scope of 'the rule, by mentioning that if the payment, otherwise than through cheque was made, on being promised and specific discount by the seller, the rigor of Section 40A(3) does not apply. c. Coming to the facts of the case, the consistent plea of the applicant was that it had to make the payment for purchase of the ground-nut, in cash, because the seller not only insisted on that, but also gave incentives, such as facility of payment within one week, and discount. The certificate issued by M/s Satyanarayana Trading Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from Hira Lal Khetan for ₹ 13,62,658/- and from Smt. Shanta Devi Mittal for ₹ 11,75,000/-. No such evidence is available on record in respect of other purchases. The assessee has also sold his property on 15/09/2011 for which a deed was also executed in favour of M/s Ocean Seven Buildtech (P) Ltd., Gurgaon on the same day after banking hours. It was submitted that Director of M/s Ocean Seven Buildtech (P) Ltd. reached to Jaipur on 15/9/2011 after the banking hours, therefore, the payments against the sale deed were received in cash due to closure of the banking hours and the same cash received from this party was further paid to these two parties from whom the land was purchased by the assessee. These facts are verifiable from these two purchase deeds, which were duly filed before the Assessing Officer. Therefore, it is established that the assessee has to make payment to these two sellers of the land in cash under the business exigency to safeguard the interest and also for genuine and bonafide needs of assessee's business. It is also a fact that these purchases and sale deeds were put forth before the Registrar on the same day after banking hours which strength ..... X X X X Extracts X X X X X X X X Extracts X X X X
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