TMI Blog2012 (2) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, the learned CIT(Appeals) erred in deleting the disallowance of ₹ 24,15,160/- made u/s. 40A(3) of the I.T. Act 1961 by the Assessing officer. 4) That, the learned CIT (Appeals) erred in law in holding that disallowance cannot be constituted as undisclosed income within the definition of Sec. 158B of the I.T. Act. 5) That, the learned CIT(Appeals) erred in law in holding that disallowance of u/s. 40A(3) in block assessment was outside the ambit of chapter XIV B of the I.T. Act ignoring provision of Sec. 158BH of Chapter XIV-B 6) That, on the facts and in the circumstances of the case, the learned CIT(Appeals) erred in deleting the addition of ₹ 3,99,763/- made by the Assessing Officer in sale of Flat No. 10 of Pratisha Apartment and Flat No. 10 of Pranav Apartment . . 2. We have heard and considered the arguments advanced by the parties and have gone through the orders of the authorities below, material available on record and the decisions relied upon. Ground Nos. 1 2 3. The relevant facts are that the assessee firm engaged in the business of builders was subjected to search operation u/s. 132 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 997 as well as the conveyance deed dt. 10-11-1998 in respect of plot No. 33 were not signed by Shri Jitendra M. Thakkar as he had no concern or right or interest in respect of plot No. 33. 3.1. The seized document marked No. A-2 showed that the assessee firm had made cash payments in respect of several plots taken up by the assessee firm for development and construction and such cash payments were found to be over and above the consideration recorded in the agreement in respect of those plots. Against the entries for such cash payments the name of Shri Narendra M. Thakkar, the brother of Shri Jitendra M. Thakkar, was written. The assessee firm had filed affidavits during the course of assessment proceedings stating that since Shri Jitendra M. Thakkar was hlding the power of attorney in respect of the land bearing survey No. 705/2/1 owned by Maharashtra Prabhodhan Seva Mandal, the negotiations for the plots of the said land were made with Shri Narendra M. Thakkar and the cash payments were made to him as on money consideration for the said plots. Hence the assessee had argued that such cash payments appearing in the seized documents should be allowed as expenditure in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... block assessment order the AO had not allowed the cash payments of ₹ 26,09,350/- as expenditure in respect of Pratiksha Apartment building as discussed in para No. 10.9.3 of the assessment order because Shri Jitendra M. Thakkar or Shri Narendra M. Thakkar was not holding any right, title, interest in respect of plot No. 33 as on 19-071997 when the said plot was taken up by the assessee for development in construction. 3.4. However the CIT(A) has allowed the amount of ₹ 26,09,350/- as expenditure holding that Shri Jitendra M. Thakkar was having the power of attorney and that the assessee firm was negotiating with Shri Narendra M. Thakkar in respect of the said plot. The CIT(A) also referred to the entry on page No. 14 of seized booking register A-9 where the total cost of the said plot is mentioned at ₹ 31,93,600/- and where the deduction of agreement consideration of ₹ 5,84,255/- from ₹ 31,93,600/- is shown and the balance of ₹ 26,09,345/- with a remark cash paid is written. The CIT(A) relied upon the argument made by the assessee that the amount of ₹ 26,09,345/- was paid to Shri. Paraji Abaji Karanjkar through Shri. Narendra M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Tribunal nor the revenue has rebutted this material fact before us that A.O did not doubt that payment amounting to ₹ 26,09,350/0 was made in respect of the plot No. 33 as evident in seized document marked as Annexure A2. We thus fully concur with the finding of the ld CIT(A) that once the payment for the said plot has been established, there is no reason to disallow the said expenditure merely because the payments were made to the person who was negotiating in respect of all the plots. We also do not find infirmity in the observation of the ld CIT(A) made by him on the basis of submission of the assessee and documents seized that the nexus of such cash payment made to Shri Narendra M. Thakker, brother of Shri Jitendra M. Thakker in respect of plot No. 33 stands established. We thus find that when the nexus of transactions between the assessee in one hand and Shri Jitendra M. Thakker and his brother Shri. Narendra M. Thakker on the other hand to all these projects including Pratikshah project have been established, there is no reason as to why this specific payment towards such plot No. 33 as Annexure A2 should not be allowed against the on-money receipt on sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Sadhuram Wadhwani, IT(SS) No. 10/Nag/1999 dated 13.11.2002 wherein the Tribunal has held that the disallowance u/s. 40A(3) in the block assessment was outside the ambit of Chapter XIV B of the Act. 7. In support of the ground, the ld. D.R. has placed reliance on the assessment order and has also cited following decisions : 1) Ganesh Foundry and casting Ltd. Vs. ITAT Anr. (2010), 328 ITR 202 (Pat.) 2) CIT Vs. M/s. Sai Metal Works, ITA No. 125 of 2004 Others, judgment dt. 10.3.2011 (Pun. Har.). 8. The ld. A.R., on the other hand, tried to justify the first appellate order on the issue. He placed reliance on the decisions cited before the authorities below and also on the decision of Hon ble Madras High Court in the case of TCV Engineering Ltd. Vs. ACIT (2006) 205 CTR (Mad) 161. He submitted that the decisions relied upon by the Ld. D.R. having distinguishable facts are not applicable in the present case. He also placed reliance on the following decisions : 1. Cargo Clearing Agency (Guj.) Vs. JCIT (2008), 218 CTR (Guj.) 541 2. CIT Vs. Banwarilal Bansidhar (1998), 148 CTR (Allha) 533 3. CIT Vs. S. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in the cases of CIT Vs. Vegitable Products (Supra) and CIT Vs. Podar Cement Pvt. Ltd. (Supra), we adopt the judgment on the issue which is favourable to the assessee. We thus respectfully following the decision of Cargo Clearing Agency (Guj.) Vs.JCIT (Supra) Others relied upon by the Ld. A.R. hold that the Ld CIT(A) has rightly deleted the disallowance u/s. 40A (3) of the Act made by the A.O with direction to delete the same involving amount of ₹ 24,15,160/-. The same is upheld. Ground No. 3 to 5 involving this issue are thus rejected. Ground No. 6 10. The relevant facts are that A.O. estimated ₹ 3,99,763/- on account of on-money receipt in respect of 2 flats sold by the assessee. The A.O did not accept the explanation of the assessee that it had constructed 6 buildings and in respect of the facts in the six buildings, he had taken on money except in the case of two flats. It was explained by the assessee that the registers and diaries found gives details of onmoney received from all the flat purchasers of the six buildings except for the two flats. It was submitted that the assessee did not have any on-money in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
