TMI Blog2021 (9) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eded 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.9.2015 ): 1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the disallowance made under Section 40A(3) amounting to ₹ 22.56 lakhs is to be allowed? and 2. Whether the Tribunal was right in upholding the action of the CIT(A), towards land development expenses amounting to ₹ 9.84 crores is to be allowed even though the assessee failed to produce any evidence in support of such claim? (iii) TCA.Nos. 994 995 of 2019 (admitted on 17.12.2019) : (i) Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the assessing officer cannot initiate proceedings under Section 153A of the I.T.Act, where there was no incriminating material found during the course of search operation u/s.132 of the Act? (ii) Whether the ITAT was correct in not taking cognizance of the Kerala High Court's decision in the case of CIT v. St.Francis Clay Decor Tiles (385 ITR 624) and the Karnataka High Court's decision in the case of Canara Housing Development Co. V. DCIT (49 taxmann.com 98)? and (iii) Whether the ITAT was correct in confirming the disallowance of land dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during search proceedings? and 4. Whether on the facts and the circumstances of the case, the 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? 4. We have heard Mr.T.R.Senthil Kumar, learned Senior Standing Counsel assisted by Mrs.K.G.Usharani, learned Junior Standing Counsel appearing for the appellant-Revenue and Mrs.Pushya Sitaraman, learned Senior Counsel appearing for Mr.R.Murali, learned counsel for the respondent-assessee. Prelude : AY 2007-08 : 5. For the relevant assessment year namely 2007-08, the assessee filed e-return on 15.11.2008 admitting an income of ₹ 11,39,56,780/-. The return was duly processed under Section 143(1) of the Act. Subsequently, the case was taken up for scrutiny and a notice under Section 143(2) of the Act along with a questionnaire was issued on 11.6.2009. The assessee was in the business of property development and the main business was to purchase land, develop it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... address of the party. The assessee also claimed a total cash payment of ₹ 39,08,78,254/- during the relevant year namely AY 2007-08 and the average expenses per day were shown as ₹ 10,70,900/-. In the absence of proper documents, the Assessing Officer disallowed a sum of ₹ 6,22,75,902/- towards 20% of the claim of expenditure made in cash and added back to the total income and finally arrived at the assessed income to the tune of ₹ 22,09,77,552/-, completed the assessment by order dated 29.12.2009 and raised a demand to the tune of ₹ 5,68,31,528/-. 9. As against the order of assessment, the assessee filed an appeal before the CIT(A), who, by order dated 18.3.2011, partly allowed the appeal by confirming the disallowance made by the Assessing Officer under Section 40A(3) of the Act and allowing the claim of the assessee towards development expenses among other things. Aggrieved by that, both the Department as well as the assessee filed two appeals before the Tribunal, which, by order dated 09.7.2013, deleted the disallowance made under Section 40A(3) of the Act and allowed the claim of the assessee towards land development expenses. Hence, the Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A), who allowed it by order dated 03.4.2018. As against the same, the Revenue filed an appeal before the Tribunal, which, by order dated 28.3.2019, dismissed the same. Hence, the Revenue is on appeal before us by filing TCA.No.792 of 2019. AY 2011-12 to 2014-15 : 13. For these assessment years also, the assessments were completed on 31.3.2016 pursuant to the search and seizure operations conducted on 03.9.2013. For the assessment years from 2011-12 to 2013-14, the notices under Section 153A of the Act 29.4.2014 were issued. But, in all the four cases, a notice under Section 142(1) came to be issued. Pursuant to that, the assesssee filed their return of income declaring the income to the tune of ₹ 6,09,19,530/-, ₹ 10,70,23,600/-, ₹ 8,05,82,670/- and ₹ 1,01,46,150/- respectively. 14. The Assessing Officer arrived the total income at ₹ 15,99,81,007/- and ₹ 4,53,69,402/- respectively for the assessment years 2011-12 and 2014-15 in view of disallowance of the amounts claimed towards land development expenses. As against the assessment orders dated 31.3.2016 for the years 2011-12 and 2014- 15, the assessee filed appeals before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales I. Issue pertaining to land development expenses : 18. One of the issues involved in the batch of cases, which is common to the all the assessment years namely 2007-08, 2008-09, 2011-12, 2012-13, 2013-14 and 2014-15, is with regard to land development expenses incurred by the respondent/assessee. 19. Since the issue is common for all the aforementioned assessment years, we have examined the order of assessment passed under Section 143(3) of the Act for the assessment year 2007-08 dated 29.12.2009. On appeal by the assessee, the CIT(A), by order dated 18.3.2011, partly allowed the appeal by confirming the disallowance made by the Assessing Officer under Section 40A(3) of the Act and by allowing the claim of the assessee towards development expenses. Aggrieved by that, both the Department as well as the assessee filed two appeals before the Tribunal. The two salient features in the order dated 09.7.2013 passed by the Tribunal are (i) upholding the order passed by the CIT(A) in deleting the disallowance made under Section 40A(3) of the Act and (ii) allowing the claim of the assessee towards land development expenses. 20. The Assessing Officer was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o disallowance under Section 40A(3) for the assessment year 2007-08 : 25. The second issue is with regard to disallowance under Section 40A(3) of the Act for the assessment year 2007-08. 26. The Assessing Officer did not agree with the assessee that cash payments were made to the vendors and went by the letter and spirit of Section 40A(3) of the Act that cash payments have been effected beyond the threshold limit and therefore disallowed the same. The assessee preferred an appeal before the CIT(A), who examined the genuineness of the transaction as to whether the assessee would be entitled to claim the benefit of the proviso to Section 40A(3) of the Act. The CIT(A) rejected the finding on the fact that the cash payments were duly recorded in the registered sale deed and they were endorsed by the concerned Sub-Registrar and the total sale consideration was taken into consideration for the purpose of demanding the stamp duty and registration purposes. Therefore, the CIT(A) held that when the Government official namely Registering Authority certified that the payments were actually made to the sellers and when the genuineness of the sale was not doubted, the disallowance un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly and that subsequently, on account of compulsion, some of the vendors opened the bank account in the nearby town and the assessee paid the amounts by cheque. They further stated that the vendors were uneducated, that they were not able to come out of their village to open the bank account, that in such a situation, the assessee was compelled to pay the amount by cash and that in some cases, the assessee paid the amount by cash on holidays as the vendors had to honour their commitments. 31. The Assessing Officer was not convinced with the explanation offered by the assessee and accordingly disallowed that portion of the payments, which were made by the assessee by cash to the vendors excluding the amounts paid for stamp duty and registration charges. 32. Aggrieved by such an order, the assessee preferred an appeal before the CIT(A). The factual position was explained before the CIT(A), who found that for the payment made in respect of 15 land owners to the tune of ₹ 3,93,00,000/-, the vendors were residents of Kannagapattu Village, that they did not have banking facilities and that the Village Administrative Officer concerned certified that there was no bank in Kannag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2010, the Assessing Officer extracted the explanation offered by the assessee in their written submission dated 15.12.2010. To say the least, the said written submission is absolutely vague without furnishing any details. Consequently, the Assessing Officer cannot be faulted for having completed the assessment and assigning reasons as to why the disallowance has to be made. 36. Therefore, 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. 37. Therefore, while vacat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tricted or allowed to incriminating materials found during the course of search. 41. So far as the assessee is concerned, they would place heavy reliance on the following decisions (i) of the High Court of Delhi in the case of PCIT Vs. Smt.Amita Garg [reported in (2020) 114 Taxmann.com 551]; (ii) of the Rajasthan High Court in the case of Jai Steel (India) Ltd. Vs. ACIT [reported in (2013) 219 Taxmann 223]; (iii) of the Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. [reported in (2015) 374 ITR 645]; and (iv) of the Delhi High Court in the case of CIT Vs. Kabul Chawla [reported in (2016) 380 ITR 573]. 42. It is pointed out by the learned Senior Standing Counsel that as against the decision of the Delhi High Court in the case of Smt. Amita Garg, the Revenue filed a special leave petition before the Hon'ble Supreme Court, in which, leave has been granted and the matter has been tagged along with Civil Appeal No.14702 of 2015 as reported in (2020) 114 Taxmann.com 552 [PCIT Vs. Devi Dass Garg]. 43. As against the decision of the Bombay High Court in the case of Continental Warehousing Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details in a convenient format. 48. Be that as it may, 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. 49. Accordingly, on this issue, we dismiss TCA.Nos.792, 991, 994 and 995 of 2019. V. Issue pertaining to addition on account of escapement of sales : 50. This leaves us with only one question to be decided in TCA. No.792 of 2019, which is substantial question of law No.4 framed for consideration. At the risk of repetition, it is extracted as hereunder : Whether on the facts and the circumstances of the case, the ITAT was justified in deleting the addition in respect of the receipts from Kannagapattu land purchased from Smt.D.Sangupathi and M/s.SSD Hom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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