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TMI Blog2011 (12) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... is no violation of Rule 46A of the Rules and accordingly, answer the said question of law against the revenue and in favour of the assessee. Regarding addition u/s 40(A)(3) - assessee has been described as a family trust which is engaged in putting up commercial construction and that as observed by the Assessing Officer, certain agreements have been entered into for selling portion of the premises and even according to the submission of learned counsel appearing for the respondent, the property has now been leased and assessee was receiving rent and therefore, building was not being constructed for personal use and the obligation under Section 40(A)(3) of the Act could not said to have been absolved in respect of the assessee - Decided in favor of revenue. Regarding undisclosed income - There was an error in writing the account, the same has been rectified and return has been filed in the year 2001 and the same has been accepted by the Appellate Authorities and therefore, finding of the appellate authorities deleting the additions of undisclosed income - Decided in favor of the assessee - IT APPEAL NO. 1325 OF 2006 - - - Dated:- 7-12-2011 - V.G. SABHAHIT AND S. N. SATYANAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001 as filed in response to notice under Section 148 of the Act. After hearing the representative of the assessee, the Assessing Officer held that the return has not been filed in accordance with law and it was found that no deduction under Section 40A(3) of the Act is permissible in respect of 20% of Rs. 7,50,335/- i.e., Rs. 1,50,067/- wherein payment had been made by cash even though the amount was in excess of Rs. 20,000/- and further, in respect of the amount paid to Mangala Builders Private Limited. M/s. Indus Constructions and M/s. Baliga Sales Corporation, Assessing Officer found that in view of the previsions of Section 68 of the Act, as there was discrepancy in the accounts maintained by the assessee and Mangala Builders Private Limited, M/s. Baliga Sales Corporation and M/s. Indus Construction to the extent of Rs. 38,000/-, Rs. 11,04,585/- and Rs. 17,10,000/-, added the said income and accordingly passed the order of assessment. Being aggrieved by the said order, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Mangalore. The first appellate authority by order dated 20-2-2004, held that disallowance under Section 40A(3) at Rs. 1,50,067/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td, M/s. Baliga Sales Corporation and M/s. Indus Constructions, it was found that there was discrepancy in the accounts maintained by the assessee and the respective firms denied after receiving payment as contended by the assessee and therefore, Appellate Authorities were not justified in deleting the undisclosed credit under Section 68 of the Act. 6. The learned counsel appearing for the respondent submitted that no additional documents have been produced before the First Appellate Authority. The Assessing Officer had the benefit of going through the accounts maintained by the assessee. Even otherwise, on the direction issued by the First Appellate Authority, documents have been produced and a copy of the letter has been produced by the assessee which according to him would clearly show that those particulars have been furnished as the information was directed to be furnished by the assessee to decide the case and therefore, there is no violation of Rule 46A of the Rules. He further submitted that the assessee was not doing a commercial activity of putting up construction for the purpose of sale and no exemption has been claimed under Section 48B of the Act and therefore, dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Further, it is clear that before the ITAT, no ground was raised regarding reception of additional evidence by the First Appellate Authority in contravention of Rule 46A of Rules and in any view of the matter, we hold that the first appellate authority was justified in relying upon the material produced and there is no violation of Rule 46A of the Rules and accordingly, answer the said question of law against the revenue and in favour of the assessee. Re: Substantial question of law No. (2):- 9. It is clear from the order passed by the Assessing Officer that though the assessee which is described as family trust was putting up construction not for self-occupation, but for the business of selling a portion of the building and leasing over the premises, it cannot be said that it was being constructed as a private building and in view of the provisions under Section 28 29 of the Act, it is clear that no payment in excess of Rs. 20,000, can be made except by way of cheque and admittedly in respect of the amount wherein payment has been made in cash in respect of the amount in excess of Rs. 20,000/-, the same has been disallowed. The material on record would clearly show tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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