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TMI Blog2017 (6) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... rur Vysa Bank Ltd, a clear finding has been given by the CIT(A) that it was proceeds of the deposits made by the assessee in the year 2005-06. Ld. Commissioner of Income Tax (Appeals) has also noted that assessee had accounted accrued interest of B77,188/-. Revenue has also not raised ground citing violation of Rule 6DD. We are therefore of the opinion that ld. Commissioner of Income Tax (Appeals) was justified in deleting both the additions. - Decided in favour of assessee. - I.T.A. Nos.1155 & 1156/Mds/2015, And C.O.Nos. 69 & 70/Mds/2015 - - - Dated:- 20-4-2017 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER, AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER For The Department : Shri. S. Sankaralingam, CIT For The Assessee : Shri. S. Sridhar, Advocate ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER These are appeals and cross objections filed by the Revenue and assessee respectively for assessment years 2008-09 and 2009- 2010. 2. Appeal and cross objection for assessment year 2008-09 are taken up first for disposal. Revenue in its appeal has raised the following grounds:- 1. The order of the learned CIT(Appeals) is contrary to the law, facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed earlier, viz., sub clauses (1) and (2) of rule 6DD(j) the objects of curbing the circulation of black money and regulating the business transactions become more strengthened and it avoids any undue advantage being taken by unscrupulous assessees or litigation being multiplied. [vii] CIT(A) failed to observe that in the above decision the court further opined that One cannot plead ignorance of law and make cash payments contrary to law. It is too late in the day to accept any such proposition and that in the present day banking scenario, the mode of payment by way of crossed cheques or demand drafts cannot be said to be onerous duty case on an assessee which can be made a foundation for attacking the validity of the said section. (viii) CIT(A) failed in allowing the appeal without considering the fact that the assessee has not mentioned impracticability or impossibility of payment by cheque and other compelling reasons which enable it to make payment in cash. (ix) CIT(A) erred in allowing the appeal without appreciating the fact that none of the clauses under Rule 6DD of Income Tax Rules apply in the assessee's case . 3(i) CIT(A) erred in partly de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivate Limited and found this to be satisfactory. However, as per ld. Assessing Officer assessee had acquired a land for B1,02,71,500/- on 03.10.2007, out of which B36,500/- was paid in cash. Ld. Assessing Officer applied Sec. 40A(3) of the Act and disallowed B36,500/-. Further, as per ld. Assessing Officer there was a credit of B10,77,178/- in assessee s current account and assessee could not prove the source. So, in the fresh assessment framed u/s.143(3) r.w.s 263 of the Act in addition to the originally assessed income of B1,81,40,652/-, two more additions were made, one being B36,500/- for cash payments against land purchases and the other being B10,77,188/- for unexplained deposits in assessee s current account with Karur Vysa Bank, Ltd. 3. Aggrieved, assessee moved in appeal before ld. Commissioner of Income Tax (Appeals). Ld. CIT(A) was of the opinion that original assessment having been set aside by the ld. Commissioner of Income Tax u/s.263 of the Act, ld. Assessing Officer was obliged to redo the assessment in toto. Therefore, according to him, ld. Assessing Officer made a mistake in beginning his computation considering income as originally assessed. As per the ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals), before giving relief to the assessee. 5. Contra, ld. Authorised Representative submitted that the only additions made by the ld. Assessing Officer during the impugned assessment were B36,500/- being cash payment for land purchase and B10,77,188/- for unexplained credits the current account with Karur Vysa Bank Limited. As per ld. Authorised Representative ld. Assessing Officer had started the computation from the income assessed u/s.143 (3) r.w.s. 147 on 26.03.2013, which assessment was set aside by the ld. Commissioner of Income Tax in a proceeding u/s.263 of the Act. As per ld. Authorised Representative ld. CIT himself had noted that computation of income had to start from the income returned by the assessee and not from income assessed u/s.143(3) r.w.s. 147 of the Act. In so far as cash payment made for land purchase is concerned, ld. Authorised Representative submitted that proviso to Sec.40A(3) of the Act clearly allowed such cash payments for business expediency and Rule 6DD was not exhaustive. In so far as cash deposits made in the current account was concerned, submission of the ld. Authorised Representative was that these were proceeds of the fixed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of business expediency that such payments were made. Ld. Commissioner of Income Tax (Appeals) had relied on sub rule (j) of 6DD of the Income Tax Rules for deleting disallowance. However, we find that the said rule apply for payments made on a day on which banks are closed. Nevertheless there is much strength in the contention of the ld. Authorised Representative that exceptional situations mentioned in Rule 6DD are not exhaustive. Hon ble Delhi High Court in the case of Basu Distributor vs. ITO 292 ITR 29 has held that there could be exceptional and unavoidable circumstances that may not find a place in Rule 6DD which would still be a reasonable ground for not applying the rigours of Sec. 40A(3) of the Act. Ld. Commissioner of Income Tax (Appeals) had given a clear finding that assessee could demonstrate business expediency which justified the payments being made in cash. We cannot find any lacuna in this finding of the ld. Commissioner of Income Tax (Appeals). 8. Coming to the ground relating to deposits of 10,77,188/- made in Karur Vysa Bank Ltd, a clear finding has been given by the ld. Commissioner of Income Tax (A) that it was proceeds of the deposits made by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng from income assessed originally u/s.143(3) of the Act instead of the income returned by the assessee. As per ld. Commissioner of Income Tax (Appeals) original assessment having being set aside there was no question of adjudicating on any of the grounds raised by the assessee relating to the original assessment. Nevertheless he proceeded to deal with such grounds. He also held that disallowance of B76,32,000/- u/s.40A(3) of the Act made in the fresh assessment could not have been done since there was genuine payments done due to business expediency. 16. The facts and circumstances being the same, for the reasons mentioned by us at 6 and 7 above, while dismissing the appeal of the Revenue for the assessment year 2008-2009, we dismiss the appeal for the impugned assessment year also. 17. Coming to the cross objection of the assessee, it has raised only one effective ground which assails the adjudication done by ld. Commissioner of Income Tax (Appeals) on issues arising out of addition made by the ld. Assessing Officer in the original assessment. For the same reasons as mentioned by us at para 11, we are of the opinion that assessee has to succeed in this ground. 18. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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