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TMI Blog2017 (9) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... stamp charges and other miscellaneous expenses, which are specifically exempt u/s 6DDA(i). The Ld. CIT(A) has also noted that the costs of stamp was deposited in cash in State Bank of India, therefore, as per Rules 6DDA(i) such payments are exempted from the provisions of Sec.40A(3) of the Act. Moreover, he has made a finding of fact that out of other expenses non of the expenses exceeded Asst. Year: 2009-10-14 ₹ 20,000/-. In view of the above, Ground No.2 of Revenue is appeal is also dismissed. - M.A No.55(Asr)/2016, I.T.A No.22(Asr)/2015 And I.T.A No.3(Asr)/2015 - - - Dated:- 21-2-2017 - SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER For The Appellant : Sh. M.R.Bhagat Rajinder Chopra For The Respondent : Smt. Balwinder Kaur (DR) ORDER PER T. S. KAPOOR (AM): These are cross appeals filed by assessee as well as by Revenue against the order of Ld. CIT(A), Jalandhar, dated 28.10.2014 for Asst. Year: 2009-10. 2. The grounds of appeal taken by assessee as well as by Revenue are reproduced herein below. The following grounds taken by assessee as under: .1. The appellant order is illegal, perverse, arbitrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals of the group companies of assessees were fixed for hearing on that date and the Accountant of the firm who attended the proceedings got the impression that all the appeals of the group had been adjourned whereas this appeal was not adjourned and therefore, there was a genuine reason for not attending the hearing and it is prayed that the said Tribunal order be recalled for hearing on merits. 4. The Ld. DR had no objection for recalling of the said order and therefore, the order dated 26.05.2016 of the Tribunal is recalled and Ld. AR was asked to proceed on merits. 5. The Ld. AR, at outset, submitted that the assessee has taken the legal grounds as well as grounds on merits for the adjudication of Bench, but he submitted that he will not be pressing legal grounds and will be arguing only merits of the case. 6. Briefly stating the facts of the case, the Ld. AR submitted that assessee was engaged in the purchase and development of property and during the year it had made payments for purchase of land and had made certain cash payments for purchase of such lands. The Ld. AR submitted that the merits the case of the assessee are squarely covered by the order of Hon ble Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. Date Value of land purchase 1. 05.05.2008 Rs.13,65,000/-* 2. 23.05.2008 Rs.21,87,500/-* 3. 04.06.2008 Rs.12,50,00/-* 4. 08.07.2008 Rs.68,00,000/-* Total Rs.1,16,02,500/-* We find that the Hon ble Punjab Harayana High Court in the case of Sh. Gurdas Garg Vs. CII, 413, ITA No.413/2014 vide order dated 16.07.2015 had framed the following question of law. (i) Whether the Tribunal rightly held that appellant was not entitled to the deductions in respect of cash payments in excess of ₹ 20,000/- made to the vendors for land in view of Sec.40A of the Income Tax Act, 1961(for short the Act). The above question of law has been answered in favour of assessee by holding as under: Re: Question No.1 3. The appellant is engaged inter alia in trading in properties in his individual name. As noted in the assessment order, during the course of assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and not to postpone them; that the appellant did not know the vendors and obviously therefore, insisted for payment in cash and that as a result thereof, payments had to be made immediately to settle the deals. The Tribunal did not doubt this case. The Tribunal, however, held that the claim for deduction was not sustainable in view of Section 40A(3) as the payments which were over ?20,000/- were made in cash. The Tribunal, therefore, disallowed the same only on a construction of Section 40A(3). The Tribunal restricted the ambit of the proviso to the circumstances mentioned in Rule 6DD of the Income Tax Rules, 1962. We find it convenient to let the order of the Tribunal speak for itself: - There is no intention of the legislature to make a list of nature and extent of banking facilities available and other factors to be drafted by the assessee at their whims and fancies and as suits to the assessee. Therefore, Rules have been prescribed which are Rule 6DD of I.T. Rules, 1962 and nothing beyond that. xxx xxx xxx The Ld. CIT(A) has not taken the said proviso in the right spirit and has just accepted the submissions and arguments made by the assessee and has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ragraph 5 o f the Circular reads as under [1977/ 108 ITR (St.) 8, 9: 5. It can be said that it would, generally, satisfy the requirements of Rule 6DD(j), if a letter to the above effect is produced in respect of each transaction falling within the categories listed above from the seller giving full particulars of his address, sales tax number/permanent account number, if any, for the purposes of proper identification to enable the Income-tax Officer to satisfy himself about the genuineness of the transaction. The Income-tax Officer will, however, record his satisfaction before allowing the benefit of Rule 6DD(j). 18. It appears that fulfillment of the conditions of paragraph 5 of the circular has clearly escaped the attention of the Tribunal. The circular clearly indicates that ordinarily where the Income-tax Officer is satisfied about the genuineness of the transaction and payment and identification of the cash payment is established, the Income-tax Officer shall record his satisfaction about the fulfillment of the conditions for allowing the benefit of Rule 6DD(j). Apparently, Section 40A(3)was intended to penalize the tax evader and not the honest transactions and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... black money for business transactions. [See: Mudiam Oil Company v. /TO[( 1973) 92 ITR 519 (AP)] ]. If the payment is made by a crossed cheque drawn on a bank or a crossed bank draft then it will be easier to ascertain, when deduction is claimed, whether the payment was genuine and whether it was out of the income from disclosed sources. In interpreting a taxing statute the court cannot be oblivious of the proliferation of black money which is under circulation in our country. Any restraint intended to curb the chances and opportunities to use or create black money should not be regarded as curtailing the freedom of trade or business, 9. At the cost of repetition, the Tribunal has not disbelieved the transactions or the genuineness thereof. Nor has it disbelieved the fact of payments having been made. More important, the reasons furnished by the appellant for having made the cash payments, which we have already adverted to, have not been disbelieved. In our view, assuming these reasons to be correct, they clearly make out a case of business expediency. 10 In the circumstances, the order of the Tribunal in this regard is set aside. The payments cannot be disallowed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is stand that vouchers along with books of accounts were produced before the Assessing Officer and to prove that Assessing Officer was prejudiced against the assessee by reporting wrong facts, a photo copy of the order sheet for the assessment year under consideration was also submitted. It was claimed that order sheet entries proved that assessee fully co-operated at assessment stage and information required by A.O was submitted. These facts have been noted down by the Ld. CIT(A) at page 16 17 of his order. The Ld. CIT(A) while allowing relief to the assessee vide para 12 has also mentioned the fact of verification of order sheet entries dated 14.08.2012. We further find that Assessing Officer did not comment on the question as to whether the individual payments were less than ₹ 20,000/- or not but the Ld. CIT(A) in his order has himself verified the vouchers and has held that none of the vouchers exceeded ₹ 20,000/-. In his order, he has mentioned the examples of two vouchers of ₹ 1,50,000/- and ₹ 72,009/- dated 16.04.2008 and 15.04.2008 wherein he has mentioned that the individual payments comprised in these two vouchers were below ₹ 20,000/-. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Vouchers and even during the appellate proceedings, the Assessing Officer did not proceed to verify the said vouchers with regard to the claim of the appellant. The contention of the Assessing Officer that books of accounts alongwith the vouchers had not been produced was also found incorrect. The vouchers produced during the appellate proceedings before the undersigned clearly proves that there has not been any violation of Section 40A(3). It is also seen that same issue had been pointed out by the Special Auditor with respect to Assessment Year 2008-09 but no disallowance under section 40A(3) had been made by the same Assessing Officer. It is only that for the year under consideration no verification had been done by the Assessing Officer and Special Auditor. In the circumstances, there is no case for making disallowance under section 40A(3), which is directed to be deleted. From the above facts and findings, we do not find any infirmity in the order of Ld. CIT(A). The additional evidence was in the form of vouchers only and which were filed before Assessing Officer also as has been held by Ld. CIT(A) while examining the order sheet entry dated 14.08.2012. Therefore, gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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