TaxTMI 
TaxTMI 
2017 (5) TMI 365
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome for the assessment year 2010- 11 on 13.7.2010 declaring total income of Rs. 3,17,890/-. The case has been selected for scrutiny under manual selection of cases as per the guidelines issued by the Board and accordingly, notices u/s 143(2) & 142(1) of the Income Tax Act, 1961 (hereinafter called as 'the Act') were issued. In response to notices, the authorized representative of the assessee appeared from time to time and furnished the information as called for. During the course of assessment proceedings, the A.O. noticed that the assessee has debited an amount of Rs. 52,97,925/- towards purchase of sites and the payment for which has been paid in cash. Therefore, issued a show cause notice and asked to explain as to why the provi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not a matter for consideration for allowing the expenditure. It was further observed that though the assessee claims that the sellers insisted for cash payments, failed to file necessary evidences to prove the same. Therefore, disallowed an amount of Rs. 52,37,250/- under the provisions of section 40A(3) of the Act. 3. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The Ld. A.O. ought to have considered the fact that purchase of agricultural land is basically for investment for which provisions of section 40A(3) of the Act would not apply. It was further submitted that he had purchased the lands for the purpose of investm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to customers. It was further submitted that for application of the provisions of section 40A(3) of the Act, the date of purchase is important as per which the impugned asset is an investment and hence, disallowance provided u/s 40A(3) of the Act has no application. The Ld. D.R. on the other hand strongly supported order of the CIT(A). 5. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O. invoked the provisions of section 40A(3) of the Act, and disallowed cash payments made towards purchase of land. The assessing officer was of the opinion that the assessee himself admitted in his financial statements that he had purchased the land as a stock in trade for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents shall be deemed to be the profits & gains and business or profession under sub-section (3) of this sub section, where a payment or aggregate of payment made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft exceeds Rs. 20,000/-, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, consideration of business expediency and other relevant factors. A plain reading of provisions of section 40A(3), makes it clear that the said provision applicable where the assessee has made cash payments in excess of prescribed limits in the course of his business. The said provision does not apply when the payments a....