TaxTMI 
TaxTMI 
2019 (5) TMI 195
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....ng the Appeal filed by the Assessee for the Assessment Year 2011-2012 and upholding the disallowance of Rs. 25,02,938/-, which was partially reduced by the learned Commissioner of Income Tax (Appeals) on account of cash payments made by the Assessee involved in the business of Real Estate for the purchase of two lands at Chinnamudaliar Chavady and Odiayampattu respectively by the Assessee in the Assessment Year in question. 2. The disallowance was made by the Assessing Authority in the Assessment Order dated 27.02.2014 under Section 40A(3) of the Act for the Assessment Year 2011-2012 which disallows cash expenditure over Rs. 20,000/- and since the Assessee made the cash payments for these purchase of lands for aggregate sum of Rs. 25,02,....
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....ess. Therefore,there was no expenditure claimed in the computation of income for the Assessment Year 2011-2012 and therefore the said Provisions of Section 40A(3) do not apply to such purchase of Capital Assets for personal purpose. In the alternative, the learned counsel for the Assessee submitted that the enquiry with regard to the applicability of Rule 6DD was not held by the learned Assessing authority before whom the Assessee even though produced the confirmation letters of two sellers but he did not afford any opportunity to prove the genuineness of the transaction in question and holding it to be payment made in exceptional circumstances under Rule 6DD wherein such disallowance Under Section 40A(3) could not have been made. 4.The ....
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.... below clearly apply to the facts and circumstances of the present case. The expenditure incurred for purchase of lands which is nothing but a Stock in Trade for the Assessee who is engaged in the business of Real Estate and such expenditure in cash without establishing the exceptional circumstances covered under Rule 6DD is certainly disallowable expenditure in the hands of the Assessee. The provisions of Section 40A(3) of the Act are extracted hereunder for ready reference: "Expenses or payments not deductible in certain circumstances. 40A. (1) The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provision of this Act relating to the computation of income under ....
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....nds in question were purchased as Goods or Stock-in-Trade during the course of business is not sold during the year itself and is included in the closing stock, such contingency does not take it out from the definition of expenditure incurred by the Assessee, as employed under Section 40A(3) of the Act. Therefore, the said submission raised by the Assessee does not hold any water which is liable to be rejected and the same is accordingly rejected. 8. Coming to the second submission raised by the learned Counsel for the Assessee, we do not find any detailed discussion by any of the three authorities below on the applicability of Rule 6DD to the purchase of the two lands in question by the Assessee. The Rule 6 DD quoted by the Tribunal in ....
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....n Rule 6DD of the Income Tax Rules, 1962. It is needless to say that the burden of proof lies upon the Assessee to prove before the Assessing Authority, the exceptional circumstances for making the cash payments for which deduction is claimed to establish that such payment squarely fall within four corners of circumstances enumerated in Section 6DD of the Rules. 10. From the perusal of the records including the Assessment order and Appellate order unfortunately we do not find any discussion by any of the authorities neither the detailed circumstances in which such cash payment was made by the Assessee who wanted to produce the confirmation letters from the dealers of the lands and for the reasons not known to them it was not allowed to d....