TaxTMI 
TaxTMI 
2020 (10) TMI 1191
X X X X Extracts X X X X
X X X X Extracts X X X X
....served on the assessee company on 05.09.2016. It was further submitted that there was a change in management of the assessee company in year 2014 wherein Sh. Hari Mohan Dangayach and Smt. Kamlesh Dangayach transferred their entire shareholding to Sh. Akshya Gupta and Mrs Anju Gupta. It was further submitted that as per the mutual understanding between the old and new management, it was decided that the subject tax matter, which pertains to year prior to transfer of ownership and management of the assessee company, would be handled by the erstwhile management group. It was further submitted that Sh. Jagdish Narain Khandelwal an employee of the erstwhile management who looks after the income tax matters collected the duly filled Form No. 36 and other papers from the Counsel and he handed over the said papers to his subordinate accountant Sh. Naveli Sharan Mittal to get it signed from new management. However, Sh. Naveli Sharan Mittal after collecting the papers misplaced the same somewhere in bunch of papers and forgot all about the same. The matter came to notice of the current management on 11.07.2018 when an enquiry was made by the Assessing officer regarding payment of outstanding....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... relevant to determine whether the same reflects sufficient cause on its part in not presenting the present appeal within the prescribed time. In the instant case, it has been stated in the affidavits so submitted that there has been a change in the management of the company and the present tax matter pertaining to the period prior to change of management, it was decided that the same would be handled by the erstwhile management, however, due to change of management and lack of diligence on part of ershwhile employees, the appeal could not be filed. It has been further stated that the matter came to light of the present management on 11.07.2018 when an enquiry was made by the Assessing officer for payment of outstanding demand and thereafter, the appeal papers were prepared and appeal was submitted before the Registry on 20.08.2018 though with a delay of 654 days. We therefore find that there is no culpable negligence or malafide on the part of the assessee company in delayed filing of the present appeal and as soon as it came to know of the old tax matter pertaining to the period prior to change of the management, it took steps and filed the present appeal. Therefore, in the factu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee company was also covered in the said search operations. Subsequently, notice u/s 153A was issued on 27.12.2012 and in response, the assessee company furnished its return of income on 15.01.2013 declaring total income at Nil and reiterating the income as per the return of income originally filed u/s 139 on 08.02.2008. Thereafter, the notice u/s 143(2) was issued on 08.08.2013 and assessment was completed u/s 143(3) read with section 153A dated 25.03.2015. During the course of assessment proceedings, the Assessing Officer observed that the assessee company has purchased certain pieces of land vide six separate registered sale deeds and the sale consideration has been discharged partly in cash. Thereafter, a show cause was issued u/s 40A(3) and after considering the submission of the assessee, 25% of total expenditure incurred in cash amounting to Rs. 42,50,000/- was disallowed invoking the provisions of section 40A(3) of the Act. We therefore find that the impugned assessment order has been passed without any reference to any incriminating material found during the course of search in case of the assessee and thus, no fresh facts are required to be examined nor any findings on f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) 380 ITR 573 (Delhi) * Jai Steel (India) vs ACIT 259 CTR (Raj) 281 It was further submitted that the Hon'ble Supreme Court has also dismissed the SLP filed by the Revenue in case of Meeta Gutgutia vs. Pr. CIT (96 Taxmann.com 468). 10. Per contra, the ld. CIT/DR submitted that in case of Meeta Gutgutia, though SLP of the Department has been dismissed by the Hon'ble Supreme Court, however, merely dismissal of the SLP cannot be read as affirmation of the view taken of the Hon'ble Delhi High Court. It was further submitted that there are two subsequent SLPs which have been admitted by the Hon'ble Supreme Court on similar matters and therefore, the Department is not accepting the position taken in case of Meeta Gutgutia and other decisions cited by the ld. AR. 11. We have heard the rival contentions and purused the material available on record. A search and seizure action was carried out in case of the assessee's group on 25.04.2012. The original return of income was filed u/s 139 on 08.02.2008 and the last day of issuing notice section 143(2) had thus expired on 30.09.2008 before the date of search and the assessment proceedings therefore were not pending as on 25.04....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce to the incriminating material found, then no addition can be made to the returned income of the assessee. 12. The Hon'ble Delhi High Court in case of CIT v. Kabul Chawla (supra) while considering an identical issue has held as under:- "37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A of the Act, the AO acts under his original jurisdiction, for which, assessments have to be made; (b) regarding other cases, the addition to the income that has already been assessed, the assessment will be made on the basis of incriminating material and (c) in absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. Though such a claim by the assessee for the first time under Section 153A of the Act is not completed, the case in hand, has to be considered at best similar to a case where in spite of a search and/or requisition, nothing incriminating is found. In such a case though Section 153A of the Act would be triggered and assessment or reassessment to ascertain the total income of the person is required to be done, however, the same would in that case not result in any addition and the assessments passed earlier may have to be reiterated. 23. The reliance placed by the counsel for the appellant on the case of Anil Kumar Bhatia (supra) also does not help the case of the assessee. The relevant extract of the said judgment reads as under:- "19. Under the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....having been pulled out, the Assessing Officer under Section 153A has been entrusted with the duty of bringing to tax the total income of an assessee whose case is covered by Section 153A, by even making reassessments without any fetters, if need be. 21. Now there can be cases where at the time when the search is initiated or requisition is made, the assessment or reassessment proceedings relating to any assessment year falling within the period of the six assessment years mentioned above, may be pending. In such a case, the second proviso to sub-section (1) of Section 153A says that such proceedings "shall abate". The reason is not far to seek. Under Section 153A, there is no room for multiple assessment orders in respect of any of the six assessment years under consideration. That is because the Assessing Officer has to determine not merely the undisclosed income of the assessee, but also the 'total income' of the assessee in whose case a search or requisition has been initiated. Obviously there cannot be several orders for the same assessment year determining the total income of the assessee. In order to ensure this state of affairs namely, that in respect of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ome, if any, unearthed during the search and the income that escaped assessments are required to be clubbed together with the total income determined in the original assessment and assessed as the total income. The observations made in the judgment contrasting the provisions of determination of undisclosed income under Chapter XIVB with determination of total income under Sections 153A to 153C of the Act have to be read in the context of second proviso only, which deals with the pending assessment/reassessment proceedings. The further observations made in the context of de novo assessment proceedings also have to be read in context that irrespective of the fact whether any incriminating material is found during the course of search, the notice and consequential assessment under Section 153A have to be undertaken. 25. The argument of the learned counsel that the AO is also free to disturb income, expenditure or deduction de hors the incriminating material, while making assessment under Section 153A of the Act is also not borne out from the scheme of the said provision which as noticed above is essentially in context of search and/or requisition. The provisions of Sections 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l found in the search may be a ground for notice and assessment under Section 153A of the Act but that would not efface or terminate all the consequence, which has arisen out of the regular assessment or reassessment resulting into the demand or proceedings of penalty." (Emphasis supplied) The said judgment which essentially deals with second proviso to Section 153A of the Act also supports the conclusion, which we have reached hereinbefore. 28. It has been observed by the Hon'ble Supreme Court in K.P. Varghese v. ITO [1981] 131 ITR 597/7 Taxman 13 that "it is well recognized rule of construction that a statutory provision must be so construed, if possible that absurdity and mischief may be avoided." 29. The argument of the counsel for the appellant if taken to its logical end would mean that even in cases where the appeal arising out of the completed assessment has been decided by the CIT(A), ITAT and the High Court, on a notice issued under Section 153A of the Act, the AO would have power to undo what has been concluded up to the High Court. Any interpretation which leads to such conclusion has to be repelled and/or avoided as held by the Hon'bl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....com Pvt. Ltd. 25,10,000/- 30-10-2006 89,00,000/- Sitaram NIL 01-02-2007 71,00,000/- Govindi Bai 21,50,000/- 2,12,50,000/- 18. It was submitted that the A.O. issued a show cause notice asking the assessee company to explain why the cash payments should not be disallowed for violation of provisions of section 40A (3) of I.T. Act, 1961. The assessee company furnished its explanation which is reproduced in para 5.4 of assessment order. The A.O. however held the explanation as unacceptable for the following reasons: (i) The legislature has laid down out a few conditions, in Rule 6DD of Income-tax Rules, under which no disallowance can be made u/s 40A(3), but the assessee has not put forward any of such condition in its submission. (ii) The assessee has submitted that land has been purchased from farmers who demand payment in cash, but no any such evidence has been furnished by the assessee in support of its submission. (iii) Out of total cash payments, Rs. 53 lacs have been paid in cash to one company M/s. N.R. Buildcom Pvt. Ltd. while the assessee is submitting that cash payments have....
X X X X Extracts X X X X
X X X X Extracts X X X X
....year) in the year under consideration but the entire 'expenditure' of said stock-in-trade was carried forward to next accounting year as opening stock. This position of facts has been accepted by Ld. A.O. in assessment order as no such receipts of business has been assessed in assessment order. In order to invoke provisions of section 40A(3), the amount of 'expenditure' incurred in cash must be claimed as expenditure either while working gross profit or while working net profit. It is where a claim for allowance of expenditure is made in computing business income of the year then there could be any disallowance out of the expenditure. There cannot be disallowance of expenditure only without any claim of allowance of expenditure having been made. The legal view is fully supported with the judgement in case of Saral Motors & General Finance Ltd. Vs. ACIT Cir-2, Meerut (2009) 121 ITD 50 (Delhi) and decision of ITAT, Jaipur Bench, Jaipur in case of Salasar Overseas P. Ltd. vs. ACIT. It is thus submitted that Ld. A.O. has wrongly invoked provisions of Section 40A (3) in case of assessee company. 20. It was further submitted that the object of the provisions of section 40A(3) is to ch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hary & Co. (1996) 217 ITR 431, 433 (All), it was held that where the seller has insisted on cash payment and the payment was genuine disclosing the identity of seller, the provisions of section 40A (3) cannot be invoked. The similar views have been held by various High Courts and various Benches of the Tribunal including the Jaipur Bench which supports the case of assessee. In view of the above legal position, the provisions of section 40A(3) cannot be invoked. 21. It was further submitted that on exactly same issue having same facts the Jaipur Bench in case of Ace India Abodes Ltd. Vs. ACIT, CC-2, Jaipur (ITA No. 79/JP/2011 order dated 4-8-11), decided the issue in favour of assessee on both of above counts and held as under :- "In view of the above facts and circumstances, we hold that since assessee has not claimed any expenditure, therefore, no disallowance can be made during the year under consideration." "In this case also it has been held that where payment has been made in villages, the provisions of section 40A(3) cannot be applied." As the facts of the case and position of law are same in the case of assessee company, the issue raised in ground of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0-2006 27,90,000/- N.R. Buildcom P.Ltd. 11-10-2006 55,00,000/- 11-10-2006 25,10,000/- M/s N.R. Buildcom P. Ltd. 01-02-2007 21,50,000/- Govind Bai 31-01-2007 22,00,000 Total 2,12,50,000 2,15,00,000/- 24. It was further submitted that after introduction of section 40A(3), certain exceptions were allowed to be provided by way of delegated legislations. Accordingly, Rule 6DD was notified in the year 1969 setting out the exceptions. The Hon'ble Jurisdictional Rajasthan High Court in the case of Harshila Chordia vs. ITO 298 ITR 349 has held that list of exceptions provided under rule 6DD is not exhaustive. Meaning thereby that more could be read into it, if the same does not violate the reason for which section 40A(3) was introduced. Thus, the contention of AO and ld. CIT(A) that the appellant was unable to specify under which clause of Rule 6DD its case fall is not correct. 25. Lastly, reliance was placed on the Hon'ble Supreme Court decision in case of Attar Singh Gurmukh Singh vs ITO reported in 59 taxmann.com 11 and the decision of the Coordinate Bench in case of M/s Daga Roya....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aj) and Fakri Automobiles v. CIT [1986] 160 ITR 504 (Raj) and the relevant findings read as under: "8. As to the second question, it may be stated that the word 'expenditure' has not been defined in the Act. It is a word of wide import. Section 40A(3) refers to the expenditure incurred by the assessee in respect of which payment is made. It means all outgoings are brought under the word 'expenditure' for the purpose of the section. The expenditure for purchasing the stock-in-trade is one of such outgoings. The value of the stock-in-trade has to be taken into account while determining the gross profits under section 28 of the Act on principles of commercial accounting. The payments made for purchases would also be covered by the word 'expenditure' and such payments can be disallowed if they are made in cash in the sums exceeding the amount specified under section 40A(3). We have earlier observed that rule 6DD has to be read along with section 40A(3). The rule also contemplates payments made for stock-in-trade and raw materials. This rule is in accordance with the terms of section 40A(3). The rule provides that an assessee can be exempted from the req....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "18. We have heard the rival contentions and perused the material available on record. It would be relevant to refer to the provisions of section 40A(3) of the Act which reads as under: "(3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure. (3A) Where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year (hereinafter referred to as subsequent year) the assessee makes payment in respect thereof, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, the payment so made shall be deemed to be the profits and gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds twenty thousand rupees: Provided that no disallowance shall be made and n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt referring to the provisions of section 40A(3) and Rule 6DD and in particular, Rule 6DD(j), as existed at relevant point in time, has held as under:- "6. As to the validity of section 40A(3), it was urged that if the price of the purchased material is not allowed to be adjusted against the sale price of the material sold for want of proof of payment by a crossed cheque or crossed bank draft, then the income-tax levied will not be on the income but it will be on an assumed income. It is said that the provision authorizing levy tax on an assumed income would be a restriction on the right to carry on the business, besides being arbitrary. 7. In our opinion, there is little merit in this contention. Section 40A(3) must not be read in isolation or to the exclusion of rule 6DD. The section must be read along with the rule. If read together, it will be clear that the provisions are not intended to restrict the business activities. There is no restriction on the assessee in his trading activities. Section 40A(3) only empowers the Assessing Officer to disallow the deduction claimed as expenditure in respect of which payment is not made by crossed cheque or crossed bank ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tivities and restraint so provided are only intended to curb the chances and opportunities to use or create black money and the same should not be regarded as curtailing the freedom of trade or business. The Hon'ble Supreme Court has thus laid great emphasis on the intention behind introduction of these provisions and it would therefore be relevant to examine whether in the present case, there is any violation of such intention and if ultimately, it is determined that such intention has been violated, then certainly, the assessee deserves the disallowance of the expenditure so claimed. 24. The Hon'ble Supreme Court referring to the provisions of section 40A(3) as existed at relevant point in time which talks about considerations of business expediency and other relevant factors and Rule 6DD(j) which provides for the exceptional or unavoidable circumstances and the fact that the payment in the manner aforesaid was not practical or would have caused genuine difficulty to the payee and furnishing the necessary evidence to the satisfaction of the Assessing Officer as to the genuineness of the payments and the identity of the payee has held that: "The terms of section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent, disallowance under section 40A(3) was increased from 20% to 100%, however, Rule 6DD(j) was not reintroduced in original form to provide for exceptional and unavoidable circumstances rather it was restricted to payment by way of salary to employees and thereafter, by virtue of lastest amendment in year 2008 to payments made on a day on which the banks were closed on account of holiday or strike. 27. We do not believe that by virtue of these amendments, the legal proposition so laid down by the Hon'ble Supreme court regarding consideration of business expediency and other relevant factors has been diluted in any way. At the same time, we also believe that Rule 6DD as amended are not exhaustive enough and which visualizes all kinds and nature of business expediency in all possible situations and it is for the appropriate authority to examine and provide for a mechanism as originally envisaged which provides for exceptional or unavoidable circumstances to the satisfaction of the Assessing officer whereby genuine business expenditure should not suffer disallowance. 28. Further, the Courts have held from time to time that the Rules must be interpreted in a manner s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as exhaustive of exceptional circumstances. The Hon'ble High Court observed that the Tribunal has erroneously assumed that enumeration of instances in the circular in which the provisions of clause (j) under rule 6DD would operate to be exhaustive of such circumstances and had not been properly understood its implication. It was further observed by the Hon'ble High Court that primary object of enacting section 40A(3) in its original incarnation was two-fold, firstly, putting a check on trading transactions with a mind to evade the liability to tax on income earned out such transaction and, secondly, to inculcate the banking habits amongst the business community. The consequence which was provided was to disallow of deduction of such payments/expenses which were not through bank either by crossed cheques or by demand draft or by pay order. It was further held by the Hon'ble High Court that: "......Apparently, this provision was directly related to curb the evasion of tax and inculcating the banking habits. Therefore, the consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the Act. 33. In case of Anupam Tele Services v. Income Tax Officer, the matter which came up for consideration before the Hon'ble Gujarat High Court, the facts of the case were that the assessee who is involved in the business of distribution mobile and recharge vouchers of Tata Tele Services Ltd had made payment of Rs. 33,10,194/- to Tata Tele Services Ltd., by cash on different dates. The assessee had made such payment through account payee cheques till 22nd Aug, 2005, when a circular was issued by Tata Tele Services Ltd., requiring the appellant to deposit cash at the company's office at Surat. In that factual background , the Hon'ble High Court held as under:- "17. Rule 6DD of the IT Rules, 1962 provides for situations under which disallowance under s. 40A(3) shall not be made and no payment shall be deemed to be the profits and gains of business or profession under the said section. Amongst the various clauses, cl. (j) which is relevant, read as under: (j) where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike; 18. It could be appreciated that s. 40A and in particular sub-c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tity of the payee were in any case doubted. These were the conclusions on facts drawn by the CIT(A). The Tribunal also did not disturb such facts but relied solely on r. 6dd(j) of the rules to hold that since the case of the assessee did not fall under the said exclusion clause nor was covered under any of the clauses of r. 6DD, consequences envisaged in s. 40A(3) of the Act must follow. 22. In our opinion, the Tribunal committed an error in coming to such a conclusion. We would base our conclusions on the following reasons: (a) The paramount consideration of section 40A(3) is to curb and reduce the possibilities of black money transactions. As held by the Supreme Court in Attar Singh Gurmukh Singh (supra), section 40A(3) of the Act does not eliminate considerations of business expediencies. (b) In the present case, the appellant assessee was compelled to make cash payments on account of peculiar situation. Such situation was as follow- (i) the principal company, to which the assessee was a distributor, insisted that cheque payment from a co-operative bank would not do, since the realization takes a longer time; (ii) the assessee was, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that rule 6DD(j) is not exhaustive of the circumstances in which the proviso to section 40A(3) is applicable and it only illustrative. The Hon'ble High Court refers to the decision of the Hon'ble Rajasthan High Court in case of Smt. Harshila Chordia v. ITO (Supra) and the decision of Hon'ble Supreme Court in case of Attar Singh Gurmukh Singh v. ITO (Supra). The High Court further observed that the ld. CIT(A) has given a finding that the identity of the payee i.e. vendors in respect of land purchase by the appellant was established, the sale deeds were produced, the genuineness thereof was accepted and the amount paid in respect of each of these agreement was satisfied before the Stamp Registration Authority and the transactions were held to be genuine and the bar against the grant of deductions u/s 40A(3) of the Act was not attracted. The Hon'ble High Court further observed that the Tribunal did not upset these findings including as to the genuineness and the correctness of the transactions and it is also important to note that the Tribunal noted the contention on behalf of the appellant that there was a boom in the real estate market and therefore it was necessary, therefore, to....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n'ble Rajasthan High Court referring to the intent behind introduction of section 40A(3) and catena of decisions right from Attar Singh Gurmukh Singh, Smt. Harshila Chordia, Gurdas Garg, Anupam Tele Services referred supra has decided the issue in favour of the assessee and against the department. 39. The issue which is being disputed before us has to be considered and decided in light of facts on record and the legal position which emerges from the above referred decisions. The facts of the case are that during the year under consideration, the assessee firm has purchased 26 pieces of plot of land in the month of April and May, 2012 from various persons for a total consideration of Rs. 2,46,28,425/-, out of which payment amounting to Rs. 1,71,67,000/- were made in cash to various persons, payment amounting to Rs. 59,48,920/- were made in cheque to various persons, and Rs. 8,15,700/- and Rs. 6,84,296/- were paid in cash towards stamp duty and court fee respectively. During the course of assessment proceedings, the assessee submitted copies of the sale deed, the particulars of which find mention on page 7 and 8 of the assessment order. On perusal of the said details, it is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0,00 18,00,000 18,00,000 5,07,00 9-Apr-12 - 9,00,000 9,00,000 27,00,000 9-Apr-12 21,93,000 3,34,000 11-Apr-12 - 2,00,000 2,00,000 29,00,000 11-Apr-12 3,73,000 3,34,000 12-Apr-12 - - - 29,00,000 - - 3,34,000 13-Apr-12 - - - 29,00,000 - - 11,97,100 19-Apr-12 - 30,00,000 30,00,000 59,00,000 23-Apr-12 21,36,900 11,57,000 24-Apr-12 30,00,000 25,00,000 55,00,000 1,14,00,000 24-Apr-12 55,40,100 11,57,000 25-Apr-12 - - - 1,14,00,000 - - 11,57,000 30-Apr-12 - - - 1,14,00,000 - - 11,57,000 4-May-12 - - - 1,14,00,000 - - 11,57,000 7-May-12 - - - 1,14,00,000 - - 11,57,000 8-May-12 19,00,000 23,00,000 42,00,000 1,56,00,000 8-May-12 38,55,000 15,02,000 12-May-12 - - - 1,56,00,000 - - 15,02,000 14-May-12 - - - 1,56,00,000 - - 15,02,000 15-May-12 - - - 1,56,00,000 - - 15,02,000 16-May-12 - 15,00,000 15,00,000 1,71,00,000 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the lower authorities and have not been disputed by them. It is not the case of the Revenue either that unaccounted or undisclosed income of the assessee has been utilised in making the cash payments. 43. In the entirety of facts and circumstances of the case and respectfully following the legal proposition laid down by the various Courts and Coordinate Benches referred supra, we are of the view that the identity of the persons from whom the various plots of land have been purchased and source of cash payments as withdrawals from the assessee's bank account has been established. The genuineness of the transaction has been established as evidenced by the registered sale deeds and lastly, the test of business expediency has been met in the instant case. Further, as held by the Hon'ble Rajasthan High Court in case of Harshila Chordia (supra), the consequences, which were to befall on account of non-observation of sub- section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A(3) h....