TaxTMI 
TaxTMI 
2021 (9) TMI 773
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....stances of the case, the Tribunal was right in holding that the disallowance made under Section 40(A)(3) amounting to Rs. 3.93 crores is to be allowed? and 2. Whether the Tribunal was right in upholding the action of the CIT(A), towards land development expenses amounting to Rs. 12.13 crores is to be allowed even though the assessee failed to produce any evidence in support of such claim?" (ii) TCA.Nos.570 & 571 of 2015 (admitted on 01.9.2015 ): "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the disallowance made under Section 40A(3) amounting to Rs. 22.56 lakhs is to be allowed? and 2. Whether the Tribunal was right in upholding the action of the CIT(A), towards land development expenses amounting to Rs. 9.84 crores is to be allowed even though the assessee failed to produce any evidence in support of such claim?" (iii) TCA.Nos. 994 & 995 of 2019 (admitted on 17.12.2019) : "(i) Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the assessing officer cannot initiate proceedings under Section 153A of the I.T.Act, where there w....
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....d the addition made u/s.40A(3) of the Act was correct, in spite of the fact that many payments have been made by cheque also and both the assessee and the sellers had bank accounts and the assessee has been resorting to cash payments as per his convenience? 3. Whether on the facts and the circumstances of the case, the ITAT was correct in law, in deciding that the additions are not based on incriminating materials without appreciating that these additions are based on solid evidences found during search proceedings? and 4. Whether on the facts and the circumstances of the case, the ITAT was justified in deleting the addition in respect of the receipts from Kannagapattu land purchased from Smt.D.Sangupathi and M/s.SSD Homes & Estate Developers P limited later transferred to the assessee as advances which ought to have been accounted for sales but has been classified under advances?" 4. We have heard Mr.T.R.Senthil Kumar, learned Senior Standing Counsel assisted by Mrs.K.G.Usharani, learned Junior Standing Counsel appearing for the appellant-Revenue and Mrs.Pushya Sitaraman, learned Senior Counsel appearing for Mr.R.Murali, learned counsel for the respondent-asse....
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....ards land development cost. In addition, on verification of the documents, it came to light that a part of the expenses was made through self made vouchers incurred in cash and that the assessee did not deduct tax at source in respect of that portion of the payments. In furtherance of it, cash expenses to the tune of Rs. 39,08,78,254/- was accounted to self made debit vouchers, which only contained the amount paid and the signature of the recipient and it did not contain the address of the party. The assessee also claimed a total cash payment of Rs. 39,08,78,254/- during the relevant year namely AY 2007-08 and the average expenses per day were shown as Rs. 10,70,900/-. In the absence of proper documents, the Assessing Officer disallowed a sum of Rs. 6,22,75,902/- towards 20% of the claim of expenditure made in cash and added back to the total income and finally arrived at the assessed income to the tune of Rs. 22,09,77,552/-, completed the assessment by order dated 29.12.2009 and raised a demand to the tune of Rs. 5,68,31,528/-. 9. As against the order of assessment, the assessee filed an appeal before the CIT(A), who, by order dated 18.3.2011, partly allowed the appeal by confi....
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....n 31.3.2016 under Section 143(3) read with Section 153A of the Act, by which, the Assessing Officer confirmed the disallowance of Rs. 10,25,77,251/- sustained by the CIT(A) in the earlier round of litigation on the ground that the assessee effected cash and cheque payments for purchasing the land in Kannagapattu village. 12. Aggrieved by the order of assessment dated 31.3.2016, the assessee filed an appeal before the CIT(A), who allowed it by order dated 03.4.2018. As against the same, the Revenue filed an appeal before the Tribunal, which, by order dated 28.3.2019, dismissed the same. Hence, the Revenue is on appeal before us by filing TCA.No.792 of 2019. AY 2011-12 to 2014-15 : 13. For these assessment years also, the assessments were completed on 31.3.2016 pursuant to the search and seizure operations conducted on 03.9.2013. For the assessment years from 2011-12 to 2013-14, the notices under Section 153A of the Act 29.4.2014 were issued. But, in all the four cases, a notice under Section 142(1) came to be issued. Pursuant to that, the assesssee filed their return of income declaring the income to the tune of Rs. 6,09,19,530/-, Rs. 10,70,23,600/-, Rs. 8,05,82,670/- and R....
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....pment expenses incurred by the respondent/assessee. 19. Since the issue is common for all the aforementioned assessment years, we have examined the order of assessment passed under Section 143(3) of the Act for the assessment year 2007-08 dated 29.12.2009. On appeal by the assessee, the CIT(A), by order dated 18.3.2011, partly allowed the appeal by confirming the disallowance made by the Assessing Officer under Section 40A(3) of the Act and by allowing the claim of the assessee towards development expenses. Aggrieved by that, both the Department as well as the assessee filed two appeals before the Tribunal. The two salient features in the order dated 09.7.2013 passed by the Tribunal are (i) upholding the order passed by the CIT(A) in deleting the disallowance made under Section 40A(3) of the Act and (ii) allowing the claim of the assessee towards land development expenses. 20. The Assessing Officer was of the opinion that the expenditure claimed by the assessee towards land development was highly excessive and bogus. The Assessing Officer examined each of the heads of expenses namely JCB work, bulldozer hire charges, tractor hire charges, land leveling charges, expenses towar....
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....vendors and went by the letter and spirit of Section 40A(3) of the Act that cash payments have been effected beyond the threshold limit and therefore disallowed the same. The assessee preferred an appeal before the CIT(A), who examined the genuineness of the transaction as to whether the assessee would be entitled to claim the benefit of the proviso to Section 40A(3) of the Act. The CIT(A) rejected the finding on the fact that the cash payments were duly recorded in the registered sale deed and they were endorsed by the concerned Sub-Registrar and the total sale consideration was taken into consideration for the purpose of demanding the stamp duty and registration purposes. Therefore, the CIT(A) held that when the Government official namely Registering Authority certified that the payments were actually made to the sellers and when the genuineness of the sale was not doubted, the disallowance under Section 40A(3) of the Act could not be made. The CIT(A) did not agree with the assessee and confirmed the disallowance. 27. The Tribunal tested the correctness of the decision of the CIT(A). The assessee was a builder and developer and the lands purchased by the assessee were in th....
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.... such a situation, the assessee was compelled to pay the amount by cash and that in some cases, the assessee paid the amount by cash on holidays as the vendors had to honour their commitments. 31. The Assessing Officer was not convinced with the explanation offered by the assessee and accordingly disallowed that portion of the payments, which were made by the assessee by cash to the vendors excluding the amounts paid for stamp duty and registration charges. 32. Aggrieved by such an order, the assessee preferred an appeal before the CIT(A). The factual position was explained before the CIT(A), who found that for the payment made in respect of 15 land owners to the tune of Rs. 3,93,00,000/-, the vendors were residents of Kannagapattu Village, that they did not have banking facilities and that the Village Administrative Officer concerned certified that there was no bank in Kannagapattu Village. Hence, the explanation offered by the assessee was accepted and the disallowance to that extent was deleted. With regard to the balance payments namely the payments made to 40 vendors, which were by cash as well as by cheque to the tune of Rs. 10,25,77,251/-, the CIT(A) did not agree with....
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....ent and assigning reasons as to why the disallowance has to be made. 36. Therefore, we are of the view that it is not a case where the CIT(A) passed a cryptic order nor the order passed by the Assessing Officer is without application of mind. The assessee has to be blamed for the same because of not giving a proper explanation/reply to the query raised by the Assessing Officer. In any event, we do not propose to non suit the assessee on the ground that certain details were not furnished in proper form. The assessee would state that certain of the vendors, who did not have bank accounts, could not come out of the village to open up the bank account and after insistence, they had opened the bank accounts and in certain cases, advance was paid to the vendors so as to enable them to keep up various other commitments, to which, they had been fastened. 37. Therefore, while vacating the remarks made by the Tribunal as against the CIT(A) and the Assessing Officer, we remand the matter to the Assessing Officer to consider the genuineness of the stand taken by the assessee in so far as the payments made to the tune of Rs. 10,25,77,251/-, afford an opportunity of personal hearing to the....
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.... (ii) of the Rajasthan High Court in the case of Jai Steel (India) Ltd. Vs. ACIT [reported in (2013) 219 Taxmann 223]; (iii) of the Bombay High Court in the case of CIT Vs. Continental Warehousing Corporation (Nhava Sheva) Ltd. [reported in (2015) 374 ITR 645]; and (iv) of the Delhi High Court in the case of CIT Vs. Kabul Chawla [reported in (2016) 380 ITR 573]. 42. It is pointed out by the learned Senior Standing Counsel that as against the decision of the Delhi High Court in the case of Smt. Amita Garg, the Revenue filed a special leave petition before the Hon'ble Supreme Court, in which, leave has been granted and the matter has been tagged along with Civil Appeal No.14702 of 2015 as reported in (2020) 114 Taxmann.com 552 [PCIT Vs. Devi Dass Garg]. 43. As against the decision of the Bombay High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd., an appeal was filed before the Hon'ble Supreme Court, leave has been granted and the appeal has been directed to be tagged along with Civil Appeal No.8900 of 2012 as reported in (2015) 64 Taxmann.com 34. 44. Further, we note that the same issue was decided against the assessee a....
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....rmed. Since the entire dispute revolves on the factual matrix, we are not expected to substitute our opinion in an appeal under Section 260A of the Act. Thus, we hold that there is no question of law, much less substantial question of law arising for consideration on this issue. 49. Accordingly, on this issue, we dismiss TCA.Nos.792, 991, 994 and 995 of 2019. V. Issue pertaining to addition on account of escapement of sales : 50. This leaves us with only one question to be decided in TCA. No.792 of 2019, which is substantial question of law No.4 framed for consideration. At the risk of repetition, it is extracted as hereunder : "Whether on the facts and the circumstances of the case, the ITAT was justified in deleting the addition in respect of the receipts from Kannagapattu land purchased from Smt.D.Sangupathi and M/s.SSD Homes & Estate Developers P limited later transferred to the assessee as advances which ought to have been accounted for sales but has been classified under advances?" 51. We have carefully considered the submissions made by the learned counsel on either side. On perusal of the order passed by the CIT(A) dated 03.4.2018, it is seen that the C....