TaxTMI 
TaxTMI 
2023 (9) TMI 1076
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....opened the assessment u/s. 147 of the I.T. Act by recording the following reasons. "The assessee company filed a return of income admitting the Total income at Rs. 64,31,217/- on 18.01.2011 belatedly. Even though the assessee was having taxable income, it had not filed its return of income either u/s. 139(1) or 139(4), the income chargeable to tax has escaped assessment. Further, as per intimation received from the DDIT (Inv.), Unit-II(1), Bangalore vide letter No. DDIT (Inv.)/U-II(1)/AAFCA0724R/11-12, Dt. 12.05.2011 and as per assessee's own admission (MD's sworn statement) the company made huge cash payments in excess of Rs. 20,000/- in connection with development of housing plots at Bangalore which attracts provisions of section 40A(3). The cash payment according to the sworn statement are Rs. 1.50 crores. For the above reasons, the Assessing Officer forming opinion that the income chargeable to tax had escaped assessment and had issued notice u/s. 148." 3. Accordingly notice u/s. 148 of the I.T. Act was issued to the assessee on 19.05.2011 which was served on 23.05.2011. However, there was no response from the side of the assessee to the said notic....
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....ly made payments to landlords being i.e. Sri B.V. Sampath and family members as under, over a period of time:- S. No. Financial Year Amount (Rs.) 1 2005-06 20,00,000.00 2 2006-07 1,03,47,000.00 3 2007-08 4,42,60,500.00 4 2008-09 1,30,45,000.00 Total 6,96,52,500.00 Out of said payment of Rs. 6,96,52,500/-, an amount of Rs. 6,75,83,000/- has been reportedly debited in the P&L account of the appellant as amount paid towards purchase of land and the balance amount of Rs. 20,69,500/- has been shown as advance. The entire payments were reportedly made through cheques and they were reflected in the books of account of the appellant and debited towards purchase of land. 7.3 Out of the total 342 sites, the appellant sold 160 sites measuring about 2.50 lakh sft. Thereafter, it appears that differences have crept in between the appellant and the landlords and the balance plots were taken over by the landlords. 8. Coming to the adjudication of the issue, it is seen that the AO relied upon the sworn statement of Sri M. Ramachandra Reddy, MD of the company given before the DDIT(Inv)/ Bangalore, as the sole ba....
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....d Townships Private Limited. No amount was spent by Shri B.V. Sampath. As regards the details of the customers, we do have the copies of the sale deeds which were executed at Bangalore. However, they were sent to Hyderabad for finalisation of audit. As regards cash received from customers the same is entered in the sale deed. Mr. B. V. Sampath would have received about Rs. 1.50 Crores. Also there are transactions which were directly handled by Shri B. V. Sampath for which too he has received the considerations in cash. The quantum of such direct transactions by Shri B. V. Sampath would be Rs. 2 crores to Rs. 4 crores. As regards the quantum of cash received by Shri B. V. Sampath it should be around one crore fifty lakhs. He has also sold sited out of the layout formed directly without our knowledge. " 8.1 From the above, it is evident that the MD of the appellant company merely mentioned that Sri B.V. Sampath sold sites of the layout formed directly without the appellant's knowledge and in this context of direct sale of sites by Sri B.V. Sampath, the quantum of direct transactions by Sri B.V. Sampath would be Rs. 2 to 4 crores. It can be seen that what all stated by th....
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....umentary, has been brought on record by the AO that in fact the said cash payments were made by the appellant company to Sri B.V. Sampath and family members, which are reflected in the Books of Ale of the appellant. In view of the above, the impugned disallowance of Rs. 1.50 crores u/s 40A(3) is deleted and the Grounds No.2 & 3 of appeal are allowed. 5. Aggrieved with such order of the Ld.CIT(A), the revenue is in appeal before the Tribunal by raising the following grounds of appeal. 1. The order of the learned CIT(A) is erroneous on facts as well as in law. 2. The Ld.CIT(A) erred in deleting the disallowance of Rs. 1,50,00,000/- made by invoking provisions of sec. 40A(3) of the I.T. Act. 3. The Ld.CIT(A) failed to take into cognizance the findings arrived in the remand report furnished by the AO. 4. The appellant craves to add, delete, substitute and amend any ground of appeal before and/or at the time of hearing of the appeal. 6. The ld. DR strongly relied on the order of the AO. 7. The ld.counsel for the assessee on the other hand heavily relied on the order of the ld.CIT(A) and submitted that since the ld.CIT(A) has deleted the addit....
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....ut of the layout formed directly without our knowledge. " 8.2 From the above it is seen that the assessee nowhere stated that he has paid an amount of Rs. 1.50 crore to Shri B.V. Sampath. 8.3 We find during the remand proceedings the books of accounts were produced before the AO according to which all the payments made to the landlords were paid by cheque. 9. We find the AO at para 7 of the remand report has given the following observation:- 7. On verification of copies of books of accounts furnished during the course of remand proceedings, in spiral binding for the FY 2007-08 the cash expenses incurred in cash as detailed in Annexure within the meaning of section 40A(3) i.e payments made in cash over and above Rs. 20,000/- was quantified at Rs. 17,15,165/- for site expenses and other expenses. Hence, the addition made u/s. 40A(3) to the extent of 17,15,165/- may be sustained. It is also pertinent to mention that the payments made to individuals is quantified at Rs. 1,23,94,796/-. In the absence of any explanation the expenses incurred Rs. 20,000/- and above quantified at Rs. 17,15,165/- is disallowable u/s. 40A(3) of the I.T. Act. Apart from this, the assessee co....