TaxTMI 
TaxTMI 
2025 (9) TMI 1670
X X X X Extracts X X X X
X X X X Extracts X X X X
....led by the assessee on 27.09.2015, declaring a loss of Rs. 27,78,683/-. The case of the assessee was selected for limited scrutiny under CASS. The Assessing Officer (AO) issued statutory notices to the assessee calling for details of transactions entered into by the assessee. The assessee filed details, vide letter dated 20.11.2017, from which it was noticed by the AO that during the year under consideration, the assessee's stock-in-trade included three properties purchased during the year, amounting to Rs. 27,34,800/- and the mode of payment was cash. The AO, therefore, disallowed the amount of Rs. 27,34,800/- spent by the assessee for purchase of land in cash under section 40A(3) of the Income Tax Act, 1961 (hereinafter called "the Act') ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in law and on facts in confirming the addition of Rs. 27,34,800/- u/s 40A(3) of the Income-tax Act, made by the Assessing Officer on the ground that the assessee had made cash payment for purchase of immovable properties in excess of limit specified under the said provisions of the Act. 4, BECAUSE while upholding the addition of Rs. 27,34,800/- the Id. "CIT(A)" failed to appreciate that the provisions of section 40A(3) of the Act are not attracted in the present case as the immovable properties purchased by the assessee during the year by making cash payment of Rs. 27,34,800/- remained in the closing stock and no deduction of the said amount was claimed by the assessee while computing the total income for the assessment year under ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sed by the ld. "CIT(A)" is based on presumption, surmises and conjectures and without considering the facts and circumstances of the case and law applicable thereto. 10. BECAUSE the order appealed against is contrary to facts, law and principles of natural justice. 11. BECAUSE each ground taken in appeal is mutually exclusive and without prejudice to each other. 12 The appellant craves leave to add, delete or modify any of the grounds before or at the time of hearing of appeal. 3.0 The Ld. Authorized Representative for the assessee (Ld. A.R.) submitted that the AO has disallowed payment made for the purchase of land in cash by invoking the provisions of section 40A(3) of the Act read with Rule 6DD of the Income....
X X X X Extracts X X X X
X X X X Extracts X X X X
....only illustrative. The Ld. A.R. placed reliance on numerous judicial precedents being orders of various Benches of the Tribunal as well as the Hon'ble Apex Cour, wherein relief had been allowed to the assessee vis-à-vis disallowance made under section 40A(3) of the Act. These judicial precedents have been included by the assessee in the paper book submitted by the assessee and are as under: 1. Vikrant Happy Homes (P.) Ltd. vs. DCIT reported in [2022] 138 taxmann.com 559 (ITAT, Pune). 2. Vijayeta Buildcon (P.) Ltd. vs. ACIT reported in [2021] 123 taxmann.com 133 (ITAT, Jaipur). 3. A. Daga Royal Arts vs. ITO reported in [2018] 94 taxmann.com 401 (ITAT, Jaipur). 4. ITO vs. Standard Leather (P.) Lt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty that the purchase of these lands were vital for the purpose of business of the assessee but since the sellers had insisted for payments in cash only, on account of business expediency, the assessee had no other option but to make payment for purchases in cash after withdrawing the amount from the bank accounts. It was submitted that the sellers' names and addresses were fully disclosed in the Sale Deeds and the sellers were also identified by their Voter IDs. It was further explained that the cash was handed over in front of the concerned Sub-Registrars and the same was also evident from the Sale Deed itself, wherein it had been specifically mentioned that the sellers had obtained consideration in cash at the time of execution of the Sal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e reasons why the impugned payments were made in cash. The Hon'ble Apex Court in the case of Attar Singh Gurmukh Singh vs. ITO (supra) has observed that Rules must be interpreted in a manner so as to advance and not to frustrate the object of the Legislature. The Hon'ble Apex Court further observed that given that there has been no change in the provisions of section 40A(3) of the Act, insofar as the consideration of business expediency and other relevant factors are concerned, the same continues to be relevant factors which needs to be considered and taken into account while determining the exceptions to the disallowance as contemplated in section 40A(3) of the Act so long as the intention of the Legislature is not violated. It was....