M/S ANSHUL GOYAL LAND & HOUSING LTD.,LUDHIANA vs. DCIT, LUDHIANA

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ITA 157/CHANDI/2012Status: DisposedITAT Chandigarh27 September 2019AY 2008-095 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal admitted fresh evidence (affidavits from sellers) as crucial for the case. The Tribunal set aside the CIT(A)'s order and restored the issue to the CIT(A) for fresh adjudication.

What were the facts?

The assessee made cash payments exceeding Rs. 20,000 for land purchases, violating Section 40A(3). The assessee claimed sellers insisted on cash, but failed to provide evidence before the AO and CIT(A).

What were the issues?

Whether the assessee could prove genuine hardship for making cash payments as per Section 40A(3) of the Income Tax Act, 1961.

Which sections of the Income-tax Act were involved?

Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHANDIGARH

Before: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM

For Appellant: Shri Pankaj Bhalla
Hearing: 18.09.2019Pronounced: 27.09.2019

आदेश/ORDER PER DIVA SINGH

The present appeal has been filed by the assessee wherein the correctness of the order dated 10.01.2012 of CAT(A)-2 Ludhiana pertaining to 2008–09 assessment year is assailed on the following grounds : 1. That The Ld. CIT(A)-II, Ludhiana has erred in passing the order u/s 250(6) of the Income Tax Act, 1961. 2. That The Ld. CIT(A)TI, Ludhiana has also erred in confirming the addition of Rs. 47,54,125/- made u/s 40A(3) of the Income Tax Act, 1961 without any base and reasons thereof 3. That the appellant craves, leave to vary, alter or add any grounds of appeal. 2. A perusal of the record shows that the present appeal was dismissed by the ITAT on the grounds of seeking adjournments frivolously by an order dated 14.03.2018. The assessee had filed a

ITA 157 /CHD/2012 A.Y. 2008-09 Page 2 of 5

Miscellaneous Application No. 246/CHD/2018 praying for a recall

of this order stating that adjournments were sought as Paper Book

for adducing additional evidences could not be filed as

unanticipated delays occurred in obtaining third party evidences

consisting of affidavit of the seller etc. The order dated

14.03.2018 was recalled after hearing the parties on the issue.

Pursuant to the said order, the present appeal has come up for

hearing.

3.

The ld. AR at the time of hearing inviting attention to the

impugned order submitted that on account of the nature of the

evidences required to support the assessee's claim, the assessee

despite seeking time could not make effective representation. The

evidence of affidavits of the sellers insisting that payments be made

in cash could not be easily obtained which is why the assessee even

before the CIT(A) repeatedly sought time. Referring to the

assessment order, it was his submission that the assessee was a

colonizer who has been described as Real Estate Developer by the

AO. The fresh evidences, it was submitted are now available and

the assessee would pray for remand back to the file of the CIT(A).

4.

The ld. Sr.DR objected stating that more than sufficient

opportunities have been provided to the assessee by the CIT(A), as

such the evidence may not be now admitted.

5.

We have heard the rival submissions and perused the material

available on record. It is seen that in the facts of the present case,

ITA 157 /CHD/2012 A.Y. 2008-09 Page 3 of 5

the assessee returned an income of Rs. 70,59,170/-. The assessee

was found to have contravened the provisions of Section 40A(3) of

the Income Tax Act by the AO. The AO put the assessee to notice of

the fact that out of the purchases of land made for Rs.

1,04,57,250/- the assessee had made payments in cash amounting

to Rs. 47,54,125/-. Inviting attention to provisions of Section

40A(3) of the Act, he required the assessee to offer its explanation.

5.1 The assessee as per para 2.3 and 2.4 of order is found to have

canvassed amongst other reasons that the agriculturists had

desired that the payment be made in cash at the time of Registry

and that they were not ready to accept the payments by means of

account payee cheque or demand draft because they were of the

view that in such circumstances they would get the payment after

2-3 days . Relevant extract from the assessment order is

reproduced hereunder for the sake of completeness :

2.4 In this respect, it is submitted that the Agriculturist had desired to make the payment in terms of cash at the time of Registry and they were not ready to accept the payment by means of payee's account cheque or Demand Draft because they were of the view that they will get the payment alter 2-3 days after the execution of Sale Deed………..” 5.2 The assessee is found to have argued that in the

circumstances, he had no alternative but to accept the desire of the

sellers. It is seen that the claim made before the AO was not

supported by way of any evidence. It is seen that the opportunities

before the CIT(A) were also wasted as despite seeking time, the

assessee could not file any supporting evidence. Accordingly, the

ITA 157 /CHD/2012 A.Y. 2008-09 Page 4 of 5

appeal of the assessee was dismissed ex-parte by the said authority holding as under :

5.

I have gone through the contention of the-appellant's counsel and also perused the findings of the AO. Since, the appellant failed to produce any submission/documentary evidence in support of his claim that the addition made by the AO is without any base, I do not find infirmity with the order of the AO and confirmed his findings that there was no genuine hardship before the appellant for making the payment in cash instead of a/c payee cheque or demand drafts. Thus, the case of the appellant clearly falls within the ambit of the provisions of Section 40A(3) of the Act, the contention raised by the appellant is therefore dismissed. 6. In the result, the appeal of the appellant is dismissed.” 5.3 We find that in these peculiar facts, the Affidavits of the

sellers presumably insisting on cash payments constitute

necessary and relevant evidences for determining the issue. We

agree with the Sr. DR’s submissions that the CIT(A) has afforded

sufficient opportunities, however looking at the nature of evidences

mustered, we agree that these could not have been readily

available. The assessee after purchasing the land admittedly had

no need to stay in touch with the sellers and even otherwise, had

no authority to command the filing of Affidavits. Time to trace and

persuade the sellers to truthfully dispose what transpired in these

peculiar circumstances, cannot be held to be arbitrarily sufficient

or insufficient. Accordingly, holding that the evidence is necessary

and crucial for determining the issues, the evidence is admitted.

In the light of the above mentioned peculiar facts and

circumstances, accepting the prayer of the ld. AR, the impugned

order is set aside restoring the issues back to the file of the CIT(A)

directing the assessee to place full facts and evidences in support

ITA 157 /CHD/2012 A.Y. 2008-09 Page 5 of 5

of its claim before the said authority which is stated to be readily

available. It is made clear that the opportunity so provided in good

faith shall not be abused. In the eventuality of abuse of the trust

reposed, it is made clear that the CIT(A) shall be at liberty to pass

an order on the basis of the material available on record. Said

order was pronounced in the Open Court at the time of hearing

itself.

6.

In the result, the appeal of the assessee is allowed for

statistical purposes.

Order pronounced in the Open Court on 27th September,2019.

Sd/- Sd/- ( अ�नपूणा� गु�ता ) ( �दवा �संह ) (ANNAPURNA GUPTA) (DIVA SINGH) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member “Poonam” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��यथ�/ The Respondent 2. आयकर आयु�त/ CIT 3. आयकर आयु�त (अपील)/ The CIT(A) 4. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड� फाईल/ Guard File 6.

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

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