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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI DUVVURU R.L. REDDY & Dr. M.L.MEENA
आदेश / O R D E R PER M.L.MEENA, ACCOUNTANT MEMBER:
The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-7, Chennai, in 16 dated 31.03.2019 for the AY 2012-13.
The grounds raised by the assessee are as under:
The order of the Commissioner of Income Tax (Appeals) -7, Chennai dated 31.03.2019 in I.T.A.No.91(T-14)/CIT(A)-7/2015-16 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case.
2. The CIT (Appeals) erred in sustaining the addition of Rs.25 Lakhs related to the property transactions/being the advance paid for purchase of property on the application of section 40A(3) of the Act in the computation of taxable total income without assigning proper reasons and justification.
The CIT (Appeals) failed to appreciate that the provisions of section 40A(3) of the Act had no application to the facts of the case and ought to have appreciated that having established the genuineness of the transaction, the proviso below section 40A(3A) of the Act would fortify the plea for deleting the wrong addition made in the computation of taxable total income.
4. The CIT (Appeals) failed to appreciate that the decisions cited in support were completely ignored and ought to have appreciated that there was no application of mind to the facts furnished in rendering decision mechanically confirming the order of the Assessing Officer. 5. The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 6. The Appellant craves leave to file additional grounds/arguments at the time of hearing.
Apropos, Ground No.5, the assessee has challenged the impugned order on account of violation of principles of natural justice as there was no proper opportunity granted to the assessee.
3. The issue disputed pertains to disallowance of claim of advance payments made in cash towards purchase of property under section 40A (3) of the IT Act, aggregating to Rs.25 lakhs. The Ld. CIT(A) has noted that the amount disputed was claimed to be paid on account of business expediency and commercial consideration on the request and necessity of the seller of the land. Although, the Ld. CIT(A) has observed that the impugned cash transaction occurred on account of the advance payment of Rs.25 lakhs by cash against land purchase. However, he has not substantiated how the assessee has failed to establish that such a cash payment in the form of cash was made out of commercial considerations and in the business expediency and how it was not covered within the exception clauses to the provisions of section 40A(3) while coming to the conclusion as most of the business transactions have been routed through
3 :: banking channel, of course, the said transactions are not an exception. Further, while taking an adverse view against the assessee, the Ld.CIT(A) has not granted opportunity to the assessee by way of issuance of show cause notice. Thus, in our view, the assessee has been denied an opportunity of being heard in view of the principles of natural justice.
In the light of these facts, we are of the view that CIT(A) has not afforded proper opportunity of being heard to the assessee. We, therefore, set aside the order of the CIT(A) and restore the matter back to his file with the direction to adjudicate the matter afresh on merit after affording adequate opportunity of being heard to the assessee and considering the documentary evidence to be produced in the course of proceedings. No doubt, the assessee shall cooperate in the fresh proceeding before the CIT(A).