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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI S.S.GODARA, JM & SHRI DR. DIPAK P. RIPOTE, AM
आदेश / ORDER PER S. S. GODARA, JM :
This Revenue’s appeal for A.Y. 2009-10 is directed against the CIT(A) - 2, Thane’s order dated 29/08/2019 passed in case No. 440/2015-16 involving proceeding u/s. 143(3) of the Income Tax Act, 1961 ; in short “the Act”. Heard both the parties. Case file perused.
Coming to the Revenue’s sole substantive ground that the CIT(A) has erred in law and on facts in reversing the assessment findings invoking section 40A(3) disallowance of cash payment to farmers/ vendors amounting to Rs.1,85,32,450/-, we find that lower appellate discussion to this effect reads as follows:- CIT(A) 5 TO 5.1 PAGE 8 TO 10 “5. I have carefully considered the facts of the case, findings of the A.O. in the Assessment Order, submissions of the Appellant and material placed on record. During the course of Appellate Proceedings, the Appellant has stated that he was operating as a liaison agent for M/s Samira Habitats India Ltd and its group-entities for acquiring lands in and around Alibaug. I find that this has been accepted by the Appellant in the statement recorded by him during the course of Survey conducted on M/s Samira Habitats India Ltd. He has accepted that he had received a sum of Rs. 2,36,35,000/- in cash from M/s Samira Habitats India Ltd in the same statement. During the course of Survey Proceedings, the Appellant has also produced receipts of Rs. 25,00,000/- paid to one party. It is also seen that the Appellant has stated that he was paid by M/s Samira Habitats India Ltd Group as a facilitator for acquisition of land @ Rs. 10,000/- per guntha. These facts have not been controverted by the Assessing Officer or the Investigation Wing. During the course of Assessment Proceedings, the Appellant gave details of other parties to whom he had paid payments and the same have been supported by affidavits confirmation from these parties. It is seen that these are the parties from whom M/s Samira Habitats India Ltd has finally purchased lands. Moreover, M/s Samira Habitats India Ltd has also given a confirmation, stating that the Appellant was paid Rs. 2,36,35,000/- in cash for acquisition of various lands and Rs 1,85,32,450/- have been paid by the Appellant to various parties. The A.O. has not examined either M/s Samira Habitats India Ltd or the parties from whom land was purchased and proof of these payments were given by the Appellant during the course of Assessment Proceedings. The Appellant has claimed that he was just a facilitator of land and his commission was Rs. 10,000/- per guntha. The cash given by M/s Samira Habitats India Ltd was distributed to the various parties and the receipts of the same have been obtained and one receipt was also shown during the course of Survey Proceedings. The Appellant, during the course of statement recorded in the Survey in Question No. 5, has stated and the same has been accepted that he was receiving commission for facilitating M/s Samira Habitats India Ltd in land dealing at Raigad. The same is stated as under: "Q5. Please state the amount of commission you have got for facilitating M/S Samira Habitats India Limited in the land dealing at Nagaon. Please also state that there is any amount of cash paid by M/s Samira Habitats India Limited to land owners/farmers during the purchase of land. If so, also state the quantum of payment made by M/s Samira Habitats India Limited to the concerned land owners/brokers. Ans. Sir, I confirm that I have facilitated M/s Samira Habitats India Limited in the land dealing at Sogaon. The entire amount of consideration which was to be paid through cheque has been directly paid to concerned owners/farmer through my account. The company used to give the cash portion of the consideration to me to hand over the amount to concerned farmers. As per terms and conditions laid down during the negotiation, I kept Rs. 10,000/- per guntha and I used to give balance amount to concerned owners/farmers. The same amount I used to charge from the company i.e. Rs. 10,000/- per guntha. The details of the gut numbers and the commission for the same are depicted as under.
Sr Gut No Commission Approx. value of Amount paid to FY No received in consideration farmers/owners cash from paid in cash company as (Amount in Rs.) well as owner / farmer 1 20 1104000 3505000 2953000 2008-09 2 22 340000 1080000 910000 2008-09 3 24 422000 1340000 1129000 2008-09 4 36 1850000 5873000 4948000 2008-09 5 28/1 690000 2191000 1846000 2008-09 6 28/2 90000 286000 241000 2008-09 7 18 250000 795000 670000 2008-09 8 34 310000 985000 830000 2008-09 9 16 622000 1975000 1664000 2008-09 10 26 30000 955000 805000 2008-09 11 27 422000 1340000 1129000 2008-09 12 13 422000 134000 1129000 2008-09 13 14 40000 1270000 1070000 2008-09 14 21 220000 700000 590000 2008-09 Total 7442000 23635000 16193000 2008-09
Further, I confirm that the amount referred in column 3 of the above table represents the amount of commission received in cheque against my PAN ACUPA6541N”
5.1 It is, however, seen in the statement that the Appellant had received commission of Rs.72,42,000/- and has paid Rs. 1,61,93,000/- to the farmers out of Rs.2,36,35,000/- received. During the course of Appellate Proceedings, the Appellant has contended that the amount paid to the farmers was Rs.1,85,32,450/- which was the amount shown to be paid even during the course of Assessment Proceedings. However, the Assessing Officer has accepted that Rs.1,85,32,450/- was the amount paid to the farmers and he has disallowed the same u/s 40A(3) of the I.T. Act, 1961. Section 40A(3) of the Act refers to payments made in cash, while computing income under the head „Profits and Gains from Business and Profession‟. It is, however, noted that these are payments, in cash, made by M/s Samira Habitats India Ltd. The Appellant has only earned commission income @ Rs.10,000/- per guntha which works out to Rs.51,02,550/-. No deduction of this amount of Rs.1,85,32,450/- has been claimed by Appellant as business expense. Hence, addition of Rs.1,85,32,450/- to the income of the Appellant is deleted and this Ground of Appeal is allowed.”
3. Mr. Walimbe vehemently argued during the course of hearing that the Assessing Officer had rightly made the impugned disallowance on account of the assessee’s failure in explaining the compelling circumstances in light of Rule 6DD of the Income Tax Rules. He also quoted Attar Singh Gurmukh Singh V/s ITO (1991) 191 ITR 667(SC) that purpose of the impugned statutory provision is not to regulate genuine business transactions but to prevent use of unaccounted money as well as for reducing chances of usage of black money therein.
4. We find no merit in Revenue’s instant sole substantive grievance. It has already come on record that the assessee herein had acted merely as a broker in land transactions between the farmers/vendors and the ultimate buyer M/s Samira Habitats India Ltd. wherein the latter entity utilized his services in lieu of paying commission. Meaning thereby that the assessee has never recorded either the land transaction as finalized on his behalf nor claimed the impugned expenses which could attract section 40A(3) disallowance in his hands. We thus hold that the learned Assessing Officer had erred in making the impugned disallowance in facts of the instant case. The CIT(A)’s findings under challenge stand affirmed therefore.
This Revenue’s appeal is dismissed in above terms. Order pronounced in the Open Court on this 15th day of June, 2022.
Sd/- Sd/- (DR.DIPAK P.RIPOTE) (S.S. GODARA) लेखध सदस्य/ ACCOUNTANT MEMBER न्यधनयक सदस्य/JUDICIAL MEMBER पपणे / Pune; ददनधांक / Dated : 15th June, 2022. Ashwini आदेश की प्रनतनलनप अग्रेनषत / Copy of the Order forwarded to : अपऩलधथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(A)-2, Thane. 4. The Pr.CIT-2, Thane. 5. नवभधगऩय प्रनतनननध, आयकर अपऩलऩय अनधकरण, “ए” बेंच, पपणे / DR, ITAT, “A” Bench, Pune. गधर्ा फ़धइल / Guard File. 6. आदेशधनपसधर / BY ORDER, // True Copy //
Senior Private Secretary आयकर अपऩलऩय अनधकरण, पपणे / ITAT, Pune.
S.No. Details Date Initials 1 Draft dictated on 06.06.2022 2 Draft placed before author 14.06.2022 Draft proposed & placed before the Second 3 Member 4 Draft discussed/approved by Second Member 5 Approved Draft comes to the Sr. PS/PS 6 Kept for pronouncement on 7 Date of uploading of Order 8 File sent to Bench Clerk 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order