SANJAY JAIN,NEW DELHI vs. ACIT, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH “G” NEW DELHI) BEFORE SHRI I.C. SUDHIR AND SHRI O.P. KANT ITA No.146/Del/2014 Assessment Year: 2010-11 Sanjay Jain, vs. ACIT, Chamber No. 488, Circle 37(1), Delhi High Court Block-II. New Delhi. Sher Shah Road, New Delhi. (PAN: AAGPJ8607A) (Appellant) (Respondent) Assessee by: Shri RA Bansal & Smt. Prem Lata Bansal, Adv. Department by : Smt. Anima Barnwal, DR Date of hearing : 21.03.2016 Date of pronouncement: 15 :06.2016 ORDER PER I.C. SUDHIR: JUDICIAL MEMBER The assessee has questioned first appellate order on the following grounds: 1. That the Ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.16,70,574/- made by the Assessing Officer to the long term capital gain declared by the assessee at Rs.1,47,823/-. Since the addition made by the Assessing Officer is contrary to law and therefore, liable to be set aside. 2. That the Ld. CIT(A) has erred in law and on facts in ignoring the cost of improvement while calculating long term capital gain earned by the assessee on transfer of property.

2 3. That the Ld. CIT(A) has misdirected herself in ignoring the cost of improvement on the ground that the expenditure incurred by the assessee was revenue in nature. Since the bifurcation of expenditure into capital and revenue is not relevant for the purposes of computing capital gain, the order passed by the Ld. CIT(A) is liable to be set aside. 4. That the Ld. CIT(A) has erred in confirming the capital gain calculated by the Assessing Officer on the ground that the assessee had computed indexation on the entire amount of Rs.45,07,053/- w.e.f. 2003-04, ignoring the material fact that the assessee had produced the correct calculation white making submission in the appellate proceeding and the same is produced by the CIT(A) even at page 4 of the appellate order. 5. That the Ld. CIT(A) has erred in confirming the addition on account of capital gain on the ground that there was no corresponding entry in the bank account in respect of payment of the expenses which is contrary to facts on record. 6. That the Ld. CIT(A) has erred in not allowing the benefit of section 54 of the Act to the assessee ignoring that all the conditions prescribed therein had been satisfied by the assessee. 7. That the order passed by Ld. CIT(A) is perverse in law and on facts as it is based on irrelevant material, ignoring the relevant material produced by the assessee during the appellate proceeding.

3 8. That the Ld. CIT(A) has erred in law and on facts in denying the credit of TDS of Rs.1,33,061/- to the assessee. 9. That the Ld. CIT(A) has erred in not allowing the loss of Rs.88,300/- the credit of which was not given by the bank and therefore, was allowable u/s 37(1 )(vii) or section 28 of the Income Tax Act. 10. That the Ld. CIT(A) has erred in confirming the disallowance of Rs.40,900/- made by the Assessing Officer u/s 40A(3) of the Act, reading the Rule 6DDU) of the Income Tax Rules too technically.

4 Vihar. The Assessing Officer was not satisfied with the expenditure claimed by the assessee and the cost of acquisition and thus made the addition of Rs.16,70,574 to the long term capital gain against Rs.1,47,823 declared by the assessee. The Learned CIT(Appeals) has upheld the same.

It is further provided by way of proviso that where the long term capital gain arises from the transfer of the long term capital asset, other than shares, debentures, the provisions of clause (ii) shall have effect as if for the words "cost of acquisition" and

"cost of improvement". The words "indexed cost of acquisition" and "indexed cost of any improvement" had respectively been substituted.

b) The term "cost of acquisition" has been defined in section 55(2) and the term "cost of 'improvement" has been defined in section 55(1 )(b). As per Section 55(1 )(b )(1 )(ii), cost of any improvement in relation to any capital asset other than goodwill and manufacturing rights etc. provided in sub-clause (1), means all expenditure of a capital nature incurred in making any additions or alterations to the capital asset by the assessee after it became his property but does not include any expenditure which is deductible in computing the income chargeable under the head "interest on securities, income from house property, profit and gains of business or profession or income from other sources", and the expression "improvement" shall be construed accordingly.

c) In the assessment order, the Ld. Assessing Officer has considered the provisions of section 55(2) which defines the term "cost of acquisition" but has not considered the provisions of section 55(1 )(b )(2)(ii). d) In the present case, as per the Sale Deed dated 30.08.2003, the property bearing F-115, Sector-41, Noida had been purchased by the assessee for a consideration of Rs.30,40,OOO/~ on which stamp duty of Rs.2,43,2001- was paid. thereafter, assessee incurred further expenditure of Rs.9,68,0001- in the same FY 2003-04 relevant to AY 2004-05. In the immediately succeeding AY 2005- 06, assessee further incurred an expenditure of Rs. 2,55,853/-. Thus total cost ofRs.45,07,053/- had been incurred by the assessee on the property. The said property was sold by the assessee in the current year relevant to AY 2010-11 and therefore, the assessee was entitled to the total cost of acquisition as well as cost of improvement. The long term capital gain be computed as under:

Sale consideration 63,00,000 Less: Cost of acquisition & improvement InFY2003-04(4~,51,200x632/463)=58,02,934- Less:CostofimprovementinFY2004-05 (2,55,853 x 632/480) Long term capital gain' =3,36,873- 61,39,807

6 1,61,193

e) During the assessment proceedings, vide letter-dated 16.10.2012 and 26.10.2012, assessee had produced the Sale Deed and Purchase Deed of the property No.F-115, Sector-41, Noida. Vide letter-dated 16.11.2012, assessee produced the Purchase Deed of property at Palam Vihar. Again vide letter- dated 27.11.2012 assessee produced the Balance Sheet for 03 years ending on 31.03.2004, 31.03.2005 and 31.03.2006 depicting investment at Rs.45,07,053/- in property bearing No. F-115, Sector-41', Noida which included cost of acquisition as well as cost of improvement. Thereafter, no further query had been made by the Assessing Officer and therefore, no further evidence was produced. Assessee was under an impression that the cost of improvement had been duly declared in the Balance Sheets for the earlier assessment years 2004-05 & 2005-06, which had been accepted by the Revenue and therefore, further evidences had not been called for by the Assessing Officer. Had the Assessing Officer inquired about the details of cost of improvement then the assessee would have produced the details of the same along with evidences. The assessee is now producing these evidences in support of his claim which includes the details of investments in property, invoices / bills issued by suppliers / contractors and the bank statement showing that the amount had been paid by way of Account Payee Cheques. For admitting this additional evidence, assessee has filed an application under Rule 46A of the Income Tax Rules which may be allowed as the assessee could not produce the same before the Assessing Officer. Since the appellate proceeding is the continuation of the assessment proceeding and therefore, the same may be gone into and be considered by your good self .

7 f)It is further submitted that the Assessing Officer has made addition to the capital gain but has not considered the relief available to the assessee u/s 54 of the Income Tax Act, though the details were available with him. g) As per the provisions of section 54, where in the case of an assessee being Individual or HUF, the capital gain arises from the transfer of a long term capital asset being Building or Lands appurtenant thereto and being a residential house, the income of which is chargeable under the head "Income From House Property" and the assessee has within a period of one year before or two years after the date on which the transfer took place, purchased or has within a period of three years after that date, constructed a residential house then instead of the capital gain being charged to income tax as income of the previous year in which the transfer took place, it shall be allowed as deduction to the extent the amount of capital gain or the cost of residential house whichever is less. h) In the present case, assessee had sold the property bearing No. F-115, Sector-41, Noida on 25.04.2009 and the property at Palam Vihar had been purchased on 16.04.2009. Thus the conditions prescribed in section 54 are satisfied and therefore, assessee was entitled to benefit u/s 54 of the Act. All these documents were before the Assessing Officer. He enhanced the capital gain but did not consider the .benefit available to the assessee u/s 54 of the Act. It is a well established principle of law that where an assessee is entitled to a deduction then the same has to be allowed by the Assessing Officer, even if the same had not been claimed in the return of income. In Parekh Bras vs CIT (150 ITR 105), Kerala High Court have held that “ordinarily the question as to whether an assessee is entitled to a deduction or not will depend on the relevant provisions of law relating thereto and not on the view which the assessee might take of his rights, or the method and manner in which accounts are kept. The circular issued by Central Board of Direct Taxes No.14(XL-35) of 1955 dated April 11, 1955 states that Officers of the Department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a tax payer in every way particularly in the matter of claiming and securing relief " Against this judgement, Department had filed SLP which has been dismissed by the Hon'ble Supreme Court vide order-dated 17.12.1990 which is reported at 187 ITR ST.73.

In CIT vs. Smt Archana R Bhanwatay (136 ITR 355), Bombay High Court have held that there was a duty on the part of ITO to consider whether the assessee was entitled to .1 deduction from the income from other sources though no such specific claim was made by the assessee. In CIT vs Bharat General Re-insurance Co. Ltd. (81 ITR 303), Hon'ble Jurisdictional High Court have held that "the fact that the assessee had itself included the income in the return for the AY 1958-59 was of no effect; there was no estoppel and the assessee

having itself challenged the validity of taxing the dividend for that assessment year, it must be taken that it had resiled from the position which it had wrongly taken while filing the return. It is incumbent on the Income Tax Department to find out whether a particular income was assessable in the particular year or not. Merely because the assessee wrongly includes the income in its return for the particular year, it cannot confer jurisdiction on the Department to tax that income in that year even though legally such income did not pertain to that year". To the similar effect are :- 269 ITR 01 (Born), Nirmala L Mehta vs A Balasubrarnaninan, CIT & Ors. 276 ITR 165(Guj), S R Koshti vs CIT It is needless to say that according to Article 265 of the Constitution of India, there can be no\taxation without authority of law. Acquiescence cannot take away from a party, the relief which he is entitled to in contravention of Article 265 '

In view of above, it is submitted that the capital gain arose on sale of property bearing F-115, Sector-41, Noida is exempt u/s 54 as the assessee had purchased the property at Palam Vihar for a consideration of Rs.19,00,000 + stamp duty Rs.1,35,000/-.

9 6. The Learned Senior DR on the other hand placed reliance on the orders of the authorities below on the issue. She submitted that expenditure on improvement in the property was done by the assessee even before the sale deed was executed, thus, the Assessing Officer was justified in denying such expenditure. So far as eligibility of benefit under sec. 54 of the Act is concerned, he submitted that no such claim was made before the Assessing Officer and no such benefit is granted on acquisition of second residential property. 7. Considering the above submissions, we agree with the arguments advanced by the Learned AR that as per provisions of sec. 48 of the Act, the income chargeable under the head “capital gains” shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital assets, the following amounts namely; i) expenditure incurred wholly and exclusively in connection with such transfer, ii) the cost of acquisition of the assets and the cost of any improvement thereto;

7.1 The term “cost of acquisition has been defined in section 55(2) and the term “cost of improvement” has been defined in sec. 55(1)(d). As per the above provisions, cost of any improvement in relation to any capital assets other than good will and manufacturing rights etc. provided in sub-clause (i)

10 means all expenditure of a capital nature incurred in making any additions or alterations to the capital assets by the assessee after it became his property but does not include any expenditure which is deductible in computing the income chargeable under the head “interest on securities, income from house property, profit and gains of business or profession or income from other sources”, and the expression “improvement shall be construed accordingly.

7.2 In the present case before us, the Assessing Officer has considered cost of acquisition but has not considered the cost of improvement. As per the sale deed dated 30.8.2003, the property bearing No. F-115, Sector 41, Noida had been purchased by the assessee for a consideration of Rs.30,40,000 on which stamp duty of Rs.2,43,200 was paid thereafter. Assessee had incurred further expenditure of Rs.9,68,000 in the same financial year 2003-04 relevant to assessment year 2004-05. In the immediately succeeding assessment year 2005-06, the assessee had further incurred an expenditure of Rs.2,55,853. Thus, the total cost of Rs.45,07,053 was claimed to have been incurred by the assessee on the property. The said property was sold by the assessee in the current year relevant to assessment year 2010-11 and thus he claimed total cost of acquisition as well as cost of

11 improvement. The long term capital gain computed by the assessee was as under: Sale consideration 63,00,000 Less: Const of acquisition & improvement In F.Y 2003-04 (42,51,220x632/463) =58,02,934- Less: Cost of improvement in F.Y 2004-05 (2,55,853x632/480) =3,36,873 61,39,807 Long term capital gain 1,60,193

7.3 During the assessment proceedings, the assessee had produced copies of sale deed and purchase deed of the property at Noida and had also furnished purchase deed of the property at Palam Vihar. He had also furnished balance sheets for three years ending on 31.3.2004, 31.3.2005 and 31.3.2006 depicting investment at Rs.45,07,053 in the property (Nos. F-115, sector 41) at Noida which included cost of acquisition as well as cost of improvement. The contention of the assessee remained that the Assessing Officer did not raise further query and, therefore, the assessee did not furnish further evidence in support of its claims since he was under an impression that the cost of improvement had been duly declared in the balance sheets for the earlier assessment years 2004-05 and 2005-06 which had been accepted by the Revenue. The Assessing Officer ignored the expenditure of

12 Rs.12,23,853 claimed to have been incurred by the assessee after the acquisition of property and took the cost of acquisition at Rs.32,83,200, Rs.30,40,000 the consideration shown in the sale deed plus Rs.2,43,200 on stamp duty, as per the sale deed produced by the assessee. Accordingly, the Assessing Officer computed the long term capital gain as under: Sale of House (F-115, Sec. 41, Noida) 63,00,000 Less: Cost of acquisition 2003-04 (3283200x632/463) (44,81,603) LONG TERM CAPITAL GAIN 18,18,397 20% tax on LTCG 3,36,689

7.4 The Assessing Officer thus made addition of Rs.16,70,574 to the long term capital gain as the assessee had already declared Rs.1,47,823 on this account.

7.5 Before the Learned CIT(Appeals), while questioning the addition made by the Assessing Officer, the assessee also moved an application for admission of additional evidence under Rule 46A of the Income-tax Rules on which the Learned CIT(Appeals) called for the remand report. The Assessing Officer opposed the same mainly on the basis that despite giving of sufficient opportunity by the Assessing Officer to furnish these additional

13 evidences, the assessee did not avail the opportunity. It was submitted that 30 days time was given to the assessee by the Assessing Officer to substantiate his claim. Copy of the remand report furnished by the Assessing Officer before the Learned CIT(Appeals) was provided to the assessee for his comments and considering the same, the Learned CIT(Appeals) did not allow the application. He, however, has discussed the merits of these evidences and found them not worth relying. He has accordingly come to the conclusion that the assessee had inflated the cost of acquisition of the property and he has thus upheld the addition made by the Assessing Officer. The assessee by way of additional evidence, in support of the claimed cost of improvement of the property had filed details of expenditure bills raised by the supplier and copy of bank statement showing payments. The Learned CIT(Appeals) did not find it worth relying and for his consideration on the basis that firstly the payment has been made on renovation of the property well before purchasing the same and secondly the nature of expenditure incurred on providing and fixing marble, door polishing, marble polishing, door glass, MS Jaal etc. fall under the head Revenue rather than capital. These were will of décor villa dated 24.10.2003 for Rs.8,15,000 and bank account showing payment has been made to décor villa of Rs.2 lacs on 23.8.2003, Rs. 5,60,000 on 5.9.2003, Rs.25,000 on 19.10.2003 and

14 Rs.30,000 on 12.11.2003 and the property was purchased on 30.8.2003. We thus find that the Learned CIT(Appeals) has not doubted the veracity of these bills and the bank account showing payments made to décor villa but has denied the same on the above two basis. He has observed that payment has been made on renovation on 23.8.2003 i.e. before purchasing of the property on 30.8.2003 but we find that there were other bills also showing making of payments to M/s. Décor Villa on 05.09.2003, 19.10.2003 and 12.11.2003 i.e. after the purchase of property on 30.8.2003. Similarly, as to whether expenses incurred on providing and fixing marble, door polishing, marble polishing, door glass, MS Jaal etc. is capital or revenue in nature is a debatable issue hence finding of the Learned CIT(Appeals) that these expenditure were Revenue in nature cannot be out rightly accepted. His further observation in respect of other bills totaling to Rs.2,68,847 remained that these pertained to the period 2004 to 2005 and have been entered on providing wooden partition, purchase of nails, fixing of railing, servant room doors and other temporary structure etc. and hence are Revenue in nature. It is again a debatable issue and thus cannot be out rightly held to be capital in nature. The further observation of the Learned CIT(Appeals) remained that the expenses, if incurred, have been incurred after 31.3.2004 inspite of the claim of the assessee computing indexation on the entire amount of

15 Rs.45,07,053 w.e.f. 2003-04. We thus in the interest of justice set aside the matter to the file of the Assessing Officer to decide the matter afresh on the issue of allowability of cost of improvement incurred on the property after verifying the nature of expenditure incurred as to whether it is Revenue or capital in nature and having comments of the assessee on the other observations of the Learned CIT(Appeals) on the claimed cost of improvement after affording opportunity of being heard to the assessee.

7.6 So far as denial of benefit available under sec. 54 of the Income-tax Act, 1961 to the assessee is concerned, we concur with the submissions of the assessee that even if it was not made before the Assessing Officer, the Assessing Officer ought to have made just and proper assessment. Undisputedly, this issue was raised before the Learned CIT(Appeals) as it is evident from the written submissions filed before the first appellate authority, a copy whereof has been made available at page Nos. 1 to 9 of the paper book filed on behalf of the assessee before the ITAT. The contention of the assessee in this regard remained that the assessee had sold his property at Noida on 25.4.2009 and property at Palam Vihar was purchased on 16.4.2009, thus, the conditions prescribed in sec. 54 are satisfied and, therefore, the assessee was entitled to benefit under sec. 54 of the Act. His

16 further submission in the written submissions made before the Learned CIT(Appeals) at page No. 4 para h) remained that all these documents were made available before the Assessing Officer, but the Assessing Officer enhance the capital gain without considering the benefit available to the assessee under sec. 54 of the Act. The contention of the Learned Senior DR before the ITAT is that the benefit available under sec. 54 of the Act cannot be granted on acquisition of second residential property. Since the authorities below have not decided the issue, we in the interest of justice set aside this issue to the file of the Assessing Officer to examine the eligibility of the assessee to have benefit of sec. 54 of the Act in view of the above facts after affording opportunity of being heard to the assessee. The ground Nos. 1 to 7 are allowed for statistical purposes.

9 In support of this ground, the Learned AR submitted that vide letter dated 30.11.2011, assessee had filed reconciliation of TDS reflected in Form

17 No. 26AS along with certificate in Form No.16A. Vide letter dated 10.12.2012, the assessee stated that TDS of Rs.68,596 was being reflected in Form No. 26AS but the professional income on which the same was deducted was not matchable with the income for which cheques were received. Due to this mismatched, the assessee had offered income of Rs.37,20,576 on which TDS was either not reflected in Form No. 26AS or on which the tax had been paid by the assessee. Though, the amount of Rs.68,696 was being reflected in Form No. 26AS. She pointed out that the assessee was denied benefit of TDS of Rs.1,33,061 due to non-producing of certificate whereas credit of Rs.68,596 reflected in Form No. 26AS was not allowed. She submitted that details of TDS of Rs.1,33,061 along with the income on which the same was deducted and the net amount received by the assessee were enclosed for the kind perusal of the Learned CIT(Appeals). The detail revealed that the assessee had received the net amount through cheque whereas he had offered gross amount for taxation. The Learned AR submitted that as per the provisions of sec. 198, all sums deducted as tax shall for the purpose of computing the income of an assessee be deemed to be the income received. However, provisions of sec. 199 lays down that any deduction made by the deductor and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income, the

18 deduction was made. The Learned AR submitted further that as per provisions of sec. 200, it is the duty of the deductor to pay the amount of tax deducted from the income to the Central Government and to file the TDS return with the income-tax authority who will process the same under sec. 200A of the Income-tax Act, 1961.

9.1 The Learned AR submitted that in the present case, the deductor had deducted the tax from the income of the assessee and, therefore, it was the deductor who was under an obligation to pay the same to the government treasury and file the TDS return with the income-tax authorities. She submitted that for the default on the part of the deductor, the assessee cannot be denied benefit of credit of TDS. She submitted that the Hon'ble jurisdictional High Court of Delhi in the case of court on its own motion Vs. CIT – 352 ITR 273 (Del) has observed that when the deductee does not get benefit of tax paid, he being tax-payer is harassed but the deductor does not suffer. Denying the benefit of tax deducted at source to a tax payer because of a fault of a detector which is not attributable to the deductee, causes unwarranted harassment and inconvenience. The deductee feels cheated. The Revenue cannot be a silent spectator.

19 10. The Learned Senior DR on the other hand placed reliance on the orders of the authorities below with this submission that TDS certificate was not made available to the Assessing Officer nor had the assessee moved any application before the Assessing Officer for asking the deductor to issue certificate.

20 13. The contention of the Learned AR remained that assessee maintains cash basis of accounting an income not credited in the bank account was reduced from the gross income. The Learned AR contended that Assessing Officer had not afforded opportunity of being heard to explain the matter. She submitted that details of Rs.88,300 were furnished in the paper book. Vide letter dated 10.12.2012, the assessee had explained that the amount of Rs.3,300 was booked twice in assessment year 2009-10 and was pending in the bank account for reconciliation. On finding double credit, it was reversed in the current year. Similarly, cheque of Rs.55,000 being professional receipt received from Pushpanji Punj was credited to the professional receipt account and debited to the corporation bank on 17.7.2008. Since the bank did not give credit to the said amount, the same was written off in the books of account for the current year.

13.1 Similarly, the cheque of Rs.33,000 was credited to the professional receipt account and debited to Corporation Bank on 5.2.2009. Since the bank did not give credit of the same despite follow up, the assessee written off the debts from the books of account. The Learned AR referred provisions laid down under sec. 36(1)(vii) read with sec. 36(2) as per which the amount of any bad debt or part thereof which is written off as irrecoverable in the

21 accounts of the assessee for the previous year, the same shall be allowed as deduction. If such debt or part thereof has been taken into account in computing the income of the assessee of the previous year in which the amount of such debt is written off or of an earlier previous year. She placed reliance on the following decisions: i) CIT vs. Autometer Ltd. – 292 ITR 345 (Del.); ii) CIT vs. Morgan Securities & Credits (P) Ltd. 292 ITR 339 (Del.); iii) T.R.F. Ltd. vs. CIT – 323 ITR 397 (SC);

13.2 The Learned Senior DR on the other hand placed reliance on the orders of the authorities below.

22 Hon'ble Kerala High Court in the case of Travanecore Tea Estates Co. Ltd. vs. CIT (1992) – 197 ITR 528 to hold that burden of proof that there is a debt owing to assessee that the debt arose in the course of business of the assessee and finally that had become bad in the year of accounts is all on the assessee and has upheld the action of the Assessing Officer on the basis that all these conditions are not satisfied in the case of the assessee. As per the decision of Hon'ble Supreme Court in the case of T.R.F. Ltd. vs. CIT (supra), after the amendment of sec. 36(1)(vii) of the Income-tax Act, 1961 w.e.f. 01.04.1989 in order to obtain a deduction in relation to bad debt. It is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. In the present case, assessee had shown the amount of Rs.88,300 (Rs.3,300+Rs.55,000+Rs.30,000) as professional income and had debited the same to the bank. Since the bank did not give credit despite the follow up, the same was written off as irrecoverable. Thus, the claim of the assessee in our view is justified as there is no dispute that the amount in question was written off by the assessee as irrecoverable. It is ordered accordingly to delete the addition. The ground No. 9 is accordingly allowed.

23 15. Ground No. 10:The Assessing Officer disallowed Rs.40,900 out of the total business promotion expenses invoking provisions of sec. 40A(3) of the Act as the case of the assessee falls within the ambit of Rule 6BB of the Income-tax Rules. The same has been upheld by the Learned CIT(Appeals).

16 In support of the ground, the Learned AR submitted that the claimed amount was allowable under sec. 37(1) of the Act. She submitted that during the year assessee had incurred expenditure of Rs.40,900 on account of gifts purchased from Ms. Frazers Haws and had claimed as business promotion expenses. The Assessing Officer disallowed the same invoking the provisions of sec. 40A(3) on the basis that the payment was made by the assessee in cash exceeding Rs.20,000 in a single day.

16.1 The Learned AR contended that the Assessing Officer had examined three bills of M/s. Frazers & Haws from where assessee had purchased the gifts. Genuinity of the expenditure was not doubted by the Assessing Officer and he had disallowed the same only on the ground that the payment was made in cash exceeding Rs.20,000 in a single day. The Learned AR submitted that while making disallowance the Assessing Officer failed to

24 appreciate that assessee had purchased the gifs on 05.04.2009 which was Sunday and therefore the cash payment was allowable. 17. The Learned Senior DR on the other hand placed reliance on the orders of the authorities below. 18. Considering the above submissions, we agree that the rigors of sec. 48(3) of the Act has been mitigated by way of Rule 6DD which lays down the circumstances in which a payment of aggregate of payments exceeding Rs.20,000 may be made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft. One such circumstance has been laid down in sub-rule(j) of Rule 6DD as per which where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike. We thus set aside the matter to the file of the Assessing Officer to verify as to whether the date 05.04.2009 was a Sunday then delete the addition as per the requirement of Rule 6DD discussed above. Ground No.10 is thus allowed for statistical purposes. 19. In result, the appeal is partly allowed. Order pronounced in the open court on 15 .06.2016 Sd/- ( O.P. KANT ) Sd/-( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 15/06/2016 Mohan Lal

25 Copy forwarded to: 1) Appellant 2) Respondent 3) CIT 4) CIT(Appeals) 5) DR:ITAT ASSISTANT REGISTRAR

Date Draft dictated directly on computer 15.06.2016 Draft placed before author 15.06.2016 Draft proposed & placed before the second member Draft discussed/approved by Second Member. 15.06.2016 Approved Draft comes to the Sr.PS/PS 16.06.2016 Kept for pronouncement on 15.06.2016 File sent to the Bench Clerk 16.06.2016 Date on which file goes to the AR Date on which file goes to the Head Clerk. Date of dispatch of Order.