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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI INTURI RAMA RAO
आदेश / ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the assessee directed against the order of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 12.1.2024 for the assessment year 2015-16.
Briefly, the facts of the case are as under:
The appellant is a partnership firm deriving income from sale of jaggery and real estate dealing. Return of income for the A.Y. 2015-16 was filed on 29.10.2015 disclosing total income of Rs.4,45,447/-. During the course of assessment proceedings, the Assessing Officer (AO) noticed that the appellant purchased plots which is forming part of stock-in-trade by paying the consideration of Rs.14,82,000/- in cash. Against the said return of income, the assessment was completed by the AO vide order dated 08.12.2017 passed u/s.143(3) of the Act. While doing so, the AO made the disallowance of Rs.14,82,000/- invoking the provisions of section 40A(3) of the Act.
Being aggrieved by the above assessment order, an appeal was filed before the CIT(A)/NFAC contending that sellers had insisted payment of consideration in cash. It was also asserted that since identity of the seller is established and genuineness of the transaction is not in doubt, the provisions of section 40A(3) cannot be invoked. Rejecting the above contentions, the ld. CIT(A)/NFAC confirmed the action of the AO.
Being aggrieved, the appellant is in appeal before the Tribunal in the present appeal.
When the appeal was called on, none appeared on behalf of the appellant despite due service of notice of hearing. After hearing the ld. DR and perusing the material on record, I proceed to dispose of the appeal ex parte qua the appellant.
The ld. DR placing reliance on the orders of the authorities below prayed for dismissing the appeal of the appellant, being devoid of any merit.
Heard the ld. Sr. DR and perused the relevant material on record. The solitary question that arises for my consideration is whether or not the lower authorities were justified in invoking the provisions of section 40A(3) of the Act. The factual matrix reveal that the assessee is into real estate business and purchased plots.
The sale consideration of Rs.14,82,000/- was made to the seller(s) in cash. It is the stand of the assessee from the stage of assessment proceeding itself that the identity of the seller has been established and the transaction in question took place before the Sub-Registrar which has not been doubted. Thus, it appears that the case of the appellant is that since the genuineness of the transaction is not in doubt, therefore, the provisions of section 40A(3) cannot be invoked.
I have gone through the order passed by the ld. CIT(A)/NFAC and find that the NFAC had failed to dwell into the applicability of the exceptions enumerated under Rule 6DD of the Act and the explanation filed by it. In the circumstances, I am of the considered opinion that matter requires remission to the file of CIT(A)/NFAC for denovo adjudication in accordance with law after affording due opportunity of hearing to the assessee.
In the result, the appeal of the assessee is partly allowed for statistical purpose. Order pronounced on this 25th day of April, 2024.