M/S KONARK RAJHANS PVT. LTD.,PANCHKULA vs. DCIT, CIRCLE, PANCHKULA

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ITA 1186/CHANDI/2017Status: DisposedITAT Chandigarh21 February 2018AY 2012-133 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal set aside the CIT(A)'s ex-parte order and restored the case to the CIT(A)'s file. The assessee was granted an opportunity to present its case on merits, including reasons for cash payments.

What were the facts?

The assessee, a builder, purchased land and made a significant portion of the payment in cash. The Assessing Officer disallowed a part of the expenses under Section 40A(3) for these cash payments.

What were the issues?

Whether the assessee had reasonable cause for making cash payments for land purchase and if an opportunity to present this case should be granted after an ex-parte order.

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 BENCHES ‘A’, CHANDIGARH

Before: SHRI SANJAY GARG & Dr. B.R.R. KUMAR

For Respondent: Smt. Chanderkanta, Addl. CIT
Hearing: 21.02.2018Pronounced: 21.02.2018

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order dated 31.08.2016 of the Commissioner of Income Tax (Appeals), [hereinafter referred to as CIT(A)], Panchkula.

2.

The assessee is aggrieved by the disallowance made by Assessing officer us 40A(3) of the Income-tax Act, 1961 read with Rule 6DD on account of cash payments made for purchase of land.

3.

The assessee is a builder and developer and for its business activity it purchased certain land from villagers. The assessee made total payment

of about Rs. 16 crores as consideration for the purchase of land from

different sellers out of which an amount of Rs. 3.34 crores was made in

cash. However, considering the submissions of the assessee, the Ld.

Assessing officer restricted the addition u/s 40A(3) to the extent of Rs.

1.70 cores. Being aggrieved by the above, the assessee preferred appeal

before the CIT(A).

4.

The Ld. Counsel for the assessee has submitted that the assessee

could not appear before the CIT(A) as the address of the assessee was

changed and hence, the notices of hearing could not be received by the

assessee. That there was change in the management also. Due to these

circumstances, the case remained unrepresented before the CIT(A). The

Ld. CIT(A), therefore, passed an ex-parte order. The Ld. Counsel has

further submitted that the assessee has a good case on merits and that there

was a reasonable cause for making the said payments in cash. Ld. counsel,

therefore, has submitted that assessee may be given an opportunity to

present its case before the CIT(A) so that it may demonstrate the reasons

and justification for making a small portion of the total consideration in

cash.

5.

The Ld. DR, on the other hand, has relied on the findings of the

lower authorities.

6.

Considering the overall facts and circumstances, in our view, the

interest of justice will be well served if the assessee is given an

opportunity to present its case before CIT(A). In view of this, we set aside

the order of CIT(A) and restore the same to the file of the CIT(A) for

decision afresh. Needless to say that CIT(A) will give proper opportunity

to the assessee to present its case and assessee will present itself before

the Ld. CIT(A) as and when called for and would not deliberately

contribute in delaying the conclusion of the appeal.

7.

The appeal of the assessee is allowed for statistical purposes.

Order pronounced in the Open Court.

Sd/- Sd/- (Dr. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 21.02.2018 Rkk Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR

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