R.THIRUVENGADAM Vs. ASSISTANT COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The Assessee Mr.R.Thiruvengadam has filed this Appeal under Sec. 260A of the Income Tax Act, 1961 (for brevity "the Act") raising the purported Substantial Questions of Law arising from the order passed by the learned single member of the Tribunal, rejecting the Appeal filed by the Assessee for the Assessment Year 2011-2012 and upholding the disallowance of Rs.25,02,938.00, which was partially reduced by the learned Commissioner of Income Tax (Appeals) on account of cash payments made by the Assessee involved in the business of Real Estate for the purchase of two lands at Chinnamudaliar Chavady and Odiayampattu respectively by the Assessee in the Assessment Year in question.

(2.) The disallowance was made by the Assessing Authority in the Assessment Order dtd. 27/2/2014 under Sec. 40A(3) of the Act for the Assessment Year 2011-2012 which disallows cash expenditure over Rs.20,000.00 and since the Assessee made the cash payments for these purchase of lands for aggregate sum of Rs.25,02,938.00, in violation of Rule 6DD of the Income Tax Rules 1962. The learned CIT Judgment in T.C.A.No.156 of 2010 dt. 9/4/2019 [Mr.R.Thiruvengadam Vs. The Asst.Commissioner of Income Tax] (Appeals), however, granted partial relief to the Assessee to the extent of Rs.2,10,958.00, which was incurred towards the costs of stamp paper and registration charges for the purchase of two lands in question. The further Appeal to Tribunal also failed with the following observations made by the Tribunal:

(3.) The learned Counsel for the Assessee Mr.B.Ramana Kumar submitted before us that Sec. 40A(3) of the Act does not apply to the facts and circumstances of the present case as his the lands in question were purchased by him for personal purpose as Capital Judgment in T.C.A.No.156 of 2010 dt. 9/4/2019 [Mr.R.Thiruvengadam Vs. The Asst.Commissioner of Income Tax] Assets and not in the ordinary course of business. Therefore,there was no expenditure claimed in the computation of income for the Assessment Year 2011-2012 and therefore the said Provisions of Sec. 40A(3) do not apply to such purchase of Capital Assets for personal purpose. In the alternative, the learned counsel for the Assessee submitted that the enquiry with regard to the applicability of Rule 6DD was not held by the learned Assessing authority before whom the Assessee even though produced the confirmation letters of two sellers but he did not afford any opportunity to prove the genuineness of the transaction in question and holding it to be payment made in exceptional circumstances under Rule 6DD wherein such disallowance Under Sec. 40A(3) could not have been made.