M/s. Anriya project Management Services Pvt. Ltd.,, Bangalore v. ACIT, Bangalore

ITA 144/BANG/2009 | 2004-2005
Pronouncement Date: 20-08-2010 | Result: Partly Allowed

Appeal Details

RSA Number 14421114 RSA 2009
Bench Bangalore
Appeal Number ITA 144/BANG/2009
Duration Of Justice 1 year(s) 5 month(s) 26 day(s)
Appellant M/s. Anriya project Management Services Pvt. Ltd.,, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 20-08-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 20-08-2010
Date Of Final Hearing 14-07-2010
Next Hearing Date 14-07-2010
Assessment Year 2004-2005
Appeal Filed On 24-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO. 144/BANG/2009 ASSESSMENT YEAR : 2004-05 M/S. ANRIYA PROJECT MANAGEMENT SERVICES PVT. LTD. NO.42 3 RD FLOOR R.R. PLAZA 3 RD CROSS 8 TH MAIN VASANTHANAGAR BANGALORE 560 052. : APPELLANT VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1(2) BANGALORE 560 001. : RESPONDENT APPELLANT BY : SHRI NARENDRA SHARMA ADVOCATE RESPONDENT BY : SMT. PREETHI GARG CIT-III(DR) O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE COMPANY IS DIRECTED AGA INST THE ORDER OF THE CIT (A)-VI BANGALORE IN ITA NO: 354/ ACIT CC 1(2)/BLORE/CIT (A)-VI/2007-08 DATED 25.11.2008 FOR THE ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE COMPANY [THE ASSESSEE IN SHORT] HAS RAISED NINE GROUNDS OUT OF WHICH GROUND NOS:1 8 AND 9 BEING GENERAL IN NATURE AND ITA NO.144/BANG/2009 PAGE 2 OF 10 NO SPECIFIC ISSUES INVOLVED THEY HAVE BECOME NON-CONSEQUENTIAL . DURING THE COURSE OF HEARING THE LD. A R SUBMITTED THAT HE WAS NOT PRESSING GROUND NO.6 WITH REGARD TO PAYMENTS MADE TO THE LAND OWNERS FOR THE PURCHASE OF SITES ETC. AND ACCORDINGLY T HIS GROUND WAS DISMISSED AS NOT PRESSED . GROUND NO.7 BEING DENIAL OF ITS LIABILITY TO BE CHARGED TO INTEREST U/S 234A AND 234B OF THE ACT THE SAME IS NOT MAINTAINABLE AS THE CHARGING OF INTEREST UNDER THE SAID SECTIONS IS MAN DATORY AND CONSEQUENTIAL IN NATURE. THUS WE HAVE BEEN LEFT WITH THE REMA INING GROUNDS TO BE ADJUDICATED WHICH ARE REFORMULATED F OR THE SAKE OF CLARITY AS UNDER: (I) THE MANDATORY CONDITIONS TO INVOKE THE JURISDICTION U/S 153A DID NOT EXIST OR HAVING NOT BEEN COMPLIED WITH AND CONSEQUENTLY THE ASSESSMENT MADE WAS BAD IN LAW; (II) WITHOUT PREJUDICE THE ASSESSEE DENIES ITSELF TO BE ASSESSED ON A TOTAL INCOME OF R.12.47 LAKHS AS AGAINST THE LOSS OF RS.1.91 LAKHS CLAIMED; & - THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN ADDIN G RS.11.60 LAKHS AS UNDISCLOSED INCOME. 3. BRIEFLY STATED THE ASSESSEE WAS CARRYING ON THE BUSINESS AS PROMOTERS AND BUILDERS OF APARTMENTS/COLONIES. T HE ASSESSEE HAD FURNISHED ITS RETURN OF INCOME ON 18.10.2004 ADMITT ING A LOSS OF RS.4.81 LAKHS. IN THE MEANWHILE THE PREMISES OF THE ASSES SEE AND ALSO THE RESIDENTIAL PREMISES OF ITS DIRECTORS WERE SUBJECTE D TO ACTION U/S 132 OF THE ACT ON 30.9.2005 AND DURING THE COURSE OF SEARC H CERTAIN INCRIMINATING DOCUMENTS AND BOOKS OF ACCOUNTS WERE UNEARTHED. IN COMPLIANCE WITH THE NOTICE U/S 153A OF THE ACT THE ASSESSEE HAD FURNISHED A RETURN DECLARING A LOSS OF 1.91 LAKHS. DURING THE COURSE OF ITA NO.144/BANG/2009 PAGE 3 OF 10 ASSESSMENT PROCEEDINGS THE AO HAD DRAWN THE ASSESS EES LETTER DATED: 8.12.2005 ADDRESSED TO THE ADIT(INV) UNIT 2(II) B ANGALORE WHEREIN THE ASSESSEE HAD AFFIRMED THAT CONSIDERATION PAID FOR PURCHASE OF VARIOUS LANDS RS.37 LAKHS WHICH IS NOT ACCOUNTED DECLARED FOR TAXATION NOW. HOWEVER THE ASSESSEE VIDE ITS LETTER DATED: 23.7.2 007 ASSERTED THAT .WE HAD NOT DIRECTLY ADMITTED ANY ADDITIONAL INCOM E IN THE STATEMENT. WE HAD CLARIFIED IN THE ABOVE REFERRED STATEMENT IT SELF THAT RS.37 00 000 WAS DRAWN UNDER THE HEAD LABOUR PAYMENTS AND DEBITE D TO THE HEAD LABOUR PAYMENTS IN THE BOOKS OF ACCOUNT. SINCE T HE SOURCE OF RS.37 00 000 IS OUR OWN INTERNAL ACCRUALS NO ADDITIONAL INCOME WAS DECLARED. HOWEVER THE AO TOOK CUE FROM THE STATEMENT ON OATH WHEREIN IT WAS ADMITTED THAT SOME OF THE AMOUNTS SH OWN AS PAYMENTS MADE TO LABOURERS WERE NOT ACTUALLY PAID TO THEM BU T BOOKED AS LABOUR PAYMENTS. IN THE COMPUTATION STATEMENT THE ASSESSE E HAD SHOWN CASH PAYMENT MADE TO THE LANDOWNERS OF SY.NO.2/1 2/2 L OTTEGOLLAHALLY AT RS.14.5 LAKHS AND DISALLOWED 20% U/S 40A(3) OF THE ACT. FOR THE AY 2005-06 THE ASSESSEE HAD OFFERED RS.22.5 LAKHS STA TING THAT LABOUR PAYMENTS ADDED BACK AS THE PAYMENTS WERE ACTUALLY M ADE TO LAND OWNERS OF GEDDALAHALLY OF RS. 10 LAKHS AND LAND OWN ERS OF APPROACH ROAD TO JUDICIAL LAYOUT OF RS.12.5 LAKHS. THE AO WAS THEREFORE OF THE VIEW THAT THE ACTUAL ADDITION SHOULD BE THE ENTIRE AMOUNT OF RS.14.5 LAKHS AS AGAINST THE DISALLOWANCE OF 20% U/S 40A(3) AND WHEN THIS WAS PUT TO THE A.R ACCORDING TO THE AO HE HAD AGREED FOR THE SAME AND RS.11.60 LAKHS [ RS.1450000 290000] WAS ADDED TO THE ASSESSEES INCOME. ITA NO.144/BANG/2009 PAGE 4 OF 10 4. AGGRIEVED WITH THE STAND OF THE AO THE ASSESS EE TOOK THE ISSUE AMONG OTHERS BEFORE THE CIT (A) FOR REMEDY. AFTER DUE CONSIDERATION OF THE ARS CONTENTIONS ASSESSEES REPORTED LETTER DA TED: 8.12.2005 TO THE ADIT (INV) WHEREIN THE ASSESSEE HAD ADMITTED THE IN COMES OF RS.14.5 LAKHS AND RS.22.5 LAKHS FOR THE AYS 2004-05 AND 05- 06 RESPECTIVELY THE LD. CIT (A) HAD OBSERVED THUS 6. THUS THE ARGUMENT OF AUTHORIZED REPRESENTATIVE WAS ANALYZED. THIS ANALYSIS REVEALS THAT THE MONEY DRAWN UNDER TH E HEAD LABOUR CHARGES WAS NOT SPENT FOR PAYMENT TO LABOURS BUT W AS PAID TO THE SELLERS OF LAND IN CASH WHICH MEANS THE SELLERS REC EIVED THE CASH WITH AN INTENTION NOT TO DISCLOSE THE SAME IN THEIR ACCO UNTS WHEREAS THE APPELLANT WOULD HAVE SHOWN SUCH EXPENSES AS INFLATE D LABOUR PAYMENTS AND BUT FOR THE SEARCH THE APPELLANT AS W ELL AS THE SELLERS OF LAND CAME OUT CLEAN AND CLEAR. IT CAN BE SEEN THAT THE AMOUNT WAS SHOWN IN THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A OF I.T.ACT AS CASH PAYMENTS TO LAND OWNERS AND CONSEQUENTIAL DISA LLOWANCE U/S 40A(3) OF I.T.ACT WAS OFFERED VOLUNTARILY FOR TAXA TION. BUT I OBSERVE THIS DOES NOT PROVE BONA FIDE OF THE APPELLANT. TH IS IS ONLY A DAMAGE MANAGEMENT ACTION. IN THE ORIGINAL RETURN FILED ON 18.11.04 I.E. BEFORE THE SEARCH ON 30.9.2005 NEITHER SUCH CASH IN VESTMENTS FOR ACQUISITION OF LAND NOR THE SO CALLED INFLATED LABO UR EXPENSES WERE SHOWN IN THE ACCOUNTS WHICH ITSELF REVEALS THAT THE ASSESSEE WAS NOT IN A MOOD TO ACCOUNT FOR SUCH INVESTMENTS. PROBABLY BECAUSE THE ASSESSEE WAS KNOWING THIS TRUTH THEREFORE TRUTH C AME OUT VIVIDLY IN POST SEARCH ENQUIRY BY THE INVESTIGATION WING ULTI MATELY RESULTING IN PUTTING THE TRUTH IN BLACK AND WHITE IN ITS LETTER DATED 8.12.05.A RELEVANT PORTION IS QUOTED BELOW: 3. ANRIYA PROJECT MANAGEMENT SERVICES PVT. LTD. - CONSIDERATION PAID FOR PURCHASE OF VARIOUS LANDS: RS.37.00 LAKH WHICH IS NOT ACCOUNTED DECLARED FOR TAXATION NOW. HOWEVER LATER ON BEING ADVISED BY THE WISE COUNSELS PROBABL Y THE APPELLANT ENDEAVOURED TO WRIGGLE OUT OF SITUATION OF PAYING D UE TAXES ON THE AMOUNT IT SURRENDERS HAS TAKEN THE PLEA THAT IT WAS NEVER ADMITTED IN THE STATEMENT RECORDED U/S 131 DT.6.12.2005 THAT SO URCES OF SUCH CASH PAYMENT WAS NOT EXPLAINED AND THEREFORE ADDITION U/ S 69 OF I.T.ACT IS NOT TENABLE. BUT I FIND THE ABOVE DECLARATION OF R.37 LAKHS WITH CLEAR TERMS WHICH IS NOT ACCOUNTED DECLARED FOR TAXATIO N NOW ENOUGH TO HOLD THE ADDITION MADE BY AO JUSTIFIED AND CORRECT. ITA NO.144/BANG/2009 PAGE 5 OF 10 5. DISTRESSED BY THE FINDINGS OF THE LD. CIT (A) THE ASSESSEE HAS COME UP WITH THE PRESENT APPEAL. DURING THE COURSE OF H EARING THE LD. A R ARGUED AT LENGTH REBUTTING THE STAND OF THE AUTHORI TIES BELOW THE SUMMARY AND SUBSTANCES OF WHICH ARE SUMMARIZED AS UNDER: (I) AN ACTION U/S 132 OF THE ACT TOOK PLACE AT THE PREM ISES OF THE ASSESSEE ON 30.9.2005. HOWEVER NO SATISFACTION H AS BEEN RECORDED FOR THE ISSUANCE OF NOTICE U/S 153A OF THE ACT AND THUS IT HAS BECOME BAD IN LAW; - RELIES ON THE CASE LAWS: (A) UNION OF INDIA V. AJIT JAIN & ANOTHER 260 ITR 80 (SC); (B) MANISH MAHESHWARI V. ACIT & ANOTHER 289 ITR 341 (SC); & (C) CIT V. SMT. CHITRA DEVI SONI 313 ITR 174 (RAJ) (II) HOWEVER PURSUANCE TO THE NOTICE U/S 153A OF THE AC T THE ASSESSEE FILED ITS RETURN OF INCOME ADMITTING A LO SS OF RS.1.91 613/- AFTER DISALLOWING VOLUNTARILY RS.2.9 LAKHS U/S 40A(3) BEING 20% OF TOTAL CASH PAYMENTS MADE TO THE LAND O WNERS FOR THE PURCHASE OF THE PROPERTY AT LOTTEGOLLAHALLI; - THE MD OF THE ASSESSEE UNDER OATH ON 6.12.05 HAD CATEGORICALLY STATED THAT RS.14.5 LAKHS CASH PAYMEN TS WERE MADE FOR PURCHASE OF LAND AT LOTTEGOLLAHALLI WHICH WERE THE AMOUNTS WITHDRAWN FOR LABOUR PAYMENTS; (III) THE AO HAD DISALLOWED RS.11.6 LAKHS BEING THE DIFFE RENCE BETWEEN THE TOTAL CASH PAYMENTS MADE OF R.14.5 LAKH S AND RS.2.9 LAKHS DISALLOWANCE MADE BY THE ASSESSEE VOLUNTARILY U/S 40A(3) OF THE ACT; - THAT THE DISALLOWANCE OF RS.11.9 LAKHS WAS NOT WARR ANTED SINCE THE ASSESSEE HAD MADE THE CASH PAYMENTS TO THE LAND OWNERS AND THE SAME WAS AN ALLOWABLE EXPENDITURE WHICH WAS DIRECTLY ATTRIBUTABLE TO THE COST OF THE PROJECT; - THE SAID PAYMENTS WERE MADE OUT OF WITHDRAWALS FOR LABOUR PAYMENTS WHICH WAS ALSO A DIRECT EXPENDITURE ATTRIB UTABLE TO THE COST OF THE PROJECT AND THUS NO ADDITION WAS WARRANTED. ITA NO.144/BANG/2009 PAGE 6 OF 10 5.1. ON THE OTHER HAND THE LD. D.R WAS VERY VEHE MENT IN HER RESOLVE THAT THE ASSESSEES M.D. IN HIS LETTER TO THE ADIT (INV) U-2(II) HAD CATEGORICALLY ADMITTED THAT THE CONSIDERATION PAID FOR THE PURCHASE OF VARIOUS LAN DS OF RS.37 LAKHS WHICH IS NOT ACCOUNTED DECLARED FOR TA XATION NOW. THIS GOES TO PROVE BEYOND DOUBT THAT THE ASSESSEE HAS NOW BEE N TRYING TO SHIFT ITS HAND TO ITS CONVENIENCE. THIS VERY FACT HAS BEEN B ROUGHT OUT BY THE AO IN HIS IMPUGNED ORDER. THERE WAS ALSO CLINCHING EVIDE NCE THAT WHEN THIS VERY FACT WAS BROUGHT TO THE NOTICE OF THE ASSESSEES A R DURING THE COURSE OF ASSESSMENT PROCEEDINGS HE HAD CONCEDED THE SAME AN D AGREED FOR THE ADDITION OF RS.11.60 LAKHS. THE LD. CIT (A) HAD AL SO CONFIRMED THE STAND OF THE AO FOR THE WELL REASONED FINDINGS RECORDED I N HIS IMPUGNED ORDER WHICH IS UNDER DISPUTE. IT WAS THEREFORE ASSERTE D THAT THERE SHOULD BE NO GRIEVANCE ON THE PART OF THE ASSESSEE TO AGITATE NO W AND ACCORDINGLY PLEADED THAT THE FINDING OF THE LD. CIT (A) REQUIRE S TO BE SUSTAINED. 6. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT RECORDS EVIDENCES PRODUCED BY EITHER PART Y DURING THE COURSE OF HEARING. 6.1. THE FIRST GROUND OF THE ASSESSEE IS THAT THE A SSESSMENT WAS BAD IN LAW AS THE MANDATORY CONDITIONS TO INVOKE THE JURISDICT ION U/S 153A OF THE ACT DID NOT EXIST OR HAVING NOT BEEN COMPLIED WITH AND SO ON SO FORTH. 6.2. LET US HAVE A GLIMPSE OF WHAT S.153A SAYS? 153A.(1) NOT WITHSTANDING ANYTHING CONTAINED IN SECTION 139 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECT ION 153 IN THE CASE OF A PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT OTHER DOCUMENTS OR ANY ASSETS ARE REQUISIT IONED UNDER SECTION 132A AFTER THE 31 ST DAY OF MAY 2003 THE ASSESSING OFFICER SHALL- ITA NO.144/BANG/2009 PAGE 7 OF 10 (A) ISSUE NOTICE TO SUCH PERSON REQUIRING HIM TO FU RNISH WITHIN SUCH PERIOD AS MAY BE SPECIFIED IN THE NOTICE THE RETU RN OF INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSME NT YEARS REFERRED TO IN CLAUSE (B) IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND SETTING FORTH SUCH OTHER PARTICULARS AS MAY BE PRESCRIBED AND THE PROVISIONS OF THIS ACT SHALL SO FAR AS MAY BE APP LY ACCORDINGLY AS IF SUCH RETURN WERE A RETURN REQUIRED TO BE FURNISHED UNDER SECTION 139; (B) .. IT COULD BE SEEN FROM THE IMPUGNED ORDER OF THE AO THAT SUBSEQUENT TO SEARCH OPERATION IN THE PREMISES OF THE ASSESSEE AN D ITS DIRECTORS THE ASSESSMENT IN QUESTION GOT REOPENED AUTOMATICALLY B Y VIRTUE OF S.153A OF THE ACT. THUS THE AO WAS WITHIN HIS REALM PROVIDED BY THE ACT AND THAT THE CONDUCT OF SEARCH U/S 132 OR THE REQUISITION OF BOO KS/ASSETS UNDER S.132A OF THE ACT WOULD SUFFICE FOR THE ISSUANCE OF NOTICE U/S 153A OF THE ACT AND ASSUME JURISDICTION OVER THE ASSESSEE. 6.3. WITH DUE RESPECTS WE HAVE PERUSED THE CASE LA WS REPORTED IN 260 ITR 80 (SC) AND 289 ITR 341 (SC) ON WHICH THE ASSES SEE HAD PLACED STRONG RELIANCE. WITH REGARDS WE WOULD LIKE TO PO INT OUT THAT THE SAID RULINGS OF THE HIGHEST COURT OF THE LAND WERE IN RE SPECT OF MERE INFORMATION FROM CBI RECEIVED AND ON THE BASIS OF WHICH THE SEA RCH CONDUCTED AND CONSEQUENT BLOCK ASSESSMENT WAS NOT VALID. HOWEVER THE PRESENT CASE ON HAND IS ON THE DIFFERENT FOOTING AND THE CASE LA WS ON WHICH THE ASSESSEE PLACED RELIANCE ARE DISTINGUISHABLE. MORE OVER VARIOUS HONBLE HIGH COURTS AND TRIBUNALS [SB] HAVE IMPLICITLY MADE IT CLEAR THAT THE TRIBUNAL HAS NO POWER TO EXAMINE THE VALIDITY OF AU THORIZATION FOR SEARCH AND THE SAME WAS NOT JUSTIFIABLE BEFORE THE TRIBUNA L. THE FOLLOWING JUDICIARIES HAVE EXPRESSED SIMILAR VIEWS: ITA NO.144/BANG/2009 PAGE 8 OF 10 (A) M.B.LAL V. CIT 199 CTR 571 (DEL); (B) CIT V. PARAS RICE MILLS 313 ITR 182 (P & H); (C) RAGHU RAJ PRATAP SINGH & OTHERS V. ACIT 307 ITR 450 (ALL); & (D) PROMASIN LTD. V. DCIT 281 ITR 107 [SB DEL] WE ARE THEREFORE UNANIMOUS IN OUR VIEW TO DISMISS THIS GROUND OF THE ASSESSEE. 7. WITH REGARD TO THE OTHER GRIEVANCE OF THE ASSE SSEE THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN ADDING RS.11.60 LAKHS A S UNDISCLOSED INCOME AS AGAINST THE LOSS OF RS.1.91 LAKHS DECLARED WE HA VE DULY PERUSED THE RELEVANT RECORDS AND ALSO THE CONTENTIONS OF THE AS SESSEE PUT FORTH DURING THE COURSE OF HEARING. 7.1. ON A CLOSE READING OF THE IMPUGNED ASSESSMEN T ORDER WE FIND THAT THE AO HAD REASONED FOR THE ADDITION OF RS.11 60 00 0/- THE RELEVANT PORTION OF WHICH IS EXTRACTED FOR THE APPRECIATION OF FACTS AS UNDER: 6.4.. THE ASSESSEE IN HIS SWORN STATEMENT ADMITTED THAT SOME OF THE AMOUNTS SHOWN AS PAYMENTS MADE TO LABOURERS ARE NOT ACTUALLY PAID TO THE LABOURERS BUT BOOKED AS LA BOUR PAYMENT. HOWEVER IT IS SEEN THAT IN THE COMPUTATION STATEME NT THE ASSESSEE COMPANY HAS SHOWN CASH PAYMENT MADE TO LAND OWNERS OF SY.NO.2/1 2/2 LOTTEGOLLAHALY (DWELLINGTON) AT RS.14 50 000 AN D DISALLOWED 20% U/S 40A(3). IN THE RETURN OF INCOME FILED FOR THE AY 2005-06 THE ASSESSEE HAS OFFERED RS.22.50 LAKHS STATING THAT LO UR PAYMENTS ADDED BACK SINCE PAYMENTS ARE ACTUALLY PAID TO (A) LANDO WNERS OF S.NO.28/1 GEDDALAHALLY SANJAYNAGAR RS.10 00 000/- AND (B) LAND OWNERS OF APPROACH ROAD TO JUDICIAL LAYOUT RS.12 50 000/-. IN VIEW OF THE ABOVE THE ACTUAL ADDITION SHOULD BE THE ENT IRE AMOUNT OF RS.14 50 000/- AS AGAINST DISALLOWANCE OF 20% U/S 4 0A(3). WHEN THIS WAS PUT TO THE ASSESSEES AR HE HAS AGREED FOR THE SAME . ADDITION RS.11 60 000 7.2. IN THIS CONNECTION WE RECALL THE ASSESSEE S REPLY DATED 23.7.2007 WHEREIN IT HAD STATED THAT WE HAD CLARIFIED IN THE ABOVE REFERRED STATEMENT ITSELF THAT RS.37 00 000/- WAS DRAWN UNDER THE HEAD LABOUR PAYMENTS AND ITA NO.144/BANG/2009 PAGE 9 OF 10 DEBITED TO THE HEAD LABOUR PAYMENTS IN THE BOOKS OF ACCOUNTS. SINCE THE SOURCE OF RS.37 00 000/- IS OUR OWN INTERNAL ACCRUA LS NO ADDITIONAL INCOME WAS DECLARED. THUS THE ASSESSEE TOOK A STAND THAT RS.37 LAKHS WA S DRAWN UNDER THE HEAD LABOUR PAYMENTS AND DEBITED TO THE HEAD LABOUR PAYMENTS IN THE BOOKS OF ACCOUNT BUT ACCORDING T O THE ASSESSEE A PORTION OF WHICH WAS UTILIZED AS CASH PAYMENTS TO T HE LAND OWNERS TO THE EXTENT OF RS.14.5 LAKHS FOR THE AY UNDER DISPUTE AN D DISALLOWED 20% U/S 40A (3) OF THE ACT. THIS ASSERTION OF THE ASSESSEE HAS NOT BEEN EXAMINED BY THE AO IN A COMPREHENSIVE MANNER. IN STEAD THE AOS CRYPTIC REASONING WAS THAT THE ASSESSEES PLEA IS NOT ACCEPTABLE. MOREOVER THE ASSESSEE HAD ADMITTED IN ITS STATEMENT ON OATH THAT SOME OF THE AMOUNTS SHOWN AS PAYMENTS MADE TO LABOURERS WERE NOT ACTUAL LY PAID TO THE LABOURS BUT BOOKED AS LABOUR PAYMENT. 7.3. CONSIDERING THE FACTS OF THE ISSUE AND IN TH E INTERESTS OF NATURAL JUSTICE WE ARE OF THE FIRM VIEW THAT THE ISSUE HAS NOT BEEN PROPERLY EXAMINED BY THE AO WHETHER RS.37 LAKHS ALLEGED TO HAVE BEEN DRAWN UNDER THE HEAD LABOUR PAYMENTS WAS FINDING A PLA CE IN ITS BOOKS OF ACCOUNT AND ALSO DEBITED UNDER THE HEAD LABOUR PAY MENTS AND IF SO THE ORIGIN OF SUCH WHOPPING RS.37 00 000/-? 7.4. IN TAKING INTO ACCOUNT ALL THESE FACTS AND A LSO THE CIRCUMSTANCES OF THE ISSUE AS DISCUSSED IN THE FOREGOING PARAGRAPHS WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE REQUIRES A COMPREHEN SIVE EXAMINATION AND THUS IT IS BEING REMITTED BACK ON THE FILE OF THE AO WITH A SPECIFIC DIRECTION ITA NO.144/BANG/2009 PAGE 10 OF 10 TO EXAMINE THE ISSUE AS OBSERVED BY THE BENCH SUPR A AND TO TAKE APPROPRIATE ACTION IN ACCORDANCE WITH THE PROVISION S OF THE ACT OF COURSE AFTER AFFORDING A REASONABLE OPPORTUNITY TO THE ASS ESSEE OF BEING HEARD. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICA L PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF AUGUST 2010. SD/- SD/- ( SMT. P. MADHAVI DEVI ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 20 TH AUGUST 2010. DS/- COPY TO: 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.