M/S GHANSHYAM GOYAL and ORS V. COMMISSIONER OF INCOME TAX KOT

ITA/451/2008

AI Insights

The case involves M/s Ghanshyam Goyal & Sons (HUF), the appellant, challenging the judgment and order of the Income Tax Appellate Tribunal (ITAT), which had reversed the view taken by the Commissioner of Income Tax Appeals (CITA) and dismissed the assessee's appeal. The primary legal issue was the interpretation of Section 40A(3) of the Income Tax Act, 1961, particularly whether it applies to a single payment exceeding Rs. 20,000 or to the aggregate of payments made to a person in a day. The court also considered the implications of an amendment to this section effective from April 1, 2009. The appellant argued that the amendment clarified the section's application to single payments, a view supported by a precedent from the Orissa High Court.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 750967 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 28-03-2017
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax, Orissa Vs. Aloo Supply Co., Attar Singh Gurmukh Singh Vs. Income-tax Officer, Ludhiana
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: PARINITOO JAIN
• Assessee Lawyers: R K AG RA WAL; NARESH GU PTA
• Keywords: Assessment Order; Income tax appeal; Natural Justice; Section 40A(3); Single Payment Exceeding Rs.20,000
• Section: 40A(3)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 451 / 2008 M/s Ghanshyam Goyal & Sons (HUF) Proprietor of M/s. Goyal Khad Bhandar, Khatoli, Kota, Through Its Member Sh. Ghanshyam Goyal S/o Sh. Laxmi Chand Goyal. ----Appellant Versus 1. The Commissioner of Income Tax, C.R. Building Rawat Bhata Road, CAD Circle, Kota. 2. The Income Tax Officer , Ward 2(2), C.R. Building Rawat Bhata Road, CAD Circle, Kota. ----Respondents Connected With D.B. Income Tax Appeal No. 223 / 2008 M/S Ghanshyam Goyal & Sons (HUF) Proprietor of M/s. Goyal Khad Bhandar, Khatoli Kota, Through Its Member Sh. Ghanshyam Goyal S/o Sh. Laxmi Chand Goyal ----Appellant Versus 1. The Commissioner of Income Tax, C.R. Building, Rawat Bhata Road, CAD Circle, Kota. 2. The Income Tax Officer, Ward2(2),, C.R. Building, Rawat Bhata Road, CAD Circle, Kota. ----Respondents _____________________________________________________ For Appellant(s) : Mr.R.K. Agrawal, Senior Advocate with Mr.Naresh Gupta For Respondent(s) : Smt.Parinitoo Jain _____________________________________________________ HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE GOVERDHAN BARDHAR Order 28/03/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby, the Tribunal has allowed the appeal preferred by the department reversing the view taken by the CITA and dismissed the appeal of the assessee. 2. While admitting D.B. Income Tax Appeal No.451/2008 on 11/11/2008, this Court has framed the following substantial questions of law:- “(1) Whether the provisions of Section 40A(3) of the Income Tax Act in the relevant assessment year apply to a single payment in a sum exceeding Rs.20,000/- and not to the aggregate of payments made to a person in a day and the amendment made in Section 40A(3) by the Finance Act, 2008 w.e.f. 1.4.2009 leaves no manner of doubt in that respect and vitiates the order of ITAT? (2) Whether the statement of Govind Kumar Khandelwal recorded in the course of assessment proceedings of another assessee could have any application qua the assessee-appellant that too without enabling the appellant assessee to cross examine the said witness and leave evidence in rebuttal and this was in total disregard of the rule of evidence and violation of the principles of natural justice vitiating the Assessment order as affirmed by the ITAT?” 3. Counsel for the appellant does not press Question No.2 and confined his argument only to the extent of Question No.1. 4. Counsel for the appellant has taken us to Section 40A(3) of the Income Tax Act, 1961 amended w.e.f. 01/04/2009, which reads, as under:- “40A(3) Whether the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure.” After amendment, this Court has taken into consideration the identical two substantial questions of law on 23/10/2008 in D.B. Income Tax Appeal No.223/2008. 5. Relying on the judgment of the Orissa High Court in {1980} 121 ITR 680 (Ori) : Commissioner of Income-Tax, Orissa Vs. Aloo Supply Co., counsel for the appellant has contended that in view of the amendment, it is very clear that at the relevant time, Rs.2,500/- was the statutory limit and now Rs.3,000/- urged by the assessee is quite contrary. 6. Even Rule 6DD(j) of the Rules, which was put into service by the learned counsel for the appellant was considered by the Orissa High Court and taking into consideration the judgment of the Orissa High Court, the issue is liable to be decided in favour of the assessee. 7. Learned counsel for the respondents has contended that in view of the decision of the Orissa High Court reported in 1991 ITR 667 : Attar Singh Gurmukh Singh Vs. Income-tax Officer, Ludhiana, the issue is covered in favour of the department. 8. We have heard counsel for the parties and perused the material available on record. 9. We have considered the question placed before us for consideration whether the single transaction can be taken into consideration in a day in view of the amendment which was made w.e.f. 01/04/2009 and from the language used therein, it is very clear that the single transaction can be done in a day but prior to 01/04/2009. 10. In that view of the matter, the Question No.1 is answered in favour of the assessee and against the department. 11. Hence, the appeals are allowed in part. (GOVERDHAN BARDHAR),J. (K.S. JHAVERI)ACTING C.J. Anil Goyal-PS/181-182 "