Mr. Parvez Nazir Hussain Jafri, Aurangabad V. Asst. Comm. of Income-tax, Aurangabad

ITA 1040/PUN/2011

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0026 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 16-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIN
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 1143/PN/2011 (ASSTT. YEAR : 2 008-09) THE ACIT, CIR-2 APPELLANT JEEVAN SUMAN 2 ND FLOOR, LIC BUILDING, N-5, CIDCO, AURANGABAD 431 003 V. MR. PARVEZ NASIR HUSSAIN JAFRI RESPONDENT PROP. JAFRI STEEL TRADER, H.NO.2-3-23, ALI MANZIL, SHAH BAJAR, AURANGABAD 431 001 PAN : ACQPJ2534A C.O. NO. 91/PN/2011 (ARISING OUT OF ITA NO. 1143/PN/2011) (ASSTT. YEAR : 2008-09) SHRI PARVEZ NASIR HUSSAIN JAFRI CROSS OBJECTOR PROP. JAFRI STEEL TRADER, H.NO.2-3-23, ALI MANZIL, SHAH BAJAR, AURANGABAD 431 001 PAN : ACQPJ2534A V. THE ACIT, CIR-2 RESPONDENT JEEVAN SUMAN 2 ND FLOOR, LIC BUILDING, N-5, CIDCO, AURANGABAD 431 003 ITA NO. 1040/PN/2011 (ASSTT. YEAR : 2008-09) MR. PARVEZ NASIR HUSSAIN JAFRI APPELLANT PROP. JAFRI STEEL TRADER, H.NO.2-3-23, ALI MANZIL, SHAH BAJAR, AURANGABAD 431 001 PAN : ACQPJ2534A V. THE ACIT, CIR-2 RESPONDENT JEEVAN SUMAN 2 ND FLOOR, LIC BUILDING, N-5, CIDCO, AURANGABAD 431 003. ASSESSEE BY : SHRI. M.K. KULKARNI RESPONDENT BY : SMT. VIN ITA MENON DATE OF HEARING : 13/12/ 12 DATE OF PRONOUNCEMENT : 28-12-12 2 ITA NO.1143,1040 & C.O.91/PN/2011 SHRI PARVEZ NASIR HUSSAIN JAFRID A.Y.2008-09 O R D E R PER BENCH : THIS BATCH OF TWO APPEALS AND ONE CROSS OBJECTION ARE BEING DISPOSED OF BY THIS COMMON ORDER AS THE SAME PERTAI N TO A.Y. 2008-09. ITA NO. 1143/PN/2011 2. THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD CIT(A), AURANGABAD DATED 17.6.2011 FOR T HE A.Y. 2008-09. THE REVENUE HAS TAKEN FOLLOWING EFFECTIVE GROUNDS : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), AURAN GABAD WAS CORRECT IN RELYING ON THE DECISION IN THE CASE OF S HRI RENUKESHWARA RICE MILLS VS. ITO (2005) 93 TTJ 912, ITAT, BANGALO RE, ESPECIALLY WHEN THE FACTS ARE NOT SQUARELY APPLICABLE TO ASSES SEES CASE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), AURAN GABAD WAS CORRECT IN RELYING THE APPEAL BY CONSIDERING THE DE CISION OF THE CIT(A) FOR THE IMMEDIATELY PRECEDING YEAR, AS EVEN IF THE RULE OF RE JUDICATE HAS NOT APPLICATION FOR TAX PROCEEDIN GS IN RESPECT OF THE SAME ASSESSEE FOR DIFFERENT YEARS. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), AURAN GABAD WAS CORRECT IN HOLDING THAT PAYMENTS MADE BY THE ASSESS EE ARE MADE TO SAME PARTIES DESPITE THE FACT THAT THE PARTIES WERE NOT TRACEABLE ON THE GIVEN ADDRESS. 3. THE FACTS WHICH REVEAL FROM THE RECORD ARE AS U NDER. THE ASSESSEE IN HIS INDIVIDUAL CAPACITY IS ENGAGED IN THE BUS INESS OF TRADING IN ALL KINDS OF SCRAP MATERIAL UNDER THE NAME AND STYLE AS M/S. JAFRI STEEL TRADERS. THE ASSESSEE FILED THE RETURN OF INCOME F OR THE A.Y. 2008-09 DECLARING TOTAL INCOME OF RS.5,18,000/-. THE ASSES SMENT OF THE ASSESSEE WAS COMPLETED BY THE A.O U/S. 143(3) DETERMINING TO TAL INCOME AT RS. 1,43,44,200/-, MAKING MAJOR ADDITION OF RS. 1,38,26 ,200/- FOR ALLEGED VIOLATION OF SEC. 40A(3) OF THE ACT. IT WAS NOTIC ED BY THE A.O THAT THE ASSESSEE HAD MADE PAYMENTS THROUGH BEARER CHEQUES F OR PURCHASE OF THE GOODS FROM M/S. SEEM ENTERPRISES AND M/S. J A TRADI NG COMPANY, AMOUNTING TO RS.1,38,26,200/- IN CONTRAVENTION OF S EC. 40A(3) OF THE ACT. THE A.O. HAS GIVEN THE DETAILS OF THE SAID PAY MENTS IN PARA 4.1 OF HIS ORDER AND MORE PARTICULARLY, THAT WAS IN RESPECT O F THE BANK A/C. NO. 5717 OF BOMBAY MERCANTILE CO-OPERATIVE BANK LTD., A URANGABAD. THE 3 ITA NO.1143,1040 & C.O.91/PN/2011 SHRI PARVEZ NASIR HUSSAIN JAFRID A.Y.2008-09 A.O. HAS OBSERVED THAT THE PAYMENTS MADE TO THE ABO VE PARTIES AS PER DETAILS GIVEN IN PARA NO. 4.1 IN THE ASSESSMENT ORD ER ARE NOT COVERED BY ANY EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES AS ME NTIONED UNDER RULE- 6DD OF THE INCOME TAX RULES. THE A.O. SOUGHT EXPLA NATION OF THE ASSESSEE AS TO WHY AN AMOUNT OF RS. 1,38,26,200/- S HOULD NOT BE DISALLOWED AS SAID PAYMENT WAS MADE IN VIOLATION OF THE PROVISIONS OF SEC. 40A(3) OF THE ACT. THE ASSESSEE FILED THE REP LY WHICH IS REPRODUCED IN PARA NO. 4.3 OF THE ASSESSMENT ORDER. THE ASSES SEE STATED BEFORE THE A.O THAT THE PAYMENTS TO ABOVE PARTIES WERE MADE BY THE BEARER CHEQUES SINCE HE WAS NOT AWARE OF THE PROVISIONS OF SEC. 40A(3), BUT ALL THE TRANSACTIONS ARE GENUINE. IT IS STATED THAT ST ATEMENT OF ACCOUNT OF THE PARTIES AND CONFIRMATION LETTERS WERE OBTAINED AND FROM THE INVOICES RECEIVED AGAINST THE PURCHASES FROM THEM WHICH WERE HAVING THE VAT NOS. MOREOVER, ALL THE TRANSACTIONS ARE DULY REFL ECTED IN THEIR BOOKS OF ACCOUNT AND THE PARTIES HAVE CONFIRMED THE SAME. IT IS FURTHER STATED THAT THERE IS A PROOF BY WAY OF COPIES OF THE BANK CHEQUES & ON THE BACK SIDE OF THE CHEQUES ISSUED, THE CONCERNED PARTIES H AVE PUT THEIR RUBBER STAMP AND ALSO SIGNED. THE ASSESSEE ALSO CONTENDED THAT THE IDENTICAL ADDITION WAS MADE IN THE A.Y. 2007-08 AND SAME WAS DELETED BY THE LD. CIT, AURANGABAD IN THE REVISION PETITION U/S. 264 O F THE ACT. THE A.O. WAS NOT IMPRESSED WITH THE EXPLANATION OF THE ASSES SEE AND HE REJECTED SAME AND MADE THE ADDITION OF RS. 1,38,26,200/-. 4. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD CIT (A) AND FOUND FAVOUR. THE REASONS RECORDED BY THE LD CIT(A) FOR DELETING THE ADDITION ARE AS UNDER : 7. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND RIVAL CONTENTIONS OF THE A.O AND THE APPELLANT. NOW I PR OCEED TO DEAL WITH THE CONTENTIONS RAISED BY THE A.O. AND THE APPELLANT. 7.1 THE A.O HAS RELIED ON THE FOLLOWING DECISIONS I N SUPPORT OF DISALLOWANCE U/S 40A(3) WHICH ARE ON DISTINGUISHABL E FACTS (I) CIT VS. HIMACHAL TEREPENE PRODUCTS (P) LTD. 269 ITR 538 (CAL.): IN THIS CASE THE ISSUE DECIDED IS THAT IN ABSENCE O F ANY EVIDENCE THAT THEIR EXISTED EXCEPTIONAL CIRCUMSTANCES, CASH PAYME NTS ARE TO BE DISALLOWED U/S 40A(3). (II) CIT VS. A.D. JAYAVEERAPANDIA NADAR & CONS (2007) 20 7 CTR 428 (MD-HC): IN THIS CASE, THE ISSUE DECIDED IS THAT IN THE CASES WHERE CASH PAYMENTS WERE MADE TO ASSOCIATE CONCERNS, DISALLOWA NCE U/S 40A(3) IS TO BE UPHELD. 4 ITA NO.1143,1040 & C.O.91/PN/2011 SHRI PARVEZ NASIR HUSSAIN JAFRID A.Y.2008-09 (III) MUNGI BROTHERS VS. ASST. CIT (2007) 207 CTR 216(KAR N-HC): IN THIS CASE, THE ISSUE DECIDED IS THAT WHERE EXPLANAT ION FURNISHED FOR MAKING CASH PAYMENT IS NOT FOUND SATISFACTORY SUCH PAYMENTS ARE TO BE DISALLOWED U/S 40A(3). (IV) ITO VS. EVERSHINE PLATERS (2004) 90 TTJ 929 (AGRA-T RIB): IN THIS CASE, THE ISSUE DECIDED IS THAT THE CASH PAYMENTS M ADE TO ILLITERATE CONTRACTORS ARE COVERED BY DISALLOWANCE U/S 40A(3). IN THE FOLLOWING CASES, THE ISSUE DECIDED IS T HAT THE PAYMENT MADE IN CASH FOR PURCHASE OF STOCK IN TRADE IS COVERED BY T HE PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT. (I) RATAN UDYOG VS. ITO CIRCLE 1(1), KANPUR AND ANOTHER 109 ITR 1 (ANN) (1977) (II) U.P. HOTELS AND RESTAURENT LIMITED VS. CIT U.P. 104 ITR 664 (ALL) (1975). (III) SAJOWALA JAISWAL VS. CIT ORISSA 103 ITR 706 (ORI) (1975) (IV) CIT AMRUTSAR-II VS. KHISAPCHAND MABESHWARI DAS 121 ITR 232 (1979) (V) P.R. TEXTILE VS. KERALA 121 ITR 237 (KER) (1975) 3 (VI) ATTARSINGH GURUMUKH SINGH VS. INCOME TAX OFFICER, L UDHIANA 191 ITR 667 FROM THE ABOVE FACTS IT IS CLEAR THAT THE ISSUE TO BE DECIDED UNDER APPEAL HAS NOT BEEN DECIDED IN THE ABOVE MENTIONED CASES RELIED ON BY THE A.O. 8. THE FIRST CONTENTION OF THE APPELLANT IS THAT TH E ASSESSMENT ORDER AND THE DEMAND NOTICE HAS NOT BEEN PROPERLY SERVED U/S 282 OF THE ACT AS THE SAME HAS BEEN SERVED ON THE AUTHORISED REPRE SENTATIVE/CHARTERED ACCOUNTANT WHO WAS NO AUTHORIZED TO ACCEPT ANY STAT UTORY NOTICE. ON PERUSAL OF THE COPY OF POWER OF ATTORNEY ISSUED BY THE APPELLANT IN FAVOUR OF THE CHARTERED ACCOUNTANT, IT HAS BEEN NOTICED TH AT THE APPELLANT HAS AUTHORIZED THE CHARTERED ACCOUNTANT TO DO ALL ACTS WHICH ARE NECESSARY AND INCIDENTAL FOR PROPER CONDUCT OF THE CASE SUCH AS FILING OF RETURNS, APPEALS, REVISION APPLICATION AND TO GIVE REPLY TO THE NOTICES, TO FURNISH DETAILS REQUIRED ETC. IT HAS BEEN FURTHER STATED I N THE SAID POWER OF ATTORNEY THAT ALL THE ACTS DONE BY THE POWER OF ATT ORNEY HOLDER SHALL BE DEEMED TO HAVE BEEN DONE BY THE APPELLANT. IN VIEW OF THE ABOVE FACT, IT CANNOT BE SAID THAT THE CHARTERED ACCOUNTANT WAS NO T AUTHORIZED TO ACCEPT THE ASSESSMENT ORDER AND THE DEMAND NOTICE. FURTHER, ON PERUSAL OF THE APPEAL MEMO, IT HAS BEEN NOTICED THAT THE AP PELLANT HAS FILED APPEAL ON 05/01/2011 AND THE APPEAL MEMO IS SIGNED BY THE APPELLANT ON 04/01/2011. THIS FACT ITSELF PROVES THAT AFTER SER VICE OF ASSESSMENT ORDER AND DEMAND NOTICE ON THE CHARTERED ACCOUNTANT, THE FACT HAS BEEN IMMEDIATELY COMMUNICATED TO THE APPELLANT AND DETAI LED STATEMENT OF FACTS, GROUNDS OF APPEALS RUNNING INTO 10 PAGES HAV E BEEN PREPARED AND THE SAME HAS BEEN SIGNED BY THE APPELLANT ON 04/01/ 2011. IT IS NOT IN DISPUTE THAT THE A.O. HAS PASSED THE ASSESSMENT ORD ER ON 30/12/2010. IN VIEW OF THE ABOVE FACTS, I AM OF THE CONSIDERED VIE W THAT THE APPELLANT IS NOT JUSTIFIED IN RAISING THE CONTENTION THAT THE AS SESSMENT ORDER AND THE DEMAND NOTICE HAS NOT BEEN PROPERLY SERVED U/S 282 OF THE ACT BY WAY OF RAISING ADDITIONAL GROUND DURING THE APPELLATE PROC EEDINGS. THE DECISION RELIED ON BY THE AR OF THE APPELLANT IN THE CASE OF MULAY BROTHERS VS. 5 ITA NO.1143,1040 & C.O.91/PN/2011 SHRI PARVEZ NASIR HUSSAIN JAFRID A.Y.2008-09 DCIT, AURANGABAD BEARING ITA NO. 1436/PN/2002 A.Y. 1985-86 DATED 11/09/2009 IS ON DISTINGUISHABLE FACTS. THE CONTEN TION AND THE ADDITIONAL GROUND RAISED BY THE APPELLANT IS, THEREFORE, DISMI SSED. 8.1. THE SECOND CONTENTION RAISED BY THE APPELLANT IS THAT THE PAYMENT BY BEARER CHEQUES AMOUNTS TO PAYMENT BY BILL OF EX CHANGE AND HENCE ARE OUTSIDE THE PURVIEW OF PROVISIONS OF SECTION 40 A(3) OF THE ACT AND IS SUPPORTED BY THE DECISION IN THE CASE OF CIT VS. VI JAYKUMAR GOYAL(2010) 235 CTR 516 (CHHATISGARH). THIS CONTENTION OF THE APPELLANT IS NOT ACCEPTABLE AS THE LANGUAGE OF SECTION 40A(3) IS CLE AR AND NOT AMBIGUOUS. THE SECTION CLEARLY STATES THAT WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT OR AGGREGA TE 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 20,0 00 RUPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPEN DITURE. FURTHER, IN THE CASE DECIDED BY HONBLE HIGH COURT OF CHHATISGA RH RELIED ON BY THE APPELLANT, THE PAYMENTS WERE MADE BY PAY ORDERS, BA NKERS CHEQUES AND CDRS AND NOT BY BEARER CHEQUES. IT IS WORTH NOTHIN G HERE THAT THE SAID PAY ORDERS, BANKERS CHEQUES AND CDRS WERE CREDITED IN THE BANK ACCOUNT OF THE PAYEE. THEREFORE, THE FACTS OF THE CASE REL IED ON BY THE APPELLANT ARE DISTINGUISHABLE. 8.2 THE THIRD CONTENTION OF THE APPELLANT IS THAT O N VERY SIMILAR FACTS IN THE CASE OF THE APPELLANT FOR A.Y. 2007-08, THE COM MISSIONER OF INCOME TAX, AURANGABAD VIDE ORDER U/S 264 DATED 21/0/2010 HAS DELETED THE SIMILAR DISALLOWANCE U/S 40A(3) OF THE ACT. THE SA ID ORDER OF CIT, AURANGABAD IS NOT BINDING ON THE FIRST APPELLATE AU THORITY, HOWEVER, SOME OF THE RELEVANT OBSERVATIONS AND FINDINGS CAN BE CO NSIDERED. ON THE SIMILAR FACTS OF A.Y. 2007-08, THE CIT, AURANGABAD HAS HELD THAT THE OBJECT OF PROVISION OF SECTION 40A(3) IS TO CHECK T HE EVASION OF TAXES AND TO ENSURE THAT THE PAYMENT IS MADE FROM THE DISCLOS URE SOURCES AS LAID DOWN IN THE CASE OF GIRIDHARILAL GOYANKA VS. CIT 17 9 ITR 122 (CALCUTTA). THE CIT, AURANGABAD HAS FURTHER HELD THAT THE EVIDE NCE PRODUCED BY THE APPELLANT IN THE FORM OF BANK STATEMENTS, LEDGER EX TRACT OF PARTIES, COPIES OF BANK CHEQUES ISSUED BY THE APPELLANT WHICH ARE D ULY SIGNED AND AFFIXED BY RUBBER STAMP OF THE PARTIES PROVED THE GENUINENE SS OF THE PAYMENT BY BEARER CHEQUES. THE CIT, AURANGABAD HAS ALSO FOLLO WED THE RATIO LAID DOWN IN THE CASE OF SRI. RENUKESHWARA RICE MILLS VS . INCOME TAX OFFICER (2005) 93 ITD 263 (BANGALORE). CONSIDERING THE TOT ALITY OF THE FACTS, THE CIT, AURANGABAD HAS DELETED THE DISALLOWANCE U/S 40 A(3) FOR A.Y. 2007- 08 VIDE ORDER U/S 264 DATED 21/05/2009. 8.3 THE FOURTH CONTENTION OF THE APPELLANT THAT THE OBJECT OF PROVISIONS OF SECTION 40A(3) IS TO CHECK EVASION OF TAXES BY E NSURING THAT THE PAYMENTS ARE MADE OUT OF DISCLOSED SOURCES IS FOUND TO BE SUPPORTED BY THE RATIO LAID DOWN IN THE CASE OF GIRIDHARI GOYANK A VS. CIT 179 ITR 122 (CALCUTTA). 8.4 THE FIFTH CONTENTION OF THE APPELLANT THAT THE PAYMENTS MADE BY BEARER CHEQUES WERE AS GOOD AS PAYMENTS MADE BY CRO SSED CHEQUES ARE FOUND TO BE REASONABLE AND CORRECT FOR THE REASONS THAT (A) THE STATEMENT OF ACCOUNTS AND CONFIRMATION LETTERS OF THE PARTIES , INVOICES RECEIVED AGAINST PURCHASES BEARING VAT NUMBERS CONFIRMS THE GENUINENESS OF THE ACTUAL PAYMENTS MADE; (B) IN THE BANK STATEMENT THE NAME OF THE PAYEE IS CATEGORICALLY MENTIONED WHICH PROVES THE PAYMENT TO SPECIFIED PARTIES; 6 ITA NO.1143,1040 & C.O.91/PN/2011 SHRI PARVEZ NASIR HUSSAIN JAFRID A.Y.2008-09 (C) FURTHER, COPIES OF CHEQUES ISSUED OBTAINED FROM BANK SHOW THAT ON THE BACK OF THE CHEQUES RUBBER STAMP OF THE PARTIES IS AFFIXED ALONGWITH SIGNATURE. 8.5 THE APPELLANT HAS ALSO CONTENDED THAT IN VIEW O F THE ABOVE FACTS THE DISALLOWANCE IS NOT COVERED BY PROVISIONS OF SE CTION 40A(3) IN VIEW OF RATIO LAID DOWN BY THE DECISION IN THE CASE OF SRI. RENUKESHWARA RICE MILLS VS. INCOME TAX OFFICER (2005) 93 ITD 263(BANGALORE) . THE HONBLE ITAT, BANGALORE HAS HELD THAT THE EFFECT OF ISSUE OF CRO SSED CHEQUE/DD IS THAT THE PAYEE NAMED THEREIN RECEIVES THE PAYMENT THROUG H BANKING CHANNELS. THE PURPOSE IS DUAL. IN THE FIRST INSTANCE, IT IS TO SEE THAT THE PAYEE AND PAYEE ALONE RECEIVES THE PAYMENT AND TO ENSURE THAT THE PAYMENT IS ROUTED THROUGH BANKING CHANNEL SO AS TO TRACE THE O RIGIN AND CONCLUSION OF THE TRANSACTION. IN THE INSTANT CASE, INSTEAD OF I SSUING CHEQUE/DD, THE ASSESSEE PREPARED A CHALLAN AND ALONG WITH THE CASH THE CHALLAN WAS PRESENTED TO THE BANK OF THE PAYEE FOR THE CREDIT O F THE SAME IN THE ACCOUNT OF PAYEE. IN THE RESULT, IT WAS ENSURED TH AT THE PAYEE AND PAYEE ALONE RECEIVED THE PAYMENT AND THE ORIGIN AND CONCL USION OF TRANSACTION WAS TRACEABLE. THUS, PAYMENT OF SUM DIRECTLY IN TH E BANK ACCOUNT OF PAYEE FULFILLED THE CRITERIA FOR ENSURING THE OBJEC T OF INTRODUCTION OF SECTION 40A(3). THAT WAS NOT A DIRECT PAYMENT TO THE PAYEE BUT ONLY TO THE CREDIT OF HIS BANK ACCOUNT WITHOUT THE PAYEE ACTUAL LY RECEIVING THE CASH; ACCORDINGLY, SUCH PAYMENT WAS NOT IN VIOLATION OF P ROVISION OF SECTION 40A(3) AND, HENCE NO DISALLOWANCE WAS CALLED FOR. 8.6. IN THE ABOVE MENTIONED DECISION OF HONBLE ITA T, BANGALORE, THE ASSESSEE HAS NOT MADE PAYMENT OF EXPENDITURE BY CRO SSED ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT TO THE PAYEE BUT HAS DEPOSIT ED CASH IN THE BANK ACCOUNT OF THE PAYEE. THE HONBLE ITAT HAS HELD TH AT ON THE ABOVE FACTS, THE ORIGIN AND CONCLUSION OF THE TRANSACTION IS TRA CEABLE. THEREFORE, THE EFFECT OF MAKING PAYMENT BY CROSSED ACCOUNT PAYEE C HEQUE TO ENSURE THAT THE PAYEE MENTIONED IN THE CHEQUE RECEIVES THE PAYMENT IS FULFILLED IN THE CASE DECIDED BY THE HONBLE ITAT, BANGALORE. THE HONBLE ITAT FURTHER HELD THAT THE CASH PAYMENT DIRECTLY IN THE BANK ACCOUNT O THE PAYEE FULFILLS THE OBJECTS WITH WHICH THE PROVISION S OF SECTION 40A(3) HAVE BEEN INTRODUCED. IN THE CASE UNDER APPEAL THE PAYM ENTS HAVE BEEN MADE BY BEARER CHEQUES WHICH ARE IN THE NAMES OF TH E PAYEES/SUPPLIERS AND THE BANK STATEMENTS AND COPIES OF THE CHEQUES I SSUED ON THE BACK OF WHICH STAMP AND SIGNATURE OF THE PAYEES IS AFFIXED/ MADE ENSURES THAT THE PAYMENT HAS BEEN RECEIVED BY THE PAYEES. FURTHER, THE LEDGER EXTRACTS OF THE SAID PARTIES IN THEIR BOOKS AND PAYMENT OF VAT ALSO CONFIRMS THAT THE SAID PAYMENTS HAVE BEEN ACCOUNTED FOR BY BOTH THE P ARTIES. THEREFORE, ON THE FACTS OF THE CASE OF THE APPELLANT THE ORIGI N AND CONCLUSION OF THE TRANSACTION IS TRACEABLE. THEREFORE, THE EFFECT OF MAKING PAYMENT BY CROSSED ACCOUNT PAYEE CHEQUE TO ENSURE THAT THE PAY EE MENTIONED IN THE CHEQUE RECEIVES THE PAYMENT IS FULFILLED IN THE C ASE UNDER APPEAL. FURTHER, IN VIEW OF THE ABOVE FACTS, THE OBJECT WIT H WHICH THE PROVISIONS OF SECTION 40A(3) HAVE BEEN INTRODUCED HAS BEEN FULFIL LED. IT IS WORTH NOTING HERE THAT THE ASSESSMENT YEAR INVOLVED IN THE CASE DECIDED BY THE HONBLE ITAT, BANGALORE IS 1998-99 WHICH IS AFTER THE AMEND MENT TO RULE-6DD(J) FROM A.Y. 1996-97 I.E. W.E.F. 25/07/1995. THEREFOR E, BOTH THE CASES I.E. THE CASE DECIDED BY HONBLE ITAT, BANGALORE AND THE CASE UNDER APPEAL RELATES TO THE ASSESSMENT YEAR AFTER THE AMENDED RU LE-6DD(J). IN VIEW OF THE ABOVE FACTS, I AM OF THE CONSIDERED VIEW THA T THE RATIO LAID DOWN BY 7 ITA NO.1143,1040 & C.O.91/PN/2011 SHRI PARVEZ NASIR HUSSAIN JAFRID A.Y.2008-09 HONBLE ITAT, BANGALORE RELIED ON BY THE APPELLANT IS APPLICABLE TO THE FACTS OF THE CASE OF THE APPELLANT. 8.7 IN VIEW OF THE ABOVE FACTS AND DISCUSSION AND R ESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE ITAT, BANGALORE IN THE CASE OF SRI. RENUKESHWARA RICE MILLS VS. INCOME TAX OFFICER (200 5) 93 ITD 263, THE DISALLOWANCE U/S 40A(3) AMOUNTING TO RS. 1,38,26,20 0/- IS NOT JUSTIFIED AND HENCE DELETED. THE A.O. IS DIRECTED ACCORDINGL Y. GROUND NOS. 1 & 2 ARE ALLOWED. NOW THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORD. THE LD. COUNSEL PLACED HIS HEAVY RELIANCE O N THE DECISION OF THE ITAT BANGALORE BENCH IN THE CASE OF SRI. RENUKESHWA RA RICE MILLS V. ITO, 93 ITD 263 (BANG.). RULES 6DD HAS UNDERGONE AMENDM ENT FROM THE A.Y. 2009-10. SO FAR AS THE DECISION IN THE CASE O F SRI. RENUKESHWARA RICE MILLS (SUPRA) IS CONCERNED, THE SAID ASSESSEE WAS IN THE BUSINESS OF RICE MILLS. THE ASSESSEE PURCHASED THE RICE FROM T HE AGRICULTURE PRODUCE COMMITTEE AND DEPOSITED THE AMOUNTS BY PREPARING TH E CHALLAN & CASH WAS DEPOSITED IN BANK ACCOUNT OF THE SELLER NAMELY M/S. K. PARAMESHWARAPPA & CO. THE A.O. MADE THE DISALLOWAN CE FOR THE VIOLATION OF THE SEC. 40A(3). WHEN THE MATTER REAC HED BEFORE THE TRIBUNAL, THE TRIBUNAL RELIED ON THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF ATTARSINGH GURUMUKH SINGH, 191 ITR 667 AND DELETED THE ADDITION. IN THE PRESENT CASE, THE ASSESSEE HAS PR ODUCED CONFIRMATION OF THE PARTIES SHOWING THE IDENTITY TO WHOM THE PAYMEN TS ARE MADE BY BEARER CHEQUES. MOREOVER, IT IS NOT CONTROVERTED B EFORE US THAT AS PER THE EVIDENCE IN FORM OF COPIES OF THE BANK CHEQUES OBTAINED FROM THE CONCERNED BANK, ALL THE RESPECTIVE PARTIES HAVE PUT THEIR SEALS AND SIGNATURES ON SAID CHEQUES FOR GETTING PAYMENTS AND THAT SHOWS THAT THE PAYMENTS ARE RECEIVED BY THE PAYEES ONLY. MOREVER, ASSESSEE ALSO DEMONSTRATED THE GENUINENESS OF THE PAYMENTS BY FIL ING THE LEDGER EXTRACTS OF THE SAID PARTIES IN THEIR BOOKS OF ACCO UNT AND PAYMENT OF VAT WAS ALSO CONFIRMED. THIS HAS NOT BEEN CONTROVERTED BEFORE US. WE ALSO FIND THAT ON THE IDENTICAL FACTS IN THE IMMEDIATELY PRECEDING YEAR, THE LD CIT, BANGALORE, DELETED THE ADDITION IN THE REVISIO N PETITION FILED BY THE ASSESSEE U/S. 264 OF THE ACT. WE FURTHER FIND THAT NOWHERE IT IS THE OBJECTION OF THE A.O THAT THE PAYMENTS BY THE BEARE R CHEQUES TO THE PARTIES HAVE NOT GONE INTO THEIR ACCOUNTS. ANOTHE R ASPECT IS THAT THERE IS NOT SINGLE CASH PAYMENT, BUT ALL PAYMENTS ARE MADE BY THE BEARER CHEQUES. THE PURPOSE OF MAKING COMPULSION OF THE PAYMENT BY THE 8 ITA NO.1143,1040 & C.O.91/PN/2011 SHRI PARVEZ NASIR HUSSAIN JAFRID A.Y.2008-09 CROSSED CHEQUES IS TO ENSURE THAT THE PAYMENTS GO T O THE SAME PARTY. IN THIS CASE, IT IS PROVED THAT A PAYMENT HAVE BEEN GO NE TO THE PAYEE ONLY. IN OUR OPINION, THE LD CIT(A) HAS RIGHTLY DELETED T HE ADDITION AND NO INTERFERENCE IS CALLED FOR IN HIS ORDER ON THIS ISS UE. ACCORDINGLY, THE RELEVANT GROUNDS TAKEN BY THE REVENUE ARE DISMISSE D. C.O.NO. 91/PN/2011 GROUND NO.1 6. THE LD. COUNSEL FAIRLY CONCEDED THAT THE CROSS O BJECTION IS ONLY TO SUPPORT THE ORDER OF THE LD CIT(A). WE ALSO FIND T HAT THE ASSESSEE HAS NOT RAISED ANY GRIEVANCE AGAINST THE ORDER OR PART OF THE ORDER OF LD CIT(A), HENCE, THE CROSS OBJECTION IS INFRUCTUOUS. ACCORDINGLY, THE GROUND TAKEN BY THE ASSESSEE IS DISMISSED. ITA NO. 1040/PN/2011 7. THE LD COUNSEL SUBMITS THAT HE IS NOT PRESSING T HE APPEAL AND HE WANT TO WITHDRAW THE SAME. THE LD. D.R. HAS NO OBJ ECTION. ACCORDINGLY, THE APPEAL IS DISMISSED AS WITHDRAWN. 8. IN THE RESULT, BOTH THE APPEALS AS WELL AS THE C ROSS OBJECTION ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 28 TH DECEMBER 2012. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (R.S.PADVEKAR) JUDICIAL MEMBER PUNE, DATED THE 28 TH DECEMBER, 2012 US/SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT, AURANGABAD 4. THE CIT(A)- AURANGABAD 5. THE D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE