Assistant Commissioner of Income-tax, V. Late Shri Nirmal Madangopal Dhoot, Aurangabad

ITA 1246/PUN/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1601 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 06-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT HALDER
• Section: 40A(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1246/PN/2014 '% % / ASSESSMENT YEAR : 2010-11 ACIT, CIRCLE - 2, AURANGABAD . / APPELLANT V/S LATE SHRI NIRMAL MADANGOPAL DHOOT, THROUGH L/H SMT. SHILPA N. DHOOT, ANAND, STATION ROAD, AURANGABAD PAN NO.ABIPD6841K . / RESPONDENT / APPELLANT BY : SHRI ABHIJIT HALDER / RESPONDENT BY : SHRI M.K. KULKARNI / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE OR DER DATED 03-03-2014 OF THE CIT(A) AURANGABAD RELATING TO A SSESSMENT YEAR 2010-11. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS AS UNDE R : WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD.CIT(A) AURANGABAD WAS CORRECT IN RELYING ON THE DECISION IN THE CASE OF SHRI RENUKESHWARA RICE MILL VS. ITO REPORTED IN (2005) 93 TTJ 912, ITAT, BANGALORE, ESPECIALLY WHEN THE FACTS ARE NOT SQUARELY APPLICABLE TO ASSESSEES CASE. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF (1) LABOUR SUPPLY CONTRACTOR AND INSURANCE / DATE OF HEARING :30.06.2016 / DATE OF PRONOUNCEMENT:30.06.2016 2 ITA NO.1246/PN/2014 AGENT, (2) TRADING IN PROVOGUE, LEE GARMENTS AND MANUFACTU RING AND (3) TRADING OF INDUSTRIAL ITEMS. HE FILED HIS RETURN OF INCOME ON 1 5-09- 2010 DECLARING TOTAL INCOME OF RS.31,54,100/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT WHILE EFFECTING PURCHASES FROM PROVOGUE INDIA LTD. THE ASSESSEE HAD INCURRED EXP ENDITURE FOR PURCHASES IN RESPECT OF WHICH PAYMENTS WERE MADE OTHER WISE BY AN ACCOUNT PAYEE CHEQUE OR BANK DRAFT, I.E. CASH EXCEEDING RS.20,000/- EACH. THE CASH DEPOSITED INTO THE BANK ACCOUNT OF THE ABOVE MENTIONED PARTY CAME TO RS.66,38,803/-. THE AO, THEREFOR E, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY ADDITION SHOULD NOT B E MADE SINCE THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 40A(3). REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND DISTINGUISH ING VARIOUS DECISIONS CITED BEFORE HIM THE AO MADE ADDITION OF RS.66,38,80 3/- TO THE TOTAL INCOME OF THE ASSESSEE. 4. IN APPEAL THE LD.CIT(A) FOLLOWING HIS ORDER FOR A.Y. 2008-0 9 WHICH HAS SINCE BEEN UPHELD BY THE TRIBUNAL DELETED THE ADDITION BY OBSERVING AS UNDER : 5.5 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NOTICE D THAT THE DECISIONS RELIED ON BY THE A.O. ARE ON DISTINGUISHABLE FACTS AND ARE NOT ON THE ISSUE OF DIRECT DEPOSIT OF CASH IN THE BANK ACCOUNT OF THE PAY EE AGAINST THE PURCHASES. IT IS UNDISPUTED FACT THAT THE APPELLANT HAS MADE CASH PAYMENT IN THE ACCOUNT OF PROVOGUE INDIA LTD. AND THE PAYME NTS AS WELL AS THE PAYEE ARE GENUINE. THERE IS NO ELEMENT OR POSSIBILITY OF TA X EVASION IN THIS TRANSACTION BETWEEN THE APPELLANT AND PROVOGUE INDIA LTD. THE PROVISIONS OF SECTION 40A(3) ARE INTRODUCED TO PREVENT THE TRAN SACTIONS OUTSIDE THE BOOKS RESULTING INTO THE GENERATION OF BLACK MONEY. T HE VERY SIMILAR ISSUE HAS BEEN DECIDED BY HON'BLE ITAT, BANGALORE BENCH IN THE CASE OF SRI RENUKESWARA RICE MILLS VS. ITO (2005) 93 ITD 263 (BANG .) IN FAVOUR OF THE ASSESSEE. THE SAME ISSUE OF DISALLOWANCE U/S 40A(3) ON SIMI LAR FACTS HAS BEEN DECIDED BY THE UNDERSIGNED IN THE CASE OF THE AP PELLANT FOR A.Y.2008- 09 BEARING APPEAL NO.ABD/CIT(APPEALS)/ 204/2010-11 V IDE ORDER DATED 22/06/2011 IN FAVOUR OF THE APPELLANT AFTER CONSIDER ING FACTS OF THE CASE AND RESPECTFULLY FOLLOWING THE ABOVE MENTIONED DECISI ON OF HON'BLE ITAT, BANGALORE. THE SAME RATIO APPLIES TO THE CASE UNDER AP PEAL. 3 ITA NO.1246/PN/2014 AS REGARDS, THE CONTENTION OF THE A.O. THAT SECTION 4 0A(3) WAS AMENDED BY THE FINANCE ACT, 2007 W.E.F., 01/04/2008 AND HENCE NO RELIEF CAN BE GIVEN TO THE ASSESSEE ON ACCOUNT OF EXCEPTIONAL CIRCUMSTANCES IS NOT FOUND TO BE CORRECT . THE A . O. HAS SIMPLY CONSIDERED AMENDED SUB-SECTION (3) AND HAS NOT CONSIDERED SUB-SECTION-3A AND PROVISO TO THESE SUB- SECTIONS. THE PROVISIONS OF SECTION 40A REMAINED THE SAME AND THE ONLY MAJOR CHANGE WHICH HAS BEEN MADE IS TO COVER AGGREGAT E PAYMENTS IN A DAY MADE TO ANY PERSON IN EXCESS OF RS.20,000/-. THE HON'BLE ITAT, PUNE HAS UPHELD THE DECISIONS OF THE UNDERSIGNED ON THE SIMILAR ISSUE DECIDED VIDE HON'BLE ITAT'S ORDERS IN ITA NO.1L44/PN/2012 DATED 28/12/2012 FOR A . Y. 2008-09 AND IN ITA NO.836/PN/2012 DATED 17/07/2013 FOR A . Y.2009-10. THE SAID ORDERS HAVE BEEN PASSED MUCH AFTER THE DATE OF AMENDMENT TO SECTIO N 40A(3) POINTED OUT BY THE A . O. IN VIEW OF THE ABOVE FACTS AND DISCUSSION, THE ADDITION OF RS.66,38,803/- ON ACCOUNT OF DISALLOWANCE U/S 40A(3) O F THE ACT IS DELETED. THE A . O. IS DIRECTED ACCORDINGLY. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET SUBM ITTED THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR A.Y. 2008-09 VIDE I TA NO.1144/PN/2011 ORDER DATED 28-12-2012. FOLLOWING THE S AID DECISION, THE TRIBUNAL AGAIN IN ASSESSEES OWN CASE FOR A.Y . 2009-10 VIDE ITA NO.836/PN/2012 ORDER DATED 17-12-2013 HAS DIS MISSED THE APPEAL FILED BY THE REVENUE. SINCE THE CIT(A) HAS FOLLOWED TH E ORDER OF THE TRIBUNAL IN ASSESSES OWN CASE IN THE IMMEDIATELY PR ECEDING 2 ASSESSMENT YEARS, THEREFORE, THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE AND THEREFORE THE GR OUND RAISED BY THE REVENUE SHOULD BE DISMISSED. 7. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HA ND FAIRLY CONCEDED THAT THE ISSUE STANDS DECIDED AGAINST THE REV ENUE BY THE ORDERS OF THE TRIBUNAL FOR A.YRS. 2008-09 AND 2009-10. 4 ITA NO.1246/PN/2014 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE AO HAS MADE ADDITION O F RS.66,38,803/- ON THE GROUND THAT THE ASSESSEE HAS VIOLA TED PROVISIONS OF SECTION 40A(3) SINCE IT HAS DEPOSITED CASH IN EXCESS OF RS.20,000/- INTO THE BANK ACCOUNT OF PROVOGUE INDIA LTD. WE FIND THE LD.CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.YRS. 2008-09 AND 2009-10 DELETED SUCH DISALLOWANCE WHICH HAS ALREADY BEEN REPRODUCED IN THE PRECEDING PARAGRAPHS. WE FIND IN ASSESSEES OWN CASE THE TRIBUNAL IN A.Y. 200910 WHILE DISMISSING THE APP EAL FILED BY THE REVENUE HAS OBSERVED AS UNDER : 4. IN THE ABOVE BACKGROUND, AT THE TIME OF HEARIN G, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT SIMILAR ISSUE IN THE ASSE SSEE'S OWN CASE FOR ASSESSMENT YEAR 2008-09 WAS A SUBJECT MATTER OF A CONSIDER ATION OF THE TRIBUNAL VIDE ITA NO.1144/PN/2011 DATED 28.12.2012, WHEREIN THE ORDER OF THE CIT(A) WAS AFFIRMED AND REVENUE'S APPEAL WAS DI SMISSED. THE RELEVANT DISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 28.12.2012 (SUPRA) IS AS UNDER :- 'WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. IN THIS CASE, THE FACTS ARE NOT IN DISPUTE. THE ISSUE IN CONTROVERSY IS IN RESPECT OF PAYMENTS MADE TO ONE COMPA NY FROM WHICH, THE ASSESSEE USED TO PURCHASE THE BRANDED ITEMS. AS NOTED BY THE LD. CIT(A), IT WAS AN ARRANGEMENT BETWEEN PROVOG UE INDIA LTD. AND ASSESSEE TO DIRECTLY DEPOSIT THE AMOUNT IN THE BANK A/C. OF THE SAID COMPANY. IT IS ALSO ADMITTED FACT THAT NOWHERE IT IS THE CASE OF THE A.O. THAT THE ASSESSEE HAS PAID CASH DIRECTLY TO PRO VOGUE INDIA LTD.. IN FACT, IN THE IDENTICAL SITUATION IN THE CASE OF SHRI RENUKESHWARA RICE MILLS VS. ITO, 93 TTJ 912 (BANGALORE ), IT IS HELD THAT AS THE PAYMENTS HAVE DIRECTLY GONE TO THE ACCOUN T OF THE PARTY NO DISALLOWANCE CAN BE MADE BY INVOKING PROVISIONS OF SECTION 40A(3). THE PURPOSE OF INTRODUCING HARSH PROVISION LIK E SECTION 40A(3) IS TO SEE THAT THE TRANSACTIONS LATE SHRI NIRMA L MADANGOPAL DHOOT A.Y. 2009-10 ARE IN THE MAIN STREAM OF THE ECO NOMY OF THE NATION AND THERE SHOULD NOT BE SCOPE FOR AVOIDING THE LEGITIMATE TAX, NOWHERE IT IS THE CASE OF THE A.O. THAT THE TRANSACTI ONS ARE NOT DISCLOSED BY EITHER OF THE PARTY. IN OUR OPINION, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AND NO INTERFERENCE IS CALLED FOR. IN THE RESULT, GROUND TAKEN BY THE REVENUE IS DISMISSED.' 5. FOLLOWING THE AFORESAID PRECEDENT, WHICH IS REND ERED ON SIMILAR ISSUE IN ASSESSEE'S OWN CASE IN THE PRECEDING ASSESSMENT YEAR, WE HEREBY AFFIRM THE ORDER OF THE CIT(A) AND ACCORDINGLY, THE REVENUE HAS TO FAIL. 5 ITA NO.1246/PN/2014 9. SINCE THE FACTS OF THE IMPUGNED ASSESSMENT YEAR ARE IDENTICAL TO THE FACTS IN THE 2 PRECEDING YEARS AND SINCE THE TRIBUNA L HAS ALREADY DISMISSED THE APPEALS FILED BY THE REVENUE FOR BOTH THE YE ARS, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTIC E AGAINST THE ORDER OF THE TRIBUNAL, WE FIND NO INFIRMITY IN THE ORDER OF T HE CIT(A) DELETING THE ADDITION MADE BY THE AO U/S.40A(3) OF THE I.T. ACT BY FOLLOWING THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE . WE, THEREFORE, UPHOLD THE ORDER OF THE CIT(A) AND THE GROUND RAISED BY THE REVENUE IS DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSE LF, I.E. ON 30-06-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 30 TH JUNE, 2016. ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) , AURANGABAD 4. 5. 6. THE CIT, AURANGABAD $ ''(, (, / DR, ITAT, A PUNE; - / GUARD FILE. / BY ORDER , // $ ' //TRUE COPY // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE