Rajendra Mulchand Gothi, Nashik V. Assistant Commissioner of Income tax, Nashik

ITA 1291/PUN/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9351 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-01-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Section: 40A(3); 143(3); 201; 191; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY , J UDICIAL MEMBER . / ITA NO . 1291 /PUN/201 7 / ASSESSMENT YEAR : 20 1 3 - 1 4 RAJENDRA MULCHAND GOTHI B - 102/202, ACROPOLIS APARTMENT, THATTE NAGAR, COLLEGE ROAD, NASHIK 422005 PAN : AA UPG4983E ....... / APPELLANT / V/S. THE ASST. COMMISSIONER OF INCOME TAX , CIRCLE 1, NASHIK / RESPONDENT ASSESSEE BY : SHRI PRAMOD SHINGTE REVENUE BY : SHRI S.P. WALIMBE / DATE OF HEARING : 0 9 - 0 1 - 20 20 / DATE OF PRONOUNCEMENT : 10 - 01 - 2020 / ORDER PER ANIL CHATURVEDI , A M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - 1 , NASHIK , DATED 1 0 .0 3 .2017, FOR THE ASSESSMENT YEAR 201 3 - 1 4 . 2 ITA NO.1291/PUN/2017 RAJENDRA M GOTHI 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER : - THE ASSESSEE IS A N INDIVIDUAL STATED TO BE ENGAGED IN THE BUSINESS OF SUPPLYING OF CONSTRUCTION MATERIAL AND LAND DEVELOPMENT. THE ASSESSEE ELECTRONICALLY FILED HIS RETURN OF INCOME FOR A.Y. 2013 - 14 ON 27.09.2013 DECLARING TOTAL INCOME AT RS.97,59,490/ - . THE CASE WAS TAK EN UP FOR SCRUTINY AND T HEREAFTER, ASSESSMENT WAS FRAMED U/S 143(3) OF THE INCOME - TAX ACT , 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE ORDER DATED 01.02.2016 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,02,54,690/ - . AGGRIEVED BY THE ORDER OF ASSESSING OFFICER , ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER D ATED 10.03.2017 (IN APPEAL NO. NSK/CIT(A) - 1/690/2015 - 16 ) GRANTED PARTIAL RELIEF TO THE ASSESSEE . AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND: 1. ON THE BASIS OF FACTS AND THE CIRCUMSTANCES OF THE CASE AND AS PER LAW, THE COMMISSIONER OF INCOME TAX (APPEAL) - 1, NASHIK IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF RS.1,99,195/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE ACT ON ACCOUNT OF PAYMENTS MADE TO M/S. NATRAJ PETROLEUM IN CASH PARTICULARLY WHEN THE GENUINENESS OF THE PAYMENTS MADE ARE NOT IN DISPUTE. 3 . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT IN THE AUDIT REPO RT FILED U/S 44AB OF THE ACT IT WAS STATED THAT THERE WAS VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT AMOUNTING TO RS.4,90,897/. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE AMOUNT STATED IN THE AUDIT REPORT NOT BE DISALLOWED, TO WHICH THE ASSESSEE MADE THE SUBMISSIONS WHICH WERE NOT FOUND ACCEPTABLE TO THE ASSESSING OFFICER. THE ASSESSING OFFICER THEREAFTER HELD THAT THERE WAS VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT AND ACCORDINGLY, DISALLOWED RS.4,90,897/ - . AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESSEE CARRIED THE MATTER 3 ITA NO.1291/PUN/2017 RAJENDRA M GOTHI BEFORE THE CIT(A), WHEREIN IT WAS INTER - ALIA , SUBMITTED THAT THE ASSESSEE HAD PURCHASED DIESEL FROM TIME TO TIME FROM M/S. NATRAJ PETROLEUM SITUATED AT KHAMBALE, TAL IGATPURI, DIST. NASHIK AND THE ASSESSEE WAS NOT HAVING ANY BANK ACCOUNT WHERE THE FUEL PUMP OF M/S. NATRAJ PETROLEUM WAS LOCATED. IT WAS FURTHER SUBMITTED THAT SOME OF THE PAYMENTS WERE MADE ON SUNDAYS AND OTHER BANK HOLIDAYS AND THE PAYMENTS WERE MADE D URING THE COURSE OF BUSINESS AND THE PAYMENTS WERE INCURRED ON ACCOUNT OF BUSINESS EXPEDIENCY. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE DELETED THE PAYMENTS MADE ON SUNDAYS AND ON HOLIDAYS THE PAYMENTS WHERE INDIVIDUAL BILLS WERE LESS THAN RS.20,000/ - , BUT HOWEVER UPHELD THE DISALLOWANCE OF THE BALANCE AMOUNT OF RS.1, 9 9,195/ - . 4 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 5. BEFORE US T HE LD. AR REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND CIT(A) AND FURTHER SUBMITTED THAT THE ASSESSEE IS A CONTRACTOR WHO NEEDS TO GET THE DIESEL FOR HIS VEHICLE S . THE ASSESSEE GETS THE DIESEL FROM M/S. NATRAJ PETROLEUM, WHICH IS SITUATED AT KHAMBALE, TAL IGATPURI, DIST. NASHIK, WHERE TH E ASSESSEE DOES NOT HAVE BANK ACCOUNT. HE SUBMITTED THAT ALL THE PAYMENTS HAVE BEEN MADE TO M/S. NATRAJ PETROLEUM AND ARE FOR THE PURPOSE OF BUSINESS AND HAVE BEEN NECESSITATED ON ACCOUNT OF BUSINESS EXPEDIENCY AND IT IS NOT CASE WHERE THE PAYEES ARE NOT IDENTIFIABLE OR THE PAYMENTS HAVE BEEN FOUND TO BE BOGUS AND THE GENUINENESS OF PAYMENTS IS NOT IN DOUBT. HE FURTHER RELYING ON THE DECISION IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO (1991) 191 ITR 4 ITA NO.1291/PUN/2017 RAJENDRA M GOTHI 677 (SC) AND THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF ANUPAM TELE SERVICES VS. ITO (2014) 366 ITR 122 (GUJ) SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER BE DELETED. HE FURTHER SUBMITTED THAT PUNE TRIBUNAL IN THE CASE OF SHRI SHOUKAT AHAMED MAKHUBHAI VS. ADDL.CIT IN ITA NO.508/PUN/201 5 BY RELYING ON THE AFORESAID DECISIONS OF HONBLE APEX COURT AND HONBLE HIGH COURT HAD DELETED THE ADDITION MADE U/S 40A(3) OF THE A CT. HE PLACED ON RECORD THE COPY OF THE AFORESAID PUNE ITAT DECISION. HE THEREFORE, SUBMITTED THAT THE ADDITION BE DELET ED. 6 . THE L D. DR ON THE OTHER HAND SUPPORTED THE ORDER S OF ASSESSING OFFICER AND CIT(A) . 7 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL IS WITH RESPECT TO DISALLOWANCE MADE U/S 40A(3) OF THE A CT FOR PAYMENTS MADE IN CASH. IT IS NOT IN DISPUTE THAT THE PAYMENTS HAVE BEEN MADE IN CASH BY THE ASSESSEE TO M/S. NATRAJ PETROLEUM. THE PAYMENTS MADE FOR THE PURCHASE OF DIESEL TO THE AFORESAID PARTIES ARE NOT FOUND TO BE BOGUS FOR THE PURPOSE OF PURCH ASE OF DIESEL. WE FIND THAT HONBLE APEX COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO (SUPRA) HAS HELD THAT THE TERMS OF SECTION 40A(3) OF THE ACT ARE NOT ABSOLUTE AND THAT CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. IT HAS FURTHER HELD THAT GENUINE AND BONAFIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION AND IT IS OPEN TO ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENTS IN THE MANNER PRESCRIBED IN SECTION 40A(3) OF THE ACT WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO PAYEE. IT FURTHER OBSERVED THAT PROVISIONS OF SECTION 40A(3) OF 5 ITA NO.1291/PUN/2017 RAJENDRA M GOTHI THE ACT AND RULE 66DD OF THE INCOME - TAX RULES, 1962 ARE INTENDED TO REGULATE BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTIONS. WE FURTHER FIND THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF ANUPAM TELESERVICES VS. ITO ( SUPR A ) AFTER RELYING ON THE AFORESAID DECISION OF APEX COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO (SUPRA) HELD THAT WHEN TRANSACTIONS ARE GENUINE AND THERE WAS REASONABLE EXPLANATION FOR PAYMENT IN CASH, NO DISALLOWANCE U/S 40A(3) OF THE ACT WAS WA RRANTED. NO MATERIAL HAS BEEN PLACED BY REVENUE TO DEMONSTRATE THAT THE AFORESAID PAYMENTS WERE BOGUS OR WERE NOT FOR THE PURPOSE OF BUSINESS. IN THE PRESENT CASE, WE ARE OF THE VIEW THAT THE RATIO OF AFORESAID DECISION S OF HONBLE APEX COURT AND HONBLE GUJARAT HIGH COURT ARE APPLICABLE TO THE PRESENT FACTS. WE THEREFORE HOLD THAT DISALLOWANCE U/S 40A(3) OF THE ACT WAS NOT WARRANTED IN THE PRESENT CASE AND THEREFORE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION . WE THEREFORE IN SUCH A SITUATION A LLOW THE GROUND OF ASSESSEE. 8 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 1 0 T H DAY OF JANUARY , 20 20 . SD/ - SD/ - PARTHA SARATHI CHAUDHURY ANIL CHATURVEDI JUDICIAL MEMBER ACCOUNTANT MEMBER / PUNE; / DATED : 1 0 T H JANUARY , 20 20 GCVSR 6 ITA NO.1291/PUN/2017 RAJENDRA M GOTHI / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 1 , NASHIK 4. / THE PR.CIT - 1 , NASHIK 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // // TRUE COPY// / SR. PRIVATE SECRETARY , / ITAT, PUNE