M/s Hi-Tech Colonisers (P) Ltd., Lucknow V. Additional Commissioner Of Income Tax-III, Lucknow

ITA 132/LKW/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0558 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SWATI KHANNA
• Section: 40A(3); 154

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.132/LKW/2014 ASSESSMENT YEAR:2008 - 09 ADDL. C.I.T. - III, LUCKNOW. VS M/S HI - TECH COLONISERS (P) LTD. 2 ND FLOOR, NEHA COMPLEX, FAIZABAD ROAD, INDIRA NAGAR, LUCKNOW. PAN:AAACH6087K (RESPONDENT) (APPELLANT) NONE APPELLANT BY SMT. SWATI KHANNA, D.R. RESPONDENT BY 15/04/2015 DATE OF HEARING 12 /06/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 10/12/2013 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. BECAUSE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.8,25,000/ - MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT FOR MAKING PURCHASES. 2. BECAUSE THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDIT ION/ DISALLOWANCE MADE BY INVOKING THE PROVISIONS OF SECTION 154 OF THE INCOME TAX ACT 1961. 2 3. NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE APPOINTED DATE OF HEARING ALTHOUGH LEARNED A.R. OF THE ASSESSEE SHRI V. B. BHARGAVA APPEARED ON THE PRECEDING D ATE OF HEARING I.E. 18/02/2015 AND ON THAT DATE , HEARING WAS ADJOURNED ON HIS REQUEST. ON 15/04/2015, THERE IS NO REQUEST FOR ADJOURNMENT ALSO AND UNDER THESE FACTS , WE DECIDE THIS APPEAL OF THE ASSESSEE EX - PARTE QUA THE ASSESSEE. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF CIT(A). 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. OF THE REVENUE, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUE IN DISPUTE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 5 OF HIS ORDER, WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: - 5. I HAVE CONSIDERED THE MATTER. IT IS NOTED THAT THE FOLLOWING PAYMENTS HAVE BEEN DISALLOWED BY THE ASSESSING OFFICER U/S 40A(3) OF THE ACT. S.NO. NAME OF SUPPLIER AMOUNT (IN RS.) 1. PAWAN BRICKS FIELD 1,00,000 2. B.L. TANDON & CO. 30,000 3. PRABHAKAR IRON STORE 1,50,000 4. SWAROOP ROLLING MILLS 50,000 5. SWAROOP ROLLING MILLS 50,000 6. SWAROOP ROLLING MILLS 25,000 7. SWAROOP ROLLING MILLS 50,000 8. MEHROTRA ELECTRICALS 80,000 9. CHEOTHI INDUSTRIES 75,000 10. SHRI RAM MARBLE 95,000 11. SHRI RAM MARBLE 90,000 12. S. KUMAR & CO. 50,000 13. AVADH ASPHALIC 80,000 14. DIAMOND ELECTRIC CO. 30,000 15. DIAMOND ELECTRIC CO. 30,000 16. LUCKNOW ROLLING SHUTTER 50,000 TOTAL 10,35,000 3 IN RESPECT OF PAYMENTS AT S L . NO. 1 TO 7, 9 TO 11 & 14 TO 16 , THE APPELLANT HAS GIVEN THE FOLLOWING REASONS FOR MAKING CASH PAYMENTS IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT: ( A ) THE PROPRIETOR WAS NOT PRESENT AT THE SHOP TO GIVE DIRECTION TO THE STAFF FOR ACCEPTING THE PAYMENT BY ACCOUNT PAYEE CHEQUE. ( B ) THE MATERIAL REQUIRED FOR MILITARY ENGINEERING SERVICES WORK WAS AT THAT TIME AVAILABLE WITH THAT PARTY ONLY. ( C ) P AYMENT WAS MADE IN CASH TO AVOID INTERRUPTION OF WORK. ( D ) ALL OTHER PAYMENTS TO THE PARTY HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES. ( E ) THE MONEY WAS URGENTLY REQUIRED BY THE PARTY. ( F ) THE PAYMENT TO THE PARTY WAS MADE FOR FIRST TIME AS ADVANCE FOR SUPPLY AND PARTY WAS NOT WILLING TO ACCEPT THE ACCOUNT PAYEE CHEQUE. THE APPELLANT HAS ALSO RELIED UPON CERTAIN JUDGMENTS. IT IS NOTED THAT THE CASE LAWS RELIED UPON BY THE APPELLANT RELATE TO OLD CLAUSE (J) OF RULE 6DD WHICH HAS BEEN OMITTED W.E.F. 25.07.1995. THIS EXCEPTION PROVIDED FOR THE CASES WHERE THE ASSESSEE SATISFIED THE AO THAT ( A ) PAYMENT COULD NOT BE MADE THROUGH CROSSED CHEQUE/DRAFT DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES OR ( B ) IMPRACTIBILITY OF MAKING PAYMENT IN THE PRESCRIBED MANNER OR ( C ) GENUINE HARDSHIP THAT SUCH PAYMENT WOULD CAUSE TO THE PAYEE. THERE WAS TOO MUCH LITIGATION ON THE INTERPRETATION OF THESE CONDITIONS HENCE THE OLD CLAUSE (J) WAS OMITTED AND THE PROVISION FOR EXCEPTIONAL CIRCUMSTANCES HAVE BEEN REMOVED FROM THE STATUTE. THUS UNDER THE PRESENT ENACTMENT, EVEN IF UNDER COMPELLING CIRCUMSTANCES THE ASSESSEE HAS TO INCUR SOME EXPENSES IN CASH OVER AND ABOVE THE PRESCRIBED LIMITS, SUCH EXPENDITURE WILL BE SUBJECT TO DISALLOWANCE U/S 40A(3) IF THEY ARE NOT FALLING UNDER THE EXCEPTION AS PROVIDED IN RULE 6DD. AFTER THE OMISSION OF OLD CLAUSE (J) OF RULE 6DD W.E.F. 25.07.95 THE CONSTITUTIONAL VALIDITY OF THIS SECTION WAS CHALLENGED BEFORE THE COURT IN SMT. CH. MANGAYAMMA V. UNION OF INDIA, 239 ITR 4 687 (AP) WHEREIN THE COURT HELD THAT PROVISIONS WERE CONSTITUTIONALLY VALI D AND DELETION OF OLD RULE 6DD(J) BY ITSELF DID NOT MAKE SECTION 40A(3) ARBITRARY AND UNCONSTITUTIONAL. THE HON'BLE ITAT KOLKATA SPECIAL BENCH IN THE CASE OF INCOME - TAX OFFICER V. KENARAM SAHA & SUBHASH SAHA, 116 ITD 1 HAS HELD THAT 'IT IS EVIDENT THAT NO DISALLOWANCE UNDER THIS SUB - SECTION SHALL BE MADE WHERE ANY PAYMENT IN A SUM EXCEEDING RS.20,000 IS MADE OTHE RWISE THAN BY A CROSSED CHEQUE/CROSSED BANK DRAFT IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED. T HUS , THE MANDATE OF THE PROVISO IS TO EXEMPT THE PAYMENT IN VIOLATION OF PROVISIONS OF SECTION 40A(3) IN SUCH CASES AND UNDER SUCH, CIRCUMSTANCES AS MAY BE PRESCRIBED. THE LAST SENTENCE OF THE PROVISO, I.E., 'HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE, CONSID ERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS', IS THE GUIDELINE FOR THE AUTHORITY WHO HAS TO PRESCRIBE THE CASES AND CIRCUMSTANCES UNDER WHICH THE DISALLOWANCE UNDER SECTION 40A(3) WILL NOT BE MADE DESPITE THE PAYMENT EXCEEDING RS. 20,000 OTH ER THAN BY CHEQUE/BANK DRAFT. IN PURSUANCE TO THIS PROVISO, RULE 6DD HAS BEEN BROUGHT INTO THE STATUTE VIDE INCOME - TAX (AMENDMENT) RULES, 1969 WITH EFFECT FROM 01.04.1969. RULE 6DD PRESCRIBES THE CASES AND THE CIRCUMSTANCES, IN WHICH PAYMENT IN A SUM EXCEEDING RS.20,000 / - MAY BE MADE OTHERWISE THAN BY CROSSED CHEQUE DRAWN ON A BANK OR A CROSSED BANK DRAFT. THEREAFTER THIS RULE HAS BEEN AMENDED FROM TIME TO TIME. IN VIEW OF THE ABOVE, I N OUR OPINION, THE ASSESSEE WILL GET THE EXEMPTION FROM THE RIGORS OF SECTION 40A (3) IF HE IS ABLE TO ESTABLISH THAT HIS CASE FALLS WITHIN ANY OF THE CLAUSES OF (A) TO (M) OF RULE 6DD. BURDEN WOULD BE UPON THE ASSESSEE TO ESTABLISH UNDER WHICH PARTICULAR CLAUSE HIS CASE FALLS.' THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THAT HIS CASE FALLS WITHIN ANY OF THE CLAUSES OF RULE 6DD APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR. OTHERWISE ALSO IT MAY BE MENTIONED THAT THE APPELLANT HAS NOT BEEN ABLE TO FURNISH ANY EVIDENCE TO SUBSTANTIATE THE COMPELLING CIRCUMSTANCES UNDER WHICH PAYMENTS IN VIOLATION OF SECTION 40A(3) HAVE BEEN MADE WHICH ARE DETAILED IN THE SUBMISSIONS. 5.1 IN RESPECT OF PAYMENTS AMOUNTING TO RS.80,000/ - , RS.75,000 & RS,80,000/ - MADE TO MEHROTR A ELECTRICALS. S. KUMAR & CO. & AVADH ASPHALIC (MENTIONED AT S L . NO. 8, 12 & 13) THE 5 APPELLANT SUBMITTED THAT THESE THREE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES ISSUED IN THE NAMES OF THE PROPRIETORS OF THE CONCERNS. THE APPELLANT FILED CONFIRMATION DATED 09.12.2013 FROM THE BANK OF INDIA, MAHANAGAR BRANCH IN WHICH THE APPELLANT WAS HAVING ITS ACCOUNT AND THE CHEQUES WERE ISSUED IN THE NAMES OF THESE THREE PERSONS. IT HAS BEEN CONFIRMED THAT THE FOLLOWING CHEQUES WERE CLEARED THROUGH INWA RD CLEARING: DATE CHEQUE NO. NAME AS PER BANK STATEMENT 17.08.2007 85177 PATEL 15.09.2007 90905 RAJ 27.0 9.2007 90927 ASHISH THE APPELLANT FILED CONFIRMATIONS FROM RAJ KUMAR PROP . OF M/S AVADH ASPHALIC & SUNEEL PATEL PROP . OF S. KUMAR & CO. THE APPELLANT ALSO FILED COPY OF BANK STATEMENT OF MR. ASHISH MEHROTRA PROP . OF M/S MEHROTRA ELECTRICALS IN VIJAYA BANK (A/C NO. 712401010017677) TO SHOW THAT THE AMOUNT WAS CREDITED IN HIS ACCOUNT THROUGH CLEARING ON 27.09.2007. I F IND THAT CHEQUES HAVE BEEN ISSUED IN THE NAMES OF INDIVIDUALS VIZ. ASHISH, PATEL & RAJ WHO ARE PROPRIETORS OF M/S. MEHROTRA ELECTRICALS, S. KUMAR & CO. AND AVADH ASPHALIC RESPECTIVELY AND HAVE BEEN CLEARED THROUGH INWARD CLEARING. I T IS NOTED THAT IN RESPECT OF THESE THREE PAYMENTS THE APPELLANT HAS COMPLIED WITH THE PROVISIONS OF SECTION 40A(3). HENCE THE AO WAS NOT JUSTIFIED IN DISALLOWING THE SAME. IN VIEW OF THE ABOVE , I CONFIRM THE ADDITION OF RS. 10, 35,000/ - U/S 40A(3) OF THE ACT EXCEPT THE PAYMENTS OF RS.80,000/ - , RS.50,000/ - AND RS.80,000/ - AS MENTIONED AT SL. NOS. 8, 12 & 13 RESPECTIVELY. ADDITION OF RS.8,25,000/ - IS, THEREFORE, CONFIRMED. 5.1 FROM THE ABOVE PARA FROM THE ORDER OF CIT(A), WE FIND THAT A CLEAR FINDING HAS BEEN GIVEN BY CIT(A) THAT THE ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT HIS CASE FALLS WITHIN ANY OF THE CLAUSES OF RULE 6DD APPLICABLE IN THE PRESENT ASSESSMENT YEAR. HE HAS ALSO GIVEN A FINDING THAT THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH ANY EVID ENCE TO SUBSTANTIATE THE 6 COMPELLING CIRCUMSTANCES UNDER WHICH PAYMENTS IN VIOLATION OF SECTION 40A(3) HAVE BEEN MADE IN THE PRESENT YEAR. SINCE THESE FINDINGS OF C IT(A) COULD NOT BE CONTROVERTED BY BRINGING ANY EVIDENCE BEFORE THE LOWER AUTHORITIES AND NO NE APPEARED BEFORE US TO DO SO , WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LEARNED CIT(A). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12 / 0 6 /2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR