ITO,Ward-37(1), Kolkata, Kolkata V. M/s. A.B. Wine Stores, Kolkata

ITA 1369/KOL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0505 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 25-09-2012
• Court: TRIBUNAL
• Department Lawyers: SANJAY
• Keywords: Additional evidence; Condonation of delay
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 1 369 /KOL/201 2 ASSESSMENT YEAR : 200 7 - 0 8 INCOME - TAX OFFICER, WD - 37(1), KOLKATA. VS. M/S. A. B. WINE STORES (PAN: AAJFA6312L) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 1 0 .0 6 .2015 DATE OF PRONOUNCEMENT: 1 0 . 0 6 . 2015 FOR THE APPELLANT: S HRI SANJAY, ADDL. CIT FOR THE RESPONDENT: SHRI RAVI TULSIYAN, FCA ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF CIT (A) - XXIV , KOLKATA VIDE APPEAL NO. 689 /CIT(A) - XXIV/37(1)/09 - 10 DATED 2 9 . 0 6 .201 2 . ASSESSMENT WAS FRAMED BY ITO, WARD - 37(1), KOLKATA U/S. 1 43(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 7 - 0 8 VIDE HIS ORDER DATED 3 1 . 12 .20 09 . 2. AT THE OUTSET, IT IS NOTICED THAT THIS APPEAL BY REVENUE IS TIME BARRED BY 16 DAYS AND FOR CONDONATION OF DELAY A PETITION SUPPORTED BY AFFIDAVIT IS FILED. WHEN THE AFFIDAVIT WAS CONFRONTED TO LD. COUNSEL FOR THE ASSESSEE, HE FAIRLY CONCEDED THAT THE CAUS ES SHOWN BY REVENUE ARE REASONABLE AND HENCE, DELAY CAN BE CONDONED. IN TERM OF THE ABOVE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAINST THE ORDER OF CIT(A) DELETING THE ADDITION MADE BY AO BY INVOKING THE PROVISION OF SECTION 40A(3) OF THE ACT FOR CASH PAYMENT OF RS.17,50,315/ - . FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1: 1. THE LD. CIT(A) - XXIV, KOLKATA ERRED IN DELETING THE ADDITION OF RS.17,50,318/ - MADE U/S. 40A(3) BY ACCEPTING THE ADDITIONAL EVIDENCE IN THE FORM OF STATEMENT SPECIFYING MONEY RECEIPT NUMBER IN EACH PAYMENT, WHICH CLEARLY VIOLATED RULE 46A OF THE I. T. RULES, 1962. 4. BRIEFLY STATED FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED FROM VERIF ICATION RECEIVED IN RESPECT TO EXPENDITURE INCURRED ON PAYMENT MADE EXCEEDING A SUM OF RS.20,000/ - BY CASH IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT BY THE ASSESSEE FROM THE FOLLOWING PARTIES: 2 ITA NO. 1 369 /K/201 2 M/S. A. B. WINE STORES AY 200 7 - 0 8 SL. NO. NAME OF THE PARTIES TO WHOM PAYMENT WAS MADE VIOLATING SEC. 40A(3) AMOUNT IN AGGREGATE NUMBER OF OCCASION WHEN PAYMENT WAS MADE VIOLATING SEC. 40A(3) 1. 2. 3. 4. ANGEL MARKETING B.B.M ENTERPRISE MOHAN BROTHERS (DRINKS PVT. LTD. B. DEBOO & CO. (P) LTD. RS.1,66,614/ - RS.20,47,869/ - RS.23,46,104/ - RS.41,91,003/ - RS.87,51,590/ - 4 OCCASION IN SINGLE PAYMENT 29 OCCASION IN SINGLE PAYMENT 64 OCCASION IN SINGLE PAYMENT 76 OCCASION IN SINGLE PAYMENT ACCORDING TO AO, THERE IS VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND HENCE, HE MADE DISALLOWANCE OF 20% OF SUCH EXPENDITURE AND ADDED BACK A SUM OF RS.17,50,318/ - . AGGRIEVED , ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO AFTER GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE AND ALL THE RELEVANT RECORDS DELETED THE DISALLOWAN CE BY OBSERVING IN PARA 2.3 AS UNDER: 2.3. I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. A/R AND ALSO GONE THROUGH THE ASSESSMENT ORDER. ON THE BASIS OF THE EXAMINATION OF THE BOOKS OF ACCOUNTS OF THE APPELLANT, THE A.O. HAD OBSERVED IN THE ASSE SSMENT ORDER THAT THE APPELLANT HAD INCURRED EXPENDITURE IN RESPECT TO PAYMENTS EXCEEDING RS. 20,000/ - IN CASH IN RELATION TO FOUR PARTIES. THE A.O. HAD ALSO ISSUED A SHOW CAUSE VIDE THE LETTER NO. I.T.O, WARD - 37(1)/LETTER/2009 - 10/KOL/231 DATED 11/12/09 TO THE APPELLANT TO EXPLAIN AS TO WHY THE PROVISIONS OF SECTION 40A(3) SHOULD NOT BE APPLIED IN ITS CASE. THE APPELLANT VIDE ITS LETTER DATED 15.12.2009 EXPLAINED BEFORE THE A.O. THAT DUE TO PENDING LITIGATION WITH THE BANKER, THE APPELLANT WAS UNABLE TO OPEN NEW BANK ACCOUNTS AND IT BECAME NECESSARY TO MAKE PAYMENTS IN CASH. THE LD. A/R HAS ALSO STATED IN HIS SUBMISSION DATED 07/07/2011 THAT ALL RELEVANT RECEIPTS WERE SUBMITTED BEFORE THE A.O. AND IT WAS ALSO EXPLAINED BEFORE THE A.O. THAT ON THE DATES SP ECIFIED BY HIM MULTIPLE PAYMENTS HAD BEEN MADE IN ALMOST IN ALL CASES AND IN NONE OF THE CASES, THE INDIVIDUAL PAYMENT EXCEEDED RS.20,000/ - . HOWEVER, THE A.O HAD A DISALLOWANCE OF RS. 17,50,318/- BEING 20% OF THE AGGREGATE SUM OF RS.87,51,590/ - IN ACCORDA NCE WITH THE PROVISIONS OF SECTION 40A(3). THE MAIN ISSUE INVOLVED IN THE INSTANT CASE IS THE APPLICABILITY OF SECTION 40A(3). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. HAS VERIFIED THE BOOKS OF A CCOUNTS AND PREPARED A CHART REGARDING THE PAYM ENTS MADE IN CASH EXCEEDING RS.20,000/ - TO VARIOUS PARTIES. IN THE ASSESSMENT ORDER, THE A.O. HAS T REATED THE AGGREGATE OF ALL THE PAYMENTS MADE ON A PARTICULAR DAY TO A P ARTY AS A SINGLE PAYMENT. IF THE AGGREGATE OF ALL THE PAYMENTS MADE TO A PARTY ON A P ARTICULAR DAY EXCEEDED RS.20, 000 / - , THE A.O. HAD TREATED THAT SUCH PAYMENTS HAD BEEN MADE IN VIOLATION OF SECTION 40A(3) . FOR READY REFERENCE, THE FOLLOWING CHART SU BMITTED BY THE LD. A/R IS REPRODUCED AS FOLLOWS : - SL. NO. NAME OF THE PARTIES TO WHOM PAYMENT WAS MADE VIOLATING SEC. 40A(3) AMOUNT IN AGGREGATE NUMBER OF DAYS WITH MULTIPLE PAYMENTS WHICH DOES NOT VIOLATE SEC. 40A(3) IN ANY WAY ASSESSEE S REPLY TO AO S REVELATION ASSESSEE S COMMENT 3 ITA NO. 1 369 /K/201 2 M/S. A. B. WINE STORES AY 200 7 - 0 8 1 ANGEL MARKETING 1,66,614 4 DAYS 10 (TEN) PAYMENTS THE ASSESSEE HAS TRANSACTED 10 (TEN) PAYMENTS IN 4 (FOUR) DAYS AND NONE EXCEEDED RS.20,000. KINDLY ALSO REFER TO THE ENCLOSED STATEMENT OF PAYMENT (MARKED C) 2 BBM ENTERPRISE 20,47,869 29 DAYS. 107 (ONE HUNDRED SEVEN) PAYMENTS THE ASSESSEE HAS TRANSACTED 107 (ONE HUNDRED SEVEN) PAYMENTS IN 29 (TWENTY NINE) DAYS AND NONE EXCEEDED RS.20,000. KINDLY REFER TO THE ENCLOSED STATEMENT OF PAYMENT (MARKED C) 3 MOHAN BROTHERS (DRINKS) PVT. LTD. 23,46,104 64 DAYS . 133 (PONE HUNDRED THIRTY THREE) PAYMENTS THE ASSESSEE HAS TRANSACTED 133 (ONE HUNDRED THIRTY THREE)PAYMENTS IN 64 (SIXTY FOUR) DAYS AND NONE EXCEEDED RS.20,000/ - . KINDLY REFER TO THE ENCLOSED STATEMENT OF PAYMENT (MARKED C) 4 B. DEBOO & CO. (P) LTD. 41 ,91,003 76 DAYS. 248 (TWO HUNDRED AND FORTY EIGHT ) PAYMENTS THE ASSESSEE HAS TRANSACTED 248 (TWO HUNDRED AND FORTY EIGHT) PAYMENTS IN 76 (SEVENTY SIX) DAYS AND NONE EXCEEDED RS.20,000/ - . KINDLY REFER TO THE ENCLOSED STATEMENT OF PAYMENT (MARKED C) 87,51,590 THE ABOVE CHART REVEALS THAT THE APPELLANT HAS MADE (I ) THE TOTAL PAYMENTS OF RS.1,66,614/ - TO M/S. ANGEL MARKETING IN 4 DAYS [IN 4 TRANSACTIONS], [II] THE TOTAL PAYMENTS OF RS.20,47,869 / - TO M/S. B.B.M. ENTERPRISE IN 29 DAYS [IN 107 TRANSACTIONS], (III) THE TOTAL PAYMENTS OF RS.23,46,104/ - TO MOHAN BROTHE RS (DRINKS) PVT. LIMITED IN 64 DAYS [IN 133 TRANSACTIONS] AND (IV) THE TOTAL PAYMENTS OF RS.41,91,003/ - TO B. DEBOO & CO.(P) LTD. IN 76 DAYS [IN 248 TRANSACTIONS]. THE LD. A/R HAS EXPLAINED THAT NONE OF THE TRANSACTIONS EXCEEDED THE LIMIT OF RS.20,000/- A S PRESCRIBED IN SECTION 40A(3). THE LD. A/R HAS ALSO CLARIFIED THAT THE NUMBER OF TRANSACTIONS AS SHOWN IN THE ABOVE CHART ALMOST TALLIES WITH THE NUMBER OF PAYMENTS AS SHOWN BY THE A.O. IN THE SHOW - CAUSE LETTER DATED 11/12/2009. SECTION 40A(3) HAS BEEN AM ENDED AND THE WORDS 'A PAYMENT OR AGGREGATE OF PAYMENTS' HAVE BEEN INSERTED IN THE SAID SECTION W.E.F., 01.10.2009. PRIOR TO THE SAID AMENDMENT, THE WORDS USED IN SECTION 40A(3) WERE 'A SUM'. THE PRESENT APPEAL RELATES TO THE A.Y. 2007 - 08. THE HON'BLE MAD RAS HIGH COURT IN THE CASE OF KOTHARI SANITATION AND TILES PVT. LTD. (SUPRA] AND THE HON'BLE ALLAHABAD HIGH COURT IN THE C ASE OF ASHOK IRON AND STEEL ROLLING MILLS (SUPRA) HAVE HELD HAT IRRESPEC TI VE OF ANY NUMBER OF TRANS ACTIONS WHERE THE AMOUNT DOES NOT EXCEED RS. 20,000/ - , THE RIGOUR OF SECTION 40A(3) WOULD NOT APPLY. THE LD. A/R HAS EXPLAINED THAT NONE OF THE T RANSACTION EXCEEDED THE LIMIT OF RS.20,000/ - AS PRESCRIBED BY SECTION 40A(3). I AM OF THE VIEW THAT (I) THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF KOTHARI SANITATION AND TILES PVT. LTD (SUPRA] AND (II] THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF ASHOK IRON AND STEEL ROLLING MILLS (SUPRA) ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE. IN VIEW OF THE A BOVE, I AM OF THE OPINION THAT THERE IS NO VIOLATION OF SECTION 40A(3) IN THE INSTANT CASE. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS.17,50,318/ - U/S 40A(3). THIS GROUND OF APPEAL IS ALLOWED. 4 ITA NO. 1 369 /K/201 2 M/S. A. B. WINE STORES AY 200 7 - 0 8 AGGRIEVED, REVENUE IS NOW I N APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE CIT(A) HAS EXAMINED THE LEDGER COPIES OF THE RELEVANT PARTIES I.E. ANGEL MARKETING, BBM ENTERPRISES, MOHAN BROTHERS (DRINKS) PVT. LTD. AND B. DABOO & CO. (P) LTD. AND NOTED THAT NONE OF THE PAYMENTS ON EACH OCCASION EXCEEDS RS.20,000/ - . THE ASSESSEE HAS FILED SAME LEDGER COPIES BEFORE THE AO, BEFORE THE CIT(A) AND EVEN NOW BEFORE US. IT CLEARLY DEMONSTRATES THAT NONE OF THE PAYME NTS, ON EACH OCCASION, EXCEEDS RS.20,000/ - . ONCE THIS IS THE POSITION, THE RELEVANT ASSESSMENT YEAR INVOLVED IS AY 2007 - 08, THE PROVISIONS OF SECTION 40 A (3) OF THE ACT WILL NOT APPLY. HENCE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME IS HEREBY UPHELD. APPEAL OF REVENUE IS DISMISSED. 6 . IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 7 . ORDER IS PRONOUNCED IN THE OPEN COURT . S D / - S D / - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED : 10 TH JUNE , 201 5 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT ITO, WD - 37(1), KOLKATA 2 RESPONDENT M/S. A. B. WINE STORES, 8/7A, MAHATMA GANDHI ROAD, , KOLKATA - 700 009 . 3 . THE CIT (A), KOLKATA 4. 5. CIT, KOLKATA . DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .