M/s Khandelwal Steel & Pipes, Bhubaneswar V. ACIT, Cuttack

ITA 138/CTK/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8337 (ITAT-CUTTACK)
• Duration Of Justice: 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 13-05-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J K LENKA
• Assessee Lawyers: SHADIRAM SHARMA
• Keywords: Rejection of books of accounts; Principle of natural justice; Retrospective amendment; TDS
• Section: 43B; 40A(3); 142(1); 40(a)(ia); 191; 194A; 73; 13; 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 138 /CTK/201 9 ( / ASSESSMENT YEAR : 2012 - 2013 ) M/S KHANDELWAL STEEL & PIPES, 61 4, BOMIKHAL, CUTTACK PURI RD BHUBANEWSWAR - 751010 VS. DCIT, CIRCLE - 4(1), BHUBANESWAR ./ PANNO. : A AGFK 7718 R ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI SHADIRAM SHARMA , ADVOCATE /REVENUE BY : SHRI J.K.LENKA, DR / DATE OF HEARING : 23 / 1 2 /20 19 / DATE OF PRONOUNCEMENT : 20 / 01 /20 20 / O R D E R PER L.P.SAHU , A M : THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 2 , BHUBAN ESWAR, DATED 20.03.2019 FOR ASSESSMENT YEAR 2012 - 2013 ON THE FOLLOWING GROUNDS : - 1. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), IN SHORT CIT (APPEALS), IS WHOLLY UNJUSTIFIED AND WRONG IN NOT CONSIDERING THE GENUINE CONTENTIONS, THE DETAILS AND DOCUMENTS FURNISHED BY THE APPELLANT BEFORE HIM IN VIEW OF THE ORDER/ DIRECTION OF THIS HON'BLE TRIBUNAL VIDE ITA NO. 232/CTK/2017 DATED 30/31 - 01 - 2018 WHICH IS AGAINST THE NORMS OF THE TRIBUNAL ORDER AND PRINCIPLES OF NATURAL JUSTICE IN T HE FACTS AND CIRCUMSTANCES OF THE CASE. 2. FOR THAT THE LEARNED CIT (APPEALS) IS UNJUSTIFIED AND WRONG IN SUSTAINING THE ADDITION OF RS. 4,78,213/ - MADE BY THE LEARNED ASSESSING OFFICER (IN SHORT A.O.) U/S. 40(A) (IA) OF THE INCOME TAX ACT, IN AS MUCH AS, THE APPELLANT HAS FURNISHED AN AFFIDAVIT BEFORE THE LEARNED. CIT(A) STATING THE REASON, FOR NON - SUBMISSION OR LATE SUBMISSION OF DECLARATION FORM 15 - G/15 - H, THAT IT WAS A TECHNICAL MISTAKE AND NEVER A WILFUL DEFAULT AND, MOREOVER, THE APPELLANT HAS ALR EADY FURNISHED THE DECLARATIONS BEFORE THE ID. PRINCIPAL CIT DURING THE PROCEEDING INITIATED U/S 263 OF THE I.T. ACT WHEREIN THE ITA NO. 1 38 /CTK/201 9 2 GENUINENESS, CREDITWORTHINESS OF THE LOAN CREDITORS HAS BEEN ESTABLISHED AND THE INTEREST PAID TO THEM HAVE BEEN FULLY ALLOWED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, HENCE THE ADDITION OF RS. 4,78,213/ - , BEING THE INTEREST PAID TO THE LOAN CREDITORS, NEEDS TO BE DELETED. 3. FOR THAT THE LEARNED CIT(A) IS FURTHER UNJUSTIFIED AND WRONG IN CONFIRMING THE ADDITION OF RS. 9,33,85 5/ - , MADE U/S. 40A (3) OF THE I.T. ACT BY THE LEARNED AO, ON THE ALLEGED GROUND THAT THE PAYMENTS MADE IN CASH IN THE COOLIES AND CARTAGE ACCOUNT IS IN EXCESS OF RS. 20,000/ - AND THE PAYMENTS MADE TO THE TRANSPORTERS IN A DAY IS ABOVE RS. 35,000/ - WHEN THE BANKS WERE OPEN ON THOSE DAYS, WHICH IS COMPLETELY ILLEGAL AND ARBITRARY AND WITHOUT ANY MATERIAL ON RECORD FOR SUSTAINING THE ADDITION, IN AS MUCH AS, THE APPELLANT HAS FILED DOCUMENTS OF THE TRANSPORT CARRIERS CLAIMING THE PAYMENT IN CASH AND SUCH PAYMEN TS ARE ALLOWABLE IN VIEW OF CLAUSE - I AND K OF RULE - 6 DP OF THE L.T. RULES, 1962, AS SUCH THE SAME SHOULD HAVE BEEN CONSIDERED BY THE LD. CIT (A) IN A PROPER PERSPECTIVE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS THE TRANSPORT CARRIERS UNLOAD THE GOO DS IN THE EARLY MORNING OR IN THE EVENING AFTER THE TRAFFIC HOURS, HENCE NO ULTERIOR MOTIVE SHOULD BE DRAWN. 4. FOR THAT THE LEARNED CIT (A) SHOULD HAVE DELETED THE ENTIRE ADDITION OF RS. 3,96,365/ - , WHICH IS THE EXPENSES MADE UNDER THE HEAD COOLIE AND CAR TAGE OUT WARD / INWARD, INSTEAD OF 10% BEING RS. 1,87,253/ - , IN AS MUCH AS, THE EXPENSES ARE GENUINE IN NATURE AND THE VOUCHERS DULY SIGNED BY THE DAILY LABOURERS LIKE COOLLIES AND TRAWLYWALLAS BY AFFIXING THE REVENUE STAMP AND, MOREOVER, THE LD. AO HAS NO T REJECTED THE BOOKS OF ACCOUNTS IN VIEW OF SECTION 145/145A OF THE IT ACT, AS SUCH THE EXPENSES CLAIMED NEEDS TO BE ALLOWED IN FULL IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. FOR THAT THE LEARNED A.O., AS WELL AS THE LD. CIT (A), SHOULD HAVE ALLOWED T HE PAYMENTS MADE UNDER CLAUSE - J AND K OF RULE 6 - DD OF THE L.T. RULES AND ALSO THE GENUINE EXPENSES CLAIMED UNDER THE HEAD COOLIE AND CARTAGE INWARD / OUTWARD SINCE THE BOOKS OF ACCOUNTS ARE AUDITED UNDER SECTION 44 - AB OF THE IT. ACT AND THE SAME ARE NOT R EJECTED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. FOR THAT OTHER GROUNDS, IF ANY, SHALL BE URGED AT THE TIME OF HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - S FIRM, DERIVES INCOME FROM WHOLESALE TRADING IN STEEL TUBES & PIPES AND IRON AND STEEL MATERIALS AND FILED ITS RETURN OF INCOME FOR A.Y.2012 - 2013 ELECTRONICALLY ON 30.09.2012 SHOWING TOTAL INCOME OF RS.27,20,290/ - , WHICH WAS PROCESSED U/S.143(1) OF ACT. THEREAFTER CASE OF THE ASSESSEE ITA NO. 1 38 /CTK/201 9 3 WAS SELECTED FOR SCRUTINY UNDER CASS A ND STATUTORY NOTICES U/S.143(2) & 142(1) OF THE ACT WERE ISSUED TO THE ASSESSEE . ACCORDINGLY, THE AO COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT MAKING ADDITION U/S.40(A)(IA) OF THE ACT, ADDITION ON ACCOUNT OF GROSS PROFIT, DISALLOWANCE U/S.40A(3) OF T HE ACT, DISALLOWANCE OF SERVICE TAX AND INTEREST ON VAT, DISALLOWANCE OUT OF COOLIE AND CARTAGE OUTWARD EXPENSES AND COOLIE AND CARTAGE OUTWARD EXPENSES. 3. FEELING AGGRIEVED FROM THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND T HE CIT(A) PARTIALLY DELETED THE ADDITION MADE ON ACCOUNT OF COOLIE AND CARTAGE EXPENSES AND CONFIRMED THE REST OF ADDITIONS MADE BY THE AO. 4. FEELING FURTHER AGGRIEVED FROM THE APPELLATE ORDER, THE ASSESSEE IS IN APPEAL BEFORE THE INCOME TAX APPELLATE TRI BUNAL. 5. AT THE OUTSET, LD. AR DID NOT PRESS THE GROUND NO.1, THEREFORE, WE DISMISS THE GROUND NO.1 AS NOT PRESSED. GROUND NO.6 IS GENERAL IN NATURE, WHICH REQUIRES NO ADJUDICATION. 6. WITH REGARD TO GROUND NO.2, LD. AR SUBMITTED THAT THE ADDITION MADE U /S.40(A)(IA) BY THE AO IS WHOLLY UNJUSTIFIED AND WRONG ON THE ALLEGED GROUND THAT THE NO TDS HAS BEEN DEDUCTED ON INTEREST PAID TO THE UNSECURED LOAN CREDITORS WHERE INTEREST PAID IS ABOVE RS.5,000/ - , IN AS MUCH AS, THE FACT IS THAT THE AO DID NOT RAISE SU CH POINT AT THE ASSESSMENT STAGE. IT WAS ALSO CONTENDED BY LD. AR THAT THE ASSESSEE HAS ITA NO. 1 38 /CTK/201 9 4 FURNISHED AN AFFIDAVIT BEFORE THE CIT(A) STATING THE REASON FOR NON - SUBMISSION OR LATE SUBMISSION OF DECLARATION FORM 15 - G/15 - H, THAT IT WAS A TECHNICAL MISTAKE AND NEV ER A WILLFUL DEFAULT AND, MOREOVER, THE ASSESSEE HAS ALREADY FURNISHED THE DECLARATIONS BEFORE THE PR. CIT DURING THE PROCEEDING INITIATED U/S 263 OF THE I.T. ACT WHEREIN THE GENUINENESS, CREDITWORTHINESS OF THE LOAN CREDITORS HAS BEEN ESTABLISHED AND THE INTEREST PAID TO THEM HAVE BEEN FULLY ALLOWED IN THE FACTS AND CIRCUMSTANCES OF THE CASE, HENCE THE ADDITION OF RS.4,78,213/ - BEING THE INTEREST PAID TO THE LOAN CREDITORS DESERVES TO BE DELETED. 7. CONTRA, LD. DR SUPPORTED THE ORDERS OF BOTH THE AUTHORITI ES BELOW AND SUBMITTED THAT THE ASSESSEE WAS REQUIRED TO FURNISH THE DETAILS OF INTEREST PAID AND COPIES OF LEDGER ACCOUNT IN RESPECT OF UNSECURED LOAN CREDITORS AND AS PER THE PROVISIONS OF SECTION 194A OF THE ACT, THE ASSESSEE IS REQUIRED TO DEDUCT TDS O N ACCOUNT OF PAYMENT OF INTEREST EXCEEDING RS.5000/ - IN EACH CASE, HOWEVER, THE ASSESSEE HAS FAILED TO DEDUCT TDS AS PER SECTION 194A OF THE ACT , THEREFORE, LD.DR PRAYED FOR DISMISSAL OF THE APPEAL. 8. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAS DEBITED RS.15,04,541/ - ON ACCOUNT OF INTEREST ON UNSECURED LOAN IN THE PROFIT AND LOSS ACCOUNT AND AS THE ASS ESSEE HAS FAILED TO DEDUCT TDS ITA NO. 1 38 /CTK/201 9 5 ON PAYMENT OF INTEREST AS PER THE PROVI SION OF SECTION 194A OF THE ACT , THE AO MADE ADDITION U/S.40(A)(IA) OF THE ACT . HOWEVER, THE ASSESSEE BEFORE CIT(A) HAS FURNISHED AN AFFIDAVIT STATING THE REASON FOR NON - SUBMISSION OR LA TE SUBMISSION OF DECLARATION FORM 15 - G/15 - H, THAT IT WAS A TECHNICAL MISTAKE AND NEVER A WILLFUL DEFAULT AND, MOREOVER, THE ASSESSEE HAS ALREADY FURNISHED THE DECLARATIONS BEFORE THE PR. CIT DURING THE PROCEEDING INITIATED U/S 263 OF THE I.T. ACT WHEREIN T HE GENUINENESS, CREDITWORTHINESS OF THE LOAN CREDITORS HAS BEEN ESTABLISHED AND THE INTEREST PAID TO THEM HAVE BEEN FULLY ALLOWED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE, NO DISALLOWANCE ON ACCOUNT OF NON - DEDUCTION OF TDS CAN BE MADE. HOWEVER , THE CIT(A) DISREGARDED THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE WAS LIABLE TO DEDUCT THE TDS U/S 194A R.W.S. 40(A)(IA) OF THE ACT. FURTHER THE CIT(A) RELYING ITS ORDER DATED 16.02.2017 HAS UPHELD THE ACTION OF AO AND DISMISS THE GRO UND RAISED BY THE ASSESSEE. AS PER LD. AR T HE ASSESSEE HAS ALREADY FURNISHED THE DECLARATIONS BEFORE THE PR. CIT DURING THE PROCEEDING INITIATED U/S 263 OF THE I.T. ACT WHEREIN THE GENUINENESS, CREDITWORTHINESS OF THE LOAN CREDITORS HAS BEEN ESTABLISHED AN D THE INTEREST PAID TO THEM HAVE BEEN FULLY ALLOWED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. A S PER THE AMENDMENT BROUGHT TO THE FINANCE ACT, 2014 IN SECTION 40(A)(IA) OF THE ACT W.E.F. 01.04.2015, IF 100% DISALLOWANCE MADE U/S.40(A)(IA) OF THE ACT, THA T WOULD BE ITA NO. 1 38 /CTK/201 9 6 RESTRICTED TO 30% ONLY AND THE PROVISO INSERTED IN THE ACT TO BE A CURATIVE ONE HAVING RETROSPECTIVE EFFECT AND THE ASSESSEE IS ENTITLED THE BENEFIT OF 30% DISALLOWANCE AS AGAINST 100% DISALLOWANCE MADE BY THE AO. THIS ISSUE HAS ALREADY BEEN DEC IDED BY THIS BENCH OF THE TRIBUNAL IN CASE OF OM SRI NILAMADHAB BUILDERS PVT. LTD, IN ITA NO.296/CTK/2018, ORDER DATED 26.11.2019, WHEREIN THE TRIBUNAL HAS HELD THAT I F A STATUTE IS CURATIVE OF THE PREVIOUS LAW, RETROSPECTIVE OPERATION IS GENERALLY INTENDE D. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER : - 8. FROM THE ABOVE OBSERVATIONS OF THE DIFFERENT BENCHES OF THE TRIBUNAL, WE FIND THAT THE 100% DISALLOWANCE MADE U/S.40(A)(IA) OF THE ACT HAS BEEN DIRECTED TO BE RESTRICTED TO THE EXTENT OF 30% ONLY GIVING RETROSPECTIVE EFFECT. LD. DR BEFORE US SUBMITTED THAT THERE IS NO MENTION IN THE AMENDMENT THAT THE SAME SHALL BE APPLIED RETROSPECTIVELY, HOWEVER, IN OUR CONSIDERED OPINION, I F A STATUTE IS CURATIVE OF THE PREVIOUS LAW, RETROSPECTIVE OPERATIO N IS GENERALLY INTENDED. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA EXPORT COMPANY, [2018] 93 TAXMANN.COM 51 (SC), WHILE DECIDING THE ISSUE AS TO W HETHER AMENDMENT MADE BY FINANCE ACT, 2010, TO PROVISIONS OF SECTION 40(A)(IA) IS CURATIVE IN NATURE AND IT SHOULD BE GIVEN RETROSPECTIVE OPERATION FROM DATE OF INSERTION OF SAID PROVISION I.E. WITH EFFECT FROM ASSESSMENT YEAR 2005 - 06, HAS HELD AS UNDER : - THE PURPOSE FOR BRINGING SAID AMENDMENT IS TO ENSURE TAX COMPLIANCE. THE FACT THAT THE INTEN TION OF THE LEGISLATURE WAS NOT TO PUNISH THE ASSESSEE IS FURTHER REFLECTED FROM A BARE READING OF THE PROVISIONS OF SECTION 40(A)(IA). IT ONLY RESULTS IN SHIFTING OF THE YEAR IN WHICH THE EXPENDITURE CAN BE CLAIMED AS DEDUCTION. IN A CASE WHERE THE TAX DE DUCTED AT SOURCE WAS DULY DEPOSITED WITH THE GOVERNMENT WITHIN THE PRESCRIBED TIME, THE SAID AMOUNT CAN BE CLAIMED AS A DEDUCTION FROM THE INCOME IN THE PREVIOUS YEAR IN WHICH THE TDS WAS DEDUCTED. HOWEVER, WHEN THE AMOUNT DEDUCTED IN THE FORM OF TDS WAS D EPOSITED WITH THE GOVERNMENT AFTER THE EXPIRY OF PERIOD ALLOWED FOR SUCH DEPOSIT THEN THE DEDUCTIONS CAN BE CLAIMED FOR SUCH DEPOSITED TDS AMOUNT ONLY IN THE PREVIOUS YEAR IN WHICH SUCH PAYMENT WAS MADE TO THE GOVERNMENT. [PARA 16] 9. ON CAREFUL PERUSAL O F THE AMENDMENT BROUGHT TO THE SECTION 40(A)(IA) OF THE ACT BY THE FINANCE ACT, 2014 W.E.F. 01.04.2015, IT IS CLEAR THAT THE INTENT OF LEGISLATURE TO REDUCE THE HARDSHIP, IT IS PROPOSED THAT ITA NO. 1 38 /CTK/201 9 7 IN CASE OF NON - DEDUCTION OR NON - PAYMENT OF TDS ON PAYMENTS MADE T O RESIDENTS AS SPECIFIED IN SECTION 40(A)(IA) OF THE ACT, THE DISALLOWANCE SHALL BE RESTRICTED TO 30% OF THE AMOUNT OF EXPENDITURE CLAIMED. THE HONBLE SUPREME COURT IN THE CASE OF ALLIED MOTORS (P) LTD. [1997] 224 ITR 677 (SC) HAS HELD THAT AMENDMENT WAS REMEDIAL IN NATURE, DESIGNED TO ELIMINATE UNINTENDED CONSEQUENCES WHICH MAY CAUSE UNDUE HARDSHIP TO THE ASSESSEE AND WHICH MADE THE PROVISION UNWORKABLE OR UNJUST IN A SPECIFIC SITUATION. FINALLY, AFTER CONSIDERING VARIOUS CASE LAWS, THE HONBLE SUPREME C OURT HELD THAT THE PURPOSE OF AMENDMENT WOULD NOT SERVE ITS OBJECT IN SUCH A SITUATION UNLESS, IT IS CONSTRUED AS RETROSPECTIVE AFTER OBSERVING AS UNDER : - 10. THEREFORE, IN THE WELL - KNOWN WORDS OF JUDGE LEARNED HAND, ONE CANNOT MAKE A FORTRESS OUT OF THE DICTIONARY; AND SHOULD REMEMBER THAT STATUTES HAVE SOME PURPOSE AND OBJECT TO ACCOMPLISH WHOSE SYMPATHETIC AND IMAGINATIVE DISCOVERY IS THE SUREST GUIDE TO THEIR MEANING. IN THE CASE OF R.B. JODHA MAL KUTHIALA V. CIT [1971] 82 ITR 570 , THIS COURT SAID THAT ONE SHOULD APPLY THE RULE OF REASONABLE INTERPRETATION. A PROVISO WHICH IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION WORKABLE, A PROVISO WH ICH SUPPLIES AN OBVIOUS OMISSION IN THE SECTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SECTION A REASONABLE INTERPRETATION, REQUIRES TO BE TREATED AS RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CAN BE GIVEN TO THE SECTIO N AS A WHOLE. 11. THIS VIEW HAS BEEN ACCEPTED BY A NUMBER OF HIGH COURTS. IN THE CASE OF CIT V. CHANDULAL VENICHAND [1994] 209 ITR 7/ 73 TAXMAN 349 , THE GUJARAT HIGH C OURT HAS HELD THAT THE FIRST PROVISO TO SECTION 43B IS RETROSPECTIVE AND SALES - TAX FOR THE LAST QUARTER PAID BEFORE THE FILING OF THE RETURN FOR THE ASSESSMENT YEAR IS DEDUCTIBLE. THIS DECISION DEALS WITH THE ASSESSMENT YEAR 1984 - 85. THE CALCUTTA HIGH COUR T IN THE CASE OF CIT V. SRI JAGANNATH STEEL CORPN. [1991] 191 ITR 676 , HAS TAKEN A SIMILAR VIEW HOLDING THAT THE STATUTORY LIABILITY FOR SALES - TAX ACTUALLY DISCHARGED AFTER THE EXPIRY OF THE ACCOUNTING YEAR IN COMPLIANCE WITH THE RELEVANT STATUTE IS ENTITLED TO DEDUCTION UNDER SECTION 43B. THE HIGH COURT HAS HELD THE AMENDMENT TO BE CLARIFICATORY AND, THEREFORE, RETROSPECTIVE. THE GUJARAT HIGH COURT IN THE ABOVE CASE HE LD THE AMENDMENT TO BE CURATIVE AND EXPLANATORY AND HENCE RETROSPECTIVE. THE PATNA HIGH COURT HAS ALSO HELD THE AMENDMENT INSERTING THE FIRST PROVISO TO BE EXPLANATORY IN THE CASE OF JAMSHEDPUR MOTOR ACCESSORIES STORES V. UNION OF INDIA [1991] 189 ITR 70/ 54 TAXMAN 521 . IT HAS HELD THE AMENDMENT INSERTING FIRST PROVISO TO BE RETROSPECTIVE. THE SPECIAL LEAVE PETITION FROM THIS DECISION OF THE PATNA HIGH COURT WAS DISMISSE D. THE VIEW OF THE DELHI HIGH COURT, THEREFORE, THAT THE FIRST PROVISO TO SECTION 43B WILL BE AVAILABLE ONLY PROSPECTIVELY DOES NOT APPEAR TO BE CORRECT. AS OBSERVED BY G.P. SINGH IN HIS PRINCIPLES OF STATUTORY INTERPRETATION, FOURTH EDN., PAGE 291, 'IT IS WELL - SETTLED THAT IF A STATUTE IS CURATIVE OR MERELY DECLARATORY OF THE PREVIOUS LAW RETROSPECTIVE OPERATION IS ITA NO. 1 38 /CTK/201 9 8 GENERALLY INTENDED'. IN FACT THE AMENDMENT WOULD NOT SERVE ITS OBJECT IN SUCH A SITUATION UNLESS IT IS CONSTRUED AS RETROSPECTIVE. THE VIEW, TH EREFORE, TAKEN BY THE DELHI HIGH COURT CANNOT BE SUSTAINED. 10. RESPECTFULLY FOLLOWING THE ABOVE DECISIONS OF THE TRIBUNAL AS WELL AS HONBLE SUPREME COURT, WE DIRECT THE AO TO RESTRICT THE 100% DISALLOWANCE CONFIRMED BY THE CIT(A) TO THE EXTENT OF 30% ONL Y TAKING INTO ACCOUNT THE ACTUAL CLAIM OF THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. WE ORDER ACCORDINGLY. THUS, THE SOLE GROUND OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. RESPECTFULLY FOLLOWING THE OBSERVATIONS OF THE TRIBUNAL IN THE ABOVE SAID C ASE, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO 30% MADE U/S.40(A)(IA) OF THE ACT ON ACCOUNT OF NON - DEDUCTION OF TDS. ACCORDINGLY, GROUND NO.2 OF APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 10 . WITH REGARD TO GROUND NO.3, THE LD. AR OF THE ASSESSEE SU BMITTED THAT THE AO IS NOT JUSTIFIED IN DISALLOWING SUM OF RS.9,33,858/ - U/S.40A(3) OF THE ACT ALLEGING THAT THE PAYMENTS UNDER THE HEAD COOLIE & CARTAGE INWARD I.E. TO TRANSPORTERS TOWARDS FREIGHT, LOADING & U NLOADING CHARGES TO COOLIE & TRO LLYWALA AND T RAVELLING EXPENSES TO PARTNER VIJAY KHANDELWAL ARE MADE IN CASH ABOVE RS.20000/ - AND RS.35,000/ - IN A DAY, IN AS MUCH AS, THE AO HAS NOT EXAMINED AS TO IN WHICH CIRCUMSTANCES THE ALLEGED CASH PAYMENT WAS MADE. IT WAS ALSO CONTENDED BY THE LD. AR THAT THE LO RRY DRIVERS/TRUCK DRIVERS ENTER THE BUSINESS PREMISES AFTER THE TRAFFIC HOURS I.E. EARLY MORNING OR IN THE NIGHT AND SOON AFTER THEY UNLOAD THE GOODS ASK FOR CASH PAYMENT AS THEY HAVE TO INCUR THE CASH EXPENSES LIKE FUEL, FOODING, KHALASI, REPAIRING/MAINTE NANCE OF THE VEHICLE, ETC. AS PER THE INSTRUCTIONS OF THE ITA NO. 1 38 /CTK/201 9 9 LORRY OWNERS AS SUCH THE PAYMENT IS MADE TO THEM IN CASH BEFORE OR AFTER THE BANK HOURS AND, MOREOVER, THE DRIVERS OR SUCH OTHER PERSONS ARE THE AGENTS OF THE LORRY OWNERS/TRANSPORTERS WHO PROVIDE SERVICES ON BEHALF OF SUCH PERSON. THE LD. AR FURTHER SUBMITTED THAT SUB - RULE (J)&(K) OF RULE 6DD OF I.T.RULES, 1962 FACILITATES THE ASSESSEE FOR SUCH CONTINGENCIES AND PAYMENTS, THEREFORE, THE SAME NEEDS TO BE ALLOWED. IT WAS ALSO SUBMITTED BY THE LD. AR THAT PAYMENT RS.25,335/ - MADE TOWARDS UNLOADING AND TROLLYWALAS, LABOURERS AS THEY ARE DAILY WAGES LABOURERS. FURTHER A SUM OF RS.84,000/ - WAS INCURRED UNDER THE HEAD COOLIE & CARTAGE OUTWARD, HENCE, THE SAME ARE ALLOWABLE BECAUSE THE ASSESSEE HAS COLLECTE D THE FREIGHT CHARGES IN THE SALE BILLS OF THE RESPECTIVE PARTIES AND HAS PARTLY PAID CASH TO MEET THE DESTINATION EXPENSES TO THE DRIVERS. ACCORDINGLY, LD. AR SUBMITTED THAT THE ADDITION MADE U/S.40A(3) DESERVES TO BE DELETED. 11 . LD.DR, ON THE OTHER HAND , RELIED ON THE ORDERS OF AUTHORITIES BELOW. 12 . AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSING THE ENTIRE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE AO MADE DISALLOWANCE U/S.40A(3) OF THE ACT AS THE ASSESSEE HAS INCURRED THE EXPEND ITURE IN CASH ABOVE RS.35,000/ - , TO WHICH THE CIT(A) HAS CONFIRMED THE SAME. BEFORE US, LD. AR DREW OUR ATTENTION TO THE BILLS AND VOUCHERS OF THE RECIPIENT FILED IN THE PAPER BOOK AT PAGES 200 TO 270 AND SUBMITTED THAT THE FREIGHT RECEIVED BY THEM FROM TH E ASSESSEE ITA NO. 1 38 /CTK/201 9 10 MIGHT HAVE BEEN SHOWN BY THE RECIPIENTS AS THEIR INCOME. AND IN THE SCENARIO OF DISALLOWANCE OF PAYMENTS U/S. 40A(3) OF THIS MAGNITUDE, MAY RESULT IN DOUBLE TAXATION, WHICH WAS HELD MANY A COURTS, IS NOT PERMISSIBLE UNDER THE TAXATIONS L AWS OF T HE LAND. THEREFORE, IT WAS SUBMITTED THAT IT IS ESTABLISHED BEYOND DOUBT THAT THE CONCERNED PAYMENTS WERE MADE BY THE ASSESSEE TO ITS AGENTS/BROKERS. WHILE GOING THROUGH THE DISALLOWANCE MADE U/S.40A(3) OF THE ACT BY THE AO OF RS.9,35,855/ - , THE DETAILS OF PAYMENT AS UNDER : - SL.NO DATE AMOUNT PAID NAME OF THE PARTY TO WHOM THE PAYMENT IS MADE DAY 01 11.04.2014 36,689 NATIONAL GOODS CARRIERS MONDAY 02 22.03.2012 35,225 NATIONAL GOODS CARRIERS THURSDAY 03 26.03.2012 49,730 NATIONAL GOODS CARRIERS MONDAY 04 21.04.2011 53,436 HARMINDER ROADLINES THURSDAY 05 13.05.2011 47,000 GAMESH FREIGHT CARRIER FRIDAY 06 31.05.2011 52,100 GAMESH FREIGHT CARRIER TUESDAY 07 23.07.2012 51,050 GAMESH FREIGHT CARRIER SATURDAY 08 23.11.2011 54,840 GAMESH FREIGHT CARRIER WE DNESDAY 09 27.06.2011 55,000 SHRUTI ROAD CARRIERS FRIDAY 10 17.08.2011 46,138 J R CARGO MOVERS WEDNESDAY 11 02.09.2011 44,300 TRUCK OPERATORS UNION FRIDAY 12 08.10.2011 65,020 LIBRA ALIGARH TRANSPORT CO. SATURDAY 13 22.10.2011 52,020 LIBRA ALIGARH TRA NSPORT CO. SATURDAY 14 05.11.2011 65,020 GOBINDGARH KOLKATA TRANSPORT COMPANY SATURDAY 15 31.12.2011 56,000 AKAL GOODS CARRIERS SATURDAY 16 24.12.2011 25,335 UNLOADING AND TROLLY CHARGES DEBITED IN THE ACCOUNT COOLIE AND CARTAGE INWARD EXPENSES 17 27. 07.2011 21,000 PAID TO FREIGHT CHARGES TO TALCHER AGRO DEBITED IN THE ACCOUNT COOLIE AND CARTAGE OUTWARD EXPENSES 18 10.11.2011 21,000 FREIGHT CHARGES TO KALIAPANI (NB COAL) DEBITED IN THE ACCOUNT COOLIE AND CARTAGE OUTWARD EXPENSES 19 15.11.2011 21,00 0 FREIGHT TO CHANDIKHOL DEBITED IN THE ACCOUNT COOLIE AND CARTAGE OUTWARD EXPENSES 20 21.11.2011 21,000 FREIGHT CHARGES TO KALIAPANI (NB COAL) DEBITED IN THE ACCOUNT COOLIE AND CARTAGE OUTWARD EXPENSES 21 14.12.2011 27,177 TRAVELLING EXPENSES TO VIJAYA KHANDELWAL 22 14.02.2012 33,778 TRAVELLING EXPENSES TO VIJAYA KHANDELWAL TOTAL 9,33,858 ITA NO. 1 38 /CTK/201 9 11 13 . ON PERUSAL OF THE ABOVE TABLE IT IS NOTICED THAT IN SL. NO.1, THE DATE NOTED BY THE AO IS OUTSIDE THE PURVIEW OF THE IMPUGNED ASSESSMENT YEAR. THEREFORE, WE SEND THE SAME TO THE FILE OF AO FOR VERIFICATION AS TO WHAT WAS THE CORRECT DATE OF PAYMENT. IF THE AO FINDS THAT THE PAYMENT HAS BEEN MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR STRIKE, THEN THE CLAIM OF THE ASSESSEE DESE RVES TO BE CONSIDERED AS PER THE RULE 6DD(J) OF I.T.RULES, 1962. FURTHER FROM SL.NO. 2 TO 15, THE ASSESSEE HAS MADE PAYMENTS WHICH ARE MORE THAN THE PRESCRIBED LIMIT AS PER SECTION 40A(3) OF THE ACT FOR THE ALLOWABILITY OF PAYMENT IN CASH AND ON PERUSAL OF THE PAYMENTS MADE BY THE ASSESSEE, IT IS SEEN THAT ALL THE PAYMENTS HAVE BEEN MADE IN WORKING DAYS. THE ASSESSEE COULD NOT BRING ANY POSITIVE MATERIAL ON RECORD TO SUBSTANTIATE ITS CLAIM THAT THE PAYMENTS WERE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED E ITHER ON ACCOUNT OF HOLIDAY OR STRIKE, THEREFORE, THE CONTENTION OF LD. AR FOR BENEFIT OF CLAUSE (J) OF THE RULE 6DD OF I.T.RULES, 1962 , IS NOT ACCEPTABLE. FURTHER THE CONTENTION OF LD. AR THAT THE ASSESSEE IS ENTITLED THE BENEFIT OF CLAUSE (K) OF RULE 6DD OF THE I.T.RULES, 1962 BECAUSE THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE TO THE DRIVERS OR THE AGENTS FOR SUPPLY OF GOODS, IS ALSO NOT ACCEPTABLE AS THE DRIVERS OR AGENTS HAVE ACCEPTED THE PAYMENTS ON BEHALF OF THE TRUCK OWNERS AND THE LD. AR OF THE ASS ESSEE ALSO UNABLE TO PROVE AS TO WHETHER THESE RECEIPTS HAVE BEEN OFFERED FOR TAXATION IN THE HANDS OF ITA NO. 1 38 /CTK/201 9 12 THE TRUCK OWNERS. CONSIDERING THE FACTS AS NOTED ABOVE IN RESPECT OF SL.NO. 2 TO 15, WE CONFIRM THE DISALLOWANCE MADE BY THE AO. 14 . NOW, COMING TO THE S L.NO.16 TO 20, WHEREIN THE PAYMENTS SHOWN TO HAVE BEEN MADE WHICH ARE MORE THAN RS.20,000/ - TOWARDS NARRATIONS NOTED IN THE TABLE ABOVE, IN THIS RESPECT, IT CANNOT BE IGNORED THAT THE PAYMENTS HAVE BEEN MADE FOR COOLIES AND CARTAGE CHARGES. IT IS ALSO A FA CT THAT THE COOLIES WORK TOGETHER BUT IT IS NOT CLEAR FROM THE ORDER OF BOTH THE AUTHORITIES BELOW AS TO WHETHER THE PAYMENTS HAVE BEEN MADE TO INDIVIDUAL COOLIE OR TO THE GROUP LEADER OF THE COOLIES OR ON DAILY BASIS OR AFTER THE EXPIRY OF CERTAIN TIMES. THIS FACTS HAS ALSO NOT BEEN DISPUTED BY THE AO THAT THE PAYMENTS HAVE BEEN MADE TOWARDS COOLIES/CARTAGE OUTWARD EXPENSES. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE EXPENSES CLAIMED BY THE ASSESSEE IN SL.NO.16 TO 20 TOWARDS COOLIES/CARTAGE OUTWA RD EXPENSES DESERVE TO BE ALLOWED AND WE DIRECT THE AO TO DELETE THE ADDITION OF RS.1,09,335/ - OUT OF THE TOTAL DISALLOWANCE MADE BY THE AO. 15 . FURTHER IN RESPECT OF SL.NO.21 & 22, IT IS CLEAR FROM THE STATEMENTS OF THE ASSESSEE THAT SHRI VIJAY KHANDELWAL IS A PARTNER AND THE EXPENSES HAS BEEN INCURRED BY THE ASSESSEE TOWARDS TRAVELLING EXPENSES OF THE PARTNER. THE CONTENTION OF THE LD. AR OF THE ASSESSEE IS THAT THE TRAVELLING EXPENSES HAVE BEEN PAID FOR THE REIMBURSEMENT OF THE EXPENSES INCURRED BY THE P ARTNERS, WHICH ARE SUPPORTED BY THE BILLS ITA NO. 1 38 /CTK/201 9 13 AND VOUCHERS FILED IN THE PAPER BOOK, CANNOT BE DISALLOWED UNDER THE PROVISIONS OF SECTION 40A(3) OF THE ACT. WE HAVE ALSO GONE THROUGH THE BILLS AND VOUCHERS FILED IN THE PAPER BOOK CONTAINING THE TRAVELLING EXPE NSES INCURRED BY THE PARTNER VIJAYA KHANDELWAL. IT IS ALSO A FACT THAT THE TRAVELLING EXPENSES OF THE PARTNER IS REIMBURSABLE, THEREFORE, THE SAME CANNOT BE DISALLOWED. IT IS ALSO NOT CLEAR FROM THE OBSERVATIONS OF BOTH THE AUTHORITIES BELOW AS TO WHETHER THE PAYMENTS MADE TO THE PARTNERS ON ACCOUNT OF TRAVELLING EXPENSES IN ONE TIME EXCEEDING RS.20,000/ - OR ON PIECEMEAL BASIS. THEREFORE, CONSIDERING THE SUBMISSIONS OF BOTH THE SIDES AND CAREFULLY PERUSING THE OBSERVATIONS OF BOTH THE AUTHORITIES BELOW, WE DIRECT THE AO TO ALLOW THE CLAIM OF RS.60,955/ - TOWARDS TRAVELLING EXPENSES TO THE PARTNER OF THE ASSESSEE. THUS, GROUND NO.2 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 16 . IN RESPECT OF GROUND NO.3 WITH REGARD TO DISALLOWANCE OUT OF COOLIE AND CARTAGE OU TWARD EXPENSES AND COOLIE AND CARTAGE OUTWARD EXPENSES, WE FIND THAT THE AO HAS DISALLOWED 20% OF SUCH EXPENSES. IN THIS REGARD, THE AO HAS OBSERVED THAT ALL THESE EXPENSES HAVE BEEN SUPPORTED BY THE INTERNAL VOUCHERS PAID IN CASH, THEREFORE, GENUINENESS O F THE EXPENSES HAVE BEEN DOUBTED BY BOTH THE AUTHORITIES BELOW. DUE TO THE INTERNAL VOUCHERS AND CASH PAYMENTS MADE BY THE ASSESSEE, LEAKAGE OF REVENUE CANNOT BE DENIED IN SUCH CASE. THEREFORE, ITA NO. 1 38 /CTK/201 9 14 THE CIT(A) HAS CONSIDERED THE ISSUE AND REDUCED THE DISALLOWAN CE TO 10% AS AGAINST 20% MADE BY THE AO. WE ARE IN AGREEMENT WITH THE OBSERVATIONS OF THE CIT(A) IN THIS REGARD. ACCORDINGLY, WE UPHOLD THE FINDINGS RECORDED BY THE CIT(A) WITH REGARD TO THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF COOLIE AND CARTAGE OUT WARD EXPENSES. ACCORDINGLY, GROUND NO.3 OF APPEAL OF THE ASSESSEE IS DISMISSED. 17 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 20 / 01 /20 20 . SD/ - ( C.M.GARG ) SD/ - (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK; DATED 20 / 01 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) ITAT CUTTACK BENCH, CUTTACK 1. / THE APPELLANT - M /S KHANDELWAL STEEL & PIPES, 614, BOMIKHAL, CUTTACK PURI RD BHUBANEWSWAR - 751010 2. / THE RESPONDENT - DCIT, CIRCLE - 4(1), BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / D R, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//