SP COAL RESOURCES PVT. LTD., CHENNAI V. DCIT CORPORATE CIRCLE 6(2), CHENNAI

ITA 1406/CHNY/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2279 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 07-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY , JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R ./ ITA NO.1406/CHNY/2019 /ASSESSMENT YEAR: 2015-16 M/S . S.P COAL RESOURCES PVT. LTD., C/O. SRI T.N SEETHARAMAN, ADVOCATE, #384 (OLD NO.196), LLOYDS ROAD, CHENNAI 600 086. VS. THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-6(2), CHENNAI. [PAN: AAOCS 3138G ] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI T.N. SEETHARAMAN, ADVOCATE /RESPONDENT BY : SHRI SURESH PERIASAMY, JCIT /DATE OF HEARING : 18.02.2021 / DATE OF PRONOUNCEMENT : 27.04.2021 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBE R : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI, I N ITA NO.194/2017-18/CIT(A)-15 DATED 27.02.2019 FOR THE A SSESSMENT YEAR 2015-16. 2. M/S. S.P COAL RESOURCES PVT. LTD., THE ASSESSEE, IS IN THE BUSINESS OF TRADING IN STEAM COAL USED FOR POWER GENERATION AND IN CHEMICAL AND SUGAR FACTORIES. WHILE MAKING THE ASSESSMENT FOR AS SESSMENT YEAR 2015-16, THE ASSESSING OFFICER (A.O) NOTICED THAT T HE ASSESSEE HAS PAID ITA NO.1406/CHNY/2019 :- 2 -: TO ITS CREDITORS AND TRANSPORTERS IN CASH FOR PURCH ASE OF COAL IN EXCESS OF RS. 20,000/- IN VIOLATION OF PROVISIONS OF S. 40A(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) THEREFORE, ON EXAMINATION , THE A.O HELD, INTER ALIA, THAT THIS PAYMENTS COULD HAVE BEEN MADE THROU GH BANKING CHANNEL OR ONLINE, THERE WERE NO EXCEPTIONAL CIRCUMSTANCES AS PRESCRIBED UNDER RULE 6DD OF THE INCOME TAX RULES, 1962 ETC. AND HEN CE, MADE DISALLOWANCE U/S. 40A(3) OF THE ACT. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE CIT(A). THE LD. CIT(A) HELD, INTER AL IA, THAT THE ASSESSEE AS WELL AS THE CREDITORS AND TRANSPORTERS WERE ESTA BLISHED BUSINESS CONCERNS HAVING BANK ACCOUNTS AND THEY WERE OPERATI NG IN URBAN AREAS, THE ASSESSEE COULD NOT DEMONSTRATE EXCEPTIONAL CIRC UMSTANCES LEADING TO VIOLATION OF S. 40A(3) OF THE ACT FOR SEEKING EX EMPTIONS FROM THE DISALLOWANCE U/S. 40A(3) OF THE ACT AND HENCE UPHEL D THE DISALLOWANCE. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED TH IS APPEAL. 3. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. T HE LD. AR SUBMITTED THAT THE LD. CIT(A) ERRED IN CONFIRMING T HE DISALLOWANCE EN MASSE WITHOUT LOOKING INTO THE NATURE OF EACH OF THE AMO UNTS DISALLOWED. THE LOWER AUTHORITIES HAVING NOT APPRECIATED THE FA CT THAT THE IMPUGNED SUM COMPRISED NOT ONLY EXPENDITURE OVER RS. 20,000/ - BY THE CASH, BUT ALSO REFUND OF TRADE ADVANCE RECEIVED FOR SUPPLY OF COAL FROM VARIOUS PARTIES IN THE COURSE OF ASSESSEES BUSINESS AS AN IMPORTER AND SUPPLIER ITA NO.1406/CHNY/2019 :- 3 -: OF COAL. THERE ARE A LARGE NUMBER OF PAYMENTS BELOW THE THRESHOLD LIMIT OF RS. 20,000/-, WHICH DO NOT ATTRACT THE PROVISION S OF S. 40A(3) OF THE ACT. WITHOUT APPRECIATING THE FACTS AND CIRCUMSTAN CES WITH ACCOUNTS AND WITHOUT GIVING DUE OPPORTUNITY TO THE ASSESSEE, THE A.O MADE THE ADDITION AND THE LD. CIT(A) CONFIRMED THE DISALLOWA NCE. THE LD. A.R INVITED OUR ATTENTION TO THE PAPER BOOK IN SUPPORT OF HIS GROUNDS OF APPEAL. 4. PER CONTRA, THE LD. COUNSEL FOR THE D.R INVITED OUR ATTENTION TO THE OBSERVATION MADE BY THE LD. CIT(A) IN THE ORDER THA T INSPITE OF REASONABLE OPPORTUNITY GIVEN, THE ASSESSEE COULD NO T DEMONSTRATE EXCEPTIONAL CIRCUMSTANCES AND HENCE SUPPORTED THE O RDERS OF LOWER AUTHORITIES. 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAS TAKEN A PLEA THAT THE PAYMENT WAS MADE DUE TO UNAVOIDABLE CIRCUMSTANCES, BECAUSE THE COMPANY WAS IN FINANCIAL CRISIS. SOME OF THE CUSTOMERS REFUSED TO ACCEPT COMPANYS C HEQUE AND TO OVERCOME THE PAYMENTS WERE MADE IN CASH ETC. IT IS SEEN FROM THE ASSESSMENT ORDER, THE A.O HAS NOT ANALYZED INDIVIDU AL TRANSACTIONS BEFORE TAKING THE DECISION. IN THE FACTS AND CIRCUM STANCES OF THE CASE, WE DEEM IT FIT TO REMIT THIS ISSUE BACK TO THE AO F OR FRESH EXAMINATION. ITA NO.1406/CHNY/2019 :- 4 -: THE ASSESSEE SHALL FURNISH RELEVANT MATERIAL IN SUP PORT OF ITS CONTENTION AND COMPLY WITH THE REQUIREMENTS OF THE AO IN ACCOR DANCE WITH LAW. THE AO ON DUE EXAMINATION OF THEM AND AFTER AFFORDING D UE OPPORTUNITY TO THE ASSESSEE, DECIDE THE ISSUES IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE DAY OF 27 TH APRIL, 2021 IN CHENNAI. SD/ - SD/ - ( . ) (DUVVURU RL REDDY) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 27 TH APRIL, 2021 . EDN, SR. P.S /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF