M/s. Shree Sai Construction Co., Surat V. The Jt. CIT, Range -8, Surat

ITA 1449/AHD/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 0314 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAIMES KURIAN
• Assessee Lawyers: RASHESH SHAH
• Keywords: Non compliance
• Section: 40A(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER, AND SHRI S. S. GODARA, JUDICIAL MEMBER. ITA NO. 1449/AHD/2013 (ASSESSMENT YEAR:2009-10) M/S. SHREE SAI CONSTRUCTION CO., PLOT NO.67, 1 ST FLOOR, SANT JALARAM SOCIETY, VED ROAD, SURAT - 395004 APPELLANT VS. JT. COMMISSIONER OF INCOME TAX, RANGE-8, SURAT RESPONDENT PAN: ABGFS5283G / BY ASSESSEE : SHRI RASHESH SHAH, A.R. / BY REVENUE : SHRI JAIMES KURIAN, SR. D.R. /DATE OF HEARING : 10.08.2016 /DATE OF PRONOUNCEMENT : 13.10.2016 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 ARISES FROM CIT(A)-V, SURATS ORDER DATED 06.02.2013 IN CASE NO . CAS/V/288/2011-12 IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. 2. THE ASSESSEE RAISES TWO SUBSTANTIVE GROUNDS INTE R ALIA IN CHALLENGING THE LOWER APPELLATE ORDER CONFIRMING DISALLOWANCES/ ADDITIONS OF RS.22,74,137/- AND RS.22,848/- MADE BY THE ASSESSIN G OFFICER U/S. 40A(3) & ACCRUED INTEREST; RESPECTIVELY IN ASSESSMENT ORDER DATED 27.12.2011. LD. ITA NO.1449/AHD/2013 (M/S. SHREE SAI CONSTRUCTION C O. VS. JT.CIT) A.Y. 2009-10 - 2 - COUNSEL DOES NOT PRESS FOR THE LATTER GROUND IN THE COURSE OF HEARING. THIS LEAVES US WITH THE FORMER ISSUE OF SECTION 40A(3) D ISALLOWANCE ONLY. 3. THE ASSESSEE FIRM IS A REGISTERED GOVERNMENT CON TRACTOR EXECUTING VARIOUS PROJECTS IN RURAL/REMOTE AREAS. IT INCURRE D DIESEL PURCHASE, CEMENT AND REPAIR / MAINTENANCE EXPENSES. THERE IS NO DIS PUTE THAT IT HAD MADE CASH PAYMENTS TO THE CONCERNED PAYEES EXCEEDING RS.20,00 0/- IN COURSE OF A DAY UNDER THE ABOVE THREE HEADS. TAKE FOR INSTANCE ITS DIESEL SUPPLIER M/S. AJMERI & CO. AT CHHOTA UDAIPUR. THIS PARTY SOLD DI ESEL TO ASSESSEE TO THE TUNE OF RS.36,11,869/-. THIS GROSS SUM INCLUDED CA SH PAYMENTS OF RS.6,00,957/- MADE IN COURSE OF A DAY EXCEEDING RS. 20,000/-. THE ASSESSING OFFICER ISSUED SECTION 133(6) PROCESS TO THE PAYEE CONCERN. THIS PARTY WOULD FILE CONFIRMATION TO STATE THAT THE ASSESSEE HAS IN DEED MADE THE IMPUGNED PAYMENT AS PER ITS LEDGER. THE ASSESSEE STATED REA SON OF THE SAID CASH SUMS BEING PAID TO THE FACT THAT ITS PAYEE HAD BEEN INSI STING FOR CASH PAYMENT ON SOME OCCASIONS WHEREIN THE CREDIT PERIOD EXCEEDED A TIME FRAME OF 7 TO 10 DAYS. THE ASSESSING OFFICER OBSERVED IN ASSESSMENT ORDER THAT BOTH THESE PARTIES ENJOY A REGULAR RELATIONSHIP AND THEREFORE THE ASSESSEE/PAIRS CLAIM WAS NOT ALLOWABLE. HE ADOPTED SIMILAR REASONING FOR OT HER TWO PAYMENT HEADS. ALL THIS RESULTED IN THE IMPUGNED GROSS FIGURE OF D ISALLOWANCE U/S.40A(3) AMOUNTING TO RS.22,74,137/-. THE CIT(A) CONFIRMS A SSESSING OFFICERS ACTION. 4. HEARD BOTH SIDES REITERATING THEIR RESPECTIVE ST ANDS. RELEVANT FACTS NARRATED IN PRECEDING PARAGRAPH ARE NOT REPEATED FO R THE SAKE OF BREVITY. THERE IS ADMITTEDLY NO ISSUE OF GENUINENESS OF ASSE SSEES PAYMENTS INVOLVED IN THE INSTANT APPEAL. THE ASSESSING OFFICER IS HI MSELF FAIR ENOUGH IN NOT SUMMONING ALL THE PAYEES SINCE HE HAS CALLED FOR ON LY THE ABOVE STATED DIESEL SUPPLIER WHO HAS CONFIRMED ASSESSEES LEDGER ACCOUN T. THE ASSESSING OFFICER IS OF THE OPINION THAT THIS REGULAR RELATIO NSHIP INVITES THE IMPUGNED ITA NO.1449/AHD/2013 (M/S. SHREE SAI CONSTRUCTION C O. VS. JT.CIT) A.Y. 2009-10 - 3 - DISALLOWANCE U/S.40A(3) OF THE ACT. WE NOTICE IN T HIS FACTUAL BACKDROP THAT HONBLE JURISDICTIONAL HIGH COURT IN ANUPAM TELE SE RVICES VS. ITO (2014) 366 ITR 122 (GUJ.) DEALS WITH A SIMILAR REGULAR REL ATIONSHIP TO HOLD THAT THE IMPUGNED DISALLOWANCE COULD NOT BE MADE WHEREIN AN ASSESSEE PROVES INSISTENCE OF CASH PAYMENT AT ITS PAYEE BEHEST WHOS E NON COMPLIANCE WOULD ADVERSELY EFFECT ITS BUSINESS OPERATION. THEIR LOR DSHIPS LIFT RIGOR OF SECTION 40A(3) AND CONCLUDE THAT RULE 6DD EXCEPTIONS PROVID ED IN THE INCOME TAX RULES ARE NOT EXHAUSTIVE. AND ALSO THAT THE SAME A RE TO BE LIBERALLY INTERPRETED. WE THUS FOLLOW THE VERY REASONING HER EIN AS WELL TO CONCLUDE THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN INVOK ING THE IMPUGNED SECTION 40A(3) DISALLOWANCE QUA ASSESSEES CASH PAYMENT PER TAINING TO DIESEL, CEMENT AND REPAIR/MAINTENANCE EXPENSES IN QUESTION. THE REVENUES ARGUMENT SUPPORTIVE THERETO ARE ACCORDINGLY REJECTE D. THIS SOLE SURVIVING GROUND IN THE INSTANT APPEAL SUCCEEDS. 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 13 TH DAY OF OCTOBER, 2016.] SD/- SD/- (PRAMOD KUMAR) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 13/10/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 / GUARD FILE. BY ORDER / . // . /0