M/s Bantus Interiors Pvt. Ltd., Lucknow V. Dy. Commissioner of Income Tax, Lucknow

ITA 181/LKW/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4428 (ITAT-LUCKNOW)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 08-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T P SINGH
• Section: 40A(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO.181/LKW/2016 ASSESSMENT YEAR:2012-13 DY.C.I.T., RANGE-1, LUCKNOW. VS M/S BANTUS INTERIORS PVT. LTD., VILLAGE: KAMTA, POST-CHINHAT, FAIZABAD ROAD, LUCKNOW. PAN:AABCB6405C (RESPONDENT) (APPELLANT) SHRI ASHOK SETH, C.A. APPELLANT BY SHRI T. P. SINGH, D. R. RESPONDENT BY 16/05/2016 DATE OF HEARING 17/05/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE OR DER PASSED BY LEARNED CIT(A), LUCKNOW DATED 22/01/2016 FOR THE ASSESSMENT YEAR 2012-13. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLO WING GROUNDS: 1. THAT THE INCOME RETURNED SHOULD HAVE BEEN ACCE PTED. 2. THAT THE APPELLANT WAS FORCED TO PAY THE POWER B ILLS TO GOVERNMENT UNDERTAKING BY CASH HENCE DISALLOWANCE U /S 40A(3) WAS BAD IN LAW. 3. THE PAYMENTS MADE FOR POWER TO GOVT. UNDERTAKING WAS GENUINE PAYMENT AND HENCE SHOULD NOT HAVE BEEN DISALLOWED. 4. THAT THE LEARNED LOWER COURT ERRED IN DISALLOWIN G RS.1,00,000/- OUT OF THE EXPENSES IN AD HOC AND ARB ITRARY BASIS. 5. THAT THE EXPENSES WERE ALL SUPPORTED AND WERE IN CURRED FOR THE PURPOSE OF BUSINESS HENCE AD HOC DISALLOWANCE W AS BAD IN LAW. 2 6. THAT THE EXPENSES DISALLOWED ARE TOO EXCESSIVE A RBITRARY AND WITHOUT ANY BASIS. 7. THAT THE ORDER PASSED IS AGAINST THE MERIT, CIRC UMSTANCES AND LEGAL ASPECTS OF THE CASE. 3. IT WAS SUBMITTED BY LEARNED A. R. OF THE ASSESSE E THAT ONLY TWO ISSUES ARE INVOLVED IN THIS APPEAL. 4. THE FIRST ISSUE IS REGARDING DISALLOWANCE OF RS. 89,343/- U/S 40A(3) OF THE ACT IN RESPECT OF CASH PAYMENT IN EXCESS OF RS.20,0 00/- PER DAY PER ENTITY AND THE SECOND ISSUE IS REGARDING AD HOC DISALLOWANCE O F RS.1,00,000/-. REGARDING THE FIRST ISSUE, LEARNED A.R. SUBMITTED THAT THE PA YMENT IN QUESTION WAS MADE BY THE ASSESSEE IN CASH TO MADHYANCHAL VIDYUT VITRA N NIGAM LTD. (A U.P. GOVERNMENT UNDERTAKING) IN RESPECT OF ELECTRICITY S UPPLIED BY THEM. HE FURTHER SUBMITTED THAT THE RELEVANT BILLS ARE AVAILABLE ON PAGES 7 TO 10 OF THE PAPER BOOK. HE ALSO POINTED OUT THAT AS PER THE NOTING O F THESE BILLS, THE ASSESSEE WAS REQUIRED TO MAKE PAYMENT ONLY BY CASH FOR THE R EASON THAT IN 2007 THE ASSESSEE MADE A PAYMENT BY CHEQUE BUT THE CHEQUE WA S DISHONOURED FOR SOME REASONS AND FOR THIS THEREAFTER MADHYANCHAL VI DYUT VITRAN NIGAM LTD. IS INSISTING FOR CASH PAYMENT ONLY. THEREAFTER HE SUB MITTED THAT UNDER THESE FACTS, MAKING CASH PAYMENT ON THIS ACCOUNT IS COVER ED BY BUSINESS EXPEDIENCY AND THEREFORE, NO DISALLOWANCE IS JUSTIFIED. IN SU PPORT OF THIS CONTENTION, HE PLACED RELIANCE ON THE DECISION OF APEX COURT RENDE RED IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. INCOME TAX OFFICER [1991] 1 91 ITR 667 (SC). 4.1 REGARDING THE SECOND ISSUE, LEARNED A. R. OF TH E ASSESSEE SUBMITTED THAT AS PER THE ASSESSMENT ORDER THE ASSESSING OFFI CER HAS MADE AD HOC DISALLOWANCE ON THE BASIS THAT GROSS PROFIT AND NET PROFIT RATE HAS GONE DOWN FROM 26% TO 25% AND 14% TO 9.99% RESPECTIVELY. REG ARDING THIS ALLEGATION OF THE ASSESSING OFFICER THAT THE DETAILS OF THESE EXP ENSES UNDER THE HEAD SALARY AND WAGES, MISC. EXPENSES AND TRAVELLING AND CONVEY ANCE EXPENSES WERE NOT KEPT. HE SUBMITTED THAT COMPLETE DETAILS WERE KEPT BUT THE ASSESSING OFFICER 3 HAS NOT ASKED FOR ANY PARTICULAR TYPE OF DETAILS IN RESPECT OF THESE EXPENSES THEREFORE, THE AD HOC DISALLOWANCE IS NOT JUSTIFIED . 5. AS AGAINST THIS, LEARNED D. R. OF THE REVENUE SU PPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. REGA RDING THE FIRST ISSUE I.E. REGARDING DISALLOWANCE U/S 40A(3), WE ARE SATISFIED THAT IN THE FACTS OF THE PRESENT CASE, THERE WAS BUSINESS EXPEDIENCY FOR MAK ING CASH PAYMENT ON ACCOUNT OF SUPPLY OF ELECTRICITY BY UNDERTAKING OF U.P. GOVERNMENT PARTICULARLY WHEN THE SUPPLIER HAS INSISTED FOR CASH PAYMENT AND THEREFORE, IN OUR CONSIDERED OPINION, NO DISALLOWANCE IS CALLED FOR U NDER THESE FACTS U/S 40A(3) OF THE ACT. WE, THEREFORE, DELETE THE SAME. 6.1 REGARDING THE SECOND ISSUE ALSO, WE FIND THAT T HE ASSESSING OFFICER HAS STATED IN THE ASSESSMENT ORDER THAT THE ASSESSEE HA S NOT KEPT DETAILS OF THESE EXPENSES BUT HE HAS NOT GIVEN A SINGLE INSTANCE OF DETAIL CALLED FOR BY HIM WHICH WAS NOT PROVIDED BY THE ASSESSEE. IN THE ABS ENCE OF ANY SPECIFIC INSTANCES GIVEN BY THE ASSESSING OFFICER IN SUPPORT OF THE ALLEGATION THAT NO DETAIL WAS MAINTAINED BY THE ASSESSEE, SUCH AD HOC DISALLOWANCE ON THE BASIS OF GENERAL OBSERVATION IS NOT JUSTIFIED. WE, THERE FORE, DELETE THE SAME. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (MAHAVIR PRASAD) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED:17/05/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 4 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR