M/s. H.L. Mondal , Hooghly V. ITO, Ward - 23(2), Hooghly , Hooghly

ITA 198/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9317 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANKAR HALDER
• Assessee Lawyers: MIRAJ D. SHAH
• Keywords: Set aside
• Section: 40A(3)

Judgement Text

1 ITA NO.198/KOL/2018 M/S. H. L. MOND AL, AY- 2013-14 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA ( ) . . , . . ! , ' #$ ) [BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT & SHRI A. T. VARKEY, JM] I.T.A. NO. 198/KOL/2018 ASSESSMENT YEAR: 2013-14 M/S. H. L. MONDAL (PAN: AADFH2723E) VS. INCOME-TAX OFFICER, WD. 23(2), HOOGHLY APPELLANT RESPONDENT DATE OF HEARING 07.02.2019 DATE OF PRONOUNCEMENT 03.04.2019 FOR THE APPELLANT SHRI MIRAJ D. SHAH, AR FOR THE RESPONDENT SHRI SHANKAR HALDER, JCIT, SR. D R ORDER PER SHRI A.T.VARKEY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-6, KOLKATA DATED 14.11.2017 FOR AY 2013-14. 2. GROUND NO. 1 IS AGAINST THE ACTION OF LD. CIT (A) IN CONFIRMING THE ACTION OF AO IN DISALLOWING RS.2,92,887/- ON ACCOUNT OF ALLEGED CON TRAVENTION OF SEC. 40A(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT). 3. BRIEF FACTS OF THE CASE ARE THAT THE AO NOTED THAT WHILE PERUSING THE PURCHASE LEDGER IT APPEARED TO HIM THAT THE ASSESSEE PAID IN CASH M ORE THAN RS.20,000/- IN A DAY AGAINST BILLS WHICH WERE IN VIOLATION OF SEC. 40A(3) OF THE ACT S O HE REPRODUCED IN A CHART AT PAGE 2 OF HIS ORDER THE VIOLATION HE NOTICED AND THEN HE ASK ED FOR EXPLANATION FROM THE ASSESSEE. ACCORDING TO ASSESSEE, THE PURCHASES MADE FROM THE PARTIES WERE NOT DONE IN A SINGLE DAY, SO THESE TRANSACTIONS WHEN CONSIDERED ON A DAILY BA SIS FALL BELOW RS.20,000/-, BUT THE SALESMEN HAD ACTUALLY COLLECTED THE CASH FROM THE A SSESSEE ON A DAILY BASIS AND THEREAFTER, POSTED THE SAME WITH THE RESPECTIVE COMPANIES ON A SINGLE DAY THE ENTIRE COLLECTION OF MONEY FOR SEVERAL DAYS AND IT WAS ARGUED THAT SINCE THE GENUINENESS IS NOT IN DOUBT DISALLOWANCE OF EXPENDITURE INVOKING SEC. 40A(3) OF THE ACT SHOULD NOT BE MADE. HOWEVER, 2 ITA NO.198/KOL/2018 M/S. H. L. MOND AL, AY- 2013-14 THE AO DID NOT AGREE WITH THE CONTENTION OF THE ASS ESSEE AND DISALLOWED AN AMOUNT OF RS.2,92,887/-. AGGRIEVED, ASSESSEE PREFERRED AN AP PEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO DISMISS THE SAME. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE IS A PARTNERSHIP FI RM ENGAGED IN THE RETAIL TRADING BUSINESS OF LIQUOR OF WINES AND SPIRIT . THE AO DURING THE ASSESSMENT PROCEEDINGS AFTER P ERUSAL OF THE PURCHASE LEDGER FOUND THAT TO CERTAIN PARTIES THE A SSESSEE HAS MADE PAYMENTS IN CASH IN EXCESS OF RS.20,000/- A DAY. THE ASSESSEES STAND IS THAT THE PURCHASES MADE FROM THE FOUR COMPANIES IN A DAY NEVER EXCEEDED RS.20,000/-. AC CORDING TO THE ASSESSEE, THE ASSESSEE USED TO BOOK THE EXPENDITURE OF THE RESPECTIVE PART IES ON A DAILY BASIS WHICH NEVER EXCEEDED RS.20,000/- AND THE AMOUNTS WERE KEPT READY TO BE C OLLECTED BY THE RESPECTIVE COMPANYS SALESMEN EVERY DAY. THOUGH THE SALESMEN USED TO CO LLECT THE AMOUNT WHICH DID NOT EXCEED RS.20,000/- A DAY, THESE SALESMEN USED TO REMIT THE CONSOLIDATED AMOUNT IN A WEEK OR FIFTEEN DAYS TO THE RESPECTIVE COMPANIES WHICH, ACCORDING T O LD. AR, MIGHT HAVE CREATED THE CONFUSION AND THE CONSOLIDATED FIGURE MIGHT HAVE BE EN REFLECTED BY THE RESPECTIVE COMPANIES IN THEIR PURCHASE REGISTERS. THEREFORE, ACCORDING TO LD. AR, IF AN OPPORTUNITY IS PROVIDED, THE ASSESSEE WOULD BE ABLE TO DEMONSTRATE BEFORE THE AO THE VERACITY OF THE AFORESAID CLAIM AND EXPLAIN THE MODUS OPERANDI ADOP TED BY THE ASSESSEE TO DISBURSE THE PAYMENTS TO THE COMPANIES WHICH FALL BELOW RS.20,00 0/- A DAY AND SO IT DOES NOT ATTRACT DISALLOWANCE INVOKING SEC. 40A(3) OF THE ACT. THER EFORE, HE PLEADED THAT THE MATTER MAY BE REMANDED BACK TO THE FILE OF THE AO TO VERIFY THE V ERACITY OF THE AFORESAID CLAIM OF THE ASSESSEE. THE LD. DR VEHEMENTLY OPPOSES SUCH AN AC TION, WHICH ACCORDING TO LD. DR IS AN AFTERTHOUGHT AND IF THE ASSESSEE HAD SUCH A DEFENCE , HE SHOULD HAVE BROUGHT IT TO THE NOTICE OF THE AO AT THE FIRST INSTANCE ITSELF RATHER THAN ELABORATING ALL THESE THINGS AT THE SECOND APPELLATE STAGE. 5. WE NOTE THAT THE ASSESSEE FIRM IS ENGAGED IN RET AIL LIQUOR BUSINESS. DURING THE ASSESSMENT PROCEEDINGS, THE AO NOTED FROM A PERUSAL OF THE PURCHASE LEDGER THAT ASSESSEE HAS PURCHASED GOODS FROM FOUR COMPANIES IN CASH WHI CH IS IN VIOLATION OF PROVISION OF SEC. 40A(3) OF THE ACT SINCE PAYMENT EXCEEDED RS.20,000/ - A DAY SO HE DISALLOWED THE SAID SUM 3 ITA NO.198/KOL/2018 M/S. H. L. MOND AL, AY- 2013-14 OF MONIES. WE NOTE THAT BEFORE THE AO ITSELF, THE ASSESSEE HAS CONTENDED THAT THOUGH THE ASSESSEE HAD PURCHASED GOODS FROM THE FOUR COMPANIE S IN CASH, IT HAS NEVER EXCEEDED RS.20.000/- A DAY. THIS DEFENCE OF THE ASSESSEE HA S ALREADY BEEN RECORDED BY THE AO IN HIS ASSESSMENT ORDER. HOWEVER, WITHOUT ASKING FOR THE P ROOF OF IT, THE AO HAD MADE THE DISALLOWANCE BRUSHING ASIDE THE DEFENCE RAISED BY T HE ASSESSEE. AND THE SAME DEFENCE THE ASSESSEE RAISED BEFORE THE LD. CIT(A) ALSO, SO IT C ANNOT BE TERMED AS AN AFTERTHOUGHT AS CONTENDED BY LD. DR. IN SUCH A SCENARIO, WE SET AS IDE THE ORDER OF THE LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE OF THE AO TO VER IFY AS TO WHETHER THE ASSESSEES CLAIM THAT IN A DAY CASH EXPENDITURE OF NOT MORE THAN RS.20,00 0/- HAS BEEN EXPENDED TO THE FOUR COMPANIES. IT HAS TO BE VERIFIED BY THE AO THAT TH E ASSESSEE HAD ONLY MADE PAYMENT OF LESS THAN RS.20,000/- ON A DAILY BASIS TO THESE FOUR COM PANIES, AND THE SALESMEN OF THE RESPECTIVE COMPANIES AFTER HAVING COLLECTED THE SAME ON DAILY BASIS, HOWEVER, HAVE REMITTED IT IN A CONSOLIDATED MANNER AFTER A WEEK OR FIFTEEN DAYS AN D REFLECTED THE CONSOLIDATED SUMS WHICH MIGHT HAVE BREACHED RS.20,000/-. ACCORDING TO ASSE SSEE, SINCE ASSESSEE HAS ONLY MADE PAYMENT OF LESS THAN RS.20,000/- A DAY AND FOR NO F AULT OF ASSESSEE, IF THE SALESMEN OF THE COMPANIES HAVE DEPOSITED AFTER A WEEK THE DAILY COL LECTION THAT DOES NOT MEAN THAT ASSESSEE HAS CONTRAVENED THE CEILING LIMIT OF RS.20,000/- PR ESCRIBED BY THE STATUTE. THEREFORE, IN ORDER TO VERIFY THE VERACITY OF THE AFORESAID CLAIM OF THE ASSESSEE, WE SET ASIDE THE ORDER OF LD. CIT(A) AND REMAND THE MATTER BACK TO THE FILE O F THE AO TO VERIFY AS TO WHETHER THE ASSESSEES CLAIM IS CORRECT OR NOT, IF IT IS FOUND CORRECT THEN NO DISALLOWANCE IS WARRANTED AND IF NOT, ACTION IN ACCORDANCE TO LAW TO BE TAKEN. 6. GROUND NOS. 1 AND 3 ARE GENERAL IN NATURE SO, N O ADJUDICATION IS REQUIRED. HENCE THE SAME ARE DISMISSED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 3RD APRIL , 2019 SD/- SD/- (P. M. JAGTAP) (ABY. T. VARKEY) VICE PRESIDENT JUDICIAL MEMBER DATED : 3RD APRIL, 2019 JD.(SR.P.S.) 4 ITA NO.198/KOL/2018 M/S. H. L. MOND AL, AY- 2013-14 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT M/S. H. L. MONDAL, 71, G. T. ROAD, R ISHRA, HOOGHLY, WEST BENGAL-712 248.. 2 RESPONDENT ITO, WARD-23(2), HOOGHLY. 3. 4. CIT(A)-6, KOLKATA (SENT THROUGH E-MAIL) CIT- , KOLKATA. 5. DR, ITAT, KOLKATA. (SENT THROUGH E-MAIL) / TRUE COPY, BY ORDER, ASSISTANT REGISTRAR