ROHIT INDIA, PONDICHERRY V. ACIT CENTRAL CIRCLE-2(1), CHENNAI

ITA 1992/CHNY/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1815 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 02-07-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. BHARATH
• Keywords: Commercial expediency
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.1991 & 1992/CHNY/2019 & '& / ASSESSMENT YEARS : 2014-15 & 2015-16 M/S ROHIT INDIA, R.S. NO.153/7, MANAPETVELI, BAHOUR COMMUNE, KANNI KOIL VILLAGE, PONDICHERRY 607 402. PAN : AAAFM 9102 D V. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), CHENNAI - 600 034. ()*/ APPELLANT) (+,)*/ RESPONDENT) )* - . / APPELLANT BY : SH. PHILIP GEORGE, ADVOCATE +,)* - . / RESPONDENT BY : SHRI S. BHARATH, CIT / - 0# / DATE OF HEARING : 19.11.2019 12' - 0# / DATE OF PRONOUNCEMENT : 04.12.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AG AINST THE COMMON ORDER PASSED BY THE COMMISSIONER OF INCOME T AX (APPEALS) - 18, CHENNAI, DATED 10.12.2018, FOR THE ASSESSMENT Y EARS 2014-15 AND 2015-16. SINCE COMMON ISSUE ARISES FOR CONSIDERATI ON IN BOTH THE APPEALS, WE HEARD THESE APPEALS TOGETHER AND DISPOS ING OF THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.1991 & 1992/CHNY/19 2. SH. PHILIP GEORGE, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ONLY ISSUE ARISES FOR CONSIDERATION IS DIS ALLOWANCE MADE UNDER SECTION 40A(3) OF THE INCOME-TAX ACT, 1961 (IN SHOR T 'THE ACT'). ACCORDING TO THE LD. COUNSEL, THE ASSESSEE PAID LORRY FREIGHT FOR TRANSPORTING HERBAL RAW MATERIAL FROM DISTANT PLACES IN NORTH INDIAN ST ATES. THE LORRY DRIVERS WHO BROUGHT THE GOODS TO THE ASSESSEE INSISTED FOR CASH PAYMENT. SINCE THE ASSESSEE HAS NO KNOWLEDGE ABOUT THE DRIVERS WHO CAME FOR DELIVERY OF GOODS, THE ASSESSEE WAS FORCED TO PAY CASH AS IN SISTED BY THE LORRY DRIVERS. THEREFORE, PAYMENT OF CASH IS FOR COMMERC IAL EXPEDIENCY. ACCORDING TO THE LD. COUNSEL, THE LORRY DRIVERS WIL L DELIVER THE GOODS / CARGO ONLY ON RECEIPT OF LORRY FREIGHT. THEREFORE, THERE WAS A BUSINESS NECESSITY FOR MAKING THE CASH PAYMENT. ON A QUERY FROM THE BENCH WHETHER THE DETAILS OF LORRIES AND DRIVERS ARE AVAI LABLE WITH THE ASSESSEE FOR PROVING THE GENUINENESS OF PAYMENT? THE LD.COU NSEL SUBMITTED THAT THE DETAILS ARE VERY MUCH AVAILABLE WITH THE ASSESS EE, THEREFORE, THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSE SSING OFFICER. 3. WE HEARD SHRI S. BHARATH, THE LD. DEPARTMENTAL R EPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., THE CIT(APPEALS) FOUND THAT THE ASSESSEE WOULD HAVE EMPLOYED REGULAR LORRY SERVICE FOR SUPPLY OF GOODS, THEREFORE, IT MAY NOT BE CORRECT IN SAYING THAT THE ASSESSEE WAS FORCED MAKE CASH PAYMENT DUE TO COMMERCIAL EXPEDIENCY. AC CORDING TO THE LD. 3 I.T.A. NOS.1991 & 1992/CHNY/19 D.R., IT IS ONLY A LAME EXCUSE THAT DUE TO BUSINESS EXPEDIENCY, THE CASH PAYMENT WAS MADE. 4. HAVING HEARD THE LD.COUNSEL FOR THE ASSESSEE AND THE LD. D.R., WE PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECOR D. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAS TO TRANSPORT HERBAL PRODUCTS FROM NORTH INDIAN STATES. THE CIT(APPEALS) FOUND THAT DUE TO VOLUMIN OUS PURCHASES MADE BY THE ASSESSEE, IT WOULD HAVE EMPLOYED REGULAR LOR RIES FOR DELIVERY OF GOODS. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT MERELY BECAUSE VOLUMINOUS PURCHASES WERE MADE, IT DOES NOT MEAN TH AT ONLY REGULAR LORRIES WOULD HAVE BEEN EMPLOYED BY THE ASSESSEE FO R SUPPLY OF GOODS. ENGAGEMENT OF LORRY WOULD DEPEND UPON WHO IS LOADIN G THE GOODS IN THE STATE IN WHICH THE HERBAL PRODUCTS WERE PURCHASED. THEREFORE, THE ASSESSEE MAY NOT BE IN THE CONTROL OF LORRIES WHICH ARE ENGAGED FOR TRANSPORTING THE HERBAL PRODUCTS. 5. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT ALL THE DRIVERS MAY NOT BE KNOWN TO THE ASSESSEE. SINCE, ADMITTEDLY, V OLUMINOUS GOODS WERE TRANSPORTED, SEVERAL DRIVERS MAY NOT BE KNOWN TO THE ASSESSEE AT ALL. EVEN THE KNOWN DRIVERS MAY NEED MONEY FOR PUR CHASING FUEL TO RUN THE LORRY AGAIN. THEREFORE, IT IS NOT THE CASE OF KNOWN OR UNKNOWN DRIVERS OR KNOWN OR UNKNOWN LORRIES. IRRESPECTIVE OF THE F ACT WHETHER THE ASSESSEE KNOWS THE DRIVER OR NOT, THE FACT REMAINS THAT THE LORRY DRIVERS 4 I.T.A. NOS.1991 & 1992/CHNY/19 NEED MONEY AT THE TIME OF DELIVERY OF GOODS. WHEN THE LORRIES REACH THE CITY IN THE ODD HOURS, THE ASSESSEE HAS TO NECESSAR ILY MAKE CASH PAYMENT. MOREOVER, WHEN THE LORRIES ARE COMING FRO M OTHER STATES, THE CONCERNED DRIVERS MAY NOT BE PREPARED TO GO TO BANK FOR ENCASHING THE CHEQUE RECEIVED FROM THE ASSESSEE. THEREFORE, THE HUMAN PROBABILITY IS THAT THE DRIVERS WOULD INSIST FOR CASH PAYMENT. TH IS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ASSESSEE HAS MADE THE P AYMENT IN CASH DUE TO COMMERCIAL EXPEDIENCY AND BUSINESS NECESSITY TO THE DRIVERS TOWARDS FREIGHT CHARGES. HENCE, THIS TRIBUNAL IS UNABLE TO UPHOLD THE OBSERVATION MADE BY THE CIT(APPEALS). 6. NOW THE LD.COUNSEL FOR THE ASSESSEE CLAIMS THAT THE ASSESSEE CAN PRODUCE DETAILS OF LORRIES AND DRIVERS TO WHOM THE CASH PAYMENTS WERE MADE. THESE FACTS CAN BE VERIFIED BY THE ASSE SSING OFFICER. IF THE ASSESSEE ESTABLISHES THE GENUINENESS OF PAYMENT AND EVEN IF IT EXCEEDS 20,000/- IN A DAY TO A PARTICULAR DRIVER, IT IS DUE TO COMMERCIAL EXPEDIENCY. THEREFORE, SUBJECT TO VERIFICATION OF THE DETAILS FURNISHED BY THE ASSESSEE, THE CLAIM HAS TO BE ALLOWED. ACCORDI NGLY, THE ISSUE OF DISALLOWANCE MADE UNDER SECTION 40A(3) OF THE ACT I S REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR LIMITED PURPO SE OF VERIFICATION OF DETAILS THAT MAY BE FURNISHED BY THE ASSESSEE BEFOR E THE ASSESSING OFFICER. 5 I.T.A. NOS.1991 & 1992/CHNY/19 7. WITH THE ABOVE OBSERVATION, BOTH THE APPEALS OF THE ASSESSEE STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 4 TH DECEMBER, 2019 AT CHENNAI. SD/- SD/- (. !) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 4 TH DECEMBER, 2019. KRI. - +056 76'0 /COPY TO: 1. )*/ APPELLANT 2. +,)*/ RESPONDENT 3. / 80 () /CIT(A)-18, CHENNAI-34 4. PRINCIPAL CIT, CENTRAL-2, CHENNAI 5. 69 +0 /DR 6. :& ; /GF.