The ACIT,(OSD)Circle-9, Ahmedabad V. Shri Nilesh G.Gadhiya, Ahmedabad

ITA 2030/AHD/2012

• Counselvise Citation: 203020514 RSA 2012
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-11-2012
• Assessment Year: 2009-2010
• Appeal Filed On: 10-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non compliance
• Section: 40A(3); 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD A BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTAN T MEMBER I.T.A. NO.2030/AHD/2012 A.Y.2009-10 THE A.C.I.T.,(OSD), CIRCLE-9, AHMEDABAD APPELLANT VS. SHRI NILESH G. GADHIYA B/95, CHITRALEKHA SOCIETY, AJAY TENAMENT, PART-V, VASTRAL ROAD, AMRAIWADI, AHMEDABAD PAN-AHVPG5332R RESPONDENT DEPARTMENT BY : SHRI VIVEK ANAND OJHA, SR. D.R. ASSESSEE BY : SHRI HARDIK VORA, A.R. DATE OF HEARING : 09.11.2012 DATE OF PRONOUNCEMENT : 23.11.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THIS IS REVENUES APPEAL AGAINST THE ORDER OF LD. C IT(A)-XV, AHMEDABAD DATED 1 ST JUNE, 2012. 2. REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,96,24,849/- MADE U/S 40(A)(IA) OF THE ACT FOR NON COMPLIANCE TO PROVISIONS OF SECTION 194 C OF THE ACT. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ATTR ACTED ON NON PAYMENT OF TDS DUES IN GOVERNMENT ACCOUNT BEYOND TH E DUE DATE FOR FILING OF APPEAL AND THE SAID AMENDMENT IN TRODUCED BY FINANCE ACT 2010 WAS RETROSPECTIVE IN NATURE. I.T.A. NO.2030/AHD/2012 A.Y.2009-10 2 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,97,000/- MADE U/S 40A(3) OF THE AC T FOR PAYMENT EXCEEDING RS.20,000/- IN CASH. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 5. IT IS, THEREFORE, PRAYED THAT THE ORDER OF LD. C IT(A) MAY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 3. GROUND NOS.4 AND 5 ARE GENERAL IN NATURE HENCE D O NOT REQUIRE ANY ADJUDICATION. 4. GROUND NOS.1 AND 2 RELATE TO ADDITION OF RS.1,96 ,24,849/- MADE U/S 40(A)(IA) OF THE ACT FOR NON-COMPLIANCE OF PROV ISIONS OF SECTION 194C OF THE ACT. 5. DURING THE ASSESSMENT PROCEEDINGS THE A.O. NOTIC ED THAT THOUGH ASSESSEE HAS DEDUCTED TDS ON PAYMENT MADE TO VARIOU S SUB- CONTRACTORS BUT SAME HAS NOT BEEN DEPOSITED IN GOVE RNMENT ACCOUNT WITHIN THE TIME PRESCRIBED. THEREFORE, INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ADDITION OF RS.1,96,24 ,849/- WERE MADE. LD. CIT(A) DELETED THIS ADDITION BY OBSERVING AS UN DER:- IN REFERENCE TO DISALLOWANCE OF RS.1,96,24,849/- U /S 40(A)(IA) OF THE ACT, IT IS UNDISPUTED THAT APPELLA NT HAS DEDUCTED TDS FROM ALL SUCH PAYMENTS AND DEPOSITED T HE SAME WITH GOVT. ACCOUNT. IT IS ONLY THE DEPOSIT DA TE WHICH AS PER A.O. IS BEYOND THE DUE DATE SPECIFIED IN SECTIO N 200(1) OF THE ACT WHICH HAS BEEN ALLEGED TO BE VIOLATED BY AP PELLANT. IT IS IN THIS REGARD, I AM INCLINED TO ACCEPT THE C ONTENTION OF THE APPELLANT THAT CONSIDERING THE HONBLE CALCUTTA HIGH COURT JUDGMENT IN THE CASE OF CIT VS. VIRGIN CREATO RS WHICH HAS BEEN FOLLOWED BY HONBLE ITAT AHMEDABAD IN VARI OUS CASES, THE AMENDMENT BROUGHT OUT BY FINANCE ACT, 20 10 WAS HELD AS RETROSPECTIVE AND THE APPELLANT HAS NOT VIO LATED ANY CONDITION SO TO SUBJECTED TO PROVISION OF 40(A)(IA) OF THE ACT. AS PER THE SUBMISSION DT. 07/05/2012 OF THE APPELLA NT, TDS DEDUCTED WAS PAID WELL BEFORE THE DUE DATE OF FILIN G OF RETURN OF INCOME. IT IS THEREFORE, THE DISALLOWANCES AND THEREBY I.T.A. NO.2030/AHD/2012 A.Y.2009-10 3 ADDITION MADE BY A.O. ARE NOT SUSTAINABLE IN LAW. HE IS DIRECTED TO DELETE SUCH EXPENDITURE. THE APPELLANT GETS RELIEF OF RS.1,96,24,849/-. 6. SINCE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESSE E BY PLACING RELIANCE ON THE VARIOUS DECISIONS OF THE ITAT, AHME DABAD, WE FEEL NO NEED TO INTERFERE WITH THE ORDER PASSED BY LD. CIT( A) AND THE SAME IS HEREBY UPHELD. THESE GROUNDS OF REVENUE ARE DISMIS SED. 7. GROUND NO.3 RELATES TO ADDITION OF RS.1,97,000/- MADE U/S 40A(3) OF THE ACT FOR PAYMENT EXCEEDING RS.20,000/- IN CASH. 8. THE A.O. DURING THE ASSESSMENT PROCEEDING OBSERV ED THAT ASSESSEE HAS MADE PAYMENT TO VARIOUS PERSONS AND IN THE FOLLOWING CASES ASSESSEE HAS MADE PAYMENT IN EXCESS OF RS.20, 000/- IN CASH IN VIOLATION OF SECTION 40A(3) OF THE ACT:- SR.NO. DATE AMOUNT 1 26/04/2008 31,000 2 06/10/2008 40,000 3 11/11/2008 36,000 4 19/11/2008 25,000 5 12/01/2009 35,000 6 25/03/2009 30,000 TOTAL 1,97,000 9. ASSESSEES EXPLANATION IN THIS RESPECT WAS THAT PAYMENTS WERE MADE THROUGH DIFFERENT INDIVIDUALS ON THE SAME DATE BUT ACCOUNTED AS SINGLE PAYMENT ENTRY. HENCE, THE SAME ARE ALLOWABL E AS SECTION 40A(3) ONLY TALKS ABOUT PAYMENT IN EXCESS OF RS.20, 000/- TO SINGLE PERSON IN SINGLE DAY. THIS EXPLANATION OF THE ASSE SSEE, HOWEVER, WAS NOT ACCEPTABLE TO THE A.O. AS NO EVIDENCE IN RESPEC T OF HIS SUBMISSION I.T.A. NO.2030/AHD/2012 A.Y.2009-10 4 WAS FILED BY THE ASSESSEE BEFORE THE A.O. HE, THER EFORE, INVOKED THE PROVISIONS OF SECTION 40A (3) OF THE ACT AND DISALL OWED A SUM OF RS.1,97,000/- AND ADDED THE SAME TO THE TOTAL INCOM E OF THE ASSESSEE. 10. LD. CIT(A) HAS DELETED THIS ADDITION BY OBSERVI NG AS UNDER:- IN RESPECT OF ADDITION OF RS.1,97,000/- U/S 40A(3) OF THE ACT, I AM INCLINED TO ACCEPT THE CONTENTION OF THE APPEL LANT THAT A.O. HAS NOT PROPERLY APPRECIATED THE FACTS AND SUB MISSIONS ON THIS ISSUE. THE A.O. FAILED TO APPRECIATE THE P ROCEDURE FOLLOWED BY THE APPELLANT. NO INDEPENDENT INQUIRIE S WERE MADE IN THIS REGARDS BY THE A.O. TO EVIDENCE THAT P AYMENT OF RS.20,000 OR MORE IS MADE TO A PERSON FOR LABOUR CH ARGES. THE SUBMISSION OF APPELLANT DT.18/04/2012 WITH COP IES OF VOUCHERS FOR SUCH EXPENDITURE CLEARLY REFLECT THAT PAYMENT OF VARIED AMOUNT BELOW 20,000 TO VARIOUS LABOUR ON A D AY IS MADE THROUGH MUKADUM I.E. SUPERVISOR AND THEREFOR E SECTION 40A(3) OF THE ACT IS NOT APPLICABLE. THERE IS NO FINDING TO CONTROVERT THIS PROPOSITION OF APPELLANT WHICH IS AN ESTABLISHED PRACTICE OF THE TRADE. THE APPELLANT C ANNOT BE PENALIZED FOR ESTABLISHED PRACTICE OF ACCOUNT KEEPI NG (ONE VOUCHER FOR VARIOUS PAYMENTS ON A SINGLE DATE THROU GH SUPERVISOR) AND ESTABLISHED PRACTICES OF TRADE. HO NBLE ITAT AHMEDABAD IN THE CASE OF LEADER TRANSPORT & CO. VS. ITO 6 ITR (TRIB) 229 AHD FOLLOWING HONBLE ORISSA HIGH CO URT JUDGEMENT IN THE CASE OF M/S ALOO SUPPLY CO. 121 IT R 680 HELD THAT EACH SINGLE PAYMENT SHOULD BE ABOVE RS.20 ,000 IN CASH FOR THE APPLICABILITY OF SECTION 40A(3) OF THE ACT. THE AMENDMENT OF AGGREGATE PAYMENT TO SINGLE PARTY IS W.E.F. A.Y. 09-10. IN THE CASE OF APPELLANT THERE IS NO S INGLE PAYMENT OR AGGREGATE PAYMENT TO SINGLE PERSON OF CA SH OF RS.20,000 & ABOVE TO A PERSON AND THEREFORE A.OS A CTION OF INVOKING SECTION 40A(3) OF THE ACT IS NOT SUSTAINAB LE. HE IS DIRECTED TO ALLOW SUCH EXPENDITURE AND DELETE THE A DDITION. THE APPELLANT GETS RELIEF OF RS.L,97,000/-. 11. SINCE LD. CIT(A) HAS GIVEN RELIEF TO THE ASSESS EE BY PLACING RELIANCE ON THE DECISION OF LEADER TRANSPORT & CO. VS. ITO 6 ITR (TRIB) 229 AHD AND HONBLE ORISSA HIGH COURT JUDGEM ENT IN THE CASE OF M/S ALOO SUPPLY CO. 121 ITR 680 HOLDING THAT EAC H SINGLE PAYMENT I.T.A. NO.2030/AHD/2012 A.Y.2009-10 5 SHOULD BE ABOVE RS.20,000/- IN CASH FOR THE APPLICA BILITY OF SECTION 40A(3) OF THE ACT, WE FEEL NO NEED TO INTERFERE WIT H THE ORDER PASSED BY LD. CIT(A) AND THE SAME IS HEREBY UPHELD. 12. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 23.11.2012 SD/- SD/- (A.MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUD ICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD