G.K.Mathanagopal, Pollachi V. ITO, CHENNAI

ITA 2031/CHNY/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2690 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 08-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS VIDISHA KALRA
• Assessee Lawyers: MURUGESHAN
• Keywords: Right to appeal
• Section: 6; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.2031 /MDS/2012 ASST. YEAR : 2008-09 SHRI G.K. MATHANAGOPAL PROP : GK MATHAN TRADERS, 51,GOODSHED ROAD, POLLACHI-642001 PAN : AITPM9792Q. (APPELLANT) V. THE INCOME TAX OFFICER, WARD I(2), POLLACHI. (RESPONDENT) APPELLANT BY : MR. MURUGESHAN, CA RESPONDENT BY : MRS. VIDISHA KALRA, CIT DR DATE OF HEARING : 28 JAN 2013 DATE OF PRONOUNCEMENT : 18 FEB 2013 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, COIMBATORE DATED 28.8.2012 FOR THE ASST. YEAR 2008-09. THE ASSESSEE RAISED SEVERAL GROUNDS IN ITS APPEAL WHICH ARE EFFECTIVELY ON TWO ISSUES. ITA 2031/MDS/12 2 2. THE FIRST ISSUE IN THE GROUNDS OF APPEAL IS THA T THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE DISALLOWANCE OF D.7,94,000/- MADE UNDER SEC.40A(3) OF THE I.T. ACT. THE SECOND ISSUE IN THE GROUNDS OF APPEAL OF THE AS SESSEE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SUSTA INING THE DISALLOWANCE OF D.1,43,910/- MADE TOWARDS DIFFERENC E IN STOCK VALUE. AS FAR AS THE SECOND ISSUE IS CONCERNED, WE NOTICE THAT THE ASSESSEE HAS NOT RAISED THIS GROUND BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THEREFORE, THIS GROUND DOES NOT ARISE O UT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND ACCORDINGL Y WE REJECT THIS GROUND AS NOT EMANATING FROM THE ORDER OF COMM ISSIONER OF INCOME TAX (APPEALS). 2. NOW, COMING TO THE FIRST ISSUE IN THE GROUNDS O F APPEAL, THE ASSESSING OFFICER, WHILE COMPLETING THE ASSESSM ENT MADE DISALLOWANCE OF D.7.94 LAKHS UNDER SEC.40A(3) OF TH E ACT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE MADE C ASH PAYMENTS IN EXCESS OF D.20,000/- TO VARIOUS PERSONS AND WHEN TH E ASSESSEE WAS ITA 2031/MDS/12 3 ASKED TO EXPLAIN THESE PAYMENTS, THE AUTHORISED REP RESENTATIVE OF THE ASSESSEE, SHRI K. RAMASWAMY, CA., AGREED FOR DI SALLOWANCE OF SUCH CASH PAYMENTS UNDER SEC.40A(3) OF THE ACT. LA TER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST THE DISALLOWANCE MADE BY THE ASSE SSING OFFICER. THE COMMISSIONER OF INCOME TAX (APPEALS) DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE AS WEL L AS THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAD GIVE N IN WRITING THE CONSENT FOR DISALLOWANCE AND, THEREFORE, THE ASSESS ING OFFICER RIGHTLY MADE THE DISALLOWANCE. THE COMMISSIONER OF INCOME TAX (APPEALS) IS OF THE VIEW THAT WHEN THE ASSESSEE AGREED TO THE ADDITION MADE BY THE ASSESSING OFFICER AT THE STAGE OF ASSESSMENT, H E DOES NOT HAVE ANY RIGHT TO PREFER ANY APPEAL BEFORE THE COMMISSIO NER OF INCOME TAX (APPEALS) AND, THEREFORE, REJECTED THE APPEAL O F THE ASSESSEE. 3. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE AUTHORISED RE PRESENTATIVE WITHOUT PROVIDING DETAILS TO THE ASSESSING OFFICER, AGREED FOR ADDITION. HE SUBMITS THAT THE ASSESSEE COULD NOT B E PUT TO HARDSHIP ITA 2031/MDS/12 4 FOR THE MISTAKE COMMITTED BY THE AUTHORISED REPRESE NTATIVE. THE COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE IS A SMALL TRADER IN ONIONS. HE HAD MADE PURCHASES FROM VARIOUS AGRI CULTURISTS WHO DOES NOT HAVE BANK ACCOUNT TO PROVIDE CROSSED CHEQU ES TO THEM FOR MAKING PURCHASE. THE COUNSEL FOR THE ASSESSEE SUBM ITS THAT WHENEVER THE ASSESSEE HAD MADE PURCHASES FROM THE P ERSONS OTHER THAN THE AGRICULTURISTS, HE HAS MADE PAYMENTS ONLY BY WAY OF CROSSED CHEQUES. ONLY TO THOSE AGRICULTURISTS WH O DOES NOT HAVE BANK ACCOUNT, CASH PAYMENTS WERE MADE EXCEEDING D20 ,000/-. THE COUNSEL FOR THE ASSESSEE FURTHER SUBMITS THAT ONION S COME UNDER AGRICULTURAL PRODUCE AND RULE 6DD OF THE I.T. ACT P ROVIDES FOR EXEMPTION FOR THE PAYMENTS MADE TO PURCHASES WHERE THE ASSESSEE PROCURES AGRICULTURAL PRODUCE FROM THE AGRICULTURIS TS, CULTIVATORS ETC. THEREFORE, HE SUBMITS THAT IN ANY CASE, THE PROVISI ONS OF SEC.40A(3) OF THE ACT DOES NOT APPLY TO ASSESSEES CASE WARRAN TING ANY DISALLOWANCE. THEREFORE, THE COUNSEL FOR THE ASSE SSEE SUBMITS THAT THE AUTHORISED REPRESENTATIVE WHO REPRESENTED THE C ASE BEFORE THE ASSESSING OFFICER MIS-GUIDED HIMSELF AND AGREED FOR THE DISALLOWANCE BY PUTTING THE ASSESSEE INTO GREAT HARDSHIP. THERE FORE, HE SUBMITS ITA 2031/MDS/12 5 THAT FOR NO FAULT OF THE ASSESSEE, THE ASSESSEE SHO ULD NOT SUFFER BECAUSE OF THE MISTAKE COMMITTED BY THE AUTHORISED REPRESENTATIVE AND REQUESTED THAT MATER MAY BE SENT BACK TO THE AS SESSING OFFICER FOR FRESH EXAMINATION. 4. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS). 5. WE HAVE HEARD BOTH SIDES. PERUSED THE MATERIAL S ON RECORD AND THE ORDERS OF AUTHORITIES BELOW. THE ASS ESSEE IS AN INDIVIDUAL AND IS A SMALL TIME TRADER DOING BUSINES S OF PURCHASE AND SALE OF ONIONS AND CHILLIES. DURING THE ASST. YEAR UNDER CONSIDERATION, THE ASSESSEE MADE CASH PAYMENTS TO V ARIOUS AGRICULTURISTS TO THE EXTENT OF D.7.94 LAKHS. THES E CASH PAYMENTS WERE IN EXCESS OF D.20,000/- WHICH ATTRACTED THE PR OVISIONS OF SEC.40A(3) OF THE ACT. THE ASSESSING OFFICER, WHEN CALLED FOR THE EXPLANATION OF THE ASSESSEE WHY PAYMENTS MADE IN CA SH IN EXCESS OF D.20,000/- SHOULD NOT BE DISALLOWED, THE AUTHORISED REPRESENTATIVE SEEMS TO HAVE SAID THAT THERE IS NO OBJECTION FOR M AKING DISALLOWANCE ITA 2031/MDS/12 6 UNDER SEC.40A(3) OF THE ACT. THE ASSESSING OFFICER APPARENTLY MADE THE DISALLOWANCE BASED ON THE STATEMENT OF THE ASSE SSEE AND HIS AUTHORISED REPRESENTATIVE AGREEING FOR ADDITION. O N 21.7.2010, THE ASSESSEE AND THE AUTHORISED REPRESENTATIVE HAVE SIG NED IN THE ORDER SHEET OF THE ASSESSING OFFICER AGREEING FOR DISALLO WANCE OF CASH PAYMENTS MADE IN EXCESS OF D.20,000/-. THE COMMISS IONER OF INCOME TAX (APPEALS) FOLLOWING THE JUDGMENT OF HON' BLE JURISDICTIONAL HIGH COURT IN THE CASE OF RAMANLAL K AMDAR V. CIT (108 ITR 73), HELD THAT ONCE THE ASSESSEE AGREED FOR THE ADDITION, THE ASSESSEE DOES NOT HAVE ANY RIGHT TO PREFER THE APPE AL SINCE HE IS NOT AGGRIEVED BY THE ORDER OF ASSESSING OFFICER. WHILE HOLDING SO, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD AS UNDER :- 5. I HAVE GONE THROUGH THE FACTS OF THE CASE AND O THER MATERIALS AVAILABLE ON RECORD. IT IS CLEAR FROM TH E ORDER SHEET ENTRY MADE THAT BOTH THE ASSESSEE AND HIS AUTHORIZE D REPRESENTATIVE HAD AGREED TO THE ADDITION MADE TOWA RDS DISALLOWANCE CASH PAYMENTS MADE TO AGRICULTURISTS U /S.40A(3) OF THE INCOME-TAX ACT. 5.1 THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF RAMANLAL K AMDAR VS. CIT REPORTED IN 108 ITR 73(MAD). THE FACTS OF THE CASE CITED SUPRA DECIDED BY THE JURISDICTIONAL HIGH COURT IS THAT IN THE ORIGINAL ASSESSMENT FOR THE ASSESSMENT YEAR 1962-63 A MISTAK E HAD CREPT IN WHILE WORKING OUT INTEREST UNDER SECTION 139(1)( III). THEREAFTER, THE ITO ISSUED A NOTICE TO THE ASSESSE, PROPOSING T O RECTIFY THE ITA 2031/MDS/12 7 MISTAKE UNDER SECTION 154 AND CALLING UPON THE OBJE CTIONS OF THE ASSESSEE. A PARTNER OF THE ASSESSEE APPEARED BEFOR E THE ITO PURSUANT TO THE NOTICE ISSUED BY HIM AND STATED THA T THE ASSESSEE HAD NO OBJECTION TO THE REVISION PROPOSED BY THE IT O. THEREAFTER, THE ITO PASSED AN ORDER RECTIFYING THE MISTAKE UNDE R SECTION 154. NOTWITHSTANDING THE FACT THAT A PARTNER OF THE ASSE SSEE HAD APPEARED BEFORE THE ITO AND STATED THAT THE ASSESSE E HAD NO OBJECTION TO THE PROPOSED REVISION, THE ASSESSEE PR EFERRED AN APPEAL TO THE AAC. THAT OFFICER DISMISSED THE APPE AL, UPHOLDING THE ORDER OF THE ITO. THE ASSESSE PREFERRED A FURT HER APPEAL TO THE TRIBUNAL, WHICH WAS ALSO DISMISSED. THEN THE M ATTER HAD BEEN TAKEN UP FOR APPEAL BY THE ASSESSE BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AND THE SAME WAS DECIDED IN FAVOUR OF REVENUE. 5.2 IN THE CASE CITED SUPRA, THE HONBLE HIGH COURT HELD AS UNDER:- ONCE THE ASSESSEE HAD STATED THAT IT HAD NO OBJECTION TO THE PROPOSED REVISION AND THE ITO HAD ALSO REVISED THE ORIGINAL ASSESSMENT AS PROPOSED BY HIM, THE ASSESSE COULD NOT BE SAID TO HAVE BEEN AGGRIEVED BY THE ORDER OF THE ITO. ONLY IF THE ASSESSEE WAS AGGRIEVED BY THE ORDER OF THE ITO, HE HAD THE RIGHT TO FILE AN APPEAL BEFORE THE AAC AND ONCE THE ASSESSEE COULD NOT HAVE HAD ANY GRIEVANCE IN VIEW OF THE STATEMENT MADE BY THE PARTNER, THE APPEAL TO THE AAC WAS INCOMPETENT AND EQUALLY THE APPEAL TO THE TRIBUNAL WAS INCOMPETENT. IF SO, THE INSTANT REFERENCE ARISING OUT OF THE ORDER OF THE TRIBUNAL WAS ALSO INCOMPETENT. UNDER SUCH CIRCUMSTANCES, THE REFERENCE WAS TO BE RETURNED UNANSWERED. 5.3 IN THE INSTANT CASE ALSO, THE ASSESSE AS WELL A S THE AUTHORIZED REPRESENTATIVE HAD GIVEN IN WRITING IN T HE ORDER SHEET ITSELF DECLARING THEIR CONSENT TO THE ADDITION PROP OSED TO BE MADE BY THE ASSESSING OFFICER TO THE TUNE OF 7,94,000/- U/S.40A(3) OF THE I.T. ACT. HENCE THE ASSESSEE CAN NOT HAVE A SE COND THOUGHT LATER ON AND PREFER AN APPEAL BEFORE THE CIT(APPEAL S)II, COIMBATORE. THE ASSESSEE HAVING AGREED TO THE ADDI TION MADE BY THE ITO AT THE ASSESSMENT STAGE IS BOUND BY THE ORD ER OF THE ASSESSING OFFICER AND DOES NOT HAVE ANY RIGHT TO PR EFER AN APPEAL ITA 2031/MDS/12 8 BEFORE THE COMMISSIONER OF INCOME-TAX. ACCORDINGLY , THIS GROUND OF APPEAL IS DISMISSED. 6. ON GOING THROUGH THE ORDER OF COMMISSIONER OF I NCOME TAX (APPEALS) AND THE JUDGEMENT OF HON'BLE JURISDIC TIONAL HIGH COURT IN THE CASE OF RAMANLAL KAMDAR V. CIT (SUPRA), WE F IND NO INFIRMITY OR GOOD REASON TO INTERFERE WITH THE ORDER OF THE C OMMISSIONER OF INCOME TAX (APPEALS) IN HOLDING THAT THE ASSESSEE H AS NO RIGHT OF APPEAL SINCE THE ASSESSEE AND HIS AUTHORISED REPRES ENTATIVE AGREED FOR THE SAID DISALLOWANCE DURING THE COURSE OF ASSE SSMENT PROCEEDINGS. THE FACT THAT THE ASSESSEE AND THE AU THORISED REPRESENTATIVE WHO APPEARED BEFORE ASSESSING OFFICE R AS WELL AS COMMISSIONER OF INCOME TAX (APPEALS) STATED THAT TH E ASSESSEE HAD NO OBJECTION TO THE PROPOSED DISALLOWANCE HAS NOT B EEN DISPUTED AT ANY STAGE AND EVEN BEFORE US. IN THE CIRCUMSTANCES , WE UP HOLD THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). ITA 2031/MDS/12 9 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. 8. ORDER PRONOUNCED ON MONDAY, THE 18 TH DAY OF FEBRUARY 2013. DR. O.K. NARAYANAN) (CHALLA NA GENDRA PRASAD) VICE PRESIDENT JUDICIAL MEMBE R CHENNAI, DATED : 18 TH FEBRUARY 2013 JLS. COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT-(A), (4) C.I.T., (5) D.R. (6) GUARD FILE