Shri Bhupendrasingh Hakamsingh Luhar, Mehsana V. The Dy.CIT.,Mehsana Circle, Mehsana

ITA 2083/AHD/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1375 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 24-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: S N DIVATIA
• Keywords: Opportunity of being heard
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ I.T.A. NO.2083/AHD/2011 ( / ASSESSMENT YEAR : 2008-09) BHUPENDRASINGH HAKAMSINGH LUHAR PROP.BHUPENDRA HOUSING CRANE SERVICE OPP.ONGC NAGAR HIGHWAY, PALAVASANA MEHSANA-384 002 / VS. DCIT MEHSANA CIRCLE MEHSANA ./ ./ PAN/GIR NO. : AAIPL 0486 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.N. DIVATIA, AR / RESPONDENT BY : SHRI JAGDISH, CIT-DR / DATE OF HEARING 05/05/2016 !'# / DATE OF PRONOUNCEMENT 13/06/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-GANDHINAGAR D ATED 16/05/2011 FOR THE ASSESSMENT YEAR 2008-09. ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 2 - 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- 2.1. ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF BH UPENDRA HOUSE CRANE SERVICE. HE FILED HIS RETURN OF INCOME FOR A Y 2008-09 ON 29/09/2008 DECLARING TOTAL INCOME OF RS.13,85,570/- . THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED VIDE ORDER DATED 28/11/2010 AND THE TOTAL INCOME WAS DETERMINE D AT RS.59,53,540/-. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DATED 16/05/2011 (IN APPE AL NO.CIT(A)GNR/315/2010-11) GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS:- 1. LEARNED CIT(A) HAS WRONGLY MAKING DIFFERENT DI SALLOWANCE AMOUNTING TO RS.15,97,999/- U/S.40A(3). 2. LEARNED CIT(A) HAS WRONGLY DISALLOWED DIFFERENT EXPENSES MADE OF RS.25,58,026/- U/S.40(A)(IA) AS TDS WAS NOT DEDUCTED. 3. THE REGISTRY HAS POINTED OUT THAT THERE IS DELAY OF ONE DAY IN FILING THE APPEAL. ASSESSEE HAS FILED AN AFFIDAVIT DATED 13/02/2015, WHEREIN INTER ALIA IT IS SUBMITTED THAT THE DELAY WAS CAUSED DUE TO ER ROR IN COUNTING THE PERIOD OF SIXTY DAYS AND THAT THE DELA Y IN FILING THE APPEAL WAS NEITHER INTENTIONAL NOR DELIBERATE. IT WAS, TH EREFORE, PRAYED THAT THAT THE DELAY OF FILING OF APPEAL BY ONE DAY BE CONDONE D. ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 3 - 4. THE LD.CIT-DR DID NOT SERIOUSLY OBJECT TO THE PR AYER OF CONDONATION OF THE DELAY. WE THEREFORE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING. 4.1. FIRST GROUND IS WITH RESPECT TO DISALLOWANCE U/S.40A(3) OF THE ACT. 4.2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AN D ON PERUSING THE CASH BOOK AND LEDGER, AO NOTICED THAT ASSESSEE ON V ARIOUS OCCASIONS AND UNDER VARIOUS HEADS OF EXPENSES HAD PAID CASH FOR E XPENSES IN EXCESS OF RS.20,000/- WHICH ACCORDING TO AO WAS IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. ( THE DETAILS OF SUCH P AYMENTS ARE LISTED ON PAGE NOS.2 TO 4 IN THE ASSESSMENT ORDER). ASSESSEE WAS ASKED TO SHOW- CAUSE NOTICE AS TO WHY THE DISALLOWANCE BE NOT MADE U/S.40A(3) TO WHICH ASSESSEE SUBMITTED THE REASONS FOR MAKING THE CASH PAYMENTS. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTAB LE TO THE AO. HE THEREAFTER PROCEEDED TO MAKE DISALLOWANCE AGGREGATI NG TO RS.15,97,999/- BEING THE PAYMENTS IN CASH EXCEEDING RS.20,000/- (T HE DETAILS OF WHICH ARE LISTED ON PAGE NO.11 OF THE ASSESSMENT ORDER). AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER TO CIT (A), WHO CONFIRMED THE DISALLOWANCE MADE BY THE AO BY HOLDING AS UNDER :- 3. THE FIRST GROUND OF APPEAL IS ON DIFFERENT DIS ALLOWANCES U/S.40A(3). THE FACTS AND SUBMISSIONS OF THE ASSESSEE ON DIFFER ENT TYPE OF PAYMENTS ARE CONSIDERED AND DECIDED SEPARATELY AS FOLLOWS: 3.1. CASH PAYMENT TO UMIYA TRAILOR & TRANSPORT RS .4,60,300/-. ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 4 - PAYMENTS HAVE BEEN MADE IN CASH ON DIFFERENT DAYS T O THE PARTY EACH ABOVE RS.20,000/- AND TOTALING RS.4,60,300/- WHICH HAS BEEN DISALLOWED BY THE AO. THE ASSESSEES SUBMISSIONS CAN BE SUMMA RIZED AS FOLLOWS:- 'WE HAVE PAID UMIYA TRAILER & TRANSPORT BY WAY OF A CCOUNT PAYEE CHEQUE BUT IN SOME CASE THERE IS NEED OF DRIV ER TO TAKE MONEY FOR FUEL OR ANY OTHER REASON AT SITE OF TRANS PORTATION, WHERE NEITHER UMIYA TRAILER & TRANSPORT NOR OUR ASS ESSEE MAINTAINING BANK ACCOUNTS, OUR EMPLOYEE OR OUR AGEN T HAS PAID CASH TO THE DRIVER WITH THE INSTRUCTION OF UMIYA TR AILER & TRANSPORT FROM PETTY CASH MAINTAINED BY OUR EMPLOYE E AT SITE.' HAVING CONSIDERED THE SUBMISSIONS, I HOLD THAT THE PAYMENTS ARE NOT COVERED IN ANY OF THE EXCEPTIONS AS PROVIDED IN RULE 6DD. T HE ASSESSEE HAS TRIED TO SAY THAT THE PAYMENT COULD NOT BE MADE BY CROSSED B ANK CHEQUE OR DRAFT DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES. THE AS SESSEE AND THE AR HAVE FAILED TO APPRECIATE THAT THE RESIDUARY CLAUSE AS W AS AVAILABLE UNDER THE ERSTWHILE RULE 6DD (J) IS NO LONGER AVAILABLE. THE DECISIONS CITED BY THE AR WERE UNDER THAT CLAUSE. NOW THE ASSESSEE HAS TO CLA IM AND PROVE THAT CIRCUMSTANCES IN ONE OF THE PRESENT CLAUSES AS APPL ICABLE TO THE ASSESSMENT YEAR UNDER QUESTION WERE EXISTING. RULE 6DD(G) ALLO WS THE PAYMENT IN A VILLAGE OR TOWN WHICH IS NOT SERVED BY THE BANK TO A PERSON RESIDING OR CARRYING ON BUSINESS ETC IN THAT VILLAGE OR TOWN. T HE CIRCUMSTANCES HAVE NOT EVEN BEEN CLAIMED. FURTHER, THE ASSESSEE HIMSELF HAS MADE PAYMENT TO T HE SAME PARTY BY CHEQUES ALSO WHICH HAVE BEEN ALLOWED ALSO. IN THESE CIRCUMSTANCES THE PAYMENTS MADE IN CASH ARE COVERED U/S. 40A(3) AND ARE THEREFORE NOT ALLOWABLE. THE DISALLOWANCE MADE BY T HE A.O. IS CONFIRMED. 3.2 CASH PAYMENT TO MGT INTERNATIONAL OF RS. 52 .964/- THE ASSESSEE'S SUBMISSIONS CAN BE SUMMARIZED AS FOL LOWS: 'THE LEARNED DCIT HAS DISALLOWED THE RS. 52964/-U/S 40A (3) FOR PAYMENT MADE TO MGT INTERNATIONAL. ACTUAL WE HAVE P AID ONLY 23140/- TO MGT INTERNATIONAL FOR ADVANCES TO FUEL E XPS. DURING THE WORK AT SITE TO THE EMPLOYEE OF MGT INTERNATIONAL, IF INSTRUCTION GIVEN BY TRANSPORTATION SUPPLIER FOR HIS NEED WE HAVE TO GIVE CASH IN TRANSIT IN NORMAL BUSINESS CONDITION, ACCORDING TO LAW OF N ATURAL JUSTICE WE HAVE NOT BREACH OF SECTION 40A(3). THE LEARNED DCIT FORGET IN FACTS ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 5 - AND HE IS SHOWN RS. 52,964 PAID TO MGT INTERNATIONA L INSTEAD OF RS.23140/-. WE PRAY TO YOU HONOUR DELETE THE ADDITI ON MADE U/S 40A (3) CASH PAYMENT MADE TO MGT INTERNATIONAL.' AS FAR AS THE DISPUTE REGARDING THE AMOUNT PAID IN CASH IS CONCERNED THE A.O. IS DIRECTED TO VERIFY THE AMOUNT WHILE GIVING THE APPE AL EFFECT AND DECIDE THE ISSUE ACCORDINGLY. AN OPPORTUNITY OF BEING HEARD SH ALL ALSO BE GIVEN TO THE ASSESSEE IN THIS RESPECT. HAVING CONSIDERED THE SUBMISSIONS, I HOLD THAT THE PAYMENTS ARE NOT COVERED IN ANY OF THE EXCEPTIONS A S PROVIDED IN RULE 6DD. THE ASSESSEE HAS TRIED TO SAY THAT THE PAYMENT COUL D NOT BE MADE BY CROSSED BANK CHEQUE OR DRAFT DUE TO EXCEPTIONAL OR UNAVOIDA BLE CIRCUMSTANCES. THE ASSESSEE AND THE AR HAVE FAILED TO APPRECIATE THAT THE RESIDUARY CLAUSE AS WAS AVAILABLE UNDER THE ERSTWHILE RULE 6DD (J) IS NO LO NGER AVAILABLE. THE DECISIONS CITED BY THE AR WERE UNDER THAT CLAUSE. N OW THE ASSESSEE HAS TO CLAIM AND PROVE THAT CIRCUMSTANCES IN ONE OF THE PR ESENT CLAUSES AS APPLICABLE TO THE ASSESSMENT YEAR UNDER QUESTION WE RE EXISTING. THE CIRCUMSTANCES HAVE NOT EVEN BEEN CLAIMED. IN THESE CIRCUMSTANCES THE PAYMENTS MADE IN CASH ARE COVERED U/S. 40A(3) AND A RE THEREFORE NOT ALLOWABLE. THE DISALLOWANCE MADE BY THE A.O. IS CON FIRMED SUBJECT TO VERIFICATION OF AMOUNT AS DIRECTED ABOVE. 3.3 CASH PAYMENT FOR FOREIGN TRAVEL EXPENSES OF RS. 5,97,538/- THE ASSESSEE'S SUBMISSIONS CAN BE SUMMARIZED AS FOL LOWS: 'THE LEARNED DCIT HAS ADDED OF RS. 597538/- FOR FOR EIGN TRAVEL EXPS. PAID IN CASH FOR TICKET CHARGES U/S,40A (3). IN RES PECT TO IT WE SAY THAT WE HAVE PAID CASH TO TRAVEL CORPORATION OF INDIA FO R TICKET CHARGES IN VARIOUS DATES. IN NORMAL COURSE AIR TICKET IS ISSUE D ONLY WHEN PAYMENT REACH TO PARTY. THE RATE OF AIR TICKET IS FLUCTUATI NG EVERY DAY, IF WE PAID BY ACCOUNT PAYEE CHEQUE IT CLEARED AFTER FIVE TO SIX DAYS AND AIR TICKET CHARGES ARE CHANGE FROM THE DATE OF BOOKING TO THE DATE OF PAYMENT IN THE ACCOUNT OF TRAVEL CORPORATION OF IND IA AND IF WE ISSUE CHEQUE IN ADVANCE AND PAYMENT REACH LATE WE HAVE TO MAKE PAYMENT OF 20% INTEREST FOR LATE PAYMENT, SO WE HAVE NO OPT ION TO TAKE AIR TICKET OTHER THAN CASH, THE OFFICE OF TRAVEL CORPOR ATION OF INDIA IN AHMEDABAD AND THEY ARE NOT ISSUED AIR TICKET ON CRE DIT BASIS. WE HAVE TO BUY TICKET BEFORE TWO OR THREE DAYS BEFORE TRAVELING BECAUSE IT IS NOT PREDECIDED TO GO TO FOREIGN FOR BUYING CRANE S FROM VARIOUS PARTY. THERE ARE NUMBER OF HURDLES FOR US TO GIVE C HEQUE FOR TICKET ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 6 - CHARGES SO, DURING COURSE OF BUSINESS WE HAVE PAID CASH FOR TICKET CHARGES. THIS EXPS. IS EXCLUSIVELY FOR BUSINESS PUR POSE. WE HAVE NOT MADE ANY BREACH OF S.40A (3) OF THE I. T.ACT AND IT IS OUR HUMBLE REQUEST TO YOU HONOUR DELETE THE ADDITION MADE OF R S. 597538/- FOR FOREIGN TRAVEL EXPS PAID IN CASH.' HAVING CONSIDERED THE SUBMISSIONS, I HOLD THAT THE PAYMENTS ARE NOT COVERED IN ANY OF THE EXCEPTIONS AS PROVIDED IN RULE 6DD. T HE ASSESSEE HAS TRIED TO SAY THAT THE PAYMENT COULD NOT BE MADE BY CROSSED B ANK CHEQUE OR DRAFT DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES. NO SUC H CLAUSE IS NOW AVAILABLE. NOW THE ASSESSEE HAS TO CLAIM AND PROVE THAT CIRCUMSTANCES IN ONE OF THE PRESENT CLAUSES AS APPLICABLE TO THE ASSESSM ENT YEAR UNDER QUESTION WERE EXISTING. PAYMENTS ARE DEFINITELY TAKEN IN CHE QUE BY TRAVEL AGENTS. THE ASSESSEE ITSELF SAYS THAT IF PAYMENT BY CHEQUE ARE MADE AND THEY ARE DELAYED THAN ONLY INTEREST IS PAYABLE. THESE COULD BE CONDITIONS FOR ANY PAYMENTS BUT DOES NOT ENTITLE THE ASSESSEE TO INFRINGE THE LAW. SUCH CONDITIONS CAN BE APPLIED BY ANY SUPPLIER OF GOODS AND SERVICES. IN T HESE CIRCUMSTANCES THE PAYMENTS MADE IN CASH ARE COVERED U/S. 40A(3) AND A RE THEREFORE NOT ALLOWABLE. THE DISALLOWANCE MADE BY THE A.O. IS CON FIRMED. 3.4 CASH PAYMENT FOR OUT OF REPAIRS AND MAINTENAN CE EXPENSE OF RS. 2,70.739/- THE ASSESSEE'S SUBMISSIONS CAN BE SUMMARIZED AS FOL LOWS: 'THE LEARNED DCIT HAS DISALLOWED RS. 270739/- BY AL LEGING THAT REPAIR MAINTENANCE EXPENSES PAID IN CASH ON VARIOUS DATES. BUT ACTUALLY WE HAVE PAID REPAIR & MAINTENANCE EXPENSES NOT MORE THAN 20000/- TO VARIOUS LABOUR AT SITE FOR GRAIN REPAIRI NG. WE ARE GIVING CASH TO OUR EMPLOYEE FOR VARIOUS SITE WORK AS A PET TY CASH AND HE IS GIVING US VOUCHERS FOR EXPENSES AT SITE AND WE ARE CLEARED PETTY CASH GIVEN TO HIM ON PARTICULAR DATE. WE ARE ACCOUNT REP AIR & MAINTENANCE CHARGES ON PARTICULAR DATE. WE HAVE NOT PAID ANY EX PS. ABOVE 20000/- WE ARE PROVIDE TO YOU ALL THE VOUCHERS OF REPAIR & MAINTENANCE CHARGES GIVEN BY REPAIRER. SO, WE PRAY TO YOU HONOU R DELETE THE ADDITION MADE U/S 40A (3) FOR CASH PAYMENT FOR REPA IR & MAINTENANCE.' I HAVE EXAMINED THE CONTENTIONS AND THE VOUCHERS PR ODUCED. THE STORY IS CLEARLY AN AFTERTHOUGHT AND NOT BELIEVABLE. FOR A M OMENT LET AS ASSUME THAT ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 7 - HARPREET SINGH ETC., ARE EMPLOYEES OF THE ASSESSEE IN DIFFERENT STATES AND THEY GOT THE WORK DONE THROUGH VARIOUS PEOPLE. BUT, I T IS SEEN THAT ALL THE SO CALLED SUB-VOUCHERS ARE SIGNED BY SAME CASHIER AS T HE PAYMENT GIVER. HOW CAN THE SAME CASHIER BE IN MAHARASHTRA, ANDHRA PRAD ESH, RAJASHTAN ETC. AT THE SAME TIME? FURTHER, ALL THE SUB-VOUCHERS PREPAR ED FOR DIFFERENT STATES ARE IN THE SAME HANDWRITING. HOW CAN THE SAME PERSON MA KE VOUCHERS IN DIFFERENT STATES? FURTHER, CURIOUSLY THE MAIN VOUCHER AND CLA IMED SUB-VOUCHERS FOR APRIL ARE FOR ONE STATE, JUNE FOR DIFFERENT STATES, SEPTEMBER FOR YET ANOTHER DIFFERENT STATE ETC. IS IT POSSIBLE THAT CRANES ARE GOT REPAIRED IN ONE STATE IN A PARTICULAR MONTH ONLY THAT ALSO THROUGH DIFFERENT P ERSONS. ALL THESE SHOWS THAT THE VOUCHERS ARE SELF SERVING DOCUMENTS MADE AND AR E NOT BELIEVABLE. THE ADDITION IS THEREFORE, CONFIRMED. 3.5 PAYMENT TO TRAVEL CORPORATION OF INDIA-RS.2 4.457/- NO SUBMISSION HAS BEEN GIVEN, WHATSOEVER REGARDING THIS PAYMENT. THE PAYMENT IS ABOVE RS.20,000/- AND IS MADE IN CONTRAV ENTION OF SEC. 40A(3) AND THEREFORE THE ADDITION ON ACCOUNT OF DISALLOWANCE I S CONFIRMED. 3.6 PAYMENT MADE TO K.K.TRANSPORT IN CASH RS. 192000/- THE ASSESSEE'S SUBMISSIONS CAN BE SUMMARIZED AS FOL LOWS: 'THE LEARNED DCIT HAS DISALLOWED RS.192000/- BY CON SIDERING THAT PAYMENT MADE TO K,K. TRANSPORT IN CASH. IN RESPECT TO IT WE SAY THAT WE HAVE PAID TO K.K. TRANSPORT FOR TRANSPORTATION W ORK CARRIED OUT AT SITES OF OUR GRAIN WORK. OUR EMPLOYEE HAS MADE PAYM ENT TO THE PARTY AT SITE OF WORK WE HAVE TO NO OPTION OTHER THAN PAY MENT OF CASH IF HE DEMAND CHARGES IN CASH AND WE WANT TO COMPLETE OUR WORK WITHOUT INTERRUPTION OR DELAYED IN WORK IN ADVERSE CONDITIO N WE HAVE TO COMPULSION TO MAKE PAYMENT IN CASH. ACCORDING TO NA TURAL JUSTICE WE HAVE NO BREACH OF SECTION 40A(3), YOU HONOUR ABLE T O UNDERSTAND OUR BUSINESS OF TRANSPORTATION. WE ARE REQUEST TO DEL ETE THE ADDITION MADE OF RS. 192000/- PAYMENT MADE TO K.K. TRANSPORT FOR TRANSPORTATION EXPS.' HAVING CONSIDERED THE SUBMISSIONS, I HOLD THAT THE PAYMENTS ARE NOT COVERED IN ANY OF THE EXCEPTIONS AS PROVIDED IN RULE 6DD. T HE ASSESSEE HAS TRIED TO SAY THAT THE PAYMENT COULD NOT BE MADE BY CROSSED BANK CHEQUE OR DRAFT DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES. NO SUC H CLAUSE IS NOW ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 8 - AVAILABLE. NOW THE ASSESSES HAS TO CLAIM AND PROVE THAT CIRCUMSTANCES IN ONE OF THE PRESENT CLAUSES AS APPLICABLE TO THE ASSES SMENT YEAR UNDER QUESTION WERE EXISTING. IN THESE CIRCUMSTANCES THE PAYMENTS MADE IN CASH ARE COVERED U/S. 40A(3) AND ARE THEREFORE NOT ALLOWABLE. THE DI SALLOWANCE MADE BY THE A.O. IS CONFIRMED. IN THE RESULT ALL THE DISALLOWANCES, AS MADE BY THE AO U/S. 40A(3) ARE CONFIRMED AND THE GROUND OF APPEAL IS DISMISSED. 4.3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE IS NOW IN APPEAL BEFORE. 4.4. BEFORE US, LD.AR REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT EACH OF TH E CASH PAYMENT DID NOT EXCEED RS.20,000/- AND, THEREFORE, NO DISALLOWA NCE COULD HAVE BEEN MADE U/S.40A(3) OF THE ACT. HE FURTHER SUBMITTED T HAT AMENDMENT TO SECTION 40A(3), WHEREBY THE STIPULATION OF AGGREGAT ION OF PAYMENT MADE TO A PERSON IN A DAY OTHERWISE BY THAN A/C. PAYEE CHEQUE OR A/C. PAYEE DRAFT IN EXCESS OF RS.20,000/- IS LIABLE FOR DISALLOWANCE IS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION BECAUSE THE AMENDMENT TO SECTION HAS BEEN MADE W.E.F. 01/04/2009 AND, THEREF ORE, NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION. HE FURTHER SUBMITTED THAT WHILE UPHOLDING THE DISALLOWANCE U/S.40A(3), THERE IS NO FINDING OF LD.CIT(A) AS TO WHETHER EACH PAYMENT IN A DAY MADE BY THE ASSESSEE EXCEEDED RS.20,000/-. HE FURTHER SUBMITTED THAT PROVISIONS OF SECTION 40A(3) WAS INTENDED WITH THE OBJECTIVE OF AVOIDING TAX EVASIO N AND WHEN THE PAYMENTS ARE GENUINE AND ARE MADE OUT OF INCOME FRO M DISCLOSED SOURCES, NO DISALLOWANCE U/S.40A(3) CAN BE MADE AND THE AFORESAID ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 9 - PROPOSITION, HE PLACED RELIANCE ON THE JUDGEMNT OF HONBLE GUJRAT HIGH COURT IN THE CASE OF ANUPAM TELE SERVICES VS. ITO R EPORTED AT (2014) 366 ITR 122 (GUJ.). HE THEREFORE SUBMITTED THAT THE MATTER MAY BE REMITTED TO THE FILE OF LD.CIT(A) TO DECIDE THE ISS UE AFRESH. ON THE OTHER HAND, LD.CIT-DR SUPPORTED THE ORDERS OF AO AND LD.C IT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENT RELIED UPON BY THE LD.COUN SEL FOR THE ASSESSEE. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DISALLOWANCE U/S.40A(3) OF THE ACT. IT IS AN UNDISPUTED FACT THAT ASSESSEE HAS MADE CASH PAYMENTS FOR EXPENSES. BEFORE US, ONE OF THE L D.ARS SUBMISSION IS THAT DURING RELEVANT ASSESSMENT YEAR, THE PROVISION S OF THE ACT WERE ONLY ATTRACTED WHEN EACH PAYMENT EXCEEDED A SUM OF RS.2 0,000/- AND THE ACT DID NOT STIPULATE ABOUT THE CLUBBING OF PAYMENTS MA DE IN THE ENTIRE DAY FOR DETERMINING THE DISALLOWANCE AND THAT THE AMEN DMENT TO THE PROVISION WITH RESPECT TO THE AGGREGATE PAYMENT TO A PERSON DURING THE DAY HAS TO BE CONSIDERED AS DISALLOWANCE IS MADE W .E.F. 01/04/2009. BEFORE US, REVENUE HAS NOT PLACED ANY MATERIAL ON R ECORD TO DEMONSTRATE THAT THE AMENDMENT MADE TO SUB-SECTION(3) TO SECTIO N 40A BY FINANCE ACT, 2008, WOULD BE APPLICABLE TO AY 2008-09. FUR THER, THERE IS NO FINDING OF LOWER AUTHORITIES AS TO WHETHER EACH OF THE PAYMENT MADE BY THE ASSESSEE EXCEEDED RS.20,000/- OR THE AGGREGATE PAYMENT IN THE YEAR ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 10 - EXCEEDED RS.20,000/-. APART FROM AFORESAID, WE FIND THAT THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ANUPAM TE LE SERVICES VS. ITO REPORTED AT (2014) 366 ITR 122 (GUJ.) HAS HELD THAT THE PARAMOUNT CONSIDERATION OF SECTION 40A(3) IS TO CURB AND REDU CE THE POSSIBILITIES OF BLACK MONEY TRANSACTIONS AND SECTION DOES NOT ELIM INATE CONSIDERATIONS OF BUSINESS EXPEDIENCIES. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE ISSUE NEEDS TO BE REEXAMINED AT THE E ND OF LD.CIT(A). WE, THEREFORE, RESTORE THE ISSUE BACK TO THE FILE OF LD .CIT(A) TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF OUR OBSERVATIONS MADE HEREINABOVE, THE DECISION OF HONBLE GUJARAT HIGH COURT CITED HEREIN ABOVE, AND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT THE LD .CIT(A) SHALL GRANT ADEQUATE OPPORTUNITIES OF HEARING TO BOTH THE PARTI ES. ASSESSEE IS ALSO DIRECTED TO CO-OPERATE BY PROMPTLY FURNISHING ALL T HE DETAILS CALLED FOR BY THE LOWER AUTHORITIES. THUS, THIS GROUND OF ASSESS EES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND NO.2 IS WITH RESPECT TO DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. 6.1. ON PERUSING THE LEDGER ACCOUNT OF PARTIES, A O NOTICED THAT THE ASSESSEE MADE PAYMENT OF LABOUR EXPENSES, CRANE HIR E CHARGES, INTEREST PAYMENT AND AUDIT FEES, THE EXPENSES AGGREGATED TO RS.25,58,026/-, BUT ON EXPENSES THE ASSESSEE HAD NOT DEDUCTED TDS (THE DETAILS OF EXPENSES ARE LISTED AT PAGE NOS.12 & 13 OF THE ASSESSMENT OR DER). AO WAS ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 11 - THEREFORE OF THE VIEW THAT THE EXPENSES WAS REQUIRE D TO BE DISALLOWED U/S.40(A)(IA) OF THE ACT. HE ACCORDINGLY DISALLOWE D THE EXPENSES OF RS.25,58,026/-. AGGRIEVED BY THE ORDER OF AO, ASSE SSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO UPHELD THE DISALLO WANCE MADE BY THE AO BY HOLDING AS UNDER:- 4. THE SECOND GROUND IS AGAINST DISALLOWANCE OF VA RIOUS EXPENSES OF RS.25,58,026/- U/S. 40(A)(IA) AS TDS WAS NOT DEDUCT ED. THE SUBMISSIONS OF THE ASSESSEE ARE SUMMED UP AS FO LLOWS: (A) THE LEARNED DCIT HAS DISALLOWED VARIOUS EXPENSE S MADE OF RS. 25,58,026/-U/S. 40(A)(IA) AS TDS WAS NOT DEDUCTED. WE ARE READY TO DEDUCT THE TDS IN THE CURRENT YEAR AND THERE IS NO MENS REA, AND THEREFORE THE DISALLOWANCE BE DELETED. (B) IT CANNOT BE SAID THAT THE PAYMENTS MADE FOR HI RED VEHICLES WOULD FALL IN THE CATEGORY OF PAYMENT TOWARDS A SUB-CONTR ACT WITH THE TRANSPORT OWNERS. IN THAT CASE THE ASSESSEE IS NOT LIABLE TO DEDUCT-TAX AT SOURCE, AS PER THE PROVISION OF SECTION 194C(2), ON THE PAYMENTS MADE TO THE TRANSPORT OWNERS FOR VEHICLE HIRE. CONSEQUEN TLY, THE PROVISIONS OF SECTION 40(A)(IA) SHALL NOT APPLY TO SUCH PAYMEN TS. ASSESSEE RELIED ON ITAT VISAKHAPATNAM IN THE CASE OF MYTHRI TRANSPORT CORPORATION VS. ASSISTANT COMMISSIONER OF INCOME TAX 124 TTJ 970. I HAVE GONE THROUGH THE SUBMISSIONS AND THE ASSESSM ENT ORDER. EVEN IN THE GROUNDS OF APPEAL ASSESSEE IS PLEADING IGNORANC E AND NO MENS REA AND STATES THAT THEY WOULD DEDUCT THE TDS IN FUTURE . THE GROUND OF APPEAL DESERVES TO BE DISMISSED ON THE FACE OF IT A S 40(A) (IA) IS NOT A PENALTY PROVISION BUT A PROVISION WHERE AN EXPENSE IS NOT TO BE ALLOWED UNDER CERTAIN CIRCUMSTANCES. IT DOES NOT REQUIRE OR PRESUPPOSES THAT MENS REA SHOULD BE THERE FOR AN EXPENSE TO BE DISAL LOWED. ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 12 - 6.1. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), ASSE SSEE IS NOW IN APPEAL BEFORE US. 6.2. BEFORE US, LD.AR REITERATED THE SUBMISSIONS M ADE BEFORE THE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT NO DISALLOWANC E CAN BE MADE U/S.40(A)(IA) OF THE ACT, IF THE PERSON TO WHOM THE AMOUNT HAS BEEN PAID HAS ALREADY CONSIDERED THE AMOUNT AS ITS INCOME IN VIEW OF THE FACT THAT THE SECOND PROVISO TO SECTION 40(A)(IA) INTRODUCED W.E.F. 01/04/2013 IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPE CTIVE EFFECT AND FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF AGR A TRIBUNAL IN THE CASE OF RAJEEV KUMAR AGARWAL VS. ADDL.CIT REPORTED IN (2014 ) 149 ITD 363 (AGRA). HE FURTHER SUBMITTED THAT SINCE THERE IS NO FINDING ON FACT THAT WHETHER THE PAYEES HAVE CONSIDERED THE PAYMENTS REC EIVED BY THE ASSESSEE AS THEIR INCOME, MATTER MAY BE REMITTED BA CK TO THE FILE OF LD.CIT(A). THE LD.CIT-DR, ON THE OTHER HAND, SUPPO RTED THE ORDERS OF THE AO AND LD.CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DISALLOWANCE U/S.40(A)(IA) OF THE ACT ON ACCOUNT OF NON-DEDUCTIO N OF TAX FROM THE PAYMENTS MADE BY THE ASSESSEE. BEFORE US, ONE OF THE PLEA RAISED BY THE LD.AR IS THE AMOUNT THAT HAVE BEEN PAID BY THE ASSE SSEE HAVE ALREADY BEEN CONSIDERED AS INCOME BY THE RESPECTIVE PAYEES AND, THEREFORE, NO DISALLOWANCE U/S.40(A)(IA) COULD BE MADE IN VIEW O F SECOND PROVISO TO ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 13 - SECTION 40(IA)(A) OF THE ACT WHICH IS HELD TO BE RE TROSPECTIVE IN NATURE AS HELD BY THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CA SE OF RAJEEV KUMAR AGARWAL(SUPRA). THE RELEVANT OBSERVATIONS OF THE CO ORDINATE BENCH AT PARA-4 ARE AS UNDER:- THE UNAMBIGUOUS UNDERLYING PRINCIPLE SEEMS TO BE THAT I N THE SITUATIONS IN WHICH THE ASSESSEE'S TAX WITHHOLDING LAPSE HAVE NOT RESULTED IN ANY LOSS TO THE EXCHEQUER, AND THIS FACT CAN BE REASONABLY DEMONSTR ATED, THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT. THE NET EFFEC T OF THESE AMENDMENTS IS THAT THE DISALLOWANCE UNDER SECTION 40(A)(IA) SHALL NOT BE ATTRACTED IN THE SITUATIONS IN WHICH EVEN IF THE ASSESSEE HAS NOT DE DUCTED TAX AT SOURCE FROM THE RELATED PAYMENTS FOR EXPENDITURE BUT THE RECIPI ENT OF THE MONIES HAS TAKEN INTO ACCOUNT THESE RECEIPTS IN COMPUTATION OF HIS I NCOME, PAID DUE TAXES, IF ANY, ON THE INCOME SO COMPUTED AND HAS FILED HIS IN COME TAX RETURN UNDER SECTION 139(1). AFTER CONSIDERING VARIOUS DECISION CITED THEREIN, THE COORDINATE BENCH OF TRIBUNAL FURTHER HELD AT PARA-9 AS UNDER:- WHEN WE APPRECIATE THE OBJECT OF SCHEME OF SECTIO N 40(A)(IA), AS ON THE STATUTE, AND TO EXAMINE WHETHER OR NOT, ON A 'FAIR, JUST AND EQUITABLE' INTERPRETATION OF LAW- AS IS THE GUIDANCE FROM HON' BLE DELHI HIGH COURT ON INTERPRETATION OF THIS LEGAL PROVISION, IN OUR HUMB LE UNDERSTANDING, IT COULD NOT BE AN 'INTENDED CONSEQUENCE' TO DISALLOW THE EX PENDITURE, DUE TO NON DEDUCTION OF TAX AT SOURCE, EVEN IN A SITUATION IN WHICH CORRESPONDING INCOME IS BROUGHT TO TAX IN THE HANDS OF THE RECIPIENT. TH E SCHEME OF SECTION 40(A)(IA), AS WE SEE IT, IS AIMED AT ENSURING THAT AN EXPENDITURE SHOULD NOT BE ALLOWED AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUATION IN WHICH INCOME EMBEDDED IN SUCH EXPENDITURE HAS REMAINED UN TAXED DUE TO TAX WITHHOLDING LAPSES BY THE ASSESSEE. IT IS NOT, IN O UR CONSIDERED VIEW, A PENALTY FOR TAX WITHHOLDING LAPSE BUT IT IS A SORT OF COMPE NSATORY DEDUCTION RESTRICTION FOR AN INCOME GOING UNTAXED DUE TO TAX WITHHOLDING LAPSE. THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS SEPARATELY PROVIDED FOR IN SECTION 271 C, AND, SECTION 40(A)(IA) DOES NOT ADD TO THE SAME. . . ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 14 - ACCORDINGLY, WE HOLD THAT THE INSERTION OF SECOND P ROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RE TROSPECTIVE EFFECT FROM 1 ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE(I A) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO.2) ACT, 2004. 7.2. WE FURTHER FIND THAT THERE IS NO FINDING OF THE LOWER AUTHORITIES ON THE ISSUE AS TO WHETHER THE PAYMENTS MADE BY THE A SSESSEE TO THE PAYEES HAVE BEEN BEING CONSIDERED BY THEM AS THEIR INCOME. IN VIEW OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE ISSUE NEEDS TO BE RESTORED BACK TO THE FILE OF LD.CIT(A) TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF OUR AFORESAID DISCUSSION, THE DECISION OF THE COORDINA TE BENCH IN THE CASE OF RAJEEV AGARWAL (SUPRA) AND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT THE LD.CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERA TE BY PROMPTLY FURNISHING ALL THE REQUIRED DETAILS CALLED FOR BY T HE AUTHORITIES. THUS, SECOND GROUND OF ASSESSEES APPEAL IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 1 3/06/2016 SD/- SD/ ( S.S. GODARA ) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 13/ 06 /2016 &.., .(../ T.C. NAIR, SR. PS ITA NO.2083/AHD /2011 BHUPENDRASINGH HAKAMSINGH LUHAR VS. DCIT ASST.YEAR 2008-09 - 15 - !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-GANDHINAGAR 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 9.5.16 (DICTATION-PAD 20+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.5.16/13.6.16. 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.13.6.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13.6.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER