M/s. Haryana Plywoods, Hubli V. ITO, Hubli

ITA 209/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8472 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 09-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: P C CHADAGA
• Keywords: Business expenditure
• Section: 40A(3); 133A; 208; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NOS. 208 & 209/BANG/2009 ASSESSMENT YEARS : 2004-05 & 2005-06 M/S. HARYANA PLYWOODS, STATION ROAD, HUBLI. : APPELLANT VS. THE INCOME TAX OFFICER, WARD 1(1), HUBLI. : RESPONDENT APPELLANT BY : SHRI P.C. CHADAGA RESPONDENT BY : SMT. V.S. SREELEKHA O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THESE ARE TWO APPEALS PREFERRED BY THE ASSESSEE FIR M WHICH ARE DIRECTED AGAINST THE COMBINED ORDER OF THE LD. CIT( A), HUBLI IN ITA NOS:239 & 238/CIT(A) HBL/06-07 DATED: 28.11.2008 FOR THE AS SESSMENT YEARS 2004-05 & 2005-06. ITA NO:208/09 AY 2004-05 : 2. THE ASSESSEE HAS RAISED FIVE GROUNDS, OUT OF WH ICH, GROUND NOS:1 AND 5 BEING GENERAL AND NO SPECIFIC ISSUES IN VOLVED, THEY HAVE ITA NO.208 & 209/B/09 PAGE 2 OF 12 BECOME NON-CONSEQUENTIAL. IN THE REMAINING GROUNDS , THE ESSENCES OF THE ISSUES ARE AS UNDER: THE CIT(A) ERRED IN CONFIRMING: (I) THE ADDITION OF RS.98524 TOWARDS SUPPRESSION OF SA LES; (II) THE DISALLOWANCE OF RS.20000/- MADE OUT OF TIPS PAI D TO CARPENTERS; & (III) THE ADDITION MADE U/S 40A(3) WITHOUT APPRECIATING T HE FACTS. ITA NO:209/09 AY 2005-06 : 3. SIMILARLY FOR THIS AY TOO, THE ASSESSEE HAS RAI SED FIVE GROUNDS, OUT OF WHICH, GROUND NOS:1 AND 5 BEING GEN ERAL AND NO SPECIFIC ISSUES INVOLVED AS IN LAST YEAR, THEY HAVE BECOME N ON-CONSEQUENTIAL. IN THE REMAINING GROUNDS, THE SUBSTANCES OF THE ISSUES ARE AS UNDER: THE CIT(A) ERRED IN CONFIRMING: (I) THE ADDITION OF RS.31372/- TOWARDS SUPPRESSION OF SALES; (II) THE DISALLOWANCE OF RS.15000/- MADE OUT OF GENERAL EXPENSES, TRAVELING, CONVEYANCE ETC. & (III) THE ADDITION MADE U/S 40A(3) WITHOUT APPRECIATING T HE FACTS. COMMON ORDER : 4. SINCE THE ISSUES RAISED IN THESE APPEALS ARE AL MOST SIMILAR TO EACH OTHER, FOR THE SAKE OF CONVENIENCE AND CLARITY , THESE APPEALS WERE HEARD, CONSIDERED TOGETHER AND DISPOSED OFF IN THIS COMMON ORDER. 5. THE ASSESSEE FIRM (THE ASSESSEE IN SHORT) WAS DEALING IN PURCHASE AND SALE OF PLYWOOD ON RETAIL BASIS. THE ASSESSEE FIRM IS NOT IN EXISTENCE NOW ON ACCOUNT OF LOSSES. ITA NO.208 & 209/B/09 PAGE 3 OF 12 ADDITIONS ON ACCOUNT OF SUPPRESSION OF SALES : 6. FOR THE AYS UNDER DISPUTE, THE ASSESSEE ON TUR NOVERS OF RS.23.72 LAKHS AND RS.25.34 LAKHS, ADMITTED GPS OF RS.4.18 LAKHS AND RS.5.08 LAKHS WHICH WERE ACCOUNTED FOR 17.6% AND 20 % RESPECTIVELY. THE ASSESSEE HAD NOT MAINTAINED, ACCORDING TO THE AO, ANY STOCK BOOKS AND INVENTORY OF OPENING AND CLOSING STOCK DECLARED. 6.1. THERE WAS AN ACTION U/S 133A OF THE ACT ON 29 .9.2004. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT TH E ASSESSEE HAD ISSUED DELIVERY CHALLANS FOR THE GOODS ISSUED TO THE CUSTO MERS, BUT, ON RECEIPT OF THE BILL AMOUNTS, NO SALE BILLS HAVE BEEN RAISED AN D, THUS, SUCH SALES HAVE NOT BEEN ACCOUNTED FOR. DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THE AO NOTICED THAT IN RESPECT OF SOME OF THE DELIVERY CHALLANS, THE CORRESPONDING SALES HAVE NOT BEEN FULLY ACCOUNTED F OR. THE ASSESSEE WAS ASKED TO EXPLAIN FOR THE GOODS SUPPLIED TO THE TUNE OF RS.111442/- AND RS.44139/- FOR THE AYS 04.05 AND 05-06 RESPECTIVELY AND NO SALE BILLS HAVE BEEN RAISED AND THAT SUCH SALES WERE NOT FINDING P LACES IN THE REGULAR BOOKS OF ACCOUNT. ON VERIFICATION OF DELIVERY CHAL LANS AND SALES BILLS, THE ASSESSEE COULD ABLE TO SHOW SALES BILLS ONLY TO RS. 12918/- & RS.12767/- AND FOR THE BALANCE DELIVERY CHALLANS FOR RS.98524/ - AND RS.31372/-, THERE WERE NO CORRESPONDING SALES BILLS. AS SUCH, THE AO TREATED RS.98524/- AND RS.31372/- AS SUPPRESSED SALES OUTSIDE THE BOOKS OF ACCOUNTS FOR THE AYS 04-05 AND 05-06 RESPECTIVELY. ITA NO.208 & 209/B/09 PAGE 4 OF 12 6.2. AFTER DUE CONSIDERATION OF THE ASSESSEES CON TENTIONS, THE CIT(A) HAS OBSERVED THAT 4.(1)..IT IS STATED BY THE AR THAT AO HAS NOT PROVED ANY SALES BUT DURING THE COURSE OF SURVEY WHAT IS AVAIL ABLE WAS ONLY DELIVERY CHALLANS AND NO SALE BILLS ARE MAINTAINED BY APPELL ANT AS SPECIFICALLY POINTED OUT IN ORDER. DURING THE COURSE OF SURVEY SALES ARE ACCOUNTED BASED ON DELIVERY CHALLANS AND DURING THE COURSE OF ASSES SMENT, AO HAS DETECTED CERTAIN CHALLANS FOR WHICH NO RELEVANT SALES ENTRY IS PASSED IN CASH BOOK/BOOKS. THEREFORE, CONSIDERING METHOD FOLLOWED BY APPELLANT OF ACCOUNTING SALES BASED ON DELIVERY CHALLANS, AO HAS MADE LIMITED ENQUIRY IN RESPECT OF THOSE DELIVERY CHALLANS WHICH ARE NOT ACCOUNTED IN BOOKS. WHEN APPELLANT IS NOT MAINTAINING SALE BILLS, STOCK INVENTORY, PURCHASE/SALE REGISTERS FURTHER ENQUIRY SHOULD HAVE BEEN MADE TO BRING TO TAX ENTIRE SALES IN ONLY ONE AVAILABLE FORM OF DELIVERY CHALLANS, SU CH CHALLANS ARE ALSO NOT MAINTAINED AT ALL AND APPELLANT HAS PROVED PARTIES WITH WHOM DELIVERY CHALLANS ARE ISSUED OR TO WHOM SALES ARE MADE. AO HAS RESTRICTED ENQUIRY ONLY TO THOSE DELIVERY CHALLANS WHICH ARE TREATED A S SALES, WHICH IS A BEAR MINIMUM IN THIS CASE AND IT IS PROVING SALES ONLY W ITH AVAILABLE RECORDS LIKE DELIVERY CHALLANS, EVEN THEY ARE NOT FULLY ACCOUNTE D. AO HAS NOT CONSIDERED UNACCOUNTED DELIVERY CHALLANS BY WHICH LARGE NUMBER OF SALES LEFT OUT, THEREFORE, ADDITIONS ARE CONFIRMED.. 7. BEFORE US, THE LD. A R REITERATED MORE OR LESS WHAT HAS BEEN CONTENDED BEFORE THE CIT (A). IN FURTHERANCE, IT W AS SUBMITTED THAT THE CIT (A) CONFIRMED THE ADDITION WITH AN OBSERVATION THAT THE ASSESSEE HAD NOT MAINTAINED SALE BILLS, STOCK INVENTORY ETC., WITHOU T APPRECIATING THE NATURE OF BUSINESS AND THE MODUS OPERANDI ADOPTED BY THE A SSESSEE IN THE DAY- TO-DAY BUSINESS. THE AUTHORITIES BELOW HAVE NOT CO NSIDERED THE VERY FACT THAT WHATEVER WAS GIVEN ON THE BASIS OF DELIVERY CH ALLANS DID NOT REPRESENT THE DIRECT SALES BUT GOODS GIVEN WHICH WERE SUBJECT TO APPROVAL. DURING THE COURSE OF HEARING, THE LD. A R FURNISHED A PAPE R BOOK CONTAINING 1 -34 PAGES WHICH MAINLY CONSISTS OF (I) WRITTEN SUBMISSI ONS BEFORE THE LOWER AUTHORITIES; (II) COPIES OF RETURNS OF INCOME FOR 0 4-05 & 05-06 ETC., ITA NO.208 & 209/B/09 PAGE 5 OF 12 7.1. AFTER HEARING THE SUBMISSION MADE BY THE LD. D.R. PRESENT, WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS , PERUSED THE RELEVANT RECORDS AND ALSO THE EVIDENCE PRODUCED BY THE LD. A R IN THE FORM OF PAPER BOOK, DECISIONS OF HONBLE TRIBUNAL IN THE CASE OF HARYANA HARDWARE ETC., 7.1.1 ON A CLOSE READING OF THE IMPUGNED ORDERS OF THE AO, WE FIND THAT THE ASSESSEE WAS SPECIFICALLY REQUIRED TO FURN ISH THE SALES BILLS FOR THE DELIVERY CHALLANS TO THE TUNE OF RS.1.11 LAKHS AND RS.44139/-, FOR WHICH, THE ASSESSEES REPRESENTATIVE COULD ABLE TO SHOW SA LES BILLS ONLY FOR RS.12918/- AND RS.12767/- WHICH GOES TO PROVE THAT THE ASSESSEE HAD INDULGED IN SALES OUTSIDE THE BOOKS OF ACCOUNTS. F URTHER, THERE WOULD BE NO TAKERS OF THE ASSESSEES ASSERTION THAT THE PLYWOOD IS SUCH A COMMODITY WHICH IS TAKEN BY MOST OF THE CUSTOMERS A ND CARPENTERS ON APPROXIMATE BASIS AND AFTER THE WORK IS COMPLETED T HE EXCESS OR UNWANTED MATERIAL WOULD BE RETURNED AND THE FINAL SALE BILL BE PREPARED ACCORDINGLY . [SOURCE: SUBMISSION BEFORE CIT (A) P 13 OF PB AR]. NO PRUDENT BUSINESSMAN WHO DEALS IN PLYWOOD OR ANY GOODS FOR T HAT MATTER, PARTS WITH THE COMMODITY TO HIS CUSTOMERS/CARPENTERS ON AN APP ROXIMATE BASIS AND AFTER THE WORK IS COMPLETED THE EXCESS OR UNWANTED MATERIAL WILL BE ACCEPTED BY HIM ON RETURN AND THEN ONLY A FINAL SAL E BILL WILL BE RAISED. THIS CLAIM OF THE ASSESSEE, TO PUT IT MILDLY, IS RATHER HYPOTHETICAL. 7.1.2. WITH REGARD TO THE ASSESSEES CLAIM THAT WHATEVER WAS GIVEN ON THE BASIS OF DELIVERY CHALLANS DID NOT REPRESENT THE DIRECT SALES BUT GOODS GIVEN WHICH WERE SUBJECTED TO APPROVAL. IS QUITE AMUSING. ACCORDING TO CAMBRIDGE ADVANCED LEARNERS DICTIONARY, DELIVERY (LETTERS/CHALLAN ETC) ITA NO.208 & 209/B/09 PAGE 6 OF 12 MEANS WHEN GOODS, LETTERS, PARCELS ETC., ARE TAKEN TO PEOPLES HOUSE OR PLACES OF WORK WHEREAS ESTIMATE (INVOICE) MEANS TO GUESS THE COST, SIZE, VALUE ETC. OF SOMETHING. THERE IS VAST DIFFERENCE AND LITERAL MEANING BETWEEN DELIVERY AND ESTIMATE . THUS, THE CONTENTION OF THE ASSESSEE IS LACKING CONVICTION. 7.1.3. IN AN OVERALL CONSIDERATION OF THE ISSUE AS DISCUSSED IN THE FORE-GOING PARAGRAPHS, WE ARE OF THE FIRM VIEW THAT THE ASSESSEE HAD FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE TO ASSERT THAT THE DELIVERY CHALLANS WORTH OF RS.98524/- AND RS.31372/-, THE GOODS WERE NOT SOLD OUTSIDE THE BOOKS OF ACCOUNTS. WE, THEREFORE, CONFIRM THE ADDI TIONS OF RS.98524/- AND RS.31372/- FOR THE AYS 04-05 AND 05-06 RESPECTIVELY . IT IS ORDERED ACCORDINGLY. DISALLOWANCE OF RS.20000/- UNDER BUSINESS PROMOTION FOR THE AY 2004-05: 8. THE ASSESSEE DEBITED IN THE CASH BOOK ON 31.3.0 4 AND CLAIMED AS BUSINESS PROMOTION. ON A QUERY, IT WAS EXPLAINED THAT THESE PAYMENTS WERE MADE TO CARPENTERS WHO HAVE HELPED TH E ASSESSEE IN INCREASING THE SALES. IN THE ABSENCE OF ANY EVIDEN CE TO SUPPORT ITS CLAIM, THE AO HAD DISALLOWED RS.20000/- AS EXCESSIVE AND N OT RELATING TO BUSINESS. 8.1. ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION ON THE GROUND THAT THE BUSINESS EXPENDITURE COULD BE ALLOWED BA SED ON BILLS/VOUCHERS WHICH WERE NOT FORTH-COMING IN THE CASE ON HAND. ITA NO.208 & 209/B/09 PAGE 7 OF 12 8.1.1. IT WAS CONTENDED BEFORE US THAT THE CIT(A) HAD CONFIRMED THE DISALLOWANCE AS THERE WERE NO BILLS ETC. WITHOUT AP PRECIATING THE FACT THAT THE DETAILS WERE PRODUCED BEFORE THE AO AND THAT TH ESE PAYMENTS WERE INCIDENTAL TO THE BUSINESS. 8.2. AFTER HEARING THE VERSION OF THE LD. D R WHO WAS PRESENT, WE HAVE DULY PERUSED THE RECORDS AND ALSO THE RIVAL SU BMISSIONS. 8.2.1. IT WAS NOT UNCOMMON IN THIS LINE OF BUSINES S THAT THE VERY SURVIVAL OF SUCH BUSINESS DEPENDS UPON THE MIDDLE M EN, SAY, THE SMALL TIME CONTRACTORS AND CARPENTERS WHO WILL TAKE THE P ROSPECTIVE CUSTOMERS FOR PURCHASE OF PLYWOOD, WOOD ETC. TO A PARTICULAR SHOP (SELLER) WHO WILL SUITABLY REWARD THEM WITH AN INTENTION TO ENCOURAGE THEM TO BRING SUCH MORE CUSTOMERS. THE AO HIMSELF HAD CANDIDLY ADMIT TED THAT THOUGH IT IS A PRACTICE IN THIS LINE OF BUSINESS THAT WHENEVER T HE CARPENTERS BRING THE CUSTOMERS, THE CARPENTERS EXPECT SOME COMMISSION .. WHEN, THE ASSESSEE HAD ADMITTED SALES TO THE TUNE OF RS.23.72 LAKHS, THE PALTRY CLAIM OF EXPENSES OF RS.62500, IN OUR CONSIDERED VIEW, IS QUITE REASONABLE WHICH SHOULD NOT HAVE BEEN RESTRICTED ON A FLIMSY GROUND THAT THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE EXTENT OF SALES MADE TO GI VE SO MUCH OF COMMISSION TO THE CARPENTERS. IT IS AS COULD AS AS K THE CLEANING BOY IN A HOTEL, HOW MANY PLATES/VESSELS HE HAS CLEANED? 8.2.2. IN VIEW OF THE ABOVE, THE ADDITION OF RS.20 000/- IS DELETED. ITA NO.208 & 209/B/09 PAGE 8 OF 12 9. FOR THE AY 2005-06, THE AO HAD DISALLOWED A ROU ND SUM OF RS.15000/- AS NOT RELATING TO BUSINESS TOWARDS GENE RAL EXPENDITURE, TRAVELING, CONVEYANCE ETC., SINCE THE ASSESSEE HAD NOT KEPT ANY ACCOUNT. 9.1. THE CIT(A) WAS OF THE VIEW THAT EVEN THOUGH T HE AO HAD NOT DISPUTED THAT THEY WERE INCIDENTAL TO BUSINESS, FOR WANT OF SUPPORTING DOCUMENTS, IT WAS FOUND THAT THERE WERE NO BOOKS OF ACCOUNT, BILL/VOUCHERS, IN SUCH CASE IT WAS REASONABLE TO MAKE A LUMP SUM A DDITION. 9.1.1. IT WAS CONTENDED BEFORE US THAT ALL THESE E XPENSES WERE INCURRED DURING THE COURSE OF DAY-TO-DAY BUSINESS A ND WERE ALSO INCIDENTAL TO THE BUSINESS. 9.2. WE HAVE DULY CONSIDERED THE CONTENTION OF THE ASSESSEE. ON A PERUSAL OF THE ASSESSMENT ORDER, WE FIND THAT THE ASSESSEE CLAIMED RS.60095/- BEING GENERAL EXPENDITURE, TRAVELING, CO NVEYANCE, BUSINESS PROMOTION ETC. HOWEVER, THE ASSESSEE HAS BEEN STEA DILY VOUCHING WITHOUT ANY DOCUMENTARY PROOF TO THE CONTRARY THAT THESE E XPENSES WERE INCIDENTAL AND INCURRED DURING THE COURSE OF BUSINESS. IF THE ASSESSEE WERE TO BE AN INDIVIDUAL, WE COULD HAVE ACCEPTED THE ASSESSEES A SSERTION WITHOUT ANY INKLING. HOWEVER, THE ASSESSEE BEING A PARTNERSHIP FIRM GOVERNED BY A PARTNERSHIP DEED, IT CANNOT GENERALIZE THE ISSUE AN D GET AWAY BY INSISTING THAT THESE EXPENSES WERE INCIDENTAL AND INCURRED DU RING THE COURSE OF BUSINESS. 9.3. IN THE ABOVE CIRCUMSTANCES, WE ARE IN FULL AG REEMENT WITH THE STAND OF THE AUTHORITIES BELOW ON THE GROUND THAT T HE ASSESSEE HAD CLAIMED ITA NO.208 & 209/B/09 PAGE 9 OF 12 EXPENSES OF RS.60095/- WHEREAS THE AO HAD LIMITED T HE DISALLOWANCE ONLY TO 1/4 TH OF THE CLAIMS WHICH, IN OUR VIEW, IS QUITE REASONA BLE IN THE GIVEN CIRCUMSTANCES. IT IS ORDERED ACCORDINGLY. ADDITION U/S 40A(3) OF THE ACT: 10. FOR THE AYS UNDER DISPUTE, THE ASSESSEE HAD MA DE CASH PAYMENTS IN EXCESS OF RS.20000/- BEING FREIGHT CHAR GES TO THE EXTENT OF RS.51720/- AND RS.101500/- RESPECTIVELY. THE AO IN A CRYPTIC WAY DISALLOWED 20% OF THE EXPENSES CLAIMED U/S 40A(3) O F THE ACT ON THE GROUND THAT THE SAID PAYMENTS WERE MADE OTHERWISE T HAN BY CROSSED CHEQUES/DDS ETC. FOR BOTH THE YEARS UNDER APPEAL. 10.1 THE CIT(A) TOO IN A CHARACTERISTIC MANNER OBS ERVED THAT 5.HOWEVER, IT IS STATED BY THE AR THAT SUCH PUR CHASES (SIC) PAYMENTS ARE MADE IN EXCEPTIONAL CIRCUMSTANCES BUT NEITHER B EFORE AO NOR BEFORE ME ANY SUCH CIRCUMSTANCES IS EXPLAINED FOR CONSIDERING SUCH DISALLOWANCES, THEREFORE AS PER THE PROVISIONS OF THE ACT, 20% DIS ALLOWANCE OF SUCH CASH PAYMENT MADE IS HEREBY CONFIRMED FOR BOTH YEARS. 10.2. BEFORE US, THE TYPICAL CONTENTION OF THE ASS ESSEE WAS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITIONS MADE U/S 4 0A(3) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE RELEVANT PAYMENTS WE RE MADE TOWARDS FREIGHT CHARGES UNDER UNAVOIDABLE CIRCUMSTANCES. 10.3. WE HAVE DULY CONSIDERED THE ISSUE IN DETAIL. THE ASSESSEE IN ITS WRITTEN SUBMISSION BEFORE THE CIT(A) [P.14 OF P B AR] AVERRED THAT THE PARTIES BELONGED TO A PLACE OUTSIDE THE STATE. THE TRUCKS ARRIVED WITH GOODS ITA NO.208 & 209/B/09 PAGE 10 OF 12 LATE IN THE EVENING AND THE PARTIES DEMANDED IMMEDI ATE CASH PAYMENTS AS THEY WERE IN A HURRY TO GO BACK TO THEIR PLACES. F URTHER, IF THE DELIVERY OF GOODS IS NOT TAKEN IMMEDIATELY, THE ASSESSEE HAS TO MAKE EXTRA PAYMENT. IF THE FREIGHT CHARGES ARE NOT PAID IN CASH, THEN NOBO DY WOULD COME FORWARD FOR TRANSPORTATION WORK.. 10.3.1. WE FIND SOME REASONABILITY IN THE ARGUMENT S OF THE ASSESSEE ON TWO COUNTS, NAMELY, (I) THE TRUCKS ARRI VED WITH GOODS LATE IN THE EVENING BEYOND THE WORKING HOURS OF THE BANKS AT THAT RELEVANT TIME; AND (II) THAT SOME OF THE TRUCKWALLAS WERE BELONGED TO OUTSIDE THE STATE. 10.3.2. AS COULD BE SEEN FROM THE MATERIALS AVAILA BLE ON RECORD THAT THE ASSESSEE HAD MADE CASH PAYMENTS THE SE TWO GOOD CARRIERS, NAMELY: NEW BHARATI ROAD CARRIERS, NAGPUR RS.45712 GULATI ROADLINES, HARYANA RS.29200 RS.74912 SINCE THESE TRANSPORTERS WERE FROM OTHER STATES AND THE ASSESSEES CLAIM THAT THE TRUCKS CARRIED GOODS REACHED THE ASSESSEE S PREMISES BEYOND THE WORKING HOURS OF THE BANKS HAS NOT BEEN CONTESTED B Y THE AO, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE WAS FORCED TO OBLIGE THE TRUCKERS INSISTENCE WHICH CULMINATED IN CASH PAYMENTS UNDER UNAVOIDABLE CIRCUMSTANCES. THE REVENUE HAS NOT BROUGHT ON RECO RD ANY DISCREET AND CIRCUMSTANTIAL EVIDENCE TO NAIL THE ASSESSEES CLAI M. THUS, WE ARE OF THE FIRM VIEW THAT THE ASSESSEE WAS UNDER UNAVOIDABLE C IRCUMSTANCES TO MAKE CASH PAYMENTS EXCEEDING RS.20000/- TO THE EXTENT OF RS.74912/- AND, THUS, THE AO WAS NOT JUSTIFIED IN INVOKING THE PROV ISIONS OF S.40A(3) OF THE ITA NO.208 & 209/B/09 PAGE 11 OF 12 ACT TO DISALLOW 20% OF RS.74912/- WHICH WORKS OUT TO RS.14982/-. ACCORDINGLY, THE ASSESSEE GETS A RELIEF OF RS.14982 /-. 10.3.3. HOWEVER, IN RESPECT OF OTHER GOODS CARRIERS , BY THEIR NAMES [NAMES OF THE TRANSPORTERS] WHICH RESEMBLE THEIR OR IGINS WERE WITHIN THE STATE ITSELF AND THE ASSESSEE COULD HAVE MADE THE F REIGHT CHARGES BY MEANS OF ACCOUNT PAYEE CHEQUES, THOUGH THE TRUCKS ALLEGED TO HAVE ARRIVED WITH GOODS LATE IN THE EVENING. HAD THE TR UCKERS INSISTED FOR IMMEDIATE CASH PAYMENTS LIKE THEIR COUNTER-PARTS FR OM OTHER STATES, THE ASSESSEE COULD HAVE PREVAILED ON THEM TO ACCEPT THE ACCOUNT PAYEE CHEQUES WHICH WOULD HAVE BEEN GOT ENCASHED BY THE T RUCKERS WITHIN A COUPLE OF DAYS FROM THE DATES OF PRESENTATION BEFOR E THEIR RESPECTIVE BANKS? SINCE THE ASSESSEES ASSERTION IS NOT ABOVE THE BOARD AND THE CIRCUMSTANTIAL EVIDENCE IS ALSO CONTRARY TO THE ASS ESSEES CLAIM, THE AO WAS JUSTIFIED IN INVOKING THE PROVISIONS OF S.40A(3 ) TO THIS EXTENT. 10.3.4. IN A NUT-SHELL, THE ASSESSEE GETS RELIEF OF RS.14982/- AND THE BALANCE OF RS.15618/- IS SUSTAINED. 11. IN THE RESULT, THE ASSESSEES APPEALS FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF MARCH, 2010. SD/- SD/- (GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 19 TH MARCH, 2010. DS/- ITA NO.208 & 209/B/09 PAGE 12 OF 12 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.