ITO, CHENNAI V. Sushmeetha, CHENNAI

ITA 2377/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96333 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-11-2015
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 14-10-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 19-09-2014
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: T T DURAIRAJ KANDIAR
• Section: 40A(3); 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI . , . ! , ' # $ [ BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.2377/MDS/2014 / ASSESSMENT YEAR : 2010-11 THE INCOME TAX OFFICER BUSINESS WARD XII(3) CHENNAI VS. MS. SUSHMEETHA NO.176, TH ROAD MR NAGAR, KODUNGAIYUR CHENNAI 600 118 [PAN AQQPS 1232 G ] ( %& / APPELLANT) ( '(%& /RESPONDENT) / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT /RESPONDENT BY : SHRI T.T. DURAIRAJ KANDIAR, CA / DATE OF HEARING : 14 - 10 - 2015 ! / DATE OF PRONOUNCEMENT : 06 - 1 1 - 2015 ) / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER : THIS APPEAL IS FILED BY THE REVENUE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, CHENNAI, D ATED 24.4.2014, IN I.T.A.NO.868/13-14 FOR ASSESSMENT YEAR 2010-11, PASSED U/S 143(3) AND 250 OF THE INCOME-TAX ACT, 1961. 2. THE REVENUE HAS RAISED TWO GROUNDS IN THEIR APPEAL. (I) DELETION OF DISALLOWANCE U/S 40A(3) OF THE ACT REA D WITH RULE 6DD OF ITA NO.2377/14 :- 2 -: THE INCOME-TAX RULES AND (II) DELETION OF DISALLOWA NCE OF DIESEL AND DRIVER BATTA EXPENDITURE BY THE LD. CIT(A). 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND IS PROPRIETRIX OF M/S V.J CHICKEN TR ADES, DEALING IN WHOLESALE AND RETAIL TRADE OF BROILER CHICKENS AND FILED RETURN OF INCOME ON 10.12.2011 DISCLOSING TOTAL INCOME AS ` 6,32,240/-. THE ASSESSEE IS A DEALER IN BROILER CHICKENS AND PURCHASES ARE M ADE FROM M/S SUGUNA FOODS LTD FORMERLY KNOWN AS SUGUNA POULTRY F ARM LTD. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTIC ES U/S 143(2) AND 142(1)OF THE ACT WERE ISSUED. IN RESPONSE TO THE NOTICE, THE ASSESSEE HAS FILED DOCUMENTS, FINANCIAL STATEMENTS AND TAX AUDIT REPORT U/S 44AB OF THE ACT. 4. DELETION OF DISALLOWANCE U/S.40A(3) OF THE ACT READ WITH RULE 6DD. 4.1 THE ASSESSING OFFICER HAS CALLED FOR BOOKS OF A CCOUNT AND INVOICES FOR PURCHASE AND SALE OF THE BIRDS. LD. A .R OF THE ASSESSEE SUBMITTED THAT THE AUDITED BOOKS OF ACCOUNT WERE MI SPLACED AND COULD NOT BE LOCATED AND PRODUCED LEDGER COPY OF THE ASS ESSEES ACCOUNT APPEARING IN BOOKS OF ACCOUNT OF SUPPLIER M/S SUGU NA FOODS LTD FOR THE FINANCIAL YEAR 2009-10. THE ASSESSING OFFICER, ON PERUSAL OF LEDGER ACCOUNT FOUND NET PURCHASES ARE ` 4.5 CRORES AND ASSESSEE ITA NO.2377/14 :- 3 -: HAS MADE CASH PAYMENTS ON INNUMERABLE OCCASIONS AGG REGATING TO ` 2,20,02,003/-. 4.2 THE LD. AR SUBMITTED THAT RULE 6DD DEFINES THE EXCEPTIONS OF APPLICABILITY OF SEC. 40A(3) OF THE ACT DEPENDIN G UPON THE NATURE OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS OF P OULTRY FARMING BUT LD. ASSESSING OFFICER MADE ADDITION OF PURCHASES ` 2,20,02,003/- TO THE RETURNED INCOME AND COMPLETED ASSESSMENT ON 30. 3.2013 VIDE ORDER PASSED U/S 143(3) OF THE ACT. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFOR E THE LD. CIT(A). IN THE APPELLATE PROCEEDINGS, THE LD. A.R SUBMITTED T HAT THE DISALLOWANCE OF PAYMENT OF ` 2,20,02,003/- MADE TO M/S SUGUNA FOODS LTD FOR PURCHASE OF BIRDS IN CASH ARE NOT COVERED UNDER THE PROVISIONS OF SEC. 40A(3) OF THE ACT AND THE ASSESSING OFFICER OVERLOO KED THE NATURE OF BUSINESS OF THE ASSESSEE AND CIRCUMSTANCES UNDER R ULE 6DD. THE LD. A.R EMPHASIZED CLAUSE (E)(II)OF RULE 6DD APPLICABI LITY FOR THE PRODUCE OF ANIMAL HUSBANDRY (INCLUDING LIVESTOCK MEAT, HIDE S AND SKINS) OR DAIRY OR POULTRY FARMING AND IN THE PRESENT CASE, ASSESSEE HAS MADE PAYMENT IN CASH FOR THE PURCHASE OF CHICKEN BIRDS WHICH ARE OUT OF THE PURVIEW OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE LD. CIT(A) AFTER PERUSING THE SUBMISSIONS AND CONSIDERING THE FACTS ON RECORD HAS ITA NO.2377/14 :- 4 -: DIRECTED THE ASSESSING OFFICER TO DELETE THE IMPUGN ED ADDITION AND OBSERVED AT PARA 9 OF HIS ORDER AS :- I AM IN AGREEMENT WITH THE AR THAT SINCE THE CASE OF THE APPELLANT FALLS SQUARELY WITHIN SEC. 40A(3) RW RULE 6DD WHICH HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER AND WHERE PAYMENT S WERE MADE FOR THE PURCHASE AND SALE OF THE PURCHASE OF ANIMAL HUSBANDRY INCLUDING LIVESTOCK WHICH WOULD ALSO INCLUDE POULTR Y, THE ADDITION MADE BY THE ASSESSING OFFICER ON THE SAME IS NOT JU STIFIED AND THEREFORE DIRECTED TO BE DELETED. 4.3 AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE REVENUE PREFERRED AN APPEAL BEFORE THE TRIBUNAL. THE LD. DR ARGUED T HAT THE PROVISIONS OF SEC. 40A(3) OF THE ACT ARE APPLICABLE AND THE EX CEPTIONS UNDER RULE 6DD ARE NOT AVAILABLE TO THE ASSESSEE. THE LD. CIT (A) FAILED TO CONSIDER WHAT ARE THE EXCEPTIONAL CIRCUMSTANCES IN WHICH THE CASH PAYMENTS COULD BE MADE AND RELIED ONLY ON THE EVI DENCE OF SUPPLIER OF POULTRY M/S SUGUNA FOODS LTD WHO ARE IN THE BUS INESS OF BROILER FARMING, WHICH IS NOT A CONCLUSIVE PROOF AND PRAYED FOR RESTORATION OF THE ADDITION MADE BY THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND FILED WRITTEN SUBMISSION BY CITING THE PROVISIONS APPLICA BLE AND PLEADED FOR DISMISSAL OF REVENUES APPEAL. 4.4 WE HEARD THE RIVAL SUBMISSIONS OF BOTH PARTIES, O RDERS OF THE LOWER AUTHORITIES AND THE MATERIAL ON RECORD. THE ASSESSEE IS IN ITA NO.2377/14 :- 5 -: POULTRY BUSINESS AND PURCHASING BIRDS AT CERTAIN IN TERVALS WITH CASH PAYMENTS AND HAS PRODUCED THE LEDGER COPY OF M/S. SUGUNA FOODS LTD WHICH IS NOT DISPUTED BY ASSESSING OFFICER AND RELIED ON INTERPRETATION OF CLAUSE (E) OF RULE 6DD AND EXPLA INED THAT PURCHASE OF CHICKEN BIRDS FALLS WITHIN DEFINITION OF LIVEST OCK. ON PERUSAL OF PROVISIONS OF RULE 6DD WHICH READS AS: CLAUSE (E) OF RULE 6DD CASES AND CIRCUMSTANCES IN WHICH A PAYMENT OR AGGRE GATE OF PAYMENTS EXCEEDING TWENTY THOUSAND RUPEES MAY BE MAD E TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT. (E) WHERE THE PAYMENT IS MADE FOR THE PURCHASE OF (I) AGRICULTURAL OR FOREST PRODUCE; OR (II) THE PRODUCE OF ANIMAL HUSBANDRY (INC LUDING LIVESTOCK, MEAT, HIDES AND SKINS) OR DAIRY OR POULTRY FARMING; CONSIDERING THE ABOVE PROVISIONS OF LAW , FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS EXA MINED EVIDENCE AVAILABLE ON RECORD VIS-A-VIS EXPLANATIONS MADE BY THE ASSESSEE AND THERE BEING NO INFIRMITY IN THE ORDER OF THE LD.CI T(A), WE ARE INCLINED TO UPHOLD THE SAME BY DISMISSING THE GROUND RAISED BY THE DEPARTMENT. ITA NO.2377/14 :- 6 -: 5. DELETION OF DISALLOWANCE OF DIESEL EXPENSE AND DRIVER BATTA. 5.1 IN THE ASSESSMENT PROCEEDINGS, LD. ASSESSING OF FICER HAS FOUND THE ASSESSEE HAS CLAIMED G1,65,370/- AS DIESE L EXPENSES AND G1,95,487/- AS DRIVER BATTA EXPENSES AND ESTIMATED DISALLOWANCE @25% OF TOTAL EXPENSES WHICH WORKED OUT TO G90,215/ -. THE LD.CIT(A) IN THE APPELLATE PROCEEDINGS CONSIDERING THE CLARIFICATIONS AND TYPE OF BUSINESS IN UNORGANIZED SECTOR DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION AND HAS OBSERVED AT PARA 11 OF HIS ORDER AS: THE ASSESSING OFFICER HAS NOT MADE ANY COMPARATIVE ANALYSIS OF THE DIESEL EXPENSES AND BATTA EXPENSES WITH THE SAL ES MADE AT THE VARIOUS SELLING POINTS OF CHENNAI OVER A PERIOD OF THE PAST YEAR OR TWO TO SEE WHETHER IT IS ON THE HIGHER SIDE. NEITH ER HAS HE GIVEN ANY SPECIFIC REASONS AS TO WHY THE SALES MADE AT DI FFERENT SELLING POINTS AT CHENNAI WOULD NOT ENTAIL THE DIESEL EXPEN SES AND BATTA EXPENSE AS CHARGED BY THE ASSESSEE. NOR HAS HE CRO SS CHECKED AND FOUND BOGUS/INFLATED BILLS/INVOICES FOR THE EXPENSE S CLAIMED AND BROUGHT IT ON RECORD TO JUSTIFY DISALLOWANCE OF THE SAME. 5.2 BEFORE US, THE LD. DR SUBMITTED THAT THE DIESE L AND DRIVER BATTA EXPENSES ARE NOT SUPPORTED WITH ANY EVIDENC E EXCEPT STATEMENT MADE IN ASSESSMENT PROCEEDINGS. THE LD. CIT(A) DELETED THE ADDITION CONTRARY TO THE FINDINGS OF THE ASSESS ING OFFICER AND PRAYED FOR UPHOLDING THE ORDER OF THE ASSESSING OFF ICER. ON THE OTHER HAND, THE LD.AR RELIED ON THE ORDER OF LD.CIT(A). ITA NO.2377/14 :- 7 -: 5.3 WE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE CONSIDERED OPINION THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE ARE REASONABLE AND INCIDENTAL TO BUSINESS AND THE LD. CIT(A) HAS RIGHTLY ANALYZED THE NATURE OF EXPENSES AND THEREFORE, WE A RE INCLINED TO UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THE G ROUNDS OF THE REVENUE. 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IN I.T .A.NO. 2377/MDS/2014 IS DISMISSED. ORDER PRONOUNCED ON 6 TH NOVEMBER, 2015, AT CHENNAI. SD/- SD/- ( . ) (A. MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( . ! ) (G. PAVAN KUMAR) ' / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 6 TH NOVEMBER, 2015 RD %& '()( / COPY TO: 1 . / APPELLANT 4. * / CIT 2. / RESPONDENT 5. (+, - / DR 3. *./ / CIT(A) 6. ,01 / GF