Rajarajan & Co., CHENNAI V. ITO, CHENNAI

ITA 2384/CHNY/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8904 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 30-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 22-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G JOHNSON
• Assessee Lawyers: A S SRIDHAR
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . . . , . , & BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.2384/MDS/2014 ( / ASSESSMENT YEAR: 2008-09) M/S. RAJARAJAN & CO., 16, WHANNELS ROAD, EGMORE, CHENNAI-600 008. VS THE INCOME TAX OFFICER, BUSINESS WARD-VII(3), CHENNAI. PAN:AAEFR6446D ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. A.S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR.G.JOHNSON, JCIT /DATE OF HEARING : 30 TH MAY, 2016 /DATE OF PRONOUNCEMENT : 2 ND AUGUST, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY T HE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- IV, CHENNAI DATED 28.04.2014 PASSED UNDER SECTION 1 43(3) R.W.S.158BC OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN THIS APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS AS FOLLOW S:- THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN PARTLY SUSTAINING THE DISALLOWANCE OF FREIGHT CHARGES PAID FOR `72,41,935/- INVOKING THE PROVISIO NS OF SECTION 40A(3) OF THE ACT. 2 ITA NO.2384/MDS/2014 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF EXPORT AND IMPORT FILED ITS RETURN OF INCOME ON 19.08.2008 DECLARING INCOME OF `30,430 /-. THEREAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY UNDE R CASS AND ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3 ) OF THE ACT ON 29.12.2010 WHEREIN SEVERAL ADDITIONS /DISALLOWANCES WERE MADE, AMONGST WHICH ONE OF THE DISALLOWANCE WAS PAYMENT MADE TOWARDS FREIGHT CHARG ES IN CASH EXCEEDING `20,000/- AGGREGATING TO `72,41,935/ -. IN THE ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED BY THE ASS ESSEE THAT THESE PAYMENTS WERE MADE TOWARDS FREIGHT CHARG ES ON DIFFERENT OCCASIONS WHICH ARE NOT EXCEEDING `20,000 /-. HOWEVER SINCE NO EVIDENCE WAS PRODUCED BY THE ASSES SEE OTHER THAN THE LEDGER ACCOUNT TO PROVE THAT ON A SI NGLE DAY PAYMENTS WERE NOT MADE IN EXCESS OF `20,000/- TO A SINGLE PERSON, THE LEARNED ASSESSING OFFICER MADE ADDITION OF `72,41,935/- INVOKING THE PROVISIONS OF SECTION 40A (3) OF THE ACT. 3 ITA NO.2384/MDS/2014 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER AGREEING WITH HIS VIEW. 6. BEFORE US, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAD PAID FREIGHT CHARGE S TO THE LORRY DRIVERS FOR TRANSPORTATION OF GOODS AND ON NO OCCASION PAYMENT WAS MADE IN A SINGLE DAY FOR A SINGLE PARTY EXCEEDING `20,000/-. THE LEDGER ACCOUNTS WERE ALSO PREPARED IN THE SAME MANNER BY PASSING ENTRIES AS AND WHEN T HE PAYMENTS WERE MADE. IT WAS FURTHER EXPLAINED THAT WHEREVER POSSIBLE ENDORSEMENT WAS MADE BEHIND EACH BILL MENT IONING THE DATE OF PAYMENT AND THE AMOUNT OF PAYMENT WHICH NEVER EXCEEDED ABOVE `20,000/-. THEREFORE, IT WAS PLEADED THAT THE ADDITION MADE BY INVOKING PROVISIONS OF SECTION 40A (3) BY THE REVENUE MAY BE DELETED. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, VEHEMENTLY ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE AND REQUESTED FOR SUSTAINING THE ADDITION M ADE BY THE REVENUE AUTHORITIES. 4 ITA NO.2384/MDS/2014 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM TH E FACTS OF THE CASE, IT IS EVIDENT THAT THE ASSESSEE HAS PAID FREIGHT CHARGES FOR TRANSPORTATION OF GOODS IT DEALTS WITH NAMELY TOOR DALL. IT IS A NORMAL PRACTICE THAT CERTAIN AMOUNT OF ADVANCE ARE PAID TO THE OWNERS OF THE LORRY AND BAL ANCE PAYMENT IS MADE TO THE DRIVER FOR MEETING FUEL EXPE NSES AND THE DRIVERS WAGES. ACCORDINGLY, THE ASSESSEE HAS S PLIT THE PAYMENT AND RECORDED IN ITS LEDGER ACCOUNT MENTIONI NG THE DATE AND AMOUNT OF PAYMENT. AS FAR AS THE LEDGER A CCOUNT IS CONCERNED, IT IS NOT DISPUTED THAT ANY PAYMENT IS M ADE EXCEEDING `20,000/- IN A DAY TO THE SAME PARTY. FUR THER, THE REVENUE ALSO HAS NOT BROUGHT ANY COGENT MATERIALS T O PROVE THAT THE ASSESSEE HAS PAID IN EXCESS OF `20,000/- T O A SINGLE PARTY IN A SINGLE DAY. THE NATURE OF EXPENSE AND TH E GENUINESS OF THE EXPENDITURE INCURRED BY THE ASSESS EE ARE ALSO NOT DOUBTED. FURTHER IT IS A KNOWN FACT THAT THE GOODS ARE DELIVERED AT ODD HOURS AND THE PAYMENTS ARE REQ UIRED TO BE MADE TO THE DRIVERS OF THE LORRY TO MEET THE FUE L CHARGES ETC. THEREFORE, CONSIDERING THE FACTS AND CIRCUMST ANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT IN THE CASE OF 5 ITA NO.2384/MDS/2014 THE ASSESSEE PROVISIONS OF SECTION 40A(3) OF THE AC T CANNOT BE INVOKED. HENCE, WE HEREBY DIRECT THE LEARNED ASS ESSING OFFICER TO DELETE THE ADDITION OF `72,41,935/- MADE BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE AC T. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 2 ND AUGUST, 2016 SD/- SD/- ( . . . ) ( . ) (N.R.S.GANESAN) ( A.M OHAN ALANKAMONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 2 ND AUGUST, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF