Shri Ragvendra Singh Ranawat, UDAIPUR V. ITO, UDAIPUR

ITA 241/JODH/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78161 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 13-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 30-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Depreciation; Opportunity of being heard; Additional evidence
• Section: 40A(3); 194C; 32; 6

Judgement Text

[1] IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N. K. SAINI, ACCOUNTANT MEMBER I.T.A. NO. 241/JODH/2012 ASSESSMENT YEAR: 2008-09 SHRI RAGVENDRA SINGH RANAWAT VS. THE INCOME TAX OFF ICER PROP. M.I. MINERALS WARD 1(4), 3-PIPLESWAR MAHADEO KI GALI 6, NEW FATEHPURA, RAO JI KA HATTA, UDAIPUR. UDAIPUR. PAN: AFDPR 5504 G (APPELLANT) (RESPONDENT) I.T.A. NO. 252/JODH/2012 ASSESSMENT YEAR: 2008-09 THE INCOME TAX OFFICER, VS. SHRI RAGVENDRA SINGH R ANAWAT WARD 1(4), PROP. M.I. MINERALS 6, NEW FATEHPURA, 3-PIPLESWAR MAHADEO KI GALI UDAIPUR. RAO JI KA HATTA, UDAIPUR. PAN: AFDPR 5504 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI REVENUE BY : SHRI N.A. JOSHI, D.R. DATE OF HEARING : 13/05/2014 DATE OF PRONOUNCEMENT : 19/05/2014 ORDER PER N.K. SAINI, A.M. THESE CROSS APPEALS BY THE ASSESSEE AND THE DEPART MENT ARE DIRECTED AGAINST THE ORDER DATED 28/3/2012 OF LD. C IT(A), UDAIPUR. FIRST WE [2] WILL DEAL WITH THE APPEAL OF THE ASSESSEE IN I.T.A. NO. 241/JODH/2012, FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL. 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF TH E CASE IN CONFIRMING THE DISALLOWANCE OF HIRING AND TRANSPORT ATION CHARGES OF RS. 10,80,092/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40(A)(IA) OF THE ACT. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF TH E CASE IN CONFIRMING THE DEPRECIATION ON EXCAVATORS (L&T MACH INES I & II) RUNNING ON HIRE AT THE RATE OF 15% PER ANNUM AS ALL OWED BY THE ASSESSING OFFICER WHEREAS THE SAME IS ALLOWABLE AT THE RATE OF 30% PER ANNUM AS PER THE RATES OF DEPRECIATION PRESCRIB ED UNDER SECTION 32 OF THE ACT. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF TH E CASE IN CONFIRMING THE DISALLOWANCE OF DEPRECIATION ON EXCA VATORS (L&T MACHINES I&II) RUNNING ON HIRE OF RS. 2,24,726/- MA DE BY THE ASSESSING OFFICER UNDER SECTION 32 OF THE ACT. 4. THE APPELLANT RESERVES THE RIGHT TO ADD TO THE ABOVE GROUNDS OF APPEAL AND/OR TO AMEND, MODIFY AND TO DELETE ANY OF THEM ON OR BEFORE THE HEARING OF APPEAL. 2. VIDE GROUND NO. 1, THE GRIEVANCE OF THE ASSESSEE R ELATES TO THE CONFIRMATION OF DISALLOWANCE AMOUNTING TO RS. 10,80 ,092/- MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE I.T. ACT, 19 61 (HEREINAFTER REFERRED AS THE ACT). [3] 3. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THA T THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICE D THAT THE ASSESSEE HAD MADE PAYMENT OF RS. 9,73,551/- AS HIRE CHARGES AND RS. 1,45,875/- AS TRANSPORTATION CHARGES. HE ENQUIRED ABOUT DEDUCTION OF TDS AND DETAILS OF EXPENSES. IT WAS SUBMITTED BY THE ASSESSEE THAT THE RE WAS NO WRITTEN CONTRACT AND THE JOB WAS NOT IN THE NATURE OF CONTR ACT. IT WAS FURTHER STATED THAT THE ASSESSEE OBTAINED DECLARATION IN FORM NO. 15I FROM THE TRANSPORTERS FOR NON DEDUCTION OF TDS. THE ASSESSIN G OFFICER, HOWEVER, REJECTED THE ASSESSEES CONTENTION THAT PAYMENT WAS MADE AS SOON AS WORK WAS OVER. HE ALSO POINTED OUT THAT THE PART PA YMENT AND ADVANCE PAYMENT HAD BEEN MADE TO M/S KAMAL EARTHMOVERS, M.I . ENTERPRISES AND M.I. EARTHMOVERS. THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE ON THE ONE HAND, CLAIMED THAT HE WAS NOT COVERED UNDER THE PROVISIONS OF TDS AND ON THE OTHER HAND, HE OBTAINED FORM NO. 15I FROM PAYEES BUT NO SUCH FORM HAD BEEN PRODUCED DURING THE ASSESSMENT P ROCEEDINGS. HE, THEREFORE, DISALLOWED RS. 9,34,217/- OUT OF HIRE CH ARGES, SIMILARLY TRANSPORTATION CHARGES OF RS. 1,45,875/- WERE DISAL LOWED ON ACCOUNT OF NON DEDUCTION OF TDS U/S 40 (A)(IA) OF THE ACT. ACC ORDINGLY, DISALLOWANCE OF RS. 10,80,092/- WAS MADE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THERE WAS NO ORAL OR WRITTEN AGR EEMENT BETWEEN THE ASSESSEE AND THE OWNERS OF EARTHMOVERS AND THE TRAN SPORTERS, THEREFORE, PROVISIONS OF SECTION 194C OF THE ACT WERE NOT APPL ICABLE. IT WAS FURTHER [4] STATED THAT THE PAYMENT OF TRANSPORTATION CHARGES T O EACH PERSON WAS UNDER THE PERMISSIBLE LIMIT PRESCRIBED U/S 194C OF THE ACT, HENCE TDS WAS NOT APPLICABLE. RELIANCE WAS PLACED ON THE FOLLOWIN G CASE LAWS: (I) CIT VS. UNITED RICE LAND LTD. (2008) 174 TAXM AN 286 (P&H) (II) INCOME TAX OFFICER (TDS) VS. NHORUKA ROADLINE S LTD. (2009) 117 ITD 311 (MUM). 5. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT T HERE WAS NO ORAL OR WRITTEN AGREEMENT OF CONTRACT, WAS NOT ACCEPTABLE AS THE ASSESSEE HAD A CONTRACT FOR CARRYING OUT THE WORK, WHICH HAD BEEN EXECUTED BY THE OWNER OF THE MACHINERY IN THE MINES AND THE PAYMENT WAS S PECIFICALLY MADE FOR THE EARTH MOVING ACTIVITY AND TRANSPORTATION TO THE OWNERS OF THE MACHINERY. THE LD. CIT(A) WAS OF THE VIEW THAT THE CONDUCT OF THE ASSESSEE & THE PAYEE AND THE NATURE OF WORK EXECUTE D, MADE IT CLEAR THAT THE TRANSACTIONS FELL UNDER THE PROVISIONS OF SECTI ON 194C OF THE ACT. HE ALSO POINTED OUT THAT THE ASSESSEE HIMSELF HAD STAT ED THAT FORM NO. 15I WERE OBTAINED FROM THE PAYEES, WHICH SUPPORTED THE ASSESSING OFFICERS VIEW THAT THERE WAS CONTRACT BETWEEN THE ASSESSEE A ND THE PAYEES. AS REGARDS TO THE SUBMISSIONS OF THE ASSESSEE THAT FOR TRANSPORTATION CHARGES, TRUCK NUMBER HAD BEEN GIVEN AND THE PAYMENT WAS BEL OW THE PRESCRIBED LIMIT, THE LD. CIT(A), OBSERVED THAT THE ASSESSEE C LAIMED TO HAVE OBTAINED FORM NO. 15I BUT THOSE WERE NOT PRODUCED B EFORE THE ASSESSING OFFICER, WHICH SHOWED THAT THESE PAYMENTS WERE LIAB LE FOR TAX [5] DEDUCTION AT SOURCE. THE LD. CIT(A) ALSO OBSERVED T HAT THE DECISIONS RELIED BY THE ASSESSEE WERE DISTINGUISHABLE ON FACTS. ACCO RDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER WAS UPHELD. NOW THE A SSESSEE IS IN APPEAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMI TTED THAT THE EXPENSES INCURRED FOR EACH PERSON WERE BELOW RS. 20,000/-, A S SUCH, THOSE WERE OUTSIDE THE PURVIEW OF THE PROVISIONS OF SECTION 19 4C OF THE ACT BUT NEITHER THE ASSESSING OFFICER NOR THE LD. CIT(A) APPRECIATE D THIS FACT EVEN WHEN THE DETAILS WERE FURNISHED BY THE ASSESSEE. 7. IN HIS RIVAL SUBMISSIONS, THE LEARNED D.R. SUPPO RTED THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN TH E PRESENT CASE, THE MAIN CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE WAS THAT THE PAYMENTS ON ACCOUNT OF TRANSPORTATION CHARGES AND JOB WORK F OR EARTH MOVING WAS NOT SUBJECT TO DEDUCTION OF TDS BECAUSE THE PAYMENT S MADE TO EACH PERSON WAS BELOW RS. 20,000/- AND THE TRANSACTIONS DID NOT FALL UNDER THE PROVISIONS OF SECTION 194C OF THE ACT BUT THIS FACT HAS NEITHER BEEN CONSIDERED BY THE ASSESSING OFFICER NOR BY THE LD. CIT(A). THE SAID CONTENTION WAS NOT REBUTTED. WE, THEREFORE, SET ASI DE THIS ISSUE AND REMAND THE SAME TO THE FILE OF THE ASSESSING OFFICE R TO BE DECIDED AFRESH [6] IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REAS ONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 9. THE NEXT ISSUE VIDE GROUND NOS. 2 AND 3 RELATES TO THE CONFIRMATION OF DISALLOWANCE OF DEPRECIATION ON EXCAVATORS. 10. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE ASSESSEE CLAIMED DEPRECIATION @ 30% ON EXCAVATORS (L&T MACHINE). HE WAS OF THE VIEW THAT THE ASSESSEE HAD CLAIMED EXCESS DEPRECIATION B Y RS. 2,24,726/-. THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. THE L D. CIT(A) ALSO, ON APPEAL OF THE ASSESSEE, CONFIRMED THE ACTION TAKEN BY THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL. 11. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT EXCAVATOR (L&T MACHINE) WAS RUNNING ON HIRE, THEREFORE, THE D EPRECIATION WAS ALLOWABLE @ 30%. ALTERNATIVELY, IT WAS STATED THAT THE MATTER MAY BE SENT BACK TO THE ASSESSING OFFICER TO BE DECIDED IN ACCO RDANCE WITH LAW. THE LEARNED D.R. DID NOT OBJECT IF THE LIMITED ISSU E IS SENT BACK TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 12. WE, THEREFORE, BY CONSIDERING THE SUBMISSIONS O F BOTH THE PARTIES AND THE MATERIAL ON RECORD, DEEM IT APPROPRIATE TO SEND THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO BE ADJUDICATED AFTER PROPER VERIFICATION, IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REAS ONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. [7] 13. NOW, WE WILL DEAL WITH DEPARTMENTAL APPEAL IN I .T.A. NO. 252/JODH/2012. FIRST ISSUE IN THIS APPEAL RELATES T O DELETION OF DISALLOWANCE OF RS. 44,78,809/- MADE BY THE ASSESSING OFFICER U/ S 40A(3) OF THE ACT. 14. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT T HE ASSESSEE WAS HIRING EARTHMOVERS AND DOING CONTRACT WORK. HE PURCHASED F UEL FROM M/S R.K. FUEL, UMATHI AND M/S TIRUPATI AUTOMOBILES, BHAGWAND A. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE PAYMENT OF MORE RS. 20,000/- IN CASH TOTALLING TO RS. 44,13,809/- TO M/S R.K. FUEL AND RS. 65,000/- TO M/S TIRUPATI AUTOMOBILES. HE ALSO OBSERVED THAT THE ASS ESSEE HAD SHOWN THE PAYMENT ON PIECEMEAL BASIS AND CLAIMED THAT EACH P AYMENT WAS LESS THAN RS. 20,000/- WHILE M/S R.K. FUEL HAD SHOWN THE WHOLE CONSOLIDATED PAYMENT AT A TIME, IN ITS BOOKS OF ACCOUNT. THE ASS ESSEE EXPLAINED THAT HIS SITE OF WORK WAS IN REMOTE VILLAGE WHERE NO BAN KING FACILITIES WERE AVAILABLE AND M/S R.K. FUEL DID NOT ACCEPT THE OUTS TATION CHEQUES, THEREFORE, THE ASSESSEE WAS BOUND TO PURCHASE THE F UEL IN CASH. IT WAS ALSO STATED THAT ONLY ONE PETROL PUMP WAS LOCATED N EARBY THE SITE OF MINING AREA, THEREFORE, EXEMPTION UNDER RULE 6DD(G) OF THE I.T. RULES, 1962 WAS AVAILABLE TO THE ASSESSEE. IT WAS FURTHER STATED TH AT THE DISTANCE OF PETROL PUMP AND SITE OF WORK WAS ABOUT 6 TO 7 K.M., SO THE IMPREST SYSTEM WAS FOLLOWED AND THE VARIOUS PAYMENTS MADE BY THE VEHIC LE DRIVERS WERE ADJUSTED AT THE END OF THE DAY BY ISSUING ONE BILL BY THE RECIPIENT. THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE AS SESSEE BY STATING THAT THE TRANSACTION WAS NOT COVERED UNDER RULE 6DD(G) O F THE I.T. RULES AS M/S [8] R.K. FUEL HAD BANK ACCOUNT IN IDBI RAJASMAND WHERE THE ASSESSEE HAD ALSO THE BANK ACCOUNT, IN WHICH THE SAME CHEQUES HA D BEEN PAID BY THE ASSESSEE. SO, IT COULD NOT BE SAID THAT THERE WERE NO BANKING FACILITIES. IT WAS ALSO POINTED OUT THAT THE ASSESSEE HAD NOT MADE THE PAYMENT ON THE DAY WHEN THE DIESEL WAS PURCHASED, IT HAD BEEN PAI D AFTER SOME DAYS AND M/S R.K. FUEL HAD A BANK ACCOUNT IN IDBI RAJASMAND WHERE THE ASSESSEE HAD ALSO THE BANK ACCOUNT. THE ASSESSING OFFICER AC CORDINGLY, MADE THE ADDITION OF RS. 44,78,809/- BY INVOKING THE PROVISI ONS OF SECTION 40A(3) OF THE ACT. 15. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND SUBMITTED THAT NO CASH PAYMENT EXCEEDING RS. 20 ,000/- HAD BEEN MADE BY THE ASSESSEE. IT WAS FURTHER STATED THAT TH E BOOKS OF ASSESSEE HAD NOT BEEN REJECTED BUT HAD BEEN ACCEPTED BY THE ASSESSING OFFICER. IT WAS FURTHER STATED THAT UNTIL AND UNLESS THE THIRD PARTIES WERE CALLED BY THE ASSESSING OFFICER WITH THEIR BOOKS, VOUCHERS, ACKNO WLEDGEMENTS OF GOODS, CHALLANS AND OTHER DOCUMENTS IN SUPPORT OF MODE OF PAYMENTS AND EVIDENCES OF SUCH PAYMENTS, NO RELIANCE COULD BE PL ACED BY THE ASSESSING OFFICER MERELY ON THE STATEMENTS COLLECTED FROM M/S R.K. FUEL AND M/S TIRUPATI AUTOMOBILES. RELIANCE WAS PLACED ON THE FO LLOWING CASE LAWS: (I) PRATHANA CONSTRUCTION (P) LTD. VS. DCIT-(2001 ) 70 TTJ 122 (AMHD-T) (II) JAIKISHAN RS. AGARAWAL VS. ACIT (2000) 66 TT J 701 (BANG-T). [9] (III) SMT. PURNIMAL BERI VS. DCIT (2003) 264 ITR 54 (AMRITSAR-T) TM. IT WAS CONTENDED THAT CEILING LIMIT OF RS. 20,000/- WOULD APPLY TO EACH PAYMENT AND NOT ON AGGREGATE PAYMENT AS DECIDED BY THE HON'BLE ORISSA HIGH COURT IN THE CASE OF CIT VS. M/S ALLOO SUPPLY CO. (1980) 121 ITR 680 (ORISSA). IT WAS ALSO STATED THAT THE CASE OF T HE ASSESSEE WAS COVERED UNDER RULE 6DD(G) AS DECIDED BY THE HON'BLE MADRAS HIGH COURT IN THE CASE OF K.K.S.K. LEATHER PROCESSORS PVT. LTD. 292 I TR 669 (MAD). 16. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE, OBSERVED THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE REVEALED THAT EACH PAYMENT WAS BELOW RS. 20,000/- AND SUCH BOOKS HAD N OT BEEN REJECTED. HE FURTHER OBSERVED THAT THE RECIPIENT HAD SHOWN TH E CASH PAYMENTS IN THEIR BOOKS OF ACCOUNT, EXCEEDING RS. 20,000/- IN C ONSOLIDATED ENTRY. HOWEVER, IT WAS EXPLAINED THAT THE PAYMENTS WERE MA DE BY THE ASSESSEE IN PIECEMEAL BELOW RS. 20,000/- EACH AS NOTED ON TH E REVERSE OF THE RECEIPTS. THE LD. CIT(A) POINTED OUT THAT THE PROVI SO TO SECTION 40A(3) OF THE ACT CARVES OUT CERTAIN EXEMPTION AND IN CERTAIN PRESCRIBED CIRCUMSTANCES HAVING REGARD TO THE CONSIDERATION OF THE BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTS, CASH PAYMENT C OULD BE MADE OTHERWISE THAN ACCOUNT PAYEE CHEQUE. HE FURTHER OBS ERVED THAT THE ASSESSEES SITE OF WORK WAS IN A VILLAGE, WHICH WAS NOT SERVED BY ANY BANKING FACILITY, THEREFORE, THE ASSESSEES CASE WA S COVERED UNDER RULE 6DD(G) OF THE I.T. RULES, WHICH PROVIDES THAT PAYME NT MADE IN VILLAGE OR [10] TOWN, WHICH ON THE DATE OF SUCH PAYMENT, WAS NOT SE RVED BY ANY BANK TO ANY PERSON, WHO ORDINARILY RESIDE OR WAS CARRYING H IS BUSINESS IN SUCH VILLAGE OR TOWN, THE SAME WAS ALLOWABLE. THE LD. CI T(A) OBSERVED THAT THE DIESEL WAS REQUIRED AT EARLY MORNING AND LATE NIGHT HOURS AND THE CHEQUES WERE NOT ACCEPTABLE TO THE RECIPIENT, THEREFORE, TH E ASSESSEES CASE WAS COVERED UNDER RULE 6DD(G) OF THE RULES. HE ALSO OBS ERVED THAT THE ASSESSEE HAD EXPLAINED THE REASON OF COMMERCIAL EXP EDIENCY AND NECESSITY FOR MAKING CASH PAYMENTS, WHICH WERE RELE VANT FACTORS TO BE CONSIDERED. THE LD. CIT(A) DELETED THE ADDITION MAD E BY THE ASSESSING OFFICER. NOW THE DEPARTMENT IS IN APPEAL. 17. THE LEARNED D.R. SUPPORTED THE ORDER OF THE ASS ESSING OFFICER AND FURTHER SUBMITTED THAT COPIES OF ACCOUNTS WERE RECE IVED BY THE ASSESSEE FROM THE THIRD PARTIES WHICH CLEARLY REVEALED THAT THE PAYMENTS WERE EXCEEDING RS. 20,000/-. THEREFORE, THE ASSESSING OF FICER RIGHTLY DISALLOWED U/S 40A(3) OF THE ACT AND MADE THE ADDITION. 18. IN HIS RIVAL SUBMISSIONS, THE LEARNED COUNSEL F OR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT( A). 19. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, THE CONTENTION OF THE ASSESSEE THAT BANKING F ACILITY WAS NOT AVAILABLE AT ASSESSEES SITE WHERE THE PAYMENTS WERE MADE, HA D NOT BEEN REBUTTED AT ANY STAGE, THEREFORE, THE PAYMENTS MADE IN CASH EXCEEDING RS. [11] 20,000/- IF ANY WAS COVERED UNDER RULE 6DD(G) OF TH E I.T. RULES, 1962. IN THE PRESENT CASE, THE MAIN CONTENTION OF THE ASSESS EE WAS THAT EACH INDIVIDUAL PAYMENT WAS BELOW RS. 20,000/-. THE SAID CONTENTION WAS ALSO NOT REBUTTED BY BRINGING ANY COGENT MATERIAL ON REC ORD. IN OUR OPINION, THE VIEW TAKEN BY THE LD. CIT(A) DOES NOT REQUIRE ANY I NTERFERENCE ON OUR PART. IN THAT VIEW OF THE MATTER, WE DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 20. THE NEXT ISSUE VIDE GROUND NO. 2 OF THE DEPARTM ENTAL APPEAL RELATES TO DELETION OF LUMP SUM DISALLOWANCE OF RS. 3.00 LA CS MADE BY THE ASSESSING OFFICER. 21. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO PRODUCE DETAILS OF EXPENSE S ALONGWITH BILLS AND VOUCHERS. THE ASSESSING OFFICER OBSERVED THAT THE A SSESSEE DID NOT PRODUCE THE BILLS AND VOUCHERS IN RESPECT OF EXPENS ES CLAIMED UNDER THE HEAD SALARY OF DRIVERS, HELPERS, MACHINE OPERATORS ETC.. THE EXPLANATION OF THE ASSESSEE WAS THAT THE NATURE AND PLACE OF WORK WAS SUCH THAT IT WAS NOT POSSIBLE TO OBTAIN SUCH BILLS. THE ASSESSING OF FICER DID NOT FIND MERIT IN THE EXPLANATION OF THE ASSESSEE AND MADE THE DISALL OWANCE OF RS. 3.00 LACS ON LUMP SUM BASIS. 22. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R TO THE LD. CIT(A) AND SUBMITTED THAT HE HAD MAINTAINED THE COMPLETE R ECORDS OF PAYMENT OF SALARY TO DRIVERS, MACHINE OPERATORS AND HELPERS AS WELL AS VOUCHERS OF TRANSPORTATION AND OTHER EXPENSES. IT WAS FURTHER S UBMITTED THAT THE [12] PAYMENTS WERE DULY ACKNOWLEDGED BY THE RECIPIENT, W HO WERE MOST TECHNICALLY SCALED IN THEIR JOB BUT WERE NOT FULLY LITERATE EXCEPT TO SIGN THE PAYMENTS VOUCHERS. THEREFORE, INTERNAL VOUCHERS WER E PREPARED AND THE PERSONS WHO RECEIVED THE PAYMENT HAD SINGED ON THE PAYMENT RECEIPT. THEREFORE, GENUINENESS OF THE PAYMENT COULD NOT BE DOUBTED. THE ASSESSEE ALSO SUBMITTED APPLICATION UNDER RULE 46A ENCLOSING THEREWITH SALARY PAYMENT SHEETS AND TRANSPORTATION EXPENSES VOUCHERS FOR ADMISSION AS ADDITIONAL EVIDENCE BY CLAIMING THAT T HE ASSESSING OFFICER HAD NOT SPECIFICALLY ASKED TO PRODUCE SUCH RECORDS. 23. THE LD. CIT(A) FORWARDED THOSE DETAILS TO THE A SSESSING OFFICER FOR HIS REMAND REPORT. IN THE SAID REPORT, THE ASSESSIN G OFFICER STATED AS UNDER:- IN THIS REGARD, IT IS SUBMITTED THAT VIDE ORDER SH EET ENTRY DATED 24/12/2010, I WAS SPECIFICALLY ASKED TO PRODUCE BIL LS/VOUCHERS RELATING TO DRIVERS AND HELPERS SALARY RS. 9,04,000 /-, OPERATORS SALARY RS. 4,67,000/-, SALARY EXPENSES RS. 2,40,000 /- AND BILLS OF TRANSPORTATION EXPENSES RS. 1,45,875. THE ASSESSEE HAD NOT PROVIDED THE SAME DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NOW ALSO THE ASSESSEE HAS PRODUCED TRANSPORTATION E XPENSES BILLS FOR RS. 21,957/- ONLY INSTEAD OF RS. 1,23,918 /-. REGARDING DRIVERS AND HELPERS SALARY, OPERATORS SALARY, AND S ALARY EXPENSES, THE ASSESSEE HAS PRODUCED PHOTO COPY OF S ALARY- SHEET ONLY. ON PERUSAL OF SALARY SHEETS, IT IS NOTICED THAT SOM E DRIVERS ARE ILLITERATE AND PUT THEIR THUMB IMPRESSION IN THE SA LARY SHEETS. IN THE CASES OF WHERE SIGNATURES SHOWN IN SALARY SHEET S ALSO AGAIN HIDE BY THUMB IMPRESSION IN ALL CASES OF DRIVERS AN D HELPERS. HENCE, IN THIS REGARD, IT IS SUBMITTED THAT ADDITIO NAL EVIDENCE PRODUCED BY THE ASSESSEE MAY BE ACCEPTED, HOWEVER, IT IS [13] REQUESTED THAT THE ISSUE OF DISALLOWANCE MAY KINDLY BE DECIDED ON MERITS. THE ASSESSEE IN HIS REJOINDER TO THE REMAND REPORT OF THE ASSESSING OFFICER STATED THAT HE HAD FILED DETAILS ON SALARY PAYMENT SHEETS, WHICH WERE EXAMINED BY THE ASSESSING OFFICER AND FOUND TO BE GENUINE. IT WAS FURTHER STATED THAT CERTAIN COPIES OF TRANSPORTATIO N EXPENSES WERE FILED AND THE ASSESSING OFFICER DID NOT INSIST ON PRODUCING A LL THE EVIDENCES/VOUCHERS FOR PAYMENT OF TRANSPORTATION EX PENSES DURING THE ASSESSMENT PROCEEDINGS, THE SAME WERE FURNISHED BEF ORE THE LD. CIT(A). 24. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND THE REMAND REPORT OF THE ASSESSING OFFICER, ADM ITTED THE SALARY SHEET AS AN EVIDENCE UNDER RULE 46A BY OBSERVING THAT THE ASSESSEE COULD NOT SUBMIT THOSE SHEETS AS THE ASSESSING OFFICER DID NO T SPECIFICALLY ASKED TO PRODUCE THE SAME. THE LD. CIT(A) FURTHER OBSERVED T HAT THE SALARY PAYMENTS SHEETS AND VOUCHERS FOR TRANSPORT EXPENSES FURNISHED BY THE ASSESSEE REVEALED THAT THE PAYMENTS HAD BEEN DULY A CKNOWLEDGED EITHER BY SIGNATURES OR BY PUTTING THUMB IMPRESSION AND MO REOVER, IT COULD NOT BE SAID THAT WITHOUT INCURRING SUCH EXPENSES, WORK AT MINES COULD BE EXECUTED BY THE ASSESSEE. HE ALSO POINTED OUT THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, ACCEPTED THAT THE ASSESSEE HAD SHOWN BETTER NET PROFIT RATE FOR THE YEAR UNDER CONSIDERATION IN COM PARISON TO THE EARLIER YEARS. HE, THEREFORE, DELETED THE LUMP SUM DISALLOW ANCE MADE BY THE ASSESSING OFFICER. NOW THE DEPARTMENT IS IN APPEAL. [14] 25. THE LEARNED D.R. SUPPORTED THE ORDER OF THE ASS ESSING OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER DATED 31/12/2010. 26. IN HIS RIVAL SUBMISSIONS, THE LEARNED COUNSEL F OR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT( A). 27. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON TH E RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE ASSESSING OFFICER MADE HE DISALLOWANCE OUT OF THE SALARY EXPENSES FOR THE REASON THAT THE ASSESSE E COULD NOT PRODUCE SALARY SHEETS. LATER ON, THE ASSESSEE EXPLAINED THE REASON FOR NOT PRODUCING THE SALARY SHEET BEFORE THE ASSESSING OFF ICER AND FURNISHED THE SAME BEFORE THE LD. CIT(A) WHO ADMITTED UNDER RULE 46A OF THE I.T. RULES, 1962. THOSE SALARY PAYMENT SHEETS AND VOUCHE RS FOR TRANSPORT EXPENSES REVEALED THAT THE PAYMENTS HAD BEEN DULY A CKNOWLEDGE BY THE RECIPIENT EITHER BY SIGNATURE OR BY PUTTING THUMB I MPRESSION. IN THE PRESENT CASE, THE ASSESSING OFFICER DID NOT BRING ANY MATER IAL ON RECORD TO SUBSTANTIATE THAT THE WORK WAS NOT EXECUTED BY THE ASSESSEE, EVEN THE ASSESSING OFFICER HIMSELF ADMITTED THAT THE ASSESSE E HAD SHOWN NET PROFIT RATE OF 2.18% FOR THE YEAR UNDER CONSIDERATION IN C OMPARISON TO 1.32% IN THE EARLIER YEAR. THEREFORE, NET PROFIT RATE SHOWN BY THE ASSESSEE WAS BETTER IN COMPARISON TO THE PRECEDING YEAR AND NO S PECIFIC DEFECT WAS POINTED OUT BY THE ASSESSING OFFICER IN THE BOOKS O F ACCOUNT MAINTAINED BY [15] THE ASSESSEE IN THE REGULAR COURSE OF BUSINESS. THE REFORE, THE IMPUGNED DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS RIGH TLY DELETED BY THE LD. CIT(A). 28. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES WHILE THE APPEAL OF THE DEPARTMENT IS DISM ISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MAY, 2014). SD/- SD/- ( HARI OM MARATHA ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMB ER DATED: 19 TH MAY, 2014 *RANJAN COPY FORWARDED TO: 1. APPELLANT- 2. RESPONDENT- 3. CIT(A) 4. CIT 5. D.R. BY ORDER ASSISTANT REGISTRAR JODHPUR