Veer Chese Joy Gee, V. ITO, Berhampur

ITA 28/CTK/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7550 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 16-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B N DASH
• Assessee Lawyers: R P SAHU
• Keywords: Reason to believe
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO.28/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 VE ER GHESE JOY GEE,, M/S. MATHA AGENCIES, SOMANATH NAQGAR, 2 ND LINE, BERHAMPUR VS. ITO, WARD - 3, BERHAMPUR CIRCLE, BERHAMPUR PAN/GIR NO. ABBPG 3088 L (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI R.P.SAHU, AR REVENUE BY : SHRI B.N.DASH, DR DATE OF HEARING : 1 6 /11 / 2016 DATE OF PRONOUNCEMENT : 16 /11 / 2016 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A) - BERHAMPUR , DATED 26.11.2013 , FOR THE ASSESSMENT YEAR 2009 - 2010 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD CIT(A) WAS UNJUSTIFIED IN ENHANCING THE ASSESSMENT BY A F URTHER AMOUNT OF RS.7,10,000/ - IN ADDITION TO RS.4,50,000/ - AD D ED BY THE AO U/S.40A(3) OF THE I.T.ACT. 2 ITA NO.28/CTK/2014 ASSESSMENT YEAR :2009 - 2010 2. THAT SINCE THE PAYMENTS WERE GENUINELY MADE AGAINST GENUINE PURCHASES INTO THE BANK ACCOUNT OF MIDAS GROUP OF COMPANIES, NO ADVERSE INFERENCE IS TENABLE IN LAW. 3. THAT THE ORDERS PASSED BY THE FORUMS BELOW ARE OT HERWISE ILLEGAL AND BAD IN LAW. 4. THAT FOR THESE AMONG OTHER GROUNDS TO BE URGED AT THE TIME OF HEARING THE APPELLANT PRAYS FOR ADEQUATE RELIEF IN THE INTEREST OF EQUITY AND JUSTICE. 3. THE ASSESSEE HAS ALSO VIDE LETTER DATED 31.1.2015 RAISED THE ADDITIONAL GROUNDS, WHICH READ AS UNDER: 1. THAT WHILE REOPENING THE ASSESSMENT U/S.147 OF THE I.T.A CT THE AO HAS NEVER INDICATED IN ORDER SHEET THAT HE HAS REASON TO BELIEVE THAT INCOME HAS ES CAPED ASSESSMENT. ONLY CASH PAYMENTS EXCEEDING RS.20,000/ - WERE FOUND INDICATED IN THE ORDER SHEET. THIS MEANT THAT THE NORMS PRESCRIBED U/S.147 WAS NOT FULFILLED AND THEREBY RENDERED THE PROCEEDING U/S.147 AS ILLEGAL AND BAD IN LAW. 2. THAT UNDER THE FA CTS AND CIRCUMSTANCES OF THE CASE, THE AO WAS UNJUSTIFIED IN ADDING A SUM OF RS.4,50,000/ - AND THE CIT(A) ENHANCING THE INCOME FURTHER BY A SUM OF RS.7,10,000/ - U/S.40A(3) OF THE I.T.ACT. 4. WITH REGARD TO ADDITIONAL GROUNDS OF APPEAL, NO ARGUMENTS WERE MADE BY LD A.R. OF THE ASSESSEE, THEREFORE, NO ADJUDICATION IS REQUIRED. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS MADE PAYMENTS OF RS.11,60,000/ - EXCEEDING RS.20,000/ - IN CASH IN VIOLATION OF PROVISIONS OF S ECTION 40A(3) OF THE I.T.ACT TO MIDA GROUP OF COMPANIES. OUT OF THE SAID DEPOSITS, DEPOSITS OF RS.7,10,000/ - WERE 3 ITA NO.28/CTK/2014 ASSESSMENT YEAR :2009 - 2010 MADE TO MIDA GROUP OF COMPANIES BY ASSESSEES CUSTOMERS AND RS.4 ,50,000/ - WAS DEPOSITED BY THE ASSESSEE ITSELF. IN SUPPORT OF THE SAME, THE ASSESSEE FILED CONFIRMATION LETTERS FROM THE CUSTOMERS OF THE ASSESS EE REGARDING THE CASH DEPOSITS I N ACCOUNT OF MIDA GROUP OF COMPANIES THROUGH AXIS BANK ON BEHALF OF THE ASSESSEE, THE DETAILS OF WHICH ARE AS UNDER: SL.NO. NAME OF THE PARTY DATE AMOUNT 1. KERALA TYRE WORKS, GUNUPUR 15.4.2008 60,000 2. ANJU TYRE WORKS, RAYAGADA 23.5.2008 1,00,000 3. ANJU TYHRE WORKS, RAYAGADA 14.7.2008 1,00,000 4. HINDUSTANTYRES, P ARLAKHEMUNDI 11.12.2008 1,00,000 5/ ANJU TYRE WORKS, RAYAGADA 29.12.2008 1,00,000 6. HINDUSTAN TYRES, P ARLAKHEMUNDI 9.1.2009 50,000 7. RAYAGADA TRADERS, RAYAGADA 2.2.2009 1,00,000 8/ ANJU TYRE WORKS, RAYAGADA 26.2.2009 1,00,000 6. THE ASSESSING OFFICER ACCEPTED CASH DEPOSITS OF RS.7,10,000/ - BY THE ASSESSEES CUSTOMERS IN THE BANK ACCOUNT OF MIDA GROUP OF COMPANIES AFTER RECORDING OF THE STATEMENTS OF THE ASSESSEE BEFORE THE ADIT (INVESTIGATION), BHUBANESWAR. REGARDI NG CASH DEPOSITS OF RS.4,50,000 / - MADE BY THE 4 ITA NO.28/CTK/2014 ASSESSMENT YEAR :2009 - 2010 ASSESSEE ITSELF, THE EXPLANATION OF THE ASSESSEE WAS THAT NO CASH PAYME NTS WERE MADE DIRECTLY TO THE AGENT/PERSONS OF MIDAS GROUP. ONLY DEPOSITS WERE MADE INTO THE BANK ACCOUNT OF MIDAS GROUP. THEREFORE, THERE WAS NO VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. THE PROVISION WAS ENACTED TO CHECK UNWANTED EXPENDITUR E OR PURCHASES. CASH PAYMENTS MADE BY THE ASSESSEE ARE AGAINST GENUINE PURCHASE DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT AND PURCHASE REGISTER. BEING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER MADE AN ADDITION OF RS.4,50, 000/ - U/S.40A(3 ) OF THE ACT BY DISALLOWING THE EXPENDITURE. 7. ON APPEAL, LD CIT (A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER FOR AN ADDITION OF RS.4,50,000/ - MADE BY THE ASSESSING OFFICER AND ALSO ENHANCED THE DISALLOWANCE U/S.40A(3) OF THE A CT BY RS .7,10,000/ - WHICH AMOUNTS WERE PAID BY THE DEBTORS OF THE ASSESSEE IN CASH IN THE BANK ACCOUNT OF MIDAS GROUP ON THE GROUND THAT THE PAYMENT OF RS.7,10,000/ - MADE ON BEHALF OF THE ASSESSEE IN CASH TO MIDAS GROUP IS IN VIOLATION OF PROVISIONS OF SECTION 40A (3) OF THE ACT. 8. BEFORE ME, LD A.R. OF THE ASSESSEE RELIE D ON THE DECISION OF CUTTACK BENCH OF THIS TRIBUNAL IN THE CASE OF B.ASHOK KUMAR PATRA VS ITO IN ITA NO.515/CTK/2013 FOR A.Y. 2009 - 2010 ORDER DATED 2.2.2015, WHEREIN, THE TRIBUNAL HELD THAT THE ASSESSEE WHO WAS ENGAGED IN THE BUSINESS OF WHOLESALE AND RETAI L TRADE IN GROCERY AND SPICES MADE PAYMENT TO TRUCK 5 ITA NO.28/CTK/2014 ASSESSMENT YEAR :2009 - 2010 OWNERS, WHO BRING THE COMMODITIES FROM ALL OVER INDIA TO THE ASSESSEES SHOP AND GODOWN DURING NIGHT OF WEEK DAYS AND AS THE PAYMENT TO TRUCK OWNERS DID NOT EXCEED RS.20,000/ - AND AS THE ASSESSING OFFICER HAS NOT DOUBTED THE GENUINENESS OF FREIGHT EXPENSES, THE ASSESSEE HAD REASONABLE CA USE FOR MAKING THE CASH PAYMENT AND VAC A TED THE DISALLOWANCE. HE ALSO RELIED ON THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF ANUPAMA TELESERVICES VS ITO 2014) 268 CTR (GUJ) 121, WHEREIN, IT HAS BEEN HELD THAT THE ASSESSEE WAS COMPELLED TO MAKE CASH PAYMENT ON ACCOUNT OF PECULIAR SITUATION ON INSISTENCE UPON BY THE PRINCIPAL AND GENUINENESS AND IDENTITY OF THE PAYEE NOT BEING IN DISPUTE, THE DISALLOWANCE U/S.40A (3) OF THE ACT WAS NOT SUSTAINABLE. HENCE, HE PRAYED THAT THE ADDITION OF RS.11,60,000/ - SHOULD BE DELETED. 9. ON THE OTHER HAND, LD D.R. RELIED ON ORDERS OF LOWER AUTHORITIES. 10. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. I FIND THAT PAYMENT OF RS.7,10,000/ - WAS MADE BY DEBTORS OF THE ASSESSEE BY DEPOSIT OF CASH IN THE ACCOUNT OF MIDAS GROUP TO WHOM THE AMOUNT WAS DUE AND PAYABLE BY THE ASSESSEE. THE CONTENTION OF THE ASSESSEE IS THAT THE LIABILITY OF THE ASSESSEE TO MIDAS GROUP WAS TAKEN OVER BY HIS DEBTORS. THE DEBTORS HAD THEN AMDE PAYMENT IN CASH IN THE ACCOUNT OF MIDAS GROUP IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THUS, NO VIOLATION WAS MADE BY THE 6 ITA NO.28/CTK/2014 ASSESSMENT YEAR :2009 - 2010 A SSESSEE OF SECTION 4 0A(3) OF THE ACT AND NO DISALLOWANCE WAS WARRANTAED IN THE HANDS OF THE ASSESSEE. FURTHER, THE ASSESSEE DEPOSITED RS.4,50,000/ - IN THE ACCOUNT OF MIDAS GROUP WHOSE IDENTITY IS NOT IN DISPUTE OR DEBATE. ALL THE PAYMENTS MADE ARE ACCOUN TED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. THE GENUIN ENESS OF THE PAYMENT MADE OR THE EXPENDITURE INCURRED BY THE ASSESSEE BY MAKING SUCH PAYMENT IS NOT IN DISPUTE OR DEBATE. THEREFORE, THE DECISION OF ITAT CUTTACK BENCH IN THE CASE OF B.ASHOK KUMA R PATRA (SUPRA) AND THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF ANUPAMA TELESERVICES(SUPRA) ARE SQUARELY APPLICABLE TO THE FACTS OF THE CASE. THEREFORE, THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF R S.4,50,000/ - U/S.40A(3) OF THE ACT. I, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE DISALLOWANCE OF RS.11,60,000/ - U/S.40A(3) AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE. 11 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED . O RDER PRONOUNCE D IN THE OPEN COURT ON 1 6 /11 /2016 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 16 /11 /2016 B.K.PARIDA, SPS 7 ITA NO.28/CTK/2014 ASSESSMENT YEAR :2009 - 2010 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : VEER GHESE JOY GEE,, M/S. MATHA AGENCIES, SOMANATH NAQGAR, 2 ND LINE, BERHAMPUR 2. THE RESPONDENT. ITO, WARD - 3, BERHAMPUR CIRCLE, BERHAMPUR 3. THE CIT(A) , BERHAMPUR 4. CIT , BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//