Sri Nasirkhan A. Pathan., Bangalore V. Income Tax Officer, Ward-2(2), Belgaum, Belgaum

ITA 29/PAN/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93443 (ITAT-PANAJI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B BARTHAKUR LD
• Assessee Lawyers: P DINESH
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER ITA N O . 29 /PNJ/20 15 : (A.Y 2008 - 09 ) SHRI NASIRKHAN A. PATHAN PROP : SOLAR BATTERY, NO. 19, CANTONMENT COMPLEX, P.B. ROAD, BELGAUM PAN : ABUPP5833B ( APPELLANT) VS. INCOME TAX OFFICER, WARD 2(2), BELGAUM (RESPONDENT) ASSESSEE BY : P. DINESH, ADV. REVENUE BY : B. BARTHAKUR, LD. DR DATE OF HEARING : 03 / 06 /201 5 DATE OF PRONOUNCEMENT : 03 / 06 /201 5 O R D E R 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), BELGAUM IN APPEAL NO. 627/BGM/2010 - 11 DT. 3.11.2014 FOR THE A.Y 2008 - 09. SHRI P. DINESH, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI B. BARTHAKUR, LD. DR REPRESENTED ON BEHALF OF THE REVENUE. 2. IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE IS A DEALER OF AUTOMOBILE BATTERIES. IT WAS THE SUBMISSION THAT HE ALSO UND ERTAKES REPAIRS OF AUTO BATTERIES. IT WAS THE SUBMISSION THAT IN THE COURSE OF THE ASSESSMENT, IT WAS NOTICED THAT THE ASSESSEE HAD MADE PAYMENTS IN CASH IN EXCESS OF RS. 20,000/ - PER DAY , C ONSEQUENTLY, THE PROVISIONS OF SEC. 40A(3) OF THE ACT HAD BEEN INVOKED. IT WAS THE SUBMISSION THAT THE TOTAL DISALLOWANCE U/S 40A(3) WAS TO AN EXTENT OF RS.5,51,049/ - . IT WAS THE SUBMISSION THAT OF THE SAID PAYMENTS MADE, 4 2 ITA NO. 29/PNJ/2015 (A.Y : 2008 - 09) PAYMENTS NAMELY PAYMENT OF RS. 22,897/ - ON 16.6.2007, RS.90,000/ - ON 27.10.2007 AND RS. 24,968/ - ON 3.11.2007 FELL ON SATURDAYS AND THE PAYMENTS HAVE BEEN MADE AFTER THE BANKING HOURS. IT WAS THE SUBMISSION THAT THAT CONSEQUENTLY THE PROVISIONS OF SEC. 40A(3) WAS NOT LIABLE TO BE ATTR ACTED IN RESPECT OF THE SAID PAYMENTS. SIMILARLY, AN AMOUNT OF RS. 35,000/ - WAS PAID ON 30.1.2008 WHICH WAS WEDNESDAY AND IT WAS A NATIONAL HOLIDAY ON ACCOUNT OF MUHARRAM. IT WAS THE SUBMISSION THAT THIS WAS ALSO NOT LIABLE TO BE DISALLOWED U/S 40A(3) OF THE ACT. 3. IT WAS FURTHER SUBMISSION THAT THE ASSESSEE BEING LOCATED IN BELGAUM, THE ASSESSEE USED TO SEND HIS AGENT TO HIS CUSTOMERS WHO ARE ON THE OUTSKIRTS OF HUBLI, DHARWAD ETC. THIS AGENT OF THE ASSESSEE WOULD COLLECT THE OLD BATTERIES, EXCHANGE THEM FOR NEW BATTERIES AND FOR THE OLD BATTERIES, THE ASSESSEE WOULD ALSO PAY AMOUNTS VARYING FROM RS. 1,000/ - TO RS. 2,000/ - PER BATTERY DEPENDING UPON THE CONDITION OF THE BATTERY. IT WAS THE SUBMISSION THAT THE CASH PAYMENTS WAS ON ACCOUNT OF PURCHASE S OF THE OLD BATTERIES AS ALSO THE COMMISSION IN RESPECT OF THE SALE OF THE NEW BATTERIES. IT WAS THE SUBMISSION THAT CONSEQUENTLY THE PAYMENTS FELL WITHIN THE EXEMPTION PROVIDED UNDER RULE 6DD(K) OF THE INCOME TAX RULES AND NO DISALLOWANCE WAS CALLED FOR . IT WAS THE SUBMISSION THAT THE DISALLOWANCE MADE BY THE AO AND AS CONFIRMED BY THE LD. CIT(A) MAY BE DELETED. 4. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. AO & LD. CIT(A). IT WAS THE SUBMISSION THAT THE CLAIM OF EXEMPTION PROVID ED UNDER RULE 6DD(K) AND THE PAYMENTS MADE THROUGH THE AGENT WAS A TOTALLY NEW CLAIM AND IT WAS NEVER RAISED BEFORE ANY OF THE LOWER AUTHORITIES. 5. IN REPLY, THE LD. AR DREW MY ATTENTION TO THE WRITTEN SUBMISSION FILED BEFORE THE LD. CIT(A). AT PG. 2 OF THE SAME, IN PARA 8 IT WAS SUBMITTED THAT THE 3 ITA NO. 29/PNJ/2015 (A.Y : 2008 - 09) ISSUE OF THE PAYMENT MADE TO THE AGENT AND RULE 6DD(K) HAS SPECIFICALLY BEEN SUBMITTED. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. AT THE OUTSET, ADMITTEDLY THE PAYMENTS MADE ON SATURDAYS AFTER BANKING HO URS AND ON NATIONAL HOLIDAYS CANNOT BE CONSIDERED FOR DISALLOWANCE U/S 40A(3) AS THE SAME WOULD FALL UNDER THE EXEMPTIONS PROVIDED IN BUSINESS EXPEDIENCIES AND OTHER RELEVANT FACTORS. FURTHER, ADMITTEDLY THE REVENUE HAS NOT BEEN ABLE TO SHOW THAT THE CL AIM OF THE ASSESSEE THAT THE PAYMENTS HAVE BEEN MADE TO THE AGENT AND THE SAME FELL WITHIN EXEMPTION UNDER RULE 6DD(K) IS FALSE. IN FACT, THIS CLAIM SEEMS TO HAVE BEEN RAISED EVEN BEFORE THE LD. CIT(A) AND LD. CIT(A) HAS ALSO NOT ADJUDICATED ON THE SAME B UT HAS PURELY GONE ON LEGAL PRINCIPLES. LAW IS APPLICABLE ONCE THE FACTS ARE ASCERTAINED. HERE THE FACTS AND CIRCUMSTANCES AND THE BUSINESS EXPEDIENCY FOR THE PAYMENT IN CASH HAS BEEN SUBSTANTIALLY EXPLAINED AND THE SAME IS ALSO THE ACCEPTED BUSINESS PRA CTICE AND THE SAME ALSO FELL WITHIN THE EXEMPTIONS PROVIDED UNDER RULE 6DD(K) OF THE INCOME TAX RULES. IN THE CIRCUMSTANCES, CONSIDERING THE FACTS OF THE ASSESSEES CASE THE ADDITIONS MADE BY THE LD. AO BY INVOKING THE PROVISIONS OF SEC. 40A(3) OF THE ACT AND AS CONFIRMED BY THE LD. CIT(A) STANDS DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 03/06/2015. S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 0 3 /06/ 201 5 *SSL* 4 ITA NO. 29/PNJ/2015 (A.Y : 2008 - 09) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 5 ITA NO. 29/PNJ/2015 (A.Y : 2008 - 09) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 03/06/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 03/06/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER N/A JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER N/A JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 0 3 /06/2015 SR.PS 6. DATE OF PRONOUNCEMENT 03/06/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 0 3 /06/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER