Shri Nand Ji Mishra, Ropar V. ITO, Ropar

ITA 294/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77117 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 25-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Section: 40A(3); 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.294 /CHD/2014 ASSESSMENT YEAR : 2010-11 SHRI NAND JI MISHRA, VS. THE INCOME TAX OFFICE R, CONTRACTOR, NEAR ROYAL PALACE, WARD 2(2), NANGAL ROAD, ROPAR. ROPAR. PAN: AIMPM6159L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SINGH RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 20.05.2014 DATE OF PRONOUNCEMENT : 29.05.2014 O R D E R PER SUSHMA CHOWLA, J.M. : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS), CHANDIGARH DA TED 31.01.2014 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF IN COME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL : 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN LAW AND FACTS IN UPHOLDING THE DISALLOWANCE OF RS.4 ,70,241/- MADE BY APPLYING THE PROVISIONS OF SECTION 40A(3) DISREG ARDING THE EXPLANATIONS RENDERED WHICH IS ILLEGAL, ARBITRARY A ND UNJUSTIFIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS HAS FURTHER ERRED IN ESTIMATING THE HOUSEHOLD EXPENDITURE OF TH E ASSESSEE AT RS.10,000/- PER MONTH RESULTING IN AN ADDITION OF R S.90,000/- WHICH IS ARBITRARY AND UNJUSTIFIED. 2 3. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS FURTHER ERRED IN UPHOLDING THE CHARGING OF INTEREST UNDER S ECTION 234-B OF THE ACT WHICH IS NOT CHARGEABLE IN THE FACTS OF THE CASE. 3. THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS) IS ERRONEOUS, ARBITRARY, OPPOSED TO LAW AND FACTS OF T HE CASE ID IS, THUS, UNTENABLE. 3. THE ISSUE IN GROUND NO.1 RAISED BY THE ASSESSEE IS AGAINST DISALLOWANCE MADE UNDER SECTION 40A(3) OF THE ACT A MOUNTING TO RS.4,70,241/-. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE WAS ENGAGED IN THE CONSTRUCTION OF ROADS AND HAD DECLARED GROSS RECEIP TS OF RS.2.64 CRORES DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD DECLARED NET PROFIT OF RS.10,01,224/- ON THE SAID RECEIPTS. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD MADE CERTAIN PAYMENTS IN CASH IN EXCESS OF RS.20,00 0/- FOR PURCHASES/EXPENSES, TOTALING RS.4,70,241/-. THE AS SESSEE WAS SHOW CAUSED TO JUSTIFY ITS CLAIM IN VIEW OF THE PROVISIO NS OF SECTION 40A(3) OF THE ACT. THE PLEA OF THE ASSESSEE WAS THAT HE WAS INVOLVED IN WORKS EXECUTION DURING THE DAY AND IN THE EVENING WHEN HE WAS GOING FOR PURCHASES THE ASSESSEE HAD TO PAY CASH TO THE SELLE R AS THE BANKS HAD CLOSED. THE ASSESSING OFFICER NOTED THAT ASSESSEE S CONTENTION DID NOT FALL UNDER ANY OF THE EXCEPTIONS PROVIDED IN RULE 6 DD OF THE INCOME TAX RULES AND AS THE ASSESSEE HAD MADE CASH PAYMENTS IN CONTRAVENTION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT, THE AD DITION OF RS.4,70,241/- WAS MADE IN THE HANDS OF THE ASSESSEE . 5. THE CIT (APPEALS) UPHELD THE ORDER OF THE ASSESS ING OFFICER REJECTING THE CLAIM OF THE ASSESSEE THAT OUT OF TOT AL PAYMENT, SUM OF RS.82,757/- WAS PAID FOR PURCHASING OIL AND LUBRICA NTS IN CASH AS THE PETROL PUMP DEALER DID NOT ACCEPT CHEQUES. 3 6. THE ASSESSEE IS IN APPEAL AGAINST THE SAME. THE LEARNED A.R. FOR THE ASSESSEE PLACED RELIANCE ON THE SUBMISSIONS MAD E BEFORE THE AUTHORITIES BELOW. 7. THE LEARNED D.R. FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. ADMITTEDLY THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION WHILE CARRYING OUT ITS CONTRACT WORK HAD MADE CERTAIN PAY MENT IN CASH WHICH WERE IN EXCESS OF RS.20,000/- AS TABULATED UNDER PA RA 3 OF THE ASSESSMENT ORDER TOTALING RS.4,70,241/-. THE SAID PAYMENTS WERE MADE FOR PURCHASES/EXPENSES, WHICH IN TURN WERE CLAIMED AS AN EXPENDITURE. THE BREAK UP OF THE PAYMENTS WERE AS UNDER : 09.05.2009 RS. 27678/- 27.05.2009 RS.137562/- 30.09.2009 RS.180650/- 09.10.2009 RS. 41600/- 31.12.2009 RS. 32135/- 15.01.2010 RS. 25883/- 18.03.2010 RS. 24733/- RS.470241/- 9. THE CLAIM OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW WAS THAT SINCE HE WAS INVOLVED IN THE EXECUTION OF WORK AND DEALT WITH THE GOVERNMENT DEPARTMENT, HE COULD MAKE PURCHASED ONLY IN THE EVENING WHEN THE BANKS WERE CLOSED. FURTHER HE CLAIMED TO HAVE PAID RS.82757/- FOR PURCHASE OF OIL AND LUBRICANTS AND THE SAID PAY MENT WAS MADE TO THE PETROL PUMP DEALERS WHO ONLY ACCEPTED CASH AND AS T HE PAYMENTS WERE MADE FOR CARRYING ON THE BUSINESS OF THE ASSESSEE, THE SAME WERE ALLOWABLE AS AN EXPENDITURE. 4 10. UNDER THE PROVISIONS OF SECTION 40A(3) OF THE A CT WHERE AN ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH THE PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OT HERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT, EXCEEDS RS.20,000/-, THEN NO DEDUCTION WAS ALLOWABL E IN RESPECT OF SUCH EXPENDITURE. FURTHER RULE 6DD OF INCOME TAX RULES PROVIDES CERTAIN EXCEPTIONS WHEREIN IF PAYMENT WAS MADE FOR A SUM EX CEEDING RS.20,000/-, OTHERWISE THAN BY AN ACCOUNT PAYEE CHE QUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, THEN THE EXPENSES WERE TO BE ALLOWED IN THE HANDS OF THE ASSESSEE IF IT FALLS WITHIN SUCH EXCEP TION PROVIDED THEREIN. 11. IN THE FACTS OF THE PRESENT CASE, THE PAYMENTS HAVE BEEN MADE IN CASH BY THE ASSESSEE EXCEEDING RS.20,000/- IN A DAY FOR MAKING PURCHASES OR FOR INCURRING EXPENDITURE, WHICH HAVE BEEN CLAIMED AS A DEDUCTION WHILE COMPUTING THE INCOME OF THE ASSESSE E. THE SAID EXPENDITURE IS NOT ALLOWABLE IN VIEW OF THE VIOLATI ON OF PROVISIONS OF SECTION 40A(3) OF THE ACT AND ALSO BECAUSE THE SAID PAYMENTS ARE NOT COVERED BY ANY OF THE EXCEPTIONS PROVIDED UNDER RUL E 6DD OF THE INCOME TAX. UPHOLDING THE ORDER OF THE CIT (APPEA LS) WE DISMISS GROUND NO.1 RAISED BY THE ASSESSEE. 12. THE ISSUE IN GROUND NO.2 RAISED BY THE ASSESSEE IS AGAINST ESTIMATION OF HOUSEHOLD EXPENDITURE. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD DRAWN CASH OF RS.30,000/- FOR HOU SEHOLD EXPENSES. THE FAMILY OF THE ASSESSEE CONSISTED OF FIVE MEMBER S I.E. SELF, WIFE AND THREE SONS. WHEN CONFRONTED, THE ASSESSEE EXPLAINE D THAT HIS ELDER SON WAS EMPLOYED WITH STATE BANK OF INDIA AND WAS CONTR IBUTING TOWARDS HOUSEHOLD EXPENSES. THE ASSESSING OFFICER REJECTIN G THE REPLY OF THE ASSESSEE ESTIMATED HOUSEHOLD EXPENSES AT RS.1,80,00 0/- PER ANNUM I.E. RS.15,000/- PER MONTH. IN VIEW OF THE STATUS AND OTHER SOCIAL 5 OBLIGATIONS OF THE ASSESSEE SUM OF RS.1,50,000/- WA S ADDED AS INCOME OF THE ASSESSEE ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. THE CIT (APPEALS) RESTRICTED THE ADDITION TO RS.90,000/- BY ESTIMATIN G THE HOUSEHOLD EXPENSES @ RS.10,000/- PER MONTH AND AS THE ASSESSE E HAD SHOWN WITHDRAWAL OF RS.30,000/-, THE BALANCE OF RS.90,000 /- WAS ADDED AS INCOME OF THE ASSESSEE. 13. THE ASSESSEE IS AGGRIEVED BY THE SAID ADDITION. HOWEVER, THE ASSESSEE HAS FAILED TO JUSTIFY HIS CLAIM OF ANY CON TRIBUTION MADE BY HIS ELDER SON EXCEPT THE STATEMENT TO THAT EFFECT. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES, WHERE THE FAMILY OF THE ASSESSEE CONSISTED OF FIVE MEMBERS THE ESTIMATE OF THE HOUSEHOLD EXPENSES @ RS .10,000/- PER MONTH IS VERY REASONABLE. IN VIEW THEREOF, WE UPHO LD THE ADDITION OF RS.90,000/- IN THE HANDS OF THE ASSESSEE AS THE ASS ESSEE HAD ALREADY SHOWN WITHDRAWAL OF RS.30,000/- FOR HOUSEHOLD EXPEN SES. UPHOLDING THE ORDER OF CIT (APPEALS) WE DISMISS THE GROUND NO .2 RAISED BY THE ASSESSEE. 14. THE GROUND NO.3 RAISED BY THE ASSESSEE IS AGAIN ST CHARGING OF INTEREST UNDER SECTION 234B OF THE ACT, WHICH IS CO NSEQUENTIAL IN NATURE AND THE SAME IS DISMISSED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF MAY, 2014. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH MAY, 2014 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6