Smt. Kanak Dhing, UDAIPUR V. DCIT, UDAIPUR

ITA 30/JODH/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7950 (ITAT-JODHPUR)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-11-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 10-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Business expenditure; Opportunity of being heard; Principle of natural justice; Additional evidence; Question of law
• Section: 40A(3); 54F; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBU NAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBE AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 30/JU/2012 ASSESSMENT YEAR : 2008-09 SMT. KANAK DHING VS. THE DCIT, CENTRAL CIRCLE-2, UDAIPUR UDAIPUR PAN NO. AFUPD4443B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT KOTHARI RESPONDENT BY : SHRI G.R. KOKANI DATE OF HEARING : 23.11.2012 DATE OF PRONOUNCEMENT : 17.12.2012 ORDER PER N.K.SAINI, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 13.10.2011 OF CIT(A) CENTRAL, JAIPUR. 2. VIDE GROUND NO.1, THE GRIEVANCE OF THE ASSESSEE RELATES TO CONFIRMATION OF DISALLOWANCE OF ELECTRICITY EXPENSES PAID TO AJ MER VIDYUT NIGAM LIMITED AMOUNTING TO RS. 6,15,025/- U/S 40A(3) OF THE INCOM E TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' IN SHORT]. 2 3. THE FACTS OF THE CASE RELATED TO THIS ISSUE IN B RIEF ARE THAT THE ASSESSEE WAS DOING MARBLE MINING BUSINESS IN THE PROPRIETORS HIP CONCERN OF M/S RISHABHDEO KHANJI UDYOG AND ALSO RUNNING A PETROL P UMP IN THE NAME AND STYLE OF M/S ASHISH FILLING STATION. THE ASSESSEE FILED THE RETURN OF INCOME ON 30.6.2008 DECLARING AN INCOME OF RS. 11,61,880/- WH ICH WAS PROCESSED U/S 143(1) OF THE ACT ON 16.1.2009. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED THAT THE ASSESSEE HAD MADE FOLLOWING PAYMENTS IN CA SH EXCEEDING RS. 20,000/- TO AJMER VIDYUT VITRAN NIGAM LTD. (AVVNL):- RS. 30280/- PAID ON 24.04.2007 RS. 54720/- PAID ON 29.05.2007 RS. 48554/- PAID ON 26.06.2007 RS. 49200/- PAID ON 24.07.2007 RS. 43370/- PAID ON 22.08.2007 RS. 63099/- PAID ON 24.10.2007 RS. 76257/- PAID ON 19.11.2007 RS. 41661/- PAID ON 15.12.2007 RS. 80896/- PAID ON 25.01.2008 RS. 70380/- PAID ON 26.02.2008 RS. 56788/- PAID ON 25.03.2008 RS. 615205/- TOTAL 4. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPL AIN WHY THE DISALLOWANCE U/S 40A(3) OF THE ACT SHOULD NOT BE MA DE. SINCE THE ASSESSEE HAD NOT FURNISHED ANY WRITTEN SUBMISSIONS, THE ASSESSIN G OFFICER MADE THE 3 IMPUGNED ADDITION. THE ASSESSEE CARRIED THE MATTER TO THE LD CIT(A) AND MADE FOLLOWING SUBMISSIONS, AS MENTIONED IN PARA 4. 2 OF THE IMPUGNED ORDER:- WE WOULD LIKE TO DRAW YOUR ATTENTION TO PROVISIONS OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961, WHICH READS AS UNDER:- SEC 40A(3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPEC T OF WHICH PAYMENT IS MADE, AFTER SUCH DATE (NOT BEING LATER THAN THE 31S T DAY OF MARCH, 1969) AS MAY BE SPECIFIED IN THIS BEHALF BY THE CENTRAL GOVE RNMENT BY NOTIFICATION IN THE OFFICIAL GAZETTE, IN A SUM EXCEEDING [[TWENTY] THOUSAND] RUPEES OTHERWISE THAN BY [AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT], [TWENTY PER CENT OF SUCH EXPENDI TURE SHALL NOT BE ALLOWED AS A DEDUCTION]: FURTHER UNDER RULE 6DD NO DISALLOWANCE, UNDER SUB-S ECTION (3) OF SECTION 40A SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER SUB SECTION ( 3 A) OF SECTION 40A WHERE A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON I N A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOU NT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAND RUPEES IN THE CASES AND CIR CUMSTANCES SPECIFIED HEREUNDER, NAMELY : (A) WHERE THE PAYMENT IS MADE TO - I) THE RESERVE BANK OF INDIA OR ANY BANKING COMPANY AS DEFINED AN CLAUSE (C) OF SECTION 5 OF THE BANKING REGULATION A CT, 1949; II) THE STATE BANK OF INDIA OR ANY SUBSIDIARY BANK AS D EFINED INSECTION 2 OF THE STATE BANK OF INDIA (SUBSIDIARY BANKS ) ACT, 1959; III) ANY CO-OPERATIVE BANK OR LAND MORTGAGE BANK; IV) ANY PRIMARY AGRICULTURE CREDIT SOCIETY OR ANY PRIMA RY CREDIT SOCIETY AS DEFINED UNDER SECTION 56 OF THE BANKING REGULATI ON ACT, 1949; 4 V) THE LIFE INSURANCE CORPORATION OF INDIA ESTABLISH ED UNDER SECTION 3 OF THE LIFE INSURANCE CORPORATION ACT, 1956; VI) WHERE THE PAYMENTS MADE TO THE GOVERNMENT AND UNDER THE RULES FRAMED BY IT, SUCH PAYMENT IS REQUIRED TO BE MADE I N LEGAL ENDER; (C ) WHERE THE PAYMENT IS MADE BY (I) ANY LETTER OF CREDIT ARRANGEMENTS THROUGH A BANK; (II) A MAIL OR TELEGRAPHIC TRANSFER THR OUGH A BANK; (III) A BOOK ADJUSTMENT FROM ANY ACCOUNT IN A B ANK TO ANY OTHER ACCOUNT IN THAT OR ANY OTHER BANK; (III) A BILL OF EXCHANGE-MADE PAYABLE ONLY TO A BANK; (IV) THE USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BAN K ACCOUNT; (V) A CREDIT CARD; (VI) A DEBIT CARD M/S AJMER VIDYUT VITRAN NIGAM LTD. (AVVNL) IS A GOV ERNMENT COMPANY AND IT WORKS AS THE COLLECTION AGENCY OF GOVERNMENT THAT C OLLECTS THE ELECTRICITY BILL AMOUNT ON BEHALF OF GOVERNMENT. WE WOULD LIKE TO DRAW YOUR ATTENTION TO THE FOLLOWI NG CITATIONS:- COMMISSIONER OF INCOME TAX VS. KALYAN PRASAD GUPTA HIGH COURT OF RAJASTHAN ; JAIPUR BENCH (2011) 239 CTR (R AJ.) 447 : (2011) 51 DTR 191 BUSINESS EXPENDITURE- DISALLOWANCE UNDER SECTION 40 A(3) PAYMENT TO GOVERNMENT- STATE GOVERNMENT HAS GRANTED CONTRACT T O THE ASSESSEE TO COLLECT ROYALTY ON ITS BEHALF- THUS, PAYMENTS MADE IN CASH BY THE ASSESSEE CONTRACTOR TO THE GOVERNMENT CANNOT BE DISALLOWED UNDER SECTIO N 40A(3) IN VIEW OF R. 6DD(B) - DISALLOWANCE RIGHTLY DELETED - NO SUBSTANT IAL QUESTION OF LAW ARISES. COMMISSIONER OF INCOME TAX VS. M.R. SOAP (P) LTD.HI GH COURT OF ALLAHABAD (20 6) 154 TAXMAN 496 (ALL.) 5 BUSINESS EXPENDITURE- DISALLOWANCE UNDER SECTION 40 A(3)- EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES- AO DISALLOWED CASH PAYME NTS MADE TO CERTAIN PARTIES - TRIBUNAL HAS GIVEN COGENT REASONS FOR HOL DING THAT THE PAYMENTS ARE COVERED BY R. 6DD AS THERE WERE EXCEPTIONAL CIR CUMSTANCES FOR MAKING PAYMENT IN CASH- SAID FINDING HAS BEEN ARRIVED-AT A FTER APPRECIATING THE EVIDENCE AND MATERIALS ON RECORD- THUS, THERE IS NO LEGAL INFIRMITY IN THE ORDER OF THE TRIBUNAL DELETING THE DISALLOWANCE UNDER SEC TION 40A(3). INCOME TAX OFFICER & ANR VS. K.N. PRAMOD HIGH COURT OF KARNATAKA (2010) 328 ITR 669 (KAR:) BUSINESS EXPENDITURE- DISALLOWANCE UNDER SECTION 4 0A(3)- ASSESSEE DISTRIBUTOR OF LOTTERY TICKETS, HAD PURCHASED LOTTE RY TICKETS FROM THE GOVERNMENT ORGANIZATION (MSIL) BY MAKING PAYMENTS I N CASH EXCEEDING RS. 20,000- TOTAL PAYMENT OF RS. 45,83,810 COMPRISING P AYMENT EACH, IN RESPECT OF RS. 20,000 WAS DISALLOWED UNDER SECTION 40A(3) AS EXCESS AND ADDED TO THE TOTAL INCOME. ASSESSEE CONTEND ING THAT MSIL DOES NOT ACCEPT BEARER CHEQUES AND WHEREFORE PAYMENT HAD TO BE MADE. BY CASH OR DEMAND DRAFT AND THAT LOTTERY TICKETS WOULD NOT BE GIVEN UNLESS AMOUNT IS PAID - COURT CANNOT GO INTO THE QUESTION OF FACT UNDER SECTION 260A- MATTER REMANDED TO TRIBUNAL WITH A DIRECTION TO DIS POSE OF THE APPEAL AFRESH IN ACCORDANCE WITH LAW. WE ARE ENCLOSING HEREWITH THE COPY OF CITATIONS. WE WOULD LIKE TO SUBMIT THAT ELECTRICITY CHARGES AR E PAID TO GOVERNMENT COMPANY WHICH IS EXEMPT UNDER PROVISIONS OF RULE 6DD OF INC OME TAX RULES 1962 TO ATTRACT THE DISALLOWANCE UNDER SECTION40A(3). 5. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT IF THE PAYMENT EXCEEDING RS. 20,000/- FOR EXPE NDITURE INCURRED BY THE ASSESSEE HAD BEEN MADE IN CASH THE MISCHIEF OF PROV ISIONS OF SECTION 40A(3) OF THE ACT WAS ATTRACTED IN SPITE OF THE FACT THAT EXP ENDITURE MIGHT HAVE BEEN GENUINE. HE FURTHER OBSERVED THAT NONE OF THE CONDI TIONS SPECIFIED IN RULE 6DD WERE FULFILLED BY THE ASSESSEE AND AVVNL COULD NOT BE EQUATED WITH THE GOVERNMENT. THE LD CIT(A) CONFIRMED THE ADDITION M ADE BY THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL. 6 6. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT T HE PAYMENT WAS MADE TO THE GOVERNMENT SINCE AVVNL IS A GOVERNMENT COMPANY AND IT WORKS AS A COLLECTION AGENCY OF GOVERNMENT, WHICH COLLECTS THE ELECTRICITY BILLS ON BEHALF OF THE GOVERNMENT. RELIANCE WAS PLACED ON THE FOLL OWING CASE LAWS:- A. ATTAR SINGH GURMUKH SINGH VS. ITO [1991] 191 ITR 6 67. B. HASANAND PINJOMAL VS. CIT (1978) 112 ITR 134 (GUJ. ) C. CIT VS. CHAUDHARY & CO. (1996) 217 ITR 431(ALL.) D. KANTILAL PURSHOTTAM & CO. VS. CIT (1985) 155 ITR 51 9 (RAJ.) E. SMT. HARSHILA CHORDIA VS. ITO (2008) 298 ITR 349 ( RAJ) F. M AHENDER SINGH & PARTY VS. DCIT (2006) 104 TTJ (DEL. )590 G. CIT VS. KALYAN PRASAD GUPTA (2011) 239 CTR (RAJ.) 4 47: (2011) 51 DTR 191 H. CIT VS. M.R. SOAP (P) LTD (2006) 154 TAXMAN 496 (AL L.) I. ITO & ANR VS. K.N. PRAMOD (2010) 328 ITR 669 (KAR.) 7. IN HIS RIVAL SUBMISSIONS, THE LD DR STRONGLY SUP PORTED THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED THE OBSERVATIONS M ADE BY THE CIT(A) IN THE IMPUGNED ORDER. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE PAYMENT MADE BY THE ASSE SSEE WAS A GENUINE PAYMENT, HOWEVER, IT IS NOT CLEAR AS TO WHETHER THE ASSESSEE WAS NOT MAINTAINING ANY BANK ACCOUNT THEREFORE, THE PAYMENT WAS MADE IN CAS H. WE, THEREFORE, DEEM IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE O F THE ASSESSING OFFICER TO ADJUDICATE THE SAME AFRESH, IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND 7 REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE AND BY CONSIDERING THE VARIOUS DECISIONS RELIED UPON BY THE LD. COUNSEL FO R THE ASSESSEE DURING THE COURSE OF HEARING. 9. THE NEXT ISSUE VIDE GROUND NO.2 RELATES TO THE C ONFIRMATION OF DISALLOWANCE AMOUNTING TO RS. 17,89,238/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF DEDUCTION U/S 54F OF THE ACT. 10. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE TH AT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD DECLARED LONG TERM CAPITAL GAIN OF RS. 17,89,238/- ON SALE OF VARIOUS LANDS OWNED BY HER AND CLAIMED DEDUCTION U/S 54EC OF THE ACT. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH COPIES OF PUR CHASE / SALE DEEDS OF LONG TERM CAPITAL GAIN PROPERTY. HE FURTHER OBSERVED TH AT THE ASSESSEE HAD FILED COPIES OF PURCHASE AND SALE DEED OF LONG TERM CAPIT AL GAIN PROPERTIES BUT NOT FILED EVIDENCE REGARDING CLAIM OF DEDUCTION U/S 54E C OF THE ACT AND I.E. COPIES OF REGISTERIES / PURCHASES DEEDS OF THE PROPERTY. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 54EC OF THE ACT SINCE THE ASSESSEE FAILED TO FILE THE REQUISITE DOCUMENTS . ACCORDINGLY, ADDITION OF RS. 17,89,238/- WAS MADE. 11. THE ASSESSEE CARRIED THE MATTER TO THE LD CIT(A ) AND FURNISHED THE DETAILS OF THE PROPERTIES SOLD AND THE DETAILS OF PAYMENTS MADE FOR PURCHASE OF A RESIDENTIAL HOUSE SITUATED AT PLOT NO.29, PANEARION KI MADRI, UDAIPUR FROM SMT. SITA DEVI CHAUHAN FOR A SUM OF RS. 38,60,000/ -. THIS FACT HAS BEEN 8 INCORPORATED BY THE LD CIT(A) IN PARA 5.2 OF THE IM PUGNED ORDER. FOR THE SAKE OF REPETITION, THE SAME IS NOT REPRODUCED HEREIN. THE ASSESSEE CONTENDED THAT SHE HAD INVESTED THE ENTIRE SALE PROCEEDS FOR PURCH ASE OF RESIDENTIAL HOUSE, THEREFORE, THE ENTIRE CAPITAL GAIN WAS EXEMPT FROM TAX. THE LD CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVE D THAT THOUGH THE ASSESSEE HAD FILED THE COPIES OF THE PURCHASE DEED BUT FAILE D TO FURNISH ANY REASONS AND CIRCUMSTANCES AS TO WHY THOSE EVIDENCE COULD NOT B E FILED BEFORE THE ASSESSING OFFICER SO AS TO JUSTIFY THE ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46A. HE, THEREFORE, CONFIRMED THE ADDITION MA DE BY THE ASSESSING OFFICER. NOW THE ASSESSEE IS IN APPEAL. 12. THE LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE FURNISHED ALL THE DETAILS OF PROPERTIES SOLD AND INVESTMENTS MADE IN RESIDENTIAL HOUSE, HOWEVER, THE LD CIT(A) HAD NOT GIVEN ANY COGNIZANCE TO THE SAME AND SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. IT WAS CONTENDED THAT THE ASSESSEE FULFILLED ALL THE REQUIREMENTS FOR CLAIMING THE DED UCTION U/S 54F OF THE INCOME TAX ACT, THEREFORE, THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION MADE BY THE ASSESSING OFFICER. RELIANCE WAS PLACE D ON THE FOLLOWING CASE LAWS:- A) MAHARANI YOGESHWARI KUMARI VS. CIT (1995) 126 CTR ( RAJ.) 453 : (1995) 213 ITR 541 (RAJ.) B) CIT VS. RASIKLAL MANEKLAL (HUF) (1989) CTR (SC) 31: (1989) 177 ITR 198(SC) : (1989) 43 TAXMAN 259 C) GURBAX SINGH VS KARTAR SINGH & ORS (2002) 173 CTR ( SC) 477 : (2002) 254 ITR 112 (SC): (2002) 122 TAXMAN 121 (SC) D) CIT VS. MORMASJI MANCHARJI VAID (2001) 168 CTR (GUJ .) (FB) 565 : (2001) 250 ITR 542 (GUJ.)(FB): (2001) 118 TAXMAN 27 6 (GUK) (FB) 9 E) SUNIL SIDDHARTHBHAI VS. CIT (1985) 49 CTR (SC) 172 : (1985) 156 ITR 509 (SC) : (1985) 23 TAXMAN 14W. 13. IN HIS RIVAL SUBMISSIONS, THE LD DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 14. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE P ARTIES AND MATERIAL AVAILABLE ON RECORD, IT IS NOTICED THAT THE LD CIT( A) ADMITTED IN THE IMPUGNED ORDER THAT THE ASSESSEE HAD FURNISHED THE EVIDENCES RELATING TO SALE OF THE PROPERTY AND THE PURCHASE OF RESIDENTIAL HOUSE TO CLAIM THE DEDUCTION U/S 54F OF THE ACT. HOWEVER, HE DID NOT ADMIT THE SAME SIN CE NO APPLICATION WAS MADE BY THE ASSESSEE. IN OUR OPINION, THE LD CIT(A) OUGH T TO HAVE ADMITTED THE AFORESAID EVIDENCES, SINCE THESE GO TO THE ROOT OF THE MATTER AND WERE ESSENTIAL TO BE CONSIDERED AND AFTER ADMITTING THE SAME, HE C OULD HAVE ASKED THE ASSESSING OFFICER TO FURNISH A REMAND REPORT BUT NO SUCH EXERCISE HAS BEEN DONE. WE, THEREFORE, BY KEEPING IN VIEW THE PRINCI PLES OF NATURAL JUSTICE, DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO BE ADJUDICATED A FRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 15. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 17.12.2012 ) SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMER DATED :17 TH DECEMBER, 2012 RKK 10 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR