Arun Kumar Mondal, Burdwan V. ITO, Wd-2(2), Asansol, Asansol

ITA 306/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4742 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 19-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 40A(3); 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.305-306/KOL/2014 ASSESSMENT YEARS:2009-10 & 2010-11 ARUN KUMAR MONDAL PROP. KENDUA BAZAR C.S. SHOP, P.O. KULTI, DIST. BURDWAN, PIN.713 343 [ PAN NO.ADTPM 8267 H ] / V/S . ITO, WARD-2(2), PARMAR BUILDING, G.T. ROAD, ASANSOL, DIST. BURDWAN PIN-713 304 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI RAVI TULSIYAN, FCA /BY RESPONDENT SHRI SALLONG YADEN, ADDL.CIT-DR /DATE OF HEARING 03-08-2016 /DATE OF PRONOUNCEMENT 12-08-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- BOTH APPEALS FILED BY THE ASSESSEE ARE AGAINST THE DIFFERENT ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS), ASANSOL OF EV EN DATE 09.12.2013. ASSESSMENTS WERE FRAMED BY ITO WARD-2(2), ASANSOL U /S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VI DE HIS ORDERS DATED 17.11.2011, 17.12.2012 & 13.12.2012 FOR ASSESSMENT YEARS 2009-1 0 & 2010-11 RESPECTIVELY. SHRI RAVI TULSIYAN, LD. AUTHORIZED REPRESENTATIVE A PPEARED ON BEHALF OF ASSESSEE AND SHRI SALLONG YADEN, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. 2. SINCE COMMON GROUNDS ARE INVOLVED IN BOTH THE AP PEAL OF ASSESSEE EXCEPT FIGURES, THEREFORE THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS ITA NO.305-306/KOL/2014 A. YS 2009-10 & 2010-11 ARUN KR. MONDAL VS. ITO WD-2(2), ASL PAGE 2 CONSOLIDATE ORDER FOR THE SAKE OF CONVENIENCE. WE, THEREFORE, ARE TAKING THE FACTS OF THE CASE FOR THE AY 2009-10 AS A LEAD CASE FOR THE SAKE OF CONVENIENCE. THE GROUNDS RAISED BY THE ASSESSEE PER ITS APPEAL ARE AS UNDER: - 1. THAT, THE APPELLATE ORDER PASSED BY LD. CIT(A), IS ARBITRARY, ERRONEOUS, AND HENCE BAD IN LAW. 2. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE RELE VANT CASE, LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.62,48,72 2/- [U/S 40A(3) OF I.T. ACT, 1961 BEING MADE BY LD. AO IN HIS ORDER U/S. 143(3)] 3. THAT, THE LD. CIT(A) HAS CONFIRMED THE DISALLOWA NCE OF RS.62,48,722/- U/S 40A(3) OF I.T ACT, 1961 I THE SAID CASE WITHOUT APP RECIATING THAT--- I) THAT LD. AO HAD MADE THE DISALLOWANCE OF RS.62,48,7 22/- IN THE SAID WITHOUT CONSIDERING THE REPLY OF THE APPELLANT SUBM ITTED IN RESPONSE TO HIS SHOW CAUSE LETTER. II) THE LD. AO HAS FAILED TO CONSIDER THAT THE PAYMENT TO EXCISE HAD BEEN MADE BY THE APPROVED BOTTLER HERE THROUGH ITS CURRE NT ACCOUNT MAINTAINED WITH THE STATE BANK OF INDIA, ASANSOL. III) THE LD. AO HAD ALSO FAILED TO CONSIDER THE CIRCULAR S OF EXCISE DEPTT. GOVT. OF WEST BENGAL ISSUED WITH RESPECT TO THE MAT TER OF PAYMENT OF EXCISE DUTY, VAT ETC. AND; IV) THE LD. AO HAD FAILED TO APPRECIATE THAT THE CIRCUL ARS OF EXCISE DEPARTMENT, GOVT. OF WEST BENGAL CLEARLY SAYS THAT EXCISE DUTY, VAT ETC., TO BE PAID THROUGH THE WHOLESALER, BEING THE EXCISE APPROVED BOTTLER KNOWN AS, ASANSOL BOTTLING & PACKAGING CO.( P) LTD. AND; 4. THAT, THE APPELLANT CRAVES LEAVE TO AMEND, ALTER , MODIFY AND SUBSTITUTE ALL OF THE ABOVE GROUNDS. 3. COMMON INTER-CONNECTED ISSUE IN ALL THE GROUNDS IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER BY SUSTA INING THE DISALLOWANCE OF 62,48,722/- U/S 40A(3) OF THE ACT. 4. FACTS IN BRIEF ARE THAT ASSESSEE IN THE INSTANT CASE IS AN INDIVIDUAL AND RUNNING A SHOP AS RETAIL VENDOR OF COUNTRY SPIRIT. THE ASSESS EE FOR THE YEAR UNDER CONSIDERATION HAS FILED HIS RETURN SHOWING BUSINESS INCOME OF 1,76,520/- ON 19.01.2010. THEREAFTER CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTI CE U/S 143(2) R.W.S. 142(1) OF THE ACT ISSUED UPON ASSESSEE ON 15.09.2010. IN COMPLIAN CE THERETO, THE ASSESSEE ITA NO.305-306/KOL/2014 A. YS 2009-10 & 2010-11 ARUN KR. MONDAL VS. ITO WD-2(2), ASL PAGE 3 PRODUCED, BOOKS OF ACCOUNT WHICH WERE TEST CHECKED WITH REGARD TO BALANCE-SHEET AND PROFIT AND LOSS ACCOUNT. 4.1 THE ASSESSEE, DURING THE YEAR HAS MADE CASH PAY MENT OF 62,48,722/- FOR THE PURCHASE OF COUNTRY SPIRIT FROM ASANSOL BOTTLING PA CKAGING CO. LTD. (ABPCL FOR SHORT) BY WAY OF DEPOSITING CASH IN THE ACCOUNT OF SAID SUPPLIER. THE AO OBSERVED THAT THERE IS A CLEAR VIOLATION OF THE PROVISIONS OF SEC . 40A(3) OF THE ACT READ WITH RULE 6DD OF THE IT RULES, 1962 (THE RULE FOR SHORT). A CCORDINGLY, AO DISALLOWED THE SUM OF 62,48,722/- AND ADDED TO THE TOTAL INCOME OF ASSESS EE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A), WHO CONFIRMED THE ACTION OF AO BY OBSERVING AS UNDER:- 5. IN RESPONSE, AFTER ADJOURNMENTS, THE CASE WAS P OSTED FOR 03.12.2013. THE AUTHORIZED REPRESENTATIVE SUBMITTED OBJECTIONS TO M Y PROPOSAL IN WRITING. I HAD GONE THROUGH THE SAME. THE GIST OF SUBMISSION I S THAT IN VIEW OF PROVISIONS OF WEST BENGAL EXCISE (SUPPLY OF COUNTRY SPIRIT ON PAYMENT OF DUTY) RULES, 2005, EXEMPTION UNDER RULE 6DD(B) AND RULE 6DD(K) A RE AVAILABLE. REASONS AS TO WHY RULE 6DD(B) AND RULE 6DD(K) ARE NOT APPLICAB LE HAS ALREADY BEEN COMMUNICATED IN THE NOTICE ISSUED BY ME BUT SPECIFI C POINTS RAISED HAVE NOT BEEN ADDRESSED. IT WAS ALSO CLAIMED THAT THE BOTTLI NG PLANT HAS NEVER ACCEPTED CASH. SECTION 40A(3) MANDATES THAT PAYMENT OTHER TH AN BY WAY OF ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT ENTAILS DISALLOWANCE. 6. RULES 4 AND 5 OF WEST BENGAL EXCISE (SUPPLY OF C OUNTRY SPIRIT ON PAYMENT OF DUTY) RULES, 2005 PRESCRIBE THE MANNER OF PAYMENT T O WEST BENGAL GOVT. IT STATES THAT BOTTLING PLANT HAS TO MAKE ADVANCE PAYM ENT TO GOVT. AND SUMS PAID BY INDIVIDUAL DEALERS ARE DEBITED TO THE ADVANCE. T HERE IS NO REMITTANCE OF CASE BY CASE REMITTANCE OF SUMS PAID BY DEALERS TO BOTTL ING PLANT FOR SUBSEQUENT REMITTANCE BY BOTTLING PLANT TO GOVT. THE RULES N W HERE PRESCRIBE MANDATORY CASH PAYMENT. 7. THE APPELLANT ALSO RELIES ON OBSERVATIONS IN PAR AGRAPH 4 OF THE ORDER OF HON'BLE. INCOME TAX APPELLATE TRIBUNAL IN M/S ARPIT A TRADERS VS. ITO WARD-2 COOCH BEHAR IN ITA NO.1542/KOL/2012 . PARAGRAPH 4 IS NOT A DECISION. IT NARRATES A COMPULSIVE SITUATION. A PART OF VERY SAM E ORDER IS BEING RELIED UPON BY ME. IN PARAGRAPH 5 IT IS STATED THAT WHEN THE GOVERNMENT MAKES IS COMPULSORY TO PAY IN CASH . WHETHER A COMPULSION EXISTS OR NOT IN MATTER OF FACT AND COMPULSION IS A PR-REQUISITE TO BE PROVED. THE APPELLANT IS DUTY BOUND TO EXPLAIN THE COMPULSION. IN OTHER WORDS, ON FACTS AND CIRCUMSTANCES OF CASE M/S ARPITA TRADERS MAY HAVE ESTABLISHED COMPULSION, BUT WHAT IS NEED IS THAT ITA NO.305-306/KOL/2014 A. YS 2009-10 & 2010-11 ARUN KR. MONDAL VS. ITO WD-2(2), ASL PAGE 4 COMPULSION IS ESTABLISHED BY THE APPELLANT ON THE F ACT AND CIRCUMSTANCES OF HIS CASE. IF SO ESTABLISHED THEN NATURALLY BENEFITS (SU BJECT TO MEETING ANY OTHER SPECIFIED CONDITIONS, BUT WHAT IS NEEDED IS THAT CO MPULSION IS ESTABLISHED BY THE APPELLANT ON THE FACTS AND CIRCUMSTANCES OF HIS CAS E. IF SO ESTABLISHED THEN NATURALLY BENEFITS (SUBJECT TO METING ANY OTHER SPE CIFIED CONDITIONS) OF RULE 6DD WILL FOLLOW. HERE THE APPELLANT HAS FAILED TO P ROVE THAT THERE IS A RULE BY WHICH HE HAS TO PAY THE BOTTLING PLANT BY CASH. NO RULE EXISTS (EVEN WEST BENGAL EXCISE (SUPPLY OF COUNTRY SPIRIT ON PAYMENT OF DUTY) RULES, 2005 DOES NOT MAKE COMPULSION TO PAY BY CASH TO THE COMPANY F ROM WHERE SPIRIT IS PURCHASED) AND HERE PAYMENT IS MADE TO A COMPANY HA VING DISTINCT IDENTIFY AND PAN AND NOT GOVERNMENT. 8. CONSIDERING ALL ASPECTS DISCUSSED IN PARAGRAPH 5 TO 7, I HOLD THAT THE ASSESSING OFFICER HAS RIGHTLY MADE THE DISALLOWANCE UNDER SECTION40A(3). THE GROUND AGAINST DISALLOWANCE OF RS.62,48,722 IS DISMISSED . BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 6. AT THE OUTSET, WE FIND THAT IN THE IDENTICAL FACTS & CIRCUMSTANCES THIS CO-ORDINATE BENCH HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE I N THE CASE OF PRABIR KUMAR MULLICK VS. CIT, KOLKATA IN ITANO.1603/KOL/2011 DATED 01.06.2016. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW : 11.1 THE PROVISION OF SECTION 40A(3) WAS INSERTED BY THE FINANCE ACT 1968. THE PURPOSE FOR BRINGING THE SECTION WAS MENTIONED IN THE EXPLANATORY NOTE PARA 73 WHICH READ AS UNDER : IT WILL BE PERTINENT TO GO INTO THE INTENTION BEHIN D INTRODUCTION OF PROVISIONS OF SECTION 40A(3) OF THE ACT AT THIS JUNCTURE. WE FI ND THAT THE SAID PROVISION WAS INSERTED BY FINANCE ACT 1968 WITH THE OBJECT OF CUR BING EXPENDITURE IN CASH AND TO COUNTER TAX EVASION. THE CBDT CIRCULAR NO. 6P DATED 06.07.1968 REITERATES THIS VIEW THAT THIS PROVISION IS DESIGNED TO COUNT ER EVASION OF A TAX THROUGH CLAIMS FOR EXPENDITURE SHOWN TO HAVE BEEN INCURRED IN CASH WITH A VIEW TO FRUSTRATING PROPER INVESTIGATION BY THE DEPARTMENT AS TO THE IDENTITY OF THE PAYEE AND REASONABLENESS OF THE PAYMENT. 11.2 IN THIS REGARD, IT IS PERTINENT TO GET INTO THE FOLLOWING DECISIONS ON THE IMPUGNED SUBJECT:- ATTAR SINGH GURMUKH SINGH VS ITO REPORTED IN (1991) 191 ITR 667 (SC) SECTION 40A(3) OF THE INCOME-TAX ACT, 1961, WHICH PROVIDES THAT EXPENDITURE IN EXCESS OF RS.2,500 (RS.10,000 AFTER THE 1987 AMENDM ENT) WOULD BE ALLOWED TO BE DEDUCTED ONLY IF MADE BY A CROSSED CHEQUE OR CROSSE D BANK DRAFT (EXCEPT IN SPECIFIED CASES) IS NOT ARBITRARY AND DOES NOT AMOU NT TO A RESTRICTION ON THE FUNDAMENTAL RIGHT TO CARRY ON BUSINESS. IF READ TOG ETHER WITH RULE 6DD OF THE INCOME-TAX RULES, 1962, IT WILL BE CLEAR THAT THE P ROVISIONS ARE NOT INTENDED TO RESTRICT BUSINESS ACTIVITIES. THERE IS NO RESTRICTI ON ON THE ASSESSEE IN HIS TRADING ACTIVITIES. SECTION 40A(3) ONLY EMPOWERS THE ASSESS ING OFFICER TO DISALLOW THE ITA NO.305-306/KOL/2014 A. YS 2009-10 & 2010-11 ARUN KR. MONDAL VS. ITO WD-2(2), ASL PAGE 5 DEDUCTION CLAIMED AS EXPENDITURE IN RESPECT OF WHIC H PAYMENT IS NOT MADE BY CROSSED CHEQUE OR CROSSED BANK DRAFT. THE PAYMENT B Y CROSSED CHEQUE OR CROSSED BANK DRAFT IS INSISTED UPON TO ENABLE THE ASSESSING AUTHORITY TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF IN COME FROM UNDISCLOSED SOURCES. THE TERMS OF SECTION 40A(3) ARE NOT ABSOLU TE. CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLU DED. GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFF ICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A (3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYME NT. RULE 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PA YMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT IN THE CIRCUMSTANCES SPECIFIED U NDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF SECTION 40A(3) AND RULE 6DD THAT THEY ARE INTENDED TO REGULATE BUSINESS TRANSACTIONS AND TO PREVENT THE U SE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTIONS. CIT VS CPL TANNERY REPORTED IN (2009) 318 ITR 179 ( CAL) THE SECOND CONTENTION OF THE ASSESSEE THAT OWING T O BUSINESS EXPEDIENCY, OBLIGATION AND EXIGENCY, THE ASSESSEE HAD TO MAKE C ASH PAYMENT FOR PURCHASE OF GOODS SO ESSENTIAL FOR CARRYING ON OF HIS BUSINESS, WAS ALSO NOT DISPUTED BY THE AO. THE GENUINITY OF TRANSACTIONS, RATE OF GROSS PROFIT OR THE FACT THAT THE BONA FIDE OF THE ASSESSEE THAT PAYMENTS ARE MADE TO PRODUCERS OF HIDES AND SKIN ARE ALSO NEITHER DOUBTED NOR DISPUTED BY THE AO. ON THE BAS IS OF THESE FACTS IT IS NOT JUSTIFIED ON THE PART OF THE AO TO DISALLOW 20% OF THE PAYMENTS MADE U/S 40A(3) IN THE PROCESS OF ASSESSMENT. WE, THEREFORE, DELETE T HE ADDITION OF RS. 17,90,571/- AND GROUND NO.1 IS DECIDED IN FAVOUR OF THE ASSESSE E. CIT VS CRESCENT EXPORT SYNDICATE IN ITA NO. 202 OF 2008 DATED 30.7.2008 JURISDICTIONAL HIGH COURT DECISION IT ALSO APPEARS THAT THE PURCHASES HAVE BEEN HELD TO BE GENUINE BY THE LEARNED CIT(APPEAL) BUT THE LEARNED CIT(APPEAL) HAS INVOKED SECTION 40A(3) FOR PAYMENT EXCEEDING RS.20,000/- SINCE IT IS NOT MADE BY CROSS ED CHEQUE OR BANK DRAFT BUT BY HEARER CHEQUES AND HAS COMPUTED THE PAYMENTS FALLIN G UNDER PROVISIONS TO SECTION 40A(3) FOR RS.78,45,580/- AND DISALLOWED @ 20% THER EON RS.15,69,116/-. IT IS ALSO MADE CLEAR THAT WITHOUT THE PAYMENT BEING MADE BY B EARER CHEQUE THESE GOODS COULD NOT HAVE BEEN PROCURED AND IT WOULD HAVE HAMP ERED THE SUPPLY OF GOODS WITHIN THE STIPULATED TIME. THEREFORE, THE GENUINEN ESS OF THE PURCHASE HAS BEEN ACCEPTED BY THE LD. CIT(APPEAL) WHICH HAS ALSO NOT BEEN DISPUTED BY THE DEPARTMENT AS IT APPEARS FROM THE ORDER SO PASSED B Y THE LEARNED TRIBUNAL. IT FURTHER APPEARS FROM THE ASSESSMENT ORDER THAT NEIT HER THE ASSESSING OFFICER NOR THE CIT(APPEAL) HAS DISBELIEVED THE GENUINENESS OF THE TRANSACTION. THERE WAS NO DISPUTE THAT THE PURCHASES WERE GENUINE. ITA NO.305-306/KOL/2014 A. YS 2009-10 & 2010-11 ARUN KR. MONDAL VS. ITO WD-2(2), ASL PAGE 6 ANUPAM TELE SERVICES VS ITO IN (2014) 43 TAXMANN.CO M 199 (GUJ) SECTION 40A(3) OF THE INCOME-TAX ACT, 1961, READ W ITH RULE 6DD OF THE INCOME-TAX RULES, 1962 BUSINESS DISALLOWANCE CASH PAYMENT EXCEEDING PRESCRIBED LIMITS (RULE 6DD(J)-ASSESSMENT YEAR 2006-07 ASSESSEE WAS WORKING AS AN AGENT OF TATA TELE SERVICES LIMITED FOR DISTRIBUTING MOBILE CARDS AND RECHARGE VOUCHERS PRINCIPAL COMPANY TATA INSISTED THAT CHEQUE PAYMENT FROM ASSESSEES CO-OPERATIVE BANK WOULD NOT DO, SINCE REALIZATION TOOK LONGER TI ME AND SUCH PAYMENTS SHOULD BE MADE ONLY IN CASH IN THEIR BANK ACCOUNT IF ASSESS EE WOULD NOT MAKE CASH PAYMENT AND MAKE CHEQUE PAYMENTS ALONE, IT WOULD HA VE RECEIVED RECHARGE VOUCHERS DELAYED BY 4/5 DAYS WHICH WOULD SEVERELY A FFECT ITS BUSINESS OPERATION ASSESSEE, THEREFORE, MADE CASH PAYMENT WHETHER IN VIEW OF ABOVE, NO DISALLOWANCE UNDER SECTION 40A (3) WAS TO BE MADE I N RESPECT OF PAYMENT MADE TO PRINCIPAL - HELD, YES [PARAS 21 TO 23] [ IN FAVOUR OF THE ASSESSEE ] SRI LAXMI SATYANARAYANA OIL MILL VS CIT REPORTED IN (2014) 49 TAXMANN.COM 363 (ANDHRA PRADESH HIGH COURT) SECTION 40A(3) OF THE INCOME-TAX ACT, 1961, READ W ITH RULE 6DD OF THE INCOME- TAX RULES, 1962 BUSINESS DISALLOWANCE CASH PAYM ENT EXCEEDING PRESCRIBED LIMIT (RULE 6DD) ASSESSEE MADE CERTAIN PAYMENT OF PURCHASE OF GROUND NUT IN CASH EXCEEDING PRESCRIBED LIMIT ASSESSEE SUBMITTE D THAT HER MADE PAYMENT IN CASH BECAUSE SELLER INSISTED ON THAT AND ALSO GAVE INCENTIVES AND DISCOUNTS FURTHER, SELLER ALSO ISSUED CERTIFICATE IN SUPPORT OF THIS WHETHER SINCE ASSESSEE HAD PLACED PROOF OF PAYMENT OF CONSIDERATION FOR IT S TRANSACTION TO SELLER, AND LATER ADMITTED PAYMENT AND THERE WAS NO DOUBT ABOUT GENUI NENESS OF PAYMENT, NO DISALLOWANCE COULD BE MADE UNDER SECTION 40A(3) H ELD, YES [PARA 23] [ IN FAVOUR OF THE ASSESSEE] CIT VS SMT. SHELLY PASSI REPORTED IN (2013) 350 ITR 227 (P&H) IN THIS CASE THE COURT UPHELD THE VIEW OF THE TRIBU NAL IN NOT APPLYING SECTION 40A(3) OF THE ACT TO THE CASH PAYMENTS WHEN ULTIMATELY, SUCH AMOUNTS WERE DEPOSITED IN THE BANK BY THE PAYEE. 6.1 IT IS PERTINENT TO NOTE THAT THE PRIMARY OBJECT OF ENACTING SECTION 40A(3) WERE TWO FOLDS- FIRSTLY, PUTTING A CHECK ON TRADING TRA NSACTIONS WITH THE OBJECT TO EVADE THE LIABILITY OF TAX ON INCOME EARNED OUT OF SUCH TRANS ACTION AND, SECONDLY, TO INCULCATE THE BANKING HABITS AMONGST THE BUSINESS COMMUNITY. APP ARENTLY, THIS PROVISION WAS DIRECTLY RELATED TO CURB THE EVASION OF TAX AND INC ULCATING THE BANKING HABITS. THEREFORE, THE CONSEQUENCE, WHICH WERE TO BE FALLEN ON ACCOUNT OF NON-OBSERVATION OF SECTION 40A(3) MUST HAVE NEXUS TO THE FAILURE OF SUCH OBJEC T. THEREFORE, THE GENUINENESS OF THE TRANSACTIONS BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERATION. WITH REGARD TO THE PURPOSE OF BRINGI NG THE PROVISIONS OF SECTION THERE IS ITA NO.305-306/KOL/2014 A. YS 2009-10 & 2010-11 ARUN KR. MONDAL VS. ITO WD-2(2), ASL PAGE 7 NO DOUBT ABOUT THE IDENTITY OF THE PARTY. THE LD. A R HAS DIRECTLY DEPOSITED THE CASH IN THE ACCOUNT OF THE COMPANIES AND HAS PRODUCED THE S ALES BILLS OF THE COMPANY. SO IN THE INSTANT CASE, THERE IS NO EVASION OF TAX BY CLAIMIN G THE BOGUS EXPENDITURE IN CASH. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CAS E AND RELIED ON THE VARIOUS CASE LAWS CITED ABOVE, WE ARE INCLINED TO REVERSE THE ORDER O F LOWER AUTHORITIES. HENCE THIS GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. COMING TO ITA NO.306/KOL/2014 FOR AY 10-11. 8. AS STATED EARLIER, THE ISSUE IN THIS YEAR IS SAM E AS THAT OF THE LAST YEAR. THE ONLY DIFFERENCE IS THE AMOUNT INVOLVED. SINCE THE FACTS ARE EXACTLY IDENTICAL, BOTH PARTIES AGREED THAT WHATEVER VIEW TAKEN IN THE ABOVE APPEAL OF ASSESSEE MAY BE TAKEN IN THIS APPEAL ALSO. WE HOLD ACCORDINGLY. 9. IN THE RESULT, BOTH THE ASSESSEES APPEAL STAND ALL OWED. ORDER PRONOUNCED IN OPEN COURT ON 12/08/2016 SD/- SD/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP ! - 12/08/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ARUN KR. MONDAL, PROP: KENDUA BAZAR, C.S . SHOP, P.O. KULTI, DIST. BURDWAN PIN.713 343 2. /RESPONDENT-ITO WARD-2(2), PARMAR BUILDING, G.T. RO AD, ASNSOL-713304 3. '# % / CONCERNED CIT 4. % - / CIT (A) ASANSOL 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORD ER/ , /TRUE COPY/ / '#,