VRINDAVAN LAL GUPTA, Jaipur V. ITO, Jaipur

ITA 321/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2168 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 27-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S L PODDAR
• Section: 40A(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR JH HKKXPUN] YS[KK LNL; ,O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHAR AT, JM VK;DJ VIHY LA-@ ITA NO. 321/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2014-15 SHRI VRINDAVAN LAL GUPTA 760, BARKAT NAGAR, PUSHPANJALI MARG TONK ROAD, JAIPUR CUKE VS. THE ITO WARD- 6 (2) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AFCPG5046 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI S.L. PODDAR, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY:SHRI JAGDISH CHANDRA KULHARI, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/01/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 25 /01/2018 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-2, JAIPUR DATED 21-03-2017 FOR THE ASSESSMEN T YEAR 2014-15 RAISING FOLLOWING GROUND OF APPEAL:- THAT THE LD. CIT(A) HAD NOT ALLOWED THE PAYMENTS MADE IN CASH TO JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LIMITED (SARAS DAIRY) WHICH IS GOVERNMENT COOPERATI VE ITA NO. 321/JP/2017 SHRI VRINDAVAL LAL GUPTA VS ITO , WARD- 6 (2), JAIPUR 2 SOCIETY OF RS. 59,30,000/- DISALLOWED BY THE AO U/S 40A(3) OF THE I.T. ACT, 1961. 2.1 APROPOS SOLITARY GROUND OF THE ASSESSEE, THE FA CTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER:- 2.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. IT IS NOTED THAT PAYMENTS OF A TOTAL AMOUNT OF RS. 1,14,6 4,000/- WERE MADE IN CASH TO M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD (SARAS DAIRY), JAIPUR IN VIOLATI ON OF SECTION 40A(3) OF THE I.T. ACT, 1961. THE ASSESSEE SUPPLIES MILK TO THE JAIPUR DAIARY BOOTHS FROM SARAS AT A PR ICE FIXED BY M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LT D. ON A CONTRACTUAL BASIS. IT WAS CONTENDED THAT SINCE THE ASSESSEE IS DEALING IN MILK PRODUCTS, THE SAME ARE EXEMPTED UND ER RULE 6DD(E) AND ALTERNATIVELY SOME PAYMENTS HAVE BEEN MA DE ON SUNDAYS AND BANK HOLIDAYS ALSO, HENCE WERE EXEMPTED FROM THE PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT, 1 961. THE ASSESSING OFFICER ALLOWED THE PAYMENTS OF AN AMOUNT OF RS. 55,34,000/- MADE ON BANK HOLIDAYS BUT DID NOT ALLOW THE AMOUNTS PAID ON OTHER DAYS UNDER RULE 6DD(E). THE AUTHORIZED REPRESENTATIVE REITERATED THE SAME SUBMI SSIONS IN THE PRESENT PROCEEDINGS. IT IS SEEN THAT BOTH TH E ASSESSEE AND M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH L TD HAVE BANK ACCOUNT AND PAYMENTS ARE BEING MADE THROU GH THE SAME. FURTHER RULE 6DD (E) WOULD BE APPLICABLE WHEN THE PAYMENTS IS MADE TO THE PRODUCERS OF THE DAIRY PROD UCTS WHICH IS NOT THE CASE IN HAND, PAYMENTS ARE MADE TO THE GOVERNMENT CORPORATIONS. IN VIEW OF THE ABOVE, THE PAYMENTS ARE COVERED BY THE PROVISIONS OF SECTION 40A(3), TH E DISALLOWANCE MADE BY THE ASSESSING OFFICER IS CONFI RMED. THE GROUND OF APPEAL IS DISMISSED. ITA NO. 321/JP/2017 SHRI VRINDAVAL LAL GUPTA VS ITO , WARD- 6 (2), JAIPUR 3 2.2 DURING THE COURSE OF HEARING THE LD.AR OF THE A SSESSEE PRAYED THAT THE LOWER AUTHORITIES HAVE ERRED IN DISALLOWING THE CASH PAYMENTS OF RS. 59.30LACS MADE TO M/S. JAIPUR ZILA DUGDH UTPADAK S AHAKARI SANGH LTD U/S 40A(3) OF THE ACT BY THE ASSESSEE. THE LD.AR OF THE ASSESSEE FILED THE WRITTEN SUBMISSION WHICH HAS BEEN TAKEN INTO CONSID ERATION. 2.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE LOWER AUTHORITIES. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE, THE AO OBSERVED THAT THE ASSESSEE MADE PAYMENTS OF RS. 1,14,64,000/- ON VARIOUS DATES (PA GE 2 OF ASSESSMENT ORDER) TO M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD (SARAS DIARY), JAIPUR IN VIOLATION OF PROVISIONS OF SECTIO N 40A(3) OF THE I.T. ACT, 1961. THE AO FURTHER NOTED THAT ASSESSEE MADE PAYME NTS OF RS. 55,34,000/- ON BANK HOLIDAYS WHICH ARE EXCLUDING T HE PURVIEW OF SEC 40A(3) OF THE I.T. ACT, 1961. THE AO THUS DISALLOWE D THE PAYMENTS OF RS. 59.30 LACS IN VIOLATION OF PROVISIONS OF SEC 40 A(3) OF THE ACT AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE BY OBSERVING AS UNDER:- CONSIDERING THE FACTS OF THE CASE AND RULE 6DD OF THE ACT, THE EXEMPTION IS ONLY ALLOWED FOR THE DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR STRIKE. ITA NO. 321/JP/2017 SHRI VRINDAVAL LAL GUPTA VS ITO , WARD- 6 (2), JAIPUR 4 FURTHER THE PLEA OF THE ASSESSEE DEPOSITING THE C ASH ON MONDAY IS NOT CONSIDERED AS THE MONDAY HAS NOT BEEN CONSIDERED IN EXCLUSION. IN THE LIGHT OF THE ABOVE, FOLLOWING EXPENSES IN EXCESS OF TWENTY THOUSAND IN A DAY INCU RRED IN CASH IS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S 40A(3):- S.N. DATE OF PAYMENT AMOUNT PAID 1. 20-05-2013 500000 2. 27-05-2013 300000 3. 03-06-2013 600000 4. 24-06-2013 550000 5. 15-07-2013 300000 6. 22-07-2013 450000 7. 16-08-2013 250000 8. 09-09-2013 700000 9. 01-10-2013 480000 10. 7-10-2013 600000 11. 14-10-2013 600000 12. 18-10-2013 600000 5930000 IN FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED THE A CTION OF THE AO. THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN TRANSPO RTING MILK FROM M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD (SARAS ) TO VARIOUS SARAS DAIRY BOOTHS ON COMMISSION BASIS I.E. @ RS.49.90 PE R LITRE. THE WORK OF THE ASSESSEE INCLUDED IN TAKING MILK FROM SARAS DAI RY AND DISTRIBUTION OF THE SAME TO VARIOUS SARAS DAIRY BOOTHS AND ALSO CO LLECTION OF MONEY ITA NO. 321/JP/2017 SHRI VRINDAVAL LAL GUPTA VS ITO , WARD- 6 (2), JAIPUR 5 FROM BOOTHS AND PAYING THE SAME TO SARAS DAIRY. ON SUCH COLLECTION OF MONEY, THE ASSESSEE WAS ENTITLED FOR COMMISSION @ R S. 49.90 PER LITRE. IT IS NOTED THAT IN THE CASE OF THE ASSESSEE THE IDENT ITY OF THE RECIPIENT M/S. JAIPUR ZILA DUGDH UTPADAK SAHAKARI SANGH LTD (SARAS DAIRY) IS WELL ESTABLISHED TO WHOM THE ENTIRE PAYMENT OF RS. 59.30 LACS HAS BEEN MADE BY THE ASSESSEE. IT IS NOTED THAT IN THE ENTIRE ASS ESSMENT ORDER THERE IS NOT A SINGLE WORD DOUBTING THE GENUINENESS OF PAYMENTS OR QUESTIONING THE PAYMENTS IN ANY OTHER WAY. THE ASSESSEE COLLECTED P AYMENTS FROM THE DAIRY BOOTHS AND GOT COMMISSION @ RS. 49.90 PAISE P ER LITRE. THUS THE ASSESSEE WAS IN FACT WORKING AS AN AGENT ON COMMIS SION BASIS. THEREFORE, THE PAYMENTS DID NOT REQUIRE TO BE DISAL LOWED IN HIS HANDS. THERE IS NO IOTA OF DOUBT REGARDING THE GENUINENESS OF THE PAYMENTS. THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. HA RSHILA CHORDIA VS ITO (2008) 298 ITR 349 HELD AS UNDER:- HELD: (I) THAT THERE WAS NO DISPUTE ABOUT THE GENUI NENESS OF THE TRANSACTIONS AND THE PAYMENT AND IDENTITY OF TH E RECEIVER WERE ESTABLISHED. THE CONCLUSION REACHED BY THE COMMISSI ONER (APPEALS) WAS CORRECT AND THE TRIBUNAL BY IGNORING THE SCOPE OF CLAUSE (J) OF RULE 6DD AS EXPLAINED BY THE BOARDS CIRCULAR HAD ITA NO. 321/JP/2017 SHRI VRINDAVAL LAL GUPTA VS ITO , WARD- 6 (2), JAIPUR 6 ERRED IN REVERSING THE FINDING REACHED BY THE COMMI SSIONER (APPEALS). THE ADDITION OF RS. 40,13,000/- COULD NO T BE MADE UNDER SECTION 40A(3). IN THE CASE OF ANUPAM TELE SERVICES VS ITO (2014), 366 ITR 122, THE HON'BLE GUJARAT HIGH COURT OBSERVED AS UNDER:- THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. GENUINE AN D BONAFIDE TRANSACTIONS ARE TAKEN OUT OF THE SWEEP OF THE SECTION. MOREOVER, THE CONTRACT OF THIS WORK IS IN EXISTENCE SINCE 2006 BUT NO SUCH DISALLOWANCE WAS MADE IN EARLIER YEARS. TAKING INT O CONSIDERATION THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND THE CASE LAWS IN THE CASE OF SMT. HARSHILA CHORDIA VS ITO AND ANUPAM TELE SE RVICES VS ITO (SUPRA), IT IS OBSERVED THAT THE LD. CIT(A) HAS E RRED IN DISALLOWING THE PAYMENT OF RS. 59.30 LACS TO THE ASSESSEE. THUS THE SOLITARY GROUND OF THE ASSESSEE IS ALLOWED. ITA NO. 321/JP/2017 SHRI VRINDAVAL LAL GUPTA VS ITO , WARD- 6 (2), JAIPUR 7 3.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 -01-20 18. SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 25 /01/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI VRINDAVAN LAL GUPTA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 6 (2), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 321/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR