DCIT, New Delhi V. M/s Continental Carriers of India, Delhi

ITA 3248/DEL/2010

• Counselvise Citation: 324820114 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 01-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KRISHNA
• Keywords: Rule of consistency; Retrospective amendment; Additional evidence; Question of law; Commercial expediency
• Section: 40A(3); 143(3); 148

Judgement Text

BEFORE THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH B, NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.3248 & 3249/DEL.2010 (ASSESSMENT YEARS : 2004-05 & 2005-06) DCIT, CIRCLE 35 (1), VS. M/S. CONTINENTAL CARRIER S OF INDIA, NEW DELHI. PLOT NO.3, 2 ND FLOOR, SANGAM TOWER, SAVITA VIHAR, DELHI-110 092. (PAN NO.AAAFC2562K) (APELLANT) (RESPONDENT) ASSESSEE BY : SHRI SANJAY AGGARWAL, CA & SHRI P.C. YADAV, ADVOCATE DEPARTMENT BY : SHRI KRISHNA, CIT DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : BOTH THESE APPEALS FILED BY THE REVENUE ARISES OUT OF SEPARATE ORDERS OF THE CIT (APPEALS)-XXVII, NEW DELHI DATED 11.03.2010 FOR THE ASSESSMENT YEAR 2004-05 & 2005-06 RESPECTIVELY. IN BOTH THE APPEALS, THE GROUNDS OF APPEAL TAKEN BY THE REVENUE ARE SAME EXCEPT THE DIFFERENCE IN THE FIGURE. FOR THE SAKE OF CONVENIE NCE, BOTH THE APPEALS ARE BEING DISPOSED OFF BY THIS COMMON ORDER. THE GROUN DS OF APPEAL IN ITA NO.3248/DEL/2010 ARE AS UNDER :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN RESTRICTING THE ADDITION TO RS.5,67,057/- AS AGAINST THE TOTAL ADDITION OF ITA NO.3248 & 3249/DEL/2010 2 RS.10,62,57,655/- MADE BY THE AO U/S 40A(3) OF THE I.T. ACT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN ACCEPTING THE SUBMISSION AND F RESH EVIDENCE OF THE ASSESSEE FILED BEFORE HIM AND NOT P ROVIDING OPPORTUNITY TO THE AO. THUS THERE IS A VIOLATION O F RULE 46A(1) OF THE I.T. RULES. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) O F APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS O F TRANSPORTATION OF GOODS. THE RETURN OF INCOME FOR AY 2004-05 AND 200 5-06 FILED ON 29.10.2004 AND 27.10.2005 RESPECTIVELY AND ASSESSME NTS FOR BOTH THE YEARS WERE FINALIZED U/S 143(3) OF THE INCOME-TAX A CT ON 22.01.2005 AND 31.01.2006 RESPECTIVELY. THE CASES WERE REOPENED B Y ISSUING NOTICES U/S 148 OF INCOME-TAX ACT BY RECORDING REASONS REGARDIN G CASH EXPENDITURE FOR LORRY HIRE FREIGHT OF RS.20,000/- IN AGGREGATE IN A DAY. AO MADE ADDITION ON THIS ACCOUNT WHICH HAD BEEN DELETED BY CIT (A) BY HOLDING AS UNDER :- 6. DETERMINATION: THE ASSESSING OFFICER VIDE ORDER SHEET DATED 15.04.2009 ASKED THE ASSESSEE TO EXPLAIN WHY THE PR OVISION OF SECTION 40A(3) IS NOT APPLICABLE IN ITS CASE. IN RESPONSE, THE ASSESSEE HAD PROVIDED THE DETAILS OF EXPENDITUR E IN RESPECT OF WHICH PAYMENT HAD MADE IN EXCESS OF RS.20,000/-. THE ASSESSEE HAD ADMITTED THAT THE PRO VISION OF SECTION 40A(3) IS APPLICABLE TO ITS CASE BUT ONL Y TO THE EXTENT OF RS.28,35,287/- IS WITHIN THE AMBIT OF THE SAID SECTION. THE ASSESSEE HAD DULY REPLIED TO THE ASSES SING ITA NO.3248 & 3249/DEL/2010 3 OFFICER'S QUERY. THE ASSESSING OFFICER HAD EXAMINED THE BOOKS OF ACCOUNTS ON TEST CHECK BASIS AND IT WAS NO TICED THAT THE ASSESSEE HAS MADE AGGREGATE CASH PAYMENTS OF MORE THAN RS.20,000/- TO MANY LORRIES IN A DAY AND THESE PAYMENTS WERE NOT INCLUDED IN THE AMOUNT OF RS.28,35,287/- WHICH WAS SUBMITTED BY THE ASSESSEE ON 15.04.2009. IN THE PERUSAL OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961, APPLICABLE TO RELEVANT ASSESSMENT YE AR, IT IS OBSERVED THAT THE LANGUAGE AGGREGATE CASH PAYMENTS ' AND 'IN A DAY' ARE MISSING IN RELEVANT LAW. THE ASSESSE E HAS RELIED ON THE FOLLOWING THREE JUDICIAL PRONOUNCEMEN TS WHEREIN IT IS PRONOUNCED THAT IRRESPECTIVE OF NUMBE R OF TRANSACTIONS, WHERE THE AMOUNT DOES NOT EXCEED THE SPECIFIED MONETARY LIMIT IN EACH TRANSACTION, RIGOU R OF SECTION 40A(3) WILL NOT APPLY. (A) ALOO SUPPLY CO. VS. CIT [1980] 121 ITR 0680 (ORISSA) (B) SHREE MAHAVIR CORPORATION VS. ITO [2002] 258 ITR (AT.) 0055 BANGALORE (ITAT) (C) TRIVENIPRASAD PANNALAL VS. CIT [1997] 228 ITR 0680 (MP) FROM THE PLAIN READING OF THE ABOVE JUDICIAL PRONOUNCEMENT AND RELEVANT LAW AND AMENDED LAW PRESENTED IN TABULAR FORM AS PER SUBMISSION MADE IN PARA NO. 6.2, IT IS APPARENT THAT THE AO EITHER HAD ASSU MED THAT THE AMENDED LAW HAS RETROSPECTIVELY OR FAILED TO DIFFERENTIATE THE PROVISION OF SECTION 40A(3) APPLI CABLE TO DIFFERENT YEARS. THEREFORE, ADDITION MADE ON THIS G ROUND IS NOT TENABLE IN LAW. 6.1. I HAVE CONSIDERED THE CONTENTIONS OF THE ASSE SSING OFFICER AND THE SUBMISSIONS MADE BEFORE ME. IT IS C LEAR FROM THE ABOVE PROVISIONS OF SECTION 40A(3) THAT TH E WORD 'AGGREGATE OF PAYMENTS' IS MISSING IN RELEVANT LAW I.E. ASSESSMENT YEAR 2004-05. HENCE THE ASSESSING OFFICE R HAS MISREAD THE PROVISION OF SECTION 40A(3) OF THE INCOME TAX ACT, 1961, AND APPLIED THE LAW UNDER PRESUMPTIO N THAT AMENDED LAW HAS RETROSPECTIVE EFFECT. THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.10,62,57,655/- BE RESTRICTED TO AN AMOUNT OFFERE D BY THE ASSESSEE OF RS.5,67,057/-. ITA NO.3248 & 3249/DEL/2010 4 AGAINST WHICH REVENUE IS IN APPEAL IN ITA NO.3248/ DEL/2010. FOR SIMILAR REASONS, THE RELIEF WAS GRANTED BY CIT (A) IN AY 2005-06 3. WHILE PLEADING ON BEHALF OF THE REVENUE, THE LEA RNED DR SUBMITTED THAT CIT (A) HAS ADMITTED THE ADDITIONAL EVIDENCE A ND NO OPPORTUNITY WAS GRANTED TO THE AO, THEREFORE, THERE IS VIOLATION OF RULE 46A. FURTHER HE SUBMITTED THAT THE ASSESSEE HAS NOT SUBMITTED THE D ETAILS BEFORE THE AO WHICH HAS BEEN ENTERTAINED BY THE CIT (A) AND FOR T HIS, HE RELIED ON THE AOS OBSERVATION THAT THE ASSESSEE HAS SHOWN HIS IN ABILITY TO PRODUCE THE DETAILS OF THE LORRY HIRE CHARGES PAID IN CASH WHIC H AGGREGATES MORE THAN RS.20,000/- TO A LORRY IN A DAY. HE RELIED ON THE DECISION OF CIT VS. KANGRA STEEL PVT. LTD., 320 ITR 691 (HP) AND SMT. P RABHAWATI S. SHAH VS. CIT, 231 ITR 277 (MUM.). HE ALSO PLEADED THAT THERE WAS NO BUSINESS EXPEDIENCY FOR MAKING THE CASH PAYMENTS AN D IT IS ON THE ASSESSEE TO PROVE THAT THERE WAS BUSINESS EXPEDIENC Y EXISTED FOR SUCH PAYMENTS. LEARNED DR RELIED ON CIT VS. HYNOOP FOOD & OIL P. LTD. REPORTED IN 290 ITR 702 FOR THE PROPOSITION THAT EV EN IF BUSINESS EXPEDIENCY GETS ESTABLISHED, IN THE ABSENCE OF EVID ENCE AS TO THE GENUINENESS OF THE PAYMENTS AND IDENTITY OF PAYEE, AN ASSESSEE CANNOT SEEK RECOURSE EITHER OF TWO SITUATIONS LAID DOWN IN CLAUSE (J) OF RULE 6DD. HE ALSO RELIED ON THE DECISION OF HON'BLE KAR NATAKA HIGH COURT IN THE CASE OF MUNGI BROTHERS VS. ACIT, 296 ITR 665, F OR THE PROPOSITION ITA NO.3248 & 3249/DEL/2010 5 THAT NONE OF THE EXCEPTIONAL CIRCUMSTANCES UNDER RU LE 6DD(J) WERE NOT AVAILABLE IN THE FACTS AND CIRCUMSTANCES OF THE CAS E. LEARNED DR ALSO RELIED ON SILK FAB EXPORTS VS. CIT REPORTED IN 295 ITR 123 (KER.) FOR THE PROPOSITION THAT BURDEN IS ON ASSESSEE TO PROVE THA T SPECIAL CIRCUMSTANCES NECESSITATED THE CASH PAYMENTS. HE PRAYED TO SET A SIDE THE ORDER OF CIT A) AND RESTORE AOS ORDER. 4. ON THE ISSUE OF ADDITIONAL EVIDENCE UNDER RULE 4 6A OF INCOME-TAX RULES, THE LEARNED AR SUBMITTED THAT THERE WAS NO A DDITIONAL EVIDENCE SUBMITTED BEFORE THE CIT (A). ALL THE DETAILS REGA RDING THE FREIGHT PAYMENT TO LORRY IN A DAY WHICH WERE MORE THAN AND LESS THAN RS.20,000/- WERE ALREADY AVAILABLE IN THE AUDIT REPORT ITSELF W HICH HAS BEEN THE GROUND FOR REOPENING THE ASSESSMENT. 4.1 ON THE ISSUE OF BUSINESS EXPEDIENCY, THE LEARNE D AR SUBMITTED THAT THE ASSESSEE HAS MADE CASH PAYMENT TO THE LORRY DRI VERS ON ACCOUNT OF COMMERCIAL EXPEDIENCY AS PER THE PREVALENT MARKET P RACTICE. THE DRIVERS WHO COLLECTED THE PAYMENTS WERE NOT HAVING ANY BANK ACCOUNT AND THEY HAVE TO INCUR VARIOUS EXPENSES ON THE ROADS AND HIG HWAYS. THEREFORE, THE FACTS OF THE CASE OF MUNGI BROTHERS ARE NOT APPLICA BLE TO THE FACTS OF THE ASSESSEES CASE. THE CASH PAYMENT IS A MUST IN THI S TRADE AND THESE PAYMENTS WERE FOR COMMERCIAL EXPEDIENCY WITHOUT WHI CH THE BUSINESS WILL COME TO AT A HALT. THESE PAYMENTS WERE GENUIN E FOR GENUINE BUSINESS NEEDS. HE ALSO SUBMITTED THAT THE BREAK-U P OF THE EXACT QUANTUM ITA NO.3248 & 3249/DEL/2010 6 ATTRIBUTABLE TO PAYMENT EXCEEDING RS.20,000/- WAS S UBMITTED BEFORE THE AO. THE DETAILS FOR THE CASH PAYMENTS OF RS.20,000 /- AND ABOVE WERE AVAILABLE BEFORE THE AO. THE ASSESSEE PRODUCED THE BOOKS OF ACCOUNT. THE AO HAS TEST CHECK THE BOOKS OF ACCOUNT AND HAS NOT POINTED OUT ANY SPECIFIC DEFECT IN THE BOOKS OF ACCOUNT IN THIS REG ARD. THEREFORE, THE LD. DRS RELIANCE ON THE CIT VS. HYNOOP FOOD & OIL P. L TD. IS NOT JUSTIFIED AS THE EXPENSES WERE GENUINE. HE SUBMITTED THAT AS SESSEE HAD DISCHARGED THE BURDEN TO SHOW THAT PAYMENTS WERE MADE FOR GENU INE BUSINESS NEED AND NON-PAYMENT COULD HAVE BROUGHT THE BUSINESS OF ASSESSEE AT A COMPLETE HALT. THEREFORE, RATIO OF SILK FAB EXPORT S IS ALSO NOT APPLICABLE TO ASSESSEES CASE. THE AO IGNORED THE SUBMISSIONS MADE BY THE ASSESSEE AND ARBITRARILY DISALLOWED 20% OF THE ENTI RE CASH PAYMENTS MADE BY THE ASSESSEE. AOS ALLEGATION THAT ASSESSEE COU LD NOT PRODUCE ANY DETAILS IS COMPLETELY AGAINST THE FACTS OF THE CASE . THE ASSESSEE HAS SUBMITTED THAT ALL THE RELEVANT BOOKS OF ACCOUNT WE RE MADE AVAILABLE BEFORE THE AO. THE AO COULD NOT POINT OUT ANY SPEC IFIC DEFECTS IN THESE BOOKS OF ACCOUNT. AO IN AN ARBITRARY MANNER DISAL LOWED 20% OF THE ENTIRE SUM WHETHER THE PAYMENTS WERE ABOVE RS.20,00 0/- OR NOT. HE FURTHER SUBMITTED THAT THE PROVISIONS OF SECTION 40 A (3) AS THEY STOOD AT THE RELEVANT TIME DID NOT PROVIDE FOR DISALLOWANCE WHERE THE EACH PAYMENT IN CASH WAS BELOW RS.20,000/-. THE RELEVAN T PROVISIONS FOR THAT TIME PROVIDED FOR DISALLOWANCE ONLY WHEN THE SINGL E PAYMENT MADE IN ITA NO.3248 & 3249/DEL/2010 7 CASH EXCEEDED THE LIMIT OF RS.20,000/-. HE ALSO SU BMITTED THAT THERE WAS NO PROVISION IN THE STATUTE TO DISALLOW THE AGGREGA TE OF THE CASH PAYMENTS TO PERSON OF RS.20,000/- AND MORE MADE IN A DAY. H E ALSO SUBMITTED THAT THE THRESHOLD LIMIT OF RS.20,000/- IS APPLICABLE TO A SINGLE PAYMENT AND NOT TO AN AGGREGATE PAYMENT AS PER LAW AS IT STOOD AT THAT TIME. LD. AR RELIED ON THE FOLLOWING DECISIONS FOR ABOVE PROPOSI TIONS :- (I) CIT VS. ALOO SUPPLY 121 ITR 680 (ORISSA) AGAI NST WHICH THE HON'BLE SUPREME COURT HAS DISMISSED THE SLP RE PORTED IN 143 ITR ST. 67. (II) SHRI MAHABIR CORPORATION VS. ITO, 258 ITR (AT) 55 (BANGALORE); (III) TRIVENI PRASAD PANNALAL VS. CIT, 228 ITR 0680 (MP) (IV) CIT VS. ASHOK IRON AND STEEL ROLLING MILLS 320 ITR 101 (ALL.) (V) LEADER TRANSPORT COMPANY VS. ITO 6 ITR (TRIB) 2 29 (AHD.) LEARNED AR ALSO SUBMITTED THAT THE FACTS OF THE CAS E LAWS RELIED UPON BY THE REVENUE ARE COMPLETELY AT VARIANCE TO THE ASSES SEES CASE. THE ASSESSEES CASE IS CLEARLY COVERED BY THE DECISIONS CITED SUPRA. HE FINALLY SUBMITTED THAT SUCH DISALLOWANCES HAD NOT BEEN MADE IN THE EARLIER YEARS AND ALSO IN THE SUBSEQUENT YEARS, WHERE THE SIMILAR EXPENDITURE WAS INCURRED DURING THOSE YEARS ALSO. HE ALSO PRAYED F OR RULE OF CONSISTENCY IN TREATING THE ISSUE. ITA NO.3248 & 3249/DEL/2010 8 5. WE HAVE HEARD BOTH THE SIDES IN DETAIL. ON THE ISSUE OF ADDITIONAL EVIDENCE, WE HAVE HEARD AND CONSIDERED THE SUBMISSI ONS OF BOTH THE SIDES AND CASE LAWS RELIED UPON. THE ASSESSEE SUBMITTED THE DETAILS WHICH WERE AVAILABLE TO THE AO IN RESPECT OF THE LORRY HIRE CH ARGES PAID IN CASH WHERE THE PAYMENTS OF MORE AND LESS THAN RS.20,000/-. TH E ASSESSEE HIMSELF HAS DISALLOWED 20% OF SUCH AMOUNT OF RS.28,35,387/- . THE BALANCE AMOUNT WERE SIMPLE PAYMENTS OF LESS THAN RS.20,000/ -. AS PER SECTION 40A3) OF INCOME-TAX ACT AS IT STOOD AT THE RELEVANT POINT OF TIME, ONLY SINGLE PAYMENTS OF RS.20,000/- ATTRACTS THE PROVISI ON OF THIS SECTION. AGGREGATE PAYMENTS OF RS.20,000/- TO A SINGLE PARTY WITHIN A DAY SHALL NOT EFFECT THE OUTCOME OF THE DISALLOWANCES, HAD TH ERE BEEN DETAILS OF EACH AND EVERY ITEM AS ONLY THE SINGLE PAYMENT OF M ORE THAN RS.20,000/- CAN BE MADE BASIS FOR DISALLOWANCES U/S 40A(3). IN VIEW OF THESE FACTS, WE UPHOLD THAT THERE WAS NO ADDITIONAL EVIDENCE SUB MITTED BEFORE THE CIT (A) WHICH COULD HAVE EFFECTED THE OUTCOME OF THE AP PEAL. 5.1 WE HAVE CONSIDERED THE CASE LAWS RELIED UPON BY BOTH THE SIDES AND THE SECTION 40A(3) OF THE INCOME-TAX ACT. SECTION 40A(3) AS IT STOOD AT THE RELEVANT POINT OF TIME READ AS UNDER :- 40A. EXPENSES OR PAYMENTS NOT DEDUCTIBLE IN CERTAIN CIRCUMSTANCES (3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RE SPECT OF WHICH PAYMENT IS MADE, AFTER SUCH DATE (NOT BEIN G LATER THAN THE 31ST DAY OF MARCH, 1969) AS MAY BE SPECIFI ED IN THIS BEHALF BY THE CENTRAL GOVERNMENT BY NOTIFICATI ON IN ITA NO.3248 & 3249/DEL/2010 9 THE OFFICIAL GAZETTE, IN A SUM EXCEEDING TWENTY THO USAND RUPEES OTHERWISE THAN BY A CROSSED CHEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT, TWENTY PER CENT. O F SUCH EXPENDITURE SHALL NOT BE ALLOWED AS A DEDUCTION: ............. PROVIDED FURTHER THAT NO DISALLOWANCE UNDER THIS SUB-SECTION SHALL BE MADE WHERE ANY PAYMENT IN A SU M EXCEEDING TWENTY THOUSAND RUPEES IS MADE OTHERWISE THAN BY A CROSSED CHEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT, IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES A S MAY BE PRESCRIBED, HAVING REGARD TO THE NATURE AND EXTE NT OF BANKING FACL1ITIES AVAILABLE, CONSIDERATIONS OF BUS INESS EXPEDIENCY AND OTHER RELEVANT FACTORS.' THE RELIANCE PLACED BY THE ASSESSEE ON THE JUDICIAL PRONOUNCEMENTS WHEREIN IT HAS BEEN HELD THAT NUMBER OF TRANSACTION S WHERE THE AMOUNT DOES NOT EXCEED THE SPECIFIED MONETARY LIMIT IN THE SE TRANSACTIONS, RIGOR OF SECTION 40A(3) SHALL NOT APPLY. HON'BLE ORISSA HIGH COURT IN THE CASE OF ALOO SUPPLY CO. VS. CIT, CITED SUPRA, HAD HELD A S UNDER :- (I) ALOO SUPPLY CO. VS. CIT [1980] 121 ITR 0680 (ORISSA) (SPECIAL LEAVE PETITION (SLP) DISMISSED O N 26/08/1983 BY THEIR LORDSHIPS P.N. BHAGWATI AND SABYASACHI MUKHARJI JJ) THAT IF PAYMENTS ARE MADE AT DIFFERENT TIMES DURIN G A DAY AND THE ASSESSEE HAS NO IDEA THAT HE HAS TO P AY TO THE SAME PERSON ON MORE THAN ONE OCCASION, HE CAN NOT B E SUBJECTED TO THE STATUTORY RESTRICTION CONTAINED IN THE PROVISION IN QUESTION UNLESS ANYONE PAYMENT IS ABO VE RS.2500/-. THE STATUTORY LIMIT OF RS.2,500 UNDER SE CTION 40A(3) OF THE ACT APPLIES TO PAYMENTS MADE TO A PAR TY AT A TIME AND NOT TO THE AGGREGATE OF PAYMENTS MADE TO A PARTY IN THE COURSE OF THE DAY AS RECORDED IN THE CASH BO OK. IN VIEW OF SUCH AN ANSWER, IN THE INSTANT CASE, TH E PROVISION WAS NOT AT ALL ATTRACTED. ASSESSEE WOULD BE ENTITLED TO COST OF THIS REFERENCE. ITA NO.3248 & 3249/DEL/2010 10 IN THE CASE OF SHREE MAHAVEER CORPORATION VS. ITO, CITED SUPRA, THE ITAT HELD AS UNDER :- 'THAT SECTION 40A(3) STATES THAT WHERE THE .ASSESSE E INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT IS MADE , AFTER SUCH DATE (NOT BEING LATER THAN THE 31ST DAY OF MAR CH, 1969) AS MAY BE SPECIFIED IN THIS BEHALF BY THE CEN TRAL GOVERNMENT BY NOTIFICATION IN THE OFFICIAL GAZETTE, IN A SUM EXCEEDING TEN THOUSAND RUPEES OTHERWISE THAN BY A C ROSSED CHEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT . .. THE ABOVE WORDS CLEARLY SHOW THAT THE WORD 'IN A SUM' I N SECTION 40A(3) DENOTE THE PAYMENT AT ANYONE TIME AN D NOT THE SUM TOTAL OF PAYMENTS. THEREFORE, IRRESPECTIVE OF NUMBER OF TRANSACTIONS, WHERE THE AMOUNT DOES NOT E XCEED THE SPECIFIED MONETARY LIMIT IN EACH TRANSACTION, T HE RIGOUR OF SECTION 40A(3) WILL NOT APPLY. HENCE, THE DISALL OWANCE IN RESPECT OF THE IMPUGNED PAYMENTS WAS TOTALLY UNC ALLED FOR'. IN THE CASE OF TRIVENIPRASAD PANNALAL VS. CIT, CITE D SUPRA, THE HON'BLE M.P. HIGH COURT HELD AS UNDER :- 'SECTION 40A(3) OF THE INCOME TAX ACT, 1961, SAYS THAT THE ASSESSEE SHOULD NOT INCUR ANY EXPENDITURE IN A SUM EXCEEDING RS.2,500/- OTHERWISE THAN BY A CROSSED C HEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT. SUCH EXPENDITURE SHALL NOT BE ALLOWED AS DEDUCTION. THE REFORE, THE LAW ONLY SAYS THAT THE AMOUNT EXCEEDING RS.2,5 00/- SHOULD NOT BE PAID EXCEPT BY WAY OF CHEQUE DRAWN O N A BANK OR BY A CROSSED BANK DRAFT AND IF IT EXCEEDS THIS AMOUNT, THEN SUCH EXPENDITURE SHALL NOT BE ALLOWED AS DEDUCTION. IT DOES NOT SAY THAT THE AGGREGATE OF T HE AMOUNT SHOULD NOT EXCEED RS.2,500/-. THE WORD USED ARE 'I N A SUM', I.E, SINGLE SUM HAS BEEN USED. THEREFORE, IR RESPECTIVE OF ANY NUMBER OF TRANSACTIONS, WHERE THE AMOUNT DO ES NOR EXCEED RS.2,500/- THE RIGOURS OF SECTION 40A(3) WI LL NOT APPLY'. ITA NO.3248 & 3249/DEL/2010 11 IN THE CASE OF CIT VS. ASHOK IRON & STEEL ROLLING M ILLS, CITED SUPRA, HON'BLE ALLAHABAD HIGH COURT HELD AS UNDER :- 4. HEARD THE LEARNED COUNSEL FOR THE PARTIES AND PERUSED THE RECORD. SRI A.N. MAHAJAN, LEARNED STAND ING COUNSEL ON BEHALF OF THE DEPARTMENT SUBMITS THAT IN VIEW OF THE LATEST AMENDMENT IN S. 40A(3) OF THE ACT, TH E ORDER OF THE TRIBUNAL CANNOT BE ALLOWED TO STAND. HOWEVER , WE FIND THAT S. 40A(3) OF THE ACT, AS IT THEN STOOD AT THE RELEVANT POINT OF TIME, PROVIDED THAT THE AMOUNT EX CEEDING RS.2,500 SHOULD NOT BE PAID EXCEPT BY WAY OF CHEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT AND, IF IT EXCEEDS THAT AMOUNT, THEN 20 PER CENT OF THE EXPEND ITURE SHALL NOT BE ALLOWED AS DEDUCTION. IT DOES NOT SAY THAT THE AGGREGATE OF THE AMOUNTS SHOULD NOT EXCEED RS.2,500 . THE WORDS USED ARE 'IN A SUM'. THE SAID PHRASE HAS BEEN INTERPRETED BY VARIOUS HIGH COURTS AND IT HAS BEEN HELD THAT IRRESPECTIVE OF ANY NUMBER OF TRANSACTIONS, WH ERE THE AMOUNT DOES NOT EXCEED RS.2,500, THE RIGOUR OF S. 4 0A(3) OF THE ACT WILL NOT APPLY. THE SAID VIEW HAS BEEN T AKEN BY THE MADHYA PRADESH HIGH COURT IN CIT VS. TRIVENIPRA SAD PANNALAL (1997) 142 CTR (MP) 562 : (1997) 228 ITR 6 80 (MP). IDENTICAL VIEW HAS BEEN TAKEN IN CIT VS. KOTH ARI SANITATION & TILES (P) LTD. (2006) 202 CTR (MAD) 27 7 : (2006) 282 ITR 117 (MAD). IT WAS FURTHER POINTED OU T THAT SIMILAR VIEW WAS TAKEN BY THE ORISSA HIGH COURT IN CIT VS. ALOO SUPPLY CO. (1980) 121 ITR 680 (ORI). THE RELEV ANT PORTION OF THE SAID JUDGMENT IS REPRODUCED BELOW (HEADNOTE) : 'THE WORD 'SUM' HAS NO STATUTORY DEFINITION AND MUS T HAVE THE COMMON PARLANCE MEANING. WHILE LEGISLATING, PARLIAMENT TRIES TO CONVEY ITS INTENTION THROUGH EX PRESS WORDS. IT IS ONE OF THE WELL SETTLED RULES OF INTER PRETATION THAT WHERE A WORD USED IN A STATUTE CARRIES MORE TH AN ONE MEANING, THAT MEANING WHICH MAKES THE PROVISION WORKABLE AND IS NEAREST TO THE LEGISLATIVE INTENTIO N, HAS TO BE ADOPTED. THE WORD 'SUM' IN S. 40A(3), SECOND PRO VISO, OF THE IT ACT, 1961, IS USED ONLY TO INDICATE AN AM OUNT OF MONEY AND DOES NOT REFER TO THE TOTALITY OF THE EXPENDITURE.' ITA NO.3248 & 3249/DEL/2010 12 5. AGAINST THE SAID JUDGMENT OF THE ORISSA HIGH COU RT, A SPECIAL APPEAL WAS PREFERRED BEFORE THE APEX COUR T AND THE SAID SPECIAL APPEAL HAS BEEN DISMISSED BY THE A PEX COURT AS (1983) 14 ITR (ST) 67. 6. LEARNED STANDING COUNSEL FOR THE DEPARTMENT COUL D NOT PLACE ANY DECISION CONTRARY TO THE ABOVE. ONLY SUBMISSION WHICH HE COULD MAKE IS THAT IN VIEW OF T HE AMENDMENT IN LAW, THE VIEW OF THE TRIBUNAL CANNOT B E ALLOWED TO STAND. OBVIOUSLY, THE SAID AMENDMENT WAS NOT AVAILABLE DURING THE RELEVANT ASSESSMENT YEAR AND T HE SAID AMENDMENT WAS NOT RETROSPECTIVE IN NATURE. 7. IN VIEW OF THE ABOVE, THERE IS NO LEGAL INFIRMIT Y IN THE ORDER OF THE TRIBUNAL. THE QUESTION OF LAW IS, THEREFORE, ANSWERED IN THE AFFIRMATIVE, I.E., IN FA VOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. CONSIDERING THE PLEADINGS OF BOTH SIDES AND THE RAT IO LAID DOWN IN ABOVE DECISIONS OF HON'BLE COURTS, WE UPHOLD THE ORDER OF THE CIT (A) AND HOLD THAT HE WAS JUSTIFIED IN DELETING THE ADDITION FOR BOTH THE YEARS UNDER APPEAL. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF AUGUST, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 19 TH DAY OF AUGUST, 2011/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-XXVII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT