Salem Food Products Ltd., CHENNAI V. DCIT, CHENNAI

ITA 3465/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3977 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-07-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 26-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K GURUNATHAN
• Section: 40A(3); 234B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , . !' , $ % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.3465/MDS/2016 ' (' / ASSESSMENT YEAR : 2010-11 M/S SALEM FOOD PRODUCTS LTD., C/O SHRI S. PARTHASARATHI, ADVOCATE, 3/1, PRANAVA COMPLEX, 5 TH CROSS, MALLESWARAM, BANGALORE-560 003. PAN : AAICS 6766 Q V. THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE VI(1), CHENNAI. (*+/ APPELLANT) (,-*+/ RESPONDENT) *+ . / / APPELLANT BY : SHRI V.K. GURUNATHAN, ADVOCATE ,-*+ . / / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 0 . 1$ / DATE OF HEARING : 24.07.2017 2!( . 1$ / DATE OF PRONOUNCEMENT : 27.07.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 15, CHEN NAI, DATED 13.07.2016 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2. THERE WAS A DELAY OF 65 DAYS IN FILING THIS APPE AL BY THE ASSESSEE. THE ASSESSEE HAS FILED A PETITION FOR CO NDONATION OF 2 I.T.A. NO.3465/MDS/16 DELAY. WE HAVE HEARD THE LD.COUNSEL FOR THE ASSESS EE AND THE LD. D.R. WE FIND THAT THERE WAS SUFFICIENT CAUSE FOR N OT FILING THE APPEAL BEFORE THE STIPULATED TIME. THEREFORE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. SHRI V.K. GURUNATHAN, THE LD.COUNSEL FOR THE ASS ESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISALLOWED A S UM OF ` 15,61,661/- UNDER SECTION 40A(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') ON THE GROUND THAT THE ASSESSEE HA S MADE CASH PAYMENT EXCEEDING ` 20,000/-. SIMILARLY, A DISALLOWANCE OF ` 1,15,000/- WAS ALSO MADE BY THE ASSESSING OFFICER. THE LD.COUNSEL SUBMITTED THAT THE PAYMENT WAS FOR PURCH ASE OF WHEAT PRODUCTS AND LORRY BOOKING CHARGES. A CONSOLIDATED DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER WITHOUT CONSIDERI NG THE INDEPENDENT PAYMENTS MADE TO RESPECTIVE PERSONS. A CCORDING TO THE LD. COUNSEL, THE PAYMENT MADE BY THE ASSESSEE D OES NOT EXCEED ` 20,000/- IN ANY WAY. ON A QUERY FROM THE BENCH, WH ETHER THE ASSESSING OFFICER DISALLOWED THE PAYMENTS ON TH E GROUND THAT ONLY SELF-MADE VOUCHERS WERE PRODUCED? THE LD.COUN SEL SUBMITTED THAT ALL THE PAYMENTS WERE ACCEPTED BY TH E ASSESSING OFFICER AND THE DISALLOWANCE WAS MADE ONLY UNDER SE CTION 40A(3) OF THE ACT ON THE GROUND THAT THE PAYMENT EXCEEDED ` 20,000/-. 3 I.T.A. NO.3465/MDS/16 ACCORDING TO THE LD. COUNSEL, THE DETAILS OF THE PA YMENT CLEARLY INDICATE THAT THE PAYMENT DOES NOT EXCEED ` 20,000/-, THEREFORE, THE ASSESSING OFFICER IS NOT CORRECT IN OBSERVING THAT THE ASSESSEE HAS MADE ONLY SELF-MADE VOUCHERS. THE LD.COUNSEL FURTH ER SUBMITTED THAT HE HAD NO OBJECTION IF THE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION. 4. WE HAVE HEARD SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. THE LD. D.R. SUB MITTED THAT THE ASSESSEE HAS PRODUCED ONLY SELF-MADE VOUCHERS BEFOR E THE ASSESSING OFFICER. THE ASSESSEE HAS MADE PAYMENTS TO M/S PITCHAIAH LORRY SERVICE / MERIDIAN AGENCY EXCEEDING ` 20,000/-. THEREFORE, ACCORDING TO THE LD. D.R., IT IS NOT COR RECT TO SAY THAT THE PAYMENT DOES NOT EXCEED ` 20,000/-. HOWEVER, THE LD. D.R. SUBMITTED THAT HE WOULD NOT HAVE ANY OBJECTION IF T HE MATTER IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION OF VOUCHERS ONCE AGAIN. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS PRODUCED ONLY SELF-MADE VOUCHERS. WHE N THE 4 I.T.A. NO.3465/MDS/16 ASSESSING OFFICER DOUBTED THE PAYMENT ON THE GROUND THAT THE ASSESSEE IS MAINTAINING ONLY SELF-MADE VOUCHERS, IT IS NOT KNOWN WHY THE PROVISIONS OF SECTION 40A(3) OF THE ACT WAS INVOKED? FOR THE PURPOSE OF INVOKING SECTION 40A(3) OF THE ACT, THE ASSESSING OFFICER HAS TO ACCEPT THAT THE PAYMENT AS GENUINE. ONLY IN RESPECT OF GENUINE PAYMENTS WHICH EXCEEDED ` 20,000/-, DISALLOWANCE CAN BE MADE UNDER SECTION 40A(3) OF THE ACT. IF THE PA YMENTS WERE NOT GENUINE AND THE ASSESSEE COULD NOT ESTABLISH THE GE NUINENESS OF PAYMENT, THEN THE DISALLOWANCE CAN BE FOR NOT SUPPO RTING THE EXPENSES. MOREOVER, THE ASSESSEE CLAIMS THAT NO PA YMENT WAS MADE EXCEEDING ` 20,000/-. THE ASSESSEE CLAIMS THAT THE ASSESSING OFFICER HAS TAKEN AGGREGATE PAYMENTS MADE TO PARTICULAR PERSON ON DIFFERENT DATES. IN VIEW OF THE ABOVE, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED. ACCORDINGLY, THE ORDERS OF BOTH THE AUTHORITIES BEL OW ARE SET ASIDE AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE ACT IS REMITTED BACK TO THE FILE OF T HE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE TH E MATTER IN THE LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSE SSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFT ER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 5 I.T.A. NO.3465/MDS/16 6. COMING TO THE OTHER ISSUE WITH REGARD TO LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT IS CONCERNED , THE LEVY OF INTEREST IS MANDATORY AND CONSEQUENTIAL. SINCE THE MAIN ISSUE OF DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT IS REM ITTED BACK TO THE FILE OF THE ASSESSING OFFICER, THE LEVY OF INTEREST ALSO NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY , THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE OF LEVY OF INTEREST UNDER SECT ION 234B AND 234C OF THE ACT ONCE AGAIN IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 27 TH JULY, 2017 AT CHENNAI. SD/- SD/- (. !' ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 4 /DATED, THE 27 TH JULY, 2017. KRI. 6 I.T.A. NO.3465/MDS/16 . ,156 76(1 /COPY TO: 1. *+ /APPELLANT 2. ,-*+ /RESPONDENT 3. 0 81 () /CIT(A)-15, CHENNAI-34 4. 0 81 /CIT-6, CHENNAI-34 5. 69 ,1 /DR 6. :' ; /GF.