AMRUTLAL HASTIMAL JAIN, THANE V. ASST CIT CIR 1, THANE

ITA 3508/MUM/2012

• Counselvise Citation: 350819914 RSA 2012
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 27-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: E SHRIDHAR
• Assessee Lawyers: JASMIN THANAWALA
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA 3508/MUM/2012 (ASSESSMENT YEAR : 2007-08) AMRUTLAL HASTIMAL JAIN, DHANAJI PUNAMCHAND & CO., JIVVAT BUILDING, JAMBLI NAKA, THANE 400 601 PAN: ABKPJ4785C ... APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE- 1, THANE .... RESPONDENT ASSESSEE BY : MS. JASMIN THANAWALA REVENUE BY : SHRI E. SHRIDHAR DATE OF HEARING : 27/07/2015 DATE OF PRONOUNCEMENT : 31./08/2015 ORDER PER G.S. PANNU,AM: THE IMPUGNED APPEAL IS PREFERRED BY THE ASSESSEE AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 8 TH FEBRUARY, 2012 OF CIT(A)-II, THANE, PERTAINING TO THE ASSESSMENT YEA R 2007-08, WHICH IN-TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 23/11/2009 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT). 2 AMRUTLAL HASTIMAL JAIN 2. IN THIS APPEAL, THE SOLITARY ISSUE IS WITH REGAR D TO A DISALLOWANCE OF RS.1,26,031/- MADE UNDER SECTION 40 A(3) OF THE ACT. 3. BRIEFLY PUT THE RELEVANT FACTS ARE THAT THE ASS ESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF JEWELLERY. ON VERIFICATION OF THE PURCHASES MADE D URING THE YEAR UNDER CONSIDERATION, IT WAS NOTICED BY THE ASSESSIN G OFFICER THAT THE ASSESSEE HAS MADE PURCHASES AMOUNTING TO RS.6,3 0,155/-, ON VARIOUS DATES IN VIOLATION OF THE PROVISIONS O F SECTION 40A(3) OF THE ACT, IN AS MUCH AS EACH OF THE PURCHASE EXCE EDED RS.20,000/- IN CASH. ON BEING ASKED TO EXPLAIN THE REASONS, THE ASSESSEE EXPLAINED THAT THESE PAYMENTS WERE MADE FO R PURCHASE OF JEWELLERY ON THE COUNTER FROM THE CUSTOMERS COMI NG FROM REMOTE AREAS /VILLAGES WHO DO NOT ACCEPT PAYMENTS B Y CHEQUE FOR THE SALE OF THEIR JEWELLERY. THE ASSESSING OFFICER MADE ADDITION OF RS.1,26,031/- TO THE RETURNED INCOME OF THE ASSESSE E BY APPLYING SECTION 40A(3) OF THE ACT AND DISALLOWING 20% OF P AYMENT MADE OF RS.6,30,155/- FOR PURCHASE OF JEWELLERY. THE AS SESSEE FAILED IN ITS APPEAL BEFORE CIT(A) ALSO AND IS, THEREFORE, IN APPEAL BEFORE US. 4. THE PLEA OF THE ASSESSEE BEFORE THE LOWER AUTHOR ITIES AS WELL AS BEFORE US IS THAT THE JEWELLERY BUSINESS IS BEING CARRIED OUT IN THE MARKET PLACE WHERE CUSTOMERS COME FROM THE R EMOTE AREAS/VILLAGES BELONGING TO EITHER LOWER OR LOWER MIDDLE CLASS FAMILIES WHO ARE IN DIRE NEED OF MONEY AND, THEREFO RE, THEY EXPECT LIQUID CASH AGAINST SALE OF JEWELLERY. LD. REPRESEN TATIVE FOR THE 3 AMRUTLAL HASTIMAL JAIN ASSESSEE HAS POINTED OUT THAT THE TOTAL PURCHASES MADE IN CASH ARE TO THE TUNE OF RS.6,30,155/- ONLY AGAINST A TOT AL TURNOVER OF RS.86,45,263/-. IT WAS POINTED OUT THAT IN MOST OF THE CASES SUCH CASH PURCHASES ARE MADE ON HOLIDAYS WHEN THE BAN KING FACILITIES ARE NOT AVAILABLE AND THE PEOPLE FROM RE MOTE AREAS OF VILLAGES ARE ABLE TO COME TO THE MARKET PLACE. 5. LD. DEPARTMENTAL REPRESENTATIVE HAS DEFENDED TH E ACTION OF THE INCOME TAX AUTHORITIES BY POINTING OUT THAT THE BILLS FOR PURCHASES SHOW PAYMENTS MADE IN CASH AND, THEREFOR E, THE DISALLOWANCE HAS RIGHTLY BEEN MADE UNDER THE PROVIS IONS OF SECTION 40A(3) OF THE ACT. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. NO DOUBT ASSESSEE HAS MADE PAYMENTS FOR PURCHASES WHER E EACH PAYMENT EXCEEDS RS.20,000/- AND, THEREFORE, THE SAM E IS APPARENTLY CONTRARY TO THE REQUIREMENTS CONTAINED I N SECTION 40A(3) OF THE ACT. SO HOWEVER, THE PLEA OF THE A SSESSEE IS THAT SUCH PAYMENTS HAVE BEEN EFFECTED ON ACCOUNT OF EXIG ENCIES OF BUSINESS IN AS MUCH AS THE PAYMENT HAVE BEEN MADE M OSTLY ON HOLIDAYS WHEN THE BANKING FACILITIES ARE NOT AVAILA BLE AND ALSO BECAUSE THE JEWELLERY HAS BEEN PURCHASED FROM PERSO NS COMING FROM REMOTE AREAS OR VILLAGES. IT HAS BEEN FURTHE R EXPLAINED THAT THE ASSESSEES BUSINESS IS SITUATED IN THE MARKET P LACE AND IS CATERING TO THE CUSTOMERS MAINLY BELONGING TO THE L OWER OR LOWEST MIDDLE CLASS FROM THE OUTLIYING AREAS OR VILLAGES, WHO NORMALLY DO NOT HAVE BANKING FACILITIES. ONE OF THE POINTS RAI SED BY THE CIT(A) AS TO THE EFFECT THAT THE PURCHASE BILLS FILED BY THE ASSESSEE, WHICH CONTAIN THE NAMES AND ADDRESSES OF THE SEL LERS OF THE JEWELLERY ALONGWITH COUNTER SIGNATURES ARE DOUBTFUL AS SOME OF THE 4 AMRUTLAL HASTIMAL JAIN INFORMATION IS INCOMPLETE. AS PER CIT(A) THIS CAST S A DOUBT REGARDING GENUINENESS OF SUCH PURCHASE BILLS. IN O UR CONSIDERED OPINION, THE PROVISIONS OF SECTION 40A(3) OF THE A CT APPLY EVEN TO GENUINE PAYMENTS AND IF THE INCOME TAX AUTHORITIES WERE DOUBTFUL OF THE GENUINENESS OF PURCHASES EFFECTED BY THE AS SESSEE, THE SAME CALLED FOR A SEPARATE ADDITION AND IN THAT SIT UATION RECOURSE TO SECTION 40A(3) OF THE ACT IS NOT CALLED FOR. BE THAT AS IT MAY, CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, THE ASSESSEE IN OUR VIEW HAS ESTABLISHED THAT THE PAYME NTS HAVE BEEN MADE IN CIRCUMSTANCES AND SITUATION, WHERE IT WAS NOT POSSIBLE TO EFFECT THE PAYMENTS IN THE MANNER PRESC RIBED IN SECTION 40A(3) OF THE ACT, FOR INSTANCE ON DAYS OF BANKING HOLIDAYS, ETC. THEREFORE, THE DISALLOWANCE OF RS 1 ,26,031/- SUSTAINED BY CIT(A) IS HEREBY SET ASIDE AND IS DIR ECTED TO BE DELETED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2015 SD/- SD/- (SANJAY GARG) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI,DATED : 31/08/2015 VM. 5 AMRUTLAL HASTIMAL JAIN COPY OF THE ORDER FORWARDED TO : / COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBA I VM , SR. PS