Natvar Construction Co., Surat V. The Dy.CIT.,Circle-9, Surat

ITA 352/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8650 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 16-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 09-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: M J SHAH
• Section: 40A(3)

Judgement Text

, , , , D, IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH . .. . . .. . , !' !' !' !', , , , #$ #$ #$ #$ # ## #. .. .# ## #. . . . % % % %, , , , &' ( & ' &' ( & ' &' ( & ' &' ( & ' BEFORE S/SHRI G.C. GUPTA, VICE-PRESIDENT AND N.S. SAINI, ACCOUNTANT MEMBER) ITA NO.352/AHD/2011 [ASSTT.YEAR : 2007-2008] NATVAR CONSTRUCTION CO. 311, SUPER DIAMOND MARKET VARACHHA ROAD, SURAT. PAN : AACFN 0779 K /VS. DCIT, CIR.9 SURAT. ( (( ( *+ *+ *+ *+ / APPELLANT) ( (( ( ,-*+ ,-*+ ,-*+ ,-*+ / RESPONDENT) ./ 0 1 & / ASSESSEE BY : SHRI M.J. SHAH ( 0 1 & / REVENUE BY : SHRI B.L.YADAV, SR.DR 3 0 /4' / DATE OF HEARING : 16 TH DECEMBER, 2014 567 0 /4' / DATE OF PRONOUNCEMENT : 02-02-2015 &8 / O R D E R PER SHRI G.C.GUPTA, VICE-PRESIDENT: THIS APPEAL BY THE ASSESSEE FOR THE ASSTT.YEARS 2007-08 IS DIRECTED AG AINST THE ORDER OF THE CIT(A)-V, SURAT. 2. THE GROUND NO.1 AND 1.1 OF THE APPEAL OF THE ASS ESSEE ARE AS UNDER: 1. THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF RS.1,23,044/- UNDER SECTION 40A(3) OF THE IT ACT. ITA NO.352/AHD/2011 -2- 1.1 THE CIT(A) FAILED TO APPRECIATE THE OVERALL FAC TS AND CIRCUMSTANCES OF THE CASE BEFORE CONFIRMING THE DISALLOWANCE UNDE R SEC. 40A(3) OF THE IT ACT. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS A GOVERNMENT CONTRACTOR IN BUILDING ROADS IN REMOTE A REAS. HE SUBMITTED THAT IN THE PROCESS OF ROAD MAKING, THE ASSESSEE HAS TO SPE ND ON PURCHASE OF FUEL FOR THE PURPOSE OF WARMING UP OF TAR-COAL AND THE DIESEL WA S PURCHASED FROM PETROL PUMP SITUATED IN SURROUNDING REMOTE SITE PLACES, AN D THE ASSESSEE WAS UNKNOWN TO THE DEALER OF DIESEL. HE SUBMITTED THAT SOME DI ESEL HAS TO BE PURCHASED IN THE ODD HOURS AND ON HOLIDAY ALSO. HE SUBMITTED THAT S OMETIMES CASH PAYMENTS WERE MADE FOR PURCHASE OF DIESEL THROUGH THE AGENT AND THE ASSESSEE WAS FORCED, DUE TO THESE CIRCUMSTANCES, TO MAKE THE PAYMENT IN CASH. HE SUBMITTED THAT THE CIT(A) HAS WRONGLY DECIDED THE ISSUE UNDER THE IMPR ESSION THAT THERE IS NO EXCEPTION TO THE RULE, AND THE DISALLOWANCE UNDER S ECTION 40A(3) OF THE ACT FOR CASH PAYMENT HAS TO BE MADE, EVEN IF CIRCUMSTANCES ARE BEYOND THE CONTROL OF THE ASSESSEE. HE RELIED ON THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN ANUPAM TELE SERVICES VS. ITO, 366 ITR 122 (GUJ). 4. THE LEARNED DR HAS OPPOSED THE SUBMISSIONS OF TH E LEARNED COUNSEL FOR THE ASSESSEE. HE SUBMITTED THAT THERE IS NO DISCRET ION IN THE MATTER OF DISALLOWANCE UNDER SECTION 40A(3) WITH THE REVENUE AUTHORITY AND THE ONLY EXCEPTION IS RULE 6DD WHICH PROVIDES FOR CERTAIN EX CEPTIONS WHEREIN THE CASH PAYMENT COULD BE MADE. HE REFERRED TO THE RELEVANT PORTIONS OF THE ASSESSMENT ORDER AND THE APPELLATE ORDER OF THE CIT(A) IN SUPP ORT OF THE CASE OF THE REVENUE. HE RELIED ON THE ORDERS OF THE AO AND THE CIT(A). 5. WE HAVE CONSIDERED RIVAL SUBMISSION AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). WE FIND THAT IN THE CIRCUMSTANCES OF THE CASE OF THE ASSESSEE, WHERE THE ASSESSEE IS A GOVERNMENT CONTRACTOR IN TH E BUSINESS OF LAYING ROADS IN REMOTE AREAS AND THE DIESEL HAS TO BE PURCHASED AS FUEL IN THE MACHINE FOR WARMING-UP OF THE TAR COAL AND PAYMENT HAVE TO BE M ADE TO UNKNOWN PETROL ITA NO.352/AHD/2011 -3- PUMP DEALERS AND AGENTS, AND SOMETIMES, EVEN AFTER BANKING HOURS AND ON CLOSED HOLIDAYS. THE LAW DOES NOT FORCE THAT THE D ISALLOWANCE HAS TO BE MADE COMPULSORILY, AND THEREFORE, APPROACH OF THE CIT(A) IN THIS REGARD WAS NOT SUSTAINABLE. IN A CASE WHERE THE ASSESSEE IS ABLE TO DEMONSTRATE THAT THE CASH PAYMENTS WAS MADE DUE TO CIRCUMSTANCES, BEYOND ITS CONTROL, THE DISALLOWANCE MAY NOT BE SUSTAINED, AND PARTICULARLY WHEN THE PAY MENTS FALL IN ONE OR MORE OF THE EXCEPTIONS PROVIDED UNDER RULE 6DD OF THE I.T. RULES, 1962. WE FIND THAT IN THIS CASE THE CASH PAYMENTS OF PURCHASE OF DIESE L AT THE SITE, WHERE THE ROAD WAS BEING MADE FALLS IN EXPLANATION PROVIDED UNDER RULE 6DD(J) THAT THE PAYMENT WAS REQUIRED TO BE MADE IN CASH SOMETIMES, WHEN THE BANK WAS CLOSED, AND ALSO RULE 6DD(K) AS SOME PAYMENTS WERE MADE TO THE AGENT OF THE ASSESSEE WHO WAS REQUIRED TO MAKE THE PAYMENT IN CASH FOR GO ODS ON BEHALF OF THE ASSESSEE. IN THESE FACTS OF THE CASE, WE ARE OF TH E VIEW THAT NO CASE OF DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT COULD BE MADE OUT BY THE REVENUE AND THE DISALLOWANCE IS DELETED, AND THE GR OUND NO.1 AND 1.1 OF THE ASSESSEE ARE ALLOWED. 6. THE GROUND NO.2 AND 2.1 OF THE ASSESSEE ARE AS U NDER: 2. THE CIT(A) FURTHER ERRED IN CONFIRMING THE DISA LLOWANCE OF RS.43,507/- UNDER SEC. 40A(IA) OF THE INCOME TAX AC T. 2.1 THE CIT(A) FAILED TO APPRECIATE THE OVERALL FAC TS AND CIRCUMSTANCES OF THE CASE BEFORE CONFIRMING THE DISALLOWANCE UNDE R SEC. 40A(IA) OF THE INCOME TAX ACT. 7. WE HAVE HEARD PARTIES. WE FIND THAT THE CIT(A) HAS PASSED A WELL REASONED ORDER ON THIS ISSUE. IN THIS CASE, ADMITT EDLY, THE INTEREST PAYMENT WERE MADE WITHOUT DEDUCTING TDS BY THE ASSESSEE, AND THE REFORE, THE DISALLOWANCE ITA NO.352/AHD/2011 -4- WAS RIGHTLY CONFIRMED BY THE CIT(A). ACCORDINGLY, THE GROUND NO.2 AND 2.1 OF THE ASSESSEES APPEAL ARE DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE. SD/- SD/- ( # ## # . .. . # ## # . . . . % % % % /N.S.SAINI) &' ( &' ( &' ( &' ( /ACCOUNTANT MEMBER ( . .. . . .. . /G.C. GUPTA) !' !' !' !' /VICE-PRESIDENT C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD