Shri Kannadasan , Port Blair V. DCIT, Circle - 3(2), Port Blair, Port Blair

ITA 353/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5317 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-05-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 28-02-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHURY CITSRDR
• Assessee Lawyers: NARENDRA KOCHAR
• Section: 40A(3); 143(3)

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 353 / KOL / 20 18 ASSESSMENT YEAR :2012-13 SHRI KANNADASA C/O S. KOCHAR, ADVOCATE 5, ASHUTOSH CHOWDHURY AVENUE, KOLKATA-19 [ PAN NO.ANHPK 2600 G ] V/S . DCIT, CIRCLE-3(2), PORT BLAIR, MB-210, SADIPUR, PORT BLAIR /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI NARENDRA KOCHAR, AR /BY RESPONDENT SHRI ROBIN CHOUDHURY, ADDL. CIT-SR-DR /DATE OF HEARING 02-05-2019 /DATE OF PRONOUNCEMENT 15-05-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2012-13 ARISES AGAINST COMMISSIONER OF INCOME TAX (APPEALS)-1 KOLKATAS OR DER DATED 27.12.2017 PASSED IN CASE NO.367/CIT(A)-1/P.B./2015-16, IN PRO CEEDINGS U/S 143(3) OF THE INCOME TAX ACT, 1961; IN SHORTS THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES FIRST SUBSTANTIVE GROUND CHALLENG ES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION INVOKING SEC. 40A(3) D ISALLOWANCE IN CASH PAYMENT AMOUNTING TO 3,28,600/- IN SOFTWARE PURCHASES IN ISSUE. THE CIT(A)S DETAILED DISCUSSION TO THIS EFFECT READS A S FOLLOWS:- GROUND NO. 8: THIS GROUND RELATES TO THE DISALLOWA NCE OF RS.3,28,600/- BY APPLYING SEC. 40A(3) IS TOTALLY UNCALLED FOR. THE AO OBSERVED FROM THE PURCHASE LEDGER OF THE ASS ESSEE, THAT AN AMOUNT OF AS THE APPELLANT FAILED TO ESTABLISH THAT THE SAID PAYMENTS ITA NO.353/KOL/2018 A.Y. 2 012-13 SHRI KANNADASAN VS. DCIT CIR-3(2), PORT BLAIR PAGE 2 WERE MADE THROUGH ACCOUNT PAYEE CHEQUE OR BANK DRAF T, AFTER INVOKING PROVISIONS OF SECTION 40A(3) OF THE IT ACT, THE AO DISALLOWED THE ENTIRE AMOUNT OF RS.3,28,600/-. THE APPELLANTS A/R HAS AR GUED THAT THE ON THIS ISSUE, THE SUBMISSION OF THE APPELLANT IS THAT IT WAS DUE TO URGENCY THAT PURCHASES WERE MADE FOR THE PURPOSE OF THE BUS INESS WHICH THE APPELLANT IS CARRYING ON AND, THEREFORE, THE PROVIS ION OF SEC. 40A(3) ARE NOT STRICTLY APPLICABLE. I HAVE CONSIDERED THE MATERIAL BEFORE ME. IN VIEW O F THE ABOVE DISCUSSION, IT IS CLEARLY ESTABLISHED THAT THE APPE LLANT HAD MADE THE PAYMENTS OF THE TWO AMOUNTS VIZ. RS.1,44,500/- WAS PAID IN CASH IN A SINGLE BILL TO SUBHAM COMPUTERS DATED 14.05.2011 AND ANOTHER PURCHASES ADDING TO RS.1,84,100/- WERE ALSO PAID IN CASH EACH EXCEEDING RS.20,000/-. THE APPELLANT WAS UNABLE TO OFFER ANY SATISFACTORY EXPLANATION OF SUBSTANTIATE REASONS FO R MAKING THE PAYMENT TOTALING RS.3,28,000/- BY CASH, I.E. OTHERWISE THAN THROUGH CROSSED CHEQUE/DEMAND DRAFT EITHER DURING THE ASSESSMENT OR APPELLATE PROCEEDINGS. THEREFORE, IT IS HELD THAT THERE IS NO INFIRMITY IN THE FINDING OF THE AO IN DISALLOWING THE IMPUGNED AMOUNT OF RS. 3,28,600/- U/S/. 40A(3) OF THE ACT, WHICH IS CONFIRMED. THIS GROUND IS NOT ALLOWED. 3. BOTH PARTIES REITERATE THEIR RESPECTIVE STANDS A GAINST AND IN SUPPORT OF IMPUGNED DISALLOWANCE. HON'BLE JURISDICTIONAL HIGH COURTS DECISION IN CIT VS CRESCENT EXPORT SYNDICATE IN ITA NO. 202 OF 2008 DA TED 30.7.2008 JURISDICTIONAL HIGH COURT DECISION HOLDS THAT THE IMPUGNED DISALLOWANCE IS NOT SUSTAINABLE IN AN INSTANCE OF OVERWHELMING GENUINE PAYMENT AS UNDER:- IT ALSO APPEARS THAT THE PURCHASES HAVE BEEN HELD TO BE GENUINE BY THE LEARNED CIT(APPEAL) BUT THE LEARNED CIT(APPEAL) HAS INVOKED SECTION 40A(3) FOR PAYMENT EXCEEDING RS.20,000/- SINCE IT IS NOT M ADE BY CROSSED CHEQUE OR BANK DRAFT BUT BY HEARER CHEQUES AND HAS COMPUTED T HE PAYMENTS FALLING UNDER PROVISIONS TO SECTION 40A(3) FOR RS.78,45,580 /- AND DISALLOWED @ 20% THEREON RS.15,69,116/-. IT IS ALSO MADE CLEAR THAT WITHOUT THE PAYMENT BEING MADE BY BEARER CHEQUE THESE GOODS COULD NOT HAVE BE EN PROCURED AND IT WOULD HAVE HAMPERED THE SUPPLY OF GOODS WITHIN THE STIPULATED TIME. THEREFORE, THE GENUINENESS OF THE PURCHASE HAS BEEN ACCEPTED BY THE LD. CIT(APPEAL) WHICH HAS ALSO NOT BEEN DISPUTED BY THE DEPARTMENT AS IT APPEARS FROM THE ORDER SO PASSED BY THE LEARNED TRI BUNAL. IT FURTHER APPEARS FROM THE ASSESSMENT ORDER THAT NEITHER THE ASSESSIN G OFFICER NOR THE CIT(APPEAL) HAS DISBELIEVED THE GENUINENESS OF THE TRANSACTION. THERE WAS NO DISPUTE THAT THE PURCHASES WERE GENUINE. WE ADOPT THE ABOVE THEIR LORDSHIP DETAILED DISCUSSI ON MUTATIS MUTANDIS TO DELETE THE IMPUGNED DISALLOWANCE THEREFORE. ITA NO.353/KOL/2018 A.Y. 2 012-13 SHRI KANNADASAN VS. DCIT CIR-3(2), PORT BLAIR PAGE 3 4. NEXT COMES THE LATTER ISSUE OF ESTIMATED DISALL OWANCE @ 10% AMOUNTING TO 34,32,218/- MADE IN BOTH THE LOWER PROCEEDINGS REGA RDING PROVISION OF GENERAL EXPENSE, WAGES & SALARY AS WEL L AS REPAID AND MAINTENANCE ON AD HOC BASIS. IT TRANSPIRES DURING THE COURSE OF HEARING THAT NEITHER THE ASSESSEE HAS FILED ALL DETAILED SUPPORT ING EVIDENCE REGARDING THE INSTANT HEAD(S)NOR THE LOWER AUTHORITIES HAVE DRAWN ANY COMPARATIVE CHART THEREOF VIS--VIS THE CORRESPONDING CLAIMS MADE IN PRECEDING OR SUCCEEDING ASSESSMENT YEARS. WE CONCLUDE IN THIS FACTUAL BACKD ROP OF THAT THE ESTIMATED AD HOC DISALLOWANCE OF 5% INSTEAD OF 10% IN ISSUE W OULD MEET THE ENDS OF JUSTICE WITH A RIDER THE SAME SHALL NOT BE TREATED AS PRECEDENT IN ANY OTHER ASSESSMENT YEAR. THE ASSESSEE GETS PART RELIEF IN I NSTANT SUBSTANTIVE GROUND THEREFORE. 5. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT 15 /05/2019 SD/- SD/- ( %) (' %) (DR.A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 15 / 05 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SHRI KANNADASAN C/O S.L.KOCHAR, ADVOCATE , 5 ASHUTOSH CHOWDHURY AVENUE, KOLKAT-19 2. /RESPONDENT-DCIT CIRCLE-3(2), MB-210, SADIPUR, PORT BLAIR 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ 3,