Sh. Harish Kumar Nagpal, Gwalior V. I.T.O., Range-3(2), Gwalior

ITA 37/AGR/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0361 (ITAT-AGRA)
• Duration Of Justice: 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 30-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KK MISHRA
• Assessee Lawyers: R K BHAMBANI
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (SMC) BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 37/AGRA/2013 ASSTT. YEAR : 2007-08 HARISH KUMAR NAGPAL, VS. INCOME-TAX OFFICER, PROP. JAI PAINTS & VARNISH IND., WARD 3(2), GWA LIOR. 54-B, MAHARAJ PURA INDL. AREA, GWALIOR (PAN:ABSPN 7430N) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.K. BHAMBANI, ADVOCATE RESPONDENT BY : SHRI K.K. MISHRA, JR. D.R. DATE OF HEARING : 25.02.2013 DATE OF PRONOUNCEMENT OF ORDER : 28.02.2013 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), GWALIOR DATED 06.12.2012 FOR THE ASSESSMENT YEAR 20 07-08. 2. I HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND CONSIDERED THE MATERIA L AVAILABLE ON RECORD. 3. ON GROUND NO. 1 TO 3, THE ASSESSEE CHALLENGED TH E DISALLOWANCE OF RS.1,14,471/- U/S. 40A(3) OF THE IT ACT. THE AO MAD E DISALLOWANCE UNDER THE ABOVE PROVISIONS BECAUSE THE ASSESSEE HAS MADE CASH PAYMENT OF MORE THAN ITA NO. 37/AGRA/2013 2 RS.20,000/- TOTALING TO RS.5,72,357/- IN RESPECT OF FREIGHT AND CARTAGE CHARGES. THE ASSESSEE EXPLAINED BEFORE THE AO THAT PAYMENTS HAVE BEEN MADE TO TRUCK DRIVERS BECAUSE THEY HAVE TO TAKE DIESEL ON THE WAY AND THE Y INSISTED FOR CASH PAYMENT. BEFORE THE LD. CIT(A), THE ASSESSEE COULD NOT PROVE AS TO UNDER WHICH OF THE CLAUSES OF RULE 6DD THE CASE OF THE ASSESSEE WOULD FALL IN EXCEPTION. THIS GROUND OF ASSESSEE WAS REJECTED. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. HE, HOWEVER, ACCEPTED THAT N O CONFIRMATIONS FROM THE DRIVERS HAVE BEEN FILED TO PROVE THAT THEY HAVE INS ISTED FOR CASH PAYMENT. HE HAS, HOWEVER, SUBMITTED THAT SINCE GENUINE PAYMENT HAS N OT BEEN DISPUTED, THEREFORE, NO DISALLOWANCE SHOULD BE MADE. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISION OF HONBLE GAUHATI HIGH COURT IN THE CASE OF ASSOCIATED ENGINEERING ENTERPRISE VS. C IT, 216 ITR 366, IN WHICH IT WAS HELD THAT FOR MAKING DISALLOWANCE U/S. 40A(3), THE GENUINENESS OF PAYMENT IS NOT SUFFICIENT. CIRCUMSTANCES WARRANTING CASH PAYME NT MUST BE PROVED. 5. ON CONSIDERATION OF THE FACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES, I AM NOT INCLINED TO INTERFERE WITH TH E ORDERS OF THE AUTHORITIES BELOW IN MAKING DISALLOWANCE U/S. 40A(3) OF THE IT ACT. IT I S NOT IN DISPUTE THAT CASH ITA NO. 37/AGRA/2013 3 PAYMENTS HAVE BEEN MADE FOR FREIGHT AND CARTAGE CHA RGES IN VIOLATION OF SECTION 40A(3) OF THE IT ACT. WHATEVER PLEA WAS TAKEN BEFOR E THE AUTHORITIES BELOW THAT THE TRUCK DRIVERS INSISTED FOR CASH PAYMENT, WAS NO T PROVED THROUGH ANY EVIDENCE AND NO CONFIRMATION HAS BEEN FILED TO SUPPORT SUCH CONTENTION. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF AGARWAL STEEL TRA DERS VS. CIT, 250 ITR 738, CONSIDERING THE BOARDS CIRCULAR ON RULE 6DD HELD A S UNDER : HELD, (I) THAT THE EXPLANATION RENDERED BY THE ASSESSEE I N RESPECT OF THE PAYMENTS OF RS.24,000 AND RS.40,000 WOULD BE COVERED BY THE EXCEPTIONAL CIRCUMSTANCES AS PROVIDED IN THE BOARDS CIRCULAR, YET THAT BY ITSELF WOULD NOT ENTITLE THE ASSESSEE T O CLAIM THE RELIEF. THERE IS A FURTHER REQUIREMENT PROVIDED IN THE BOAR DS CIRCULAR ITSELF OF FURNISHING A CONFIRMATORY LETTER FROM THE CONCER NED PARTIES. ADMITTEDLY, NO SUCH LETTER IN THE ABOVE TERMS HAD B EEN FURNISHED BY THE ASSESSEE. HENCE, THE TRIBUNAL WAS JUSTIFIED IN SUSTAINING THE ADDITION OFRS.64,000 IN VIEW OF THE PROVISIONS OF S ECTION 40A(3) READ WITH RULE 6DD OF THE INCOME-TAX RULES, 1962. REGARDING GENUINENESS OF PAYMENT NOT DISPUTED BY TH E AO, WE DO NOT FIND THAT THERE IS SUCH REQUIREMENT U/S. 40A(3) OF THE IT ACT , WHICH IS ALSO HELD AGAINST THE ASSESSEE BY HONBLE GAUHATI HIGH COURT IN THE CASE OF ASSOCIATED ENGINEERING ENTERPRISE (SUPRA). FURTHER, THE ASSESSEES COUNSEL COULD NOT PROVE UNDER WHICH OF THE NEWLY INSERTED RULE 6DD, THE CASE OF THE ASSESS EE WOULD FALL IN EXCEPTION. GROUNDS NOS. 1 TO 3 OF THE APPEAL OF THE ASSESSEE H AVE NO MERITS AND THE SAME ARE, ACCORDINGLY, DISMISSED. ITA NO. 37/AGRA/2013 4 5. ON GROUND NO. 4, THE ASSESSEE CHALLENGED THE ADD ITION OF RS.25,000/-. THE ASSESSEE CLAIMED THAT A SUM OF RS.25,000/- WHICH HA S BEEN CREDITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE ASSESSMENT YEAR UNDE R APPEAL, IS THE AMOUNT WHICH THE ASSESSEE DID NOT DEPOSIT IN THE SCHOOL OF HIS D AUGHTER. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE THE ASSESSEE COULD NOT ADDUCE ANY EVIDENCE TO SUBSTANTIATE HIS CLAIM THAT IN THE PRECEDING ASS ESSMENT YEAR WHEN THE SUM OF RS.25,000/- WAS WITHDRAWN, NO FEES WAS PAID BY THE ASSESSEE. THE LD. CIT(A) ON THE SAME REASONING CONFIRMED THE ADDITION. 6. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO PB-6, WHICH I S THE CAPITAL ACCOUNT FOR PRECEDING ASSESSMENT YEAR AS WELL AS ASSESSMENT YEA R UNDER APPEAL TO SHOW THAT IN PRECEDING ASSESSMENT YEAR 2006-07, THE ASSESSEE HAS SHOWN RS.25,000/- AS WITHDRAWN IN THE NAME OF HIS DAUGHTER WHICH WAS TAK EN BACK IN SUBSEQUENT ASSESSMENT YEAR 2007-08 UNDER APPEAL AND WAS SHOWN AS CAPITAL INTRODUCED BY THE SAME AMOUNT OF RS.25,000/-. ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, I AM NOT INCLINED TO INTERFERE WITH THE ORDERS OF THE AUTHORITIES BELOW IN MAKING AND C ONFIRMING THE ADDITION. THE ITA NO. 37/AGRA/2013 5 ASSESSEE HAS SHOWN RS. 25,000/- AS AMOUNT WITHDRAWN FOR PAYMENT OF FEES OF HIS DAUGHTER IN PRECEDING ASSESSMENT YEAR 2006-07. ACCO RDING TO THE ASSESSEE SINCE THE FEES WAS NOT PAID IN PRECEDING ASSESSMENT YEAR, THEREFORE, IT WAS RE-DEPOSITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE IN ASSESSMEN T YEAR UNDER APPEAL, I.E., 2007- 08. IN ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE H AS SHOWN PAYMENT OF FEES OF HIS DAUGHTER IN A SUM OF RS.52,350/-, BUT NO EVIDENCE W AS PRODUCED THAT RS.25,000/- WAS NOT DEPOSITED AS FEES ON BEHALF OF HIS DAUGHTER . IN THE ABSENCE OF ANY EVIDENCE ON RECORD, THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMI NG THE ADDITION OFRS.25,000/- ON ACCOUNT OF UNEXPLAINED AMOUNT CREDITED IN THE CAPIT AL ACCOUNT OF THE ASSESSEE. GROUND NO. 4 OF APPEAL OF THE ASSESSEE IS, ACCORDIN GLY, DISMISSED. 8. ON GROUND NO. 5, THE ASSESSEE CHALLENGED THE DIS ALLOWANCE OF RS.5,000/- OUT OF SHOP EXPENSES. THE AO HAS DISALLOWED RS.10,000/- OUT OF TELEPHONE, TRAVELING EXPENSES, GENERAL EXPENSES AND VEHICLE LOADING EXPE NSES ON THE GROUND THAT SOME OF THE EXPENSES WERE NOT SUPPORTED BY VOUCHERS AND SOME OF THE VOUCHERS ARE SELF MADE. THE LD. CIT(A), CONSIDERING THE EXPLANATION O F THE ASSESSEE AND THAT PERSONAL USER CANNOT BE RULED OUT, RESTRICTED THE A DDITION TO RS.5,000/-. THIS GROUND IS NOT ARGUED BEFORE ME AND IN ABSENCE OF ANY MATER IAL TO CONTRADICT THE FINDINGS OF THE LD. CIT(A), I DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE ITA NO. 37/AGRA/2013 6 AUTHORITIES BELOW. GROUND NO. 5 OF APPEAL OF THE AS SESSEE IS, ACCORDINGLY, DISMISSED. 9. ON GROUND NO. 6, THE ASSESSEE CHALLENGED THE ADD ITION OF RS.15,000/- ON ACCOUNT OF LOW WITHDRAWALS. ACCORDING TO THE AO, TH E ASSESSEE HAS SHOWN TOTAL HOUSEHOLD EXPENSES AT RS.33,000/-, WHICH WAS NOT FO UND SUFFICIENT LOOKING TO THE SIZE OF FAMILY OF THE ASSESSEE. THE AO, THEREFORE, ESTIMATED HOUSEHOLD EXPENSES AT RS.72,000/- AT THE RATE OF RS.6000/- PER MONTH AND MADE ADDITION OF RS.39,000/-. THE ASSESSEE SUBMITTED BEFORE THE AUTHORITIES BELOW THAT THE ASSESSEE HAS SEPARATELY DEBITED HOUSE-TAX, INCOME-TAX, LIP, SCHO OL FEES OF DAUGHTER ETC. AND THAT HIS FATHER, WIFE, SON & HUF HAVE SEPARATE INCO ME AND ASSESSED TO TAX, THEREFORE, THE ADDITION IS UNJUSTIFIED. THE LD. CIT (A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ESTIMATED THE HOUSEHOLD EXPENSES AT RS.4,000/- PER MONTH, I.E., RS.48,000/- ANNUALLY AND ADDITION WAS RESTRICTED TO RS.15,000/- ONLY. 10. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, I DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) IN REDUC ING THE ADDITION. WHATEVER SUBMISSIONS OF FAMILY EARNINGS WAS MADE BEFORE THE LD. CIT(A), HAVE BEEN GIVEN DUE ATTENTION AND CARE BY THE LD. CIT(A) FOR REDUCI NG SUBSTANTIAL ADDITION IN THE CASE OF ASSESSEE. SINCE THE ASSESSEE HAS SHOWN MEAG ER WITHDRAWAL, THEREFORE, THE ITA NO. 37/AGRA/2013 7 ADDITION FINALLY CONFIRMED AT RS.15,000/- IS STILL VERY LOW AND REASONABLE FIGURE, ON WHICH NO INTERFERENCE IS CALLED FOR. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE SR. PRIVATE SECRETARY TRUE COPY