Sh. Rakesh Gupta, Jammu V. The Income-tax Officer, Jammu

ITA 383/ASR/2013

• Counselvise Citation: 38320914 RSA 2013
• Duration Of Justice: 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MAHVIR SINGHDR
• Assessee Lawyers: WIG SINBAD
• Keywords: Principle of natural justice
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.383(ASR)/2013 ASSESSMENT YEAR:2009-2010 PAN :AATPG5113D SH.RAKESH GUPTA, VS. INCOME TAX OFFICER, C/O M/S. NIRMAL PLASTIC, WARD 1(2), JAMMU. JAMMU (APPELLANT) (RESPONDENT) APPELLANT BY:MR. WIG SINBAD, CA RESPONDENT BY:SH.MAHVIR SINGH,DR DATE OF HEARING: 01/08/2013 DATE OF PRONOUNCEMENT:06/08/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JAMMU, DATED 10.04.2013 FOR THE ASSESSMENT YEAR 2 009-10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE APPELLATE ORDER DATED 10.04.2013 IS O PPOSED TO LAW AND FACTS OF THE CASE IN SO FAR AS IT IS OPPOSED TO T HE INTEREST OF THE APPELLANT. 2. THAT THE LD. CIT(A) JAMMU OUGHT TO HAVE NOT PROVIDE D SUFFICIENT OPPORTUNITY TO THE APPELLANT OF BEING HE ARD BEFORE THE APPELLATE ORDER TO MEET THE ENDS OF NATURAL JUSTICE . ITA NO.383(ASR)/2013 2 3. THAT THE LD. CIT(A) JAMMU OUGHT TO HAVE NOT HELD T HAT THE DECISIONS RELIED UPON BY THE APPELLATE WERE NOT AP PLICABLE IN VIEW OF THE AMENDED PROVISIONS OF SECTION 40A(3) OF THE ACT AND RULE 6DD OF THE IT RULES, 1962 WITHOUT APPRECIA TING THE PROVISO PROVIDED THEREUNDER. 4. THAT THE LD. CIT(A) JAMMU OUGHT TO HAVE APPRECIATED THE FACTS AND CIRCUMSTANCES OF THE CASE SUCH AS BUSINESS EXPE DIENCY, IDENTITY OF THE PAYEE AND OTHER RELEVANT FACTORS, W HICH HAVE NECESSITATED THE CASH PAYMENTS IN EXCESS OF THE CEI LING LIMIT OF RS.20000/- PRESCRIBED U/S 40A(3) OF THE ACT. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND DELETE ANY OF THE GROUNDS AT THE TIME OF HEARING. 2. THE BRIEF FACTS IN THE GROUNDS OF APPEAL ARE THA T THE A.O. NOTED THAT THE ASSESSEE HAS ISSUED THREE BEARER CHEQUES TOTALI NG RS.12,05,229/- FOR THE PURCHASE OF RAW-MATERIAL TO THE FOLLOWING PARTIES: I) M/S. SHARMA TRADERS, NEW DELHI RS.5,69,066/- II) M/S. MEHAR PLASTIC STORES, DELHI RS.4,68,838/- III) M/S. SHANKER PLASTIC INDUSTRIES, DELHI RS.1,6 7,325/- TOTAL AMOUNT RS.12,05,229/- 2.1. A SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE AS TO WHY ADDITION OF RS.12,05,229/- MAY NOT BE MADE AS THE FIRM HAS VIOL ATED THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THE COUNSEL FOR THE ASSE SSEE SUBMITTED AN EXPLANATION VIDE REPLIES DATED 04.11.2011 AND 11.11 .2011 AND FURTHER SUBMITTED THAT THESE PAYMENTS ARE COVERED UNDER RUL E 6DD OF THE INCOME ITA NO.383(ASR)/2013 3 TAX RULES, 1962. THE AO BEING NOT SATISFIED WITH TH E EXPLANATION OF THE ASSESSEE MADE AN ADDITION OF RS.12,05,230/- U/S 40A (3) OF THE ACT. 3. BEFORE THE LD. CIT(A), THE ASSESSEES COUNSEL A RGUED THAT THIS CASE IS COVERED UNDER RULE 6DD OF I.T. RULES, 1962. THE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE CITED DECISIONS OF VARIOUS C OURTS OF LAW IN THIS REGARD. THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO 4. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE ARGU ED THAT THE EXPLANATION GIVEN BY THE ASSESSEE VIDE LETTERS DATED 04.11.2011 & 11.11.2011 WHERE THE CIRCUMSTANCES UNDER WHICH PAYMENTS MADE U/S 40A(3) ARE COVERED UNDER EXCEPTION OF RULE 6DD(J) AND RULE 6DD(K) WERE NOT CONSIDERED BY THE A.O. AS WELL AS BY THE LD. CIT(A). ALSO BEFORE MAK ING ANY DISALLOWANCE FOR REJECTING THE EXPLANATION, NO OPPORTUNITY WAS A FFORDED TO THE ASSESSEE. 5. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW AND INVITED OUT ATTENTION TO THE PROVISIONS OF SECTION 40A(3) OF THE ACT THAT MOST OF THESE PAYMENTS ARE W ITH REGARD TO THE PAST CREDITORS AND THE PAYMENTS MADE THROUGH BEARER CHE QUES ARE VERY WELL COVERED UNDER THE PROVISIONS OF SECTION 40A(3) OF T HE ACT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACTS OF THE CASE AS PRO VIDED IN SECTION 40A(3) OF THE ACT THAT ANY EXPENDITURE INCURRED IN RESPECT OF WHICH A PAYMENT OR ITA NO.383(ASR)/2013 4 AGGREGATE OF PAYMENT IS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT EXCEEDS RS.20,000/-, NO DEDUCTION SHALL BE ALLOWED IN RESPE CT OF SUCH EXPENDITURE FOR THE IMPUGNED YEAR. BUT AT THE SAME TIME, THERE IS A PROVISO TO THE SAID SECTION THAT NO DISALLOWANCE SHALL BE MADE AND NO P AYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESS ION UNDER SUB-SECTION(3) AND THIS SUB-SECTION WHERE A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS RS.20,000/-, I N SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED HAVING REGA RD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE CONSIDERATIO N OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS. RULE 6DD PRESCRIBES SUC H CIRCUMSTANCES AS SPECIFIED IN RULE 6DD(A) TO RULE 6DD( ). THEREFORE, IN SUCH FACTS AND CIRCUMSTANCES OF THE CASE, THOUGH SHOW CAUSE NOTICE HAS BEEN GIVEN BY THE AO TO THE ASSESSEE FOR DISALLOWANCE OF PAYMENT U/S 40A(3) OF THE ACT, BUT AT THE SAME TIME, IT IS ALSO NOT UNDER DISPUTE THAT TH E ASSESSEE HAS SUBMITTED HIS EXPLANATION VIDE LETTERS DATED 04.11.2011 & 11.11.2 011 THAT THE SAID PAYMENTS ARE COVERED UNDER RULE 6DD OF I.T. RULES, 1962. SUCH ARGUMENTS WERE ALSO MADE BEFORE THE LD. CIT(A). NOTWITHSTANDI NG THE SHOW CAUSE GIVEN BY THE A.O. IS NOT UNDER DISPUTE, WHICH IS FO R MAKING DISALLOWANCE U/S ITA NO.383(ASR)/2013 5 40A(3) OF THE ACT, THE AO HAS NOT GIVEN ANY OPPORTU NITY OF BEING HEARD BEFORE MAKING THE ADDITION AND BEFORE REJECTING THE EXPLANATION GIVEN BY THE A.O. THEREFORE, AT THE OUTSET, SUCH ORDER CANNOT BE SUSTAINED IN THE EYES OF LAW. SECONDLY, IT HAS BEEN ARGUED THROUGHOUT THAT THE PAYMENT MADE WHICH HAS BEEN DISALLOWED BY THE A.O. AND CONFIRMED BY TH E LD. CIT(A) ARE COVERED UNDER THE EXCEPTION OF RULE 6DD(J) TO 6DD(K ). THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A.O. IS NO T JUSTIFIED IN MAKING ANY DISALLOWANCE AND THE ORDER OF THE LD. CIT(A) IS REV ERSED ON THE ISSUE. THEREFORE, THE ADDITION SO CONFIRMED IS DIRECTED TO BE DELETED. HENCE, ALL THE GROUNDS OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.383(ASR)/2013 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 6TH AUGUST, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 6TH AUGUST, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.RAKESH GUPTA, JAMMU 2. THE ITO WARD 1(2), JAMMU 3. THE CIT(A), JAMMU 4. THE CIT, JAMMU 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY ITA NO.383(ASR)/2013 6 BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR. L