M/s. Sikka Promoters Private Ltd., Delhi V. DCIT, New Delhi

ITA 4084/DEL/2013

• Counselvise Citation: 408420114 RSA 2013
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 02-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Assessee Lawyers: K R MANJANI
• Section: 40A(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G: NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI I. C. SUDHIR, JUDICIAL MEMBER ITA NOS. 4084,4075/DEL/2013 ASSESSMENT YEAR: 2009- 2010 SIKKA PROMOTERS PRIVATE LTD. VS. DCIT C-260, SIKKA HOUSE CI RCLE-8(1) MAIN VIKAS MARG, PREET VIHAR NEW DELHI. DELHI- 110 092 (PAN AAACS2759P) (APPELLANT) (RESP ONDENT) APPELLANT BY : SHRI K.R. MANJ ANI, ADVOCATE RESPONDENT BY : SMT. RENUKA JAIN GUPTA, SR. DR ORDER PER I.C. SUDHIR, JUDICIAL MEMBER ITA NO. 4075/D/2013 THE ASSESSEE HAS QUESTIONED FIRST APPEL LATE ORDER ON THE GROUND THAT LD. CIT(A) HAS ERRED IN REJECTING APPLICATION U/S 154 EVEN THOUGH THE PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE OR ON THE DAY WHEN IT WAS HOLIDAY OR FOR SALARY AND LABOUR PAYMENT MADE O N ONE DAY. 2. IN SUPPORT OF THE GROUND THE LD. AR SUBMITT ED THAT THE PAYMENT IN CASH EXCEEDING RS. 20,000/- MADE TO DIFFERENT PARTI ES ON ACCOUNT OF SOME BONAFIDE REASON DOES NOT ATTRACT PROVISIONS OF SECT ION 40A(3) OF THE ACT. HE ITA NOS. 4084,4075/DEL/2013 2 SUBMITTED THAT THE AO HAD DISALLOWED THE PAYMENTS M ADE IN CASH EXCEEDING RS. 20,000/- ALSO IN CASES OF SOME PARTIE S WHERE IT WAS THROUGH ACCOUNT PAYEE CHEQUE OR DUE TO SOME BONAFIDE REASON . IT WAS POINTED OUT IN ITS APPLICATION MOVED U/S 154 OF THE ACT THAT PA YMENT TO OM ADVERTISING WAS MADE THROUGH ACCOUNT PAYEE CHEQUE AND BANK STAT EMENT WAS SUBMITTED ALONGWITH THE APPLICATION. REGARDING THE PAYMENT MADE TO TIMBER MERCHANT IT WAS SUBMITTED THAT WHEN THE PAYM ENT MADE ON 5.4.2008 IT WAS SATURDAY AND BANK WAS ALSO CLOSED A T 12.30 PM. THE TIMBER MERCHANT WAS NOT AGREEING TO SELL TIMBER TO THE ASS ESEE WITHOUT HAVING CASH OR DEMAND DRAFT. THE ONLY OPTION LEFT WITH THE ASSESSEE AT THAT TIME WAS TO PAY BY CASH OR DEMAND DRAFT COULD NOT BE MAD E DUE TO END OF THE CLOSURE OF BANK HOUR THAT DAY. LIKEWISE ON 7.5.2008 PAYMENT OF RS. 22,000/- WAS MADE TO SHRI S.K. SINGH, AN EMPLOYEE O F THE ASSESSEE, AS HIS WIFE WAS HOSPITALISED IN NURSING HOME AND HE WAS IN URGENT NEED OF MONEY. HE SUBMITTED FURTHER THAT ON 5.8.2008 PAYMEN T OF RS. 30,000/- WAS GIVEN TO SHRI GHANSHYAM WHO HAS TO DISTRIBUTE THE S AME AMONGST THE LABOURERS AND THE AMOUNT WAS NOT ONLY PERTAIN TO HI M WHICH COULD HAVE BEEN PROVIDED THROUGH THE VOUCHER ON WHICH THE NAME OF ALL THE LABOURERS WERE MENTIONED. LD. AR SUBMITTED FURTHER THAT THE A O WHILE REJECTING THE APPLICATION FILED U/S 154 OF THE ACT DID NOT CONSID ER THE REQUEST OF THE ASSESSEE FOR DELETING THE ADDITION OF RS. 1,56,908/ - U/S 154 OF THE ACT. THIS ACTION OF THE AO HAS BEEN UPHELD BY THE LD. CIT(A). HE SUBMITTED THAT THE ITA NOS. 4084,4075/DEL/2013 3 ASSESSEE HAD ALSO FILED DOCUMENTS IN SUPPORT OF ITS APPLICATION MOVED U/S 154 OF THE ACT. 3. THE LD. DR ON THE OTHER HAND TRIED TO JUST IFY THE ORDERS OF THE AUTHORITIES BELOW AND REITERATED THE CONTENTS OF TH OSE ORDERS. 4. CONSIDERING THE ABOVE SUBMISSION WE FIND THAT APPRECIATING THE MISTAKE APPARENT FROM RECORD IN THE ASSESSMENT ORDE R AS POINTED OUT BY THE ASSESSEE IN ITS APPLICATION U/S 154 OF THE ACT BEFORE THE AO, THE AO HAD ALREADY ACCEPTED THE SUBMISSION OF THE ASSESSEE REG ARDING THE PAYMENT MADE FOR THE PRINTING AND STATIONERY TO SHRI S.K. S INGH, SHRI S.S. CHAUHAN AND OTHERS EXCEPT THE PAYMENT MADE TO OM ADVERTISIN G OF RS. 2,66,74/- ON 1.4.2008, MAHAVIR TIMBER OF RS. 25,965/- AND RS. 2 6,770/- ON 5.4.2008 ON THE BASIS THAT NO DOCUMENTARY EVIDENCE WAS FURNISHE D IN SUPPORT THEREOF. ABOUT THE EXPLANATION OF THE ASSESEE REGARDING PAYM ENT OF RS. 26,674/- MADE TO OM ADVERTISING ON 1.4.2008 THAT IT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE NO. 127225 DRAWN ON INDUS IND BANK IN FAVOUR OF OM ADVERTISING, WE ARE OF THE VIEW THAT NON CONSIDERAT ION OF THE SAME WAS MISTAKE APPARENT FROM RECORD IN THE ORDER PASSED U/ S 154 OF THE ACT BY THE AO. IN THE CASE OF MAHAVIR TIMBER TO WHOM PAYMENT O F RS. 25,965/- AND RS. 26,770/- ON 5.4.2008 WERE MADE THE SUBMISSION O F ASSESSEE BEFORE US REMAINED THAT PAYMENT WAS MAD AS BANK WAS CLOSED BY 12.30 P.M. AS THE DATE WAS SATURDAY AND THE SAID TIMBER MERCHANT WAS INSISTING FOR CASH PAYMENT OR PAYMENT THROUGH DRAFT. WE DO NOT FIND TH AT IN THE APPLICATION ITA NOS. 4084,4075/DEL/2013 4 U/S 154 OF THE ACT MADE BEFORE THE AO SUCH EXPLANA TION WAS MADE BEFORE THE AO OR ANY EVIDENCE WAS FILED IN SUPPORT TO THIS EXPLANATION. THE FIRST APPELLATE AUTHORITY TO THIS EXTENT HAS THUS RIGHTLY APPROVED THE ACTION OF THE AO IN THIS REGARD. THE LD. CIT(A) WAS HOWEVER NOT J USTIFIED IN APPROVING THE ASSESSMENT ORDER THAT THERE WAS NO MISTAKE APPA RENT FROM RECORD IN THE ASSESSMENT ORDER REGARDING DENIAL OF EXPLANATI ON TOWARDS THE PAYMENT MADE TO OM ADVERTISING AT RS. 26674/-. THE MISTAKE WAS APPARENT AND THE AO WAS SUPPOSED TO RECTIFY IT WHILE RECTIFYING THE OTHER MISTAKE POINTED OUT IN THE APPLICATION. THE AO IS DIRECTED TO ALLOW THE SAME. THE GROUND IS THUS PARTLY ALLOWED. 4. IN THE RESULT APPEAL IS PARTLY ALLO WED. ITA NO. 4084/DEL/13 5. THE ASSESSEE HAS QUESTIONED FIRST APPELLAT E ORDER ON THE GROUND THAT LD. CIT(A) HAS ERRED IN SUSTAINING THE PENALTY FOR CONCEALMENT FOR THE DISALLOWANCE MADE U/S 40A(3) EVEN THOUGH THIS ADDIT ION WAS ALSO RECTIFIED BY THE AO U/S 154 AND THE ASSESSEE HAD FILED FULL P ARTICULARS. 6. IN SUPPORT OF THE GROUND LD. AR SUBMITT ED THAT THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE WITHOUT CONSID ERING THE WRITTEN ARGUMENTS AND EVIDENCE FILED DURING THE COURSE OF A PPELLATE PROCEEDINGS. HE SUBMITTED THAT ALL THE NECESSARY INFORMATION REG ARDING THE CASH PAYMENT EXCEEDING RS. 20,000/- MADE TO DIFFERENT PARTIES UN DER DIFFERENT CIRCUMSTANCES WERE FURNISHED BEFORE THE AO. ON THE BASIS OF WHICH ONLY HE ITA NOS. 4084,4075/DEL/2013 5 MADE DISALLOWANCE OF RS. 296908/- U/S 40A (3) REGAR DING THE PAYMENT MADE ON DIFFERENT DATES. SUBSEQUENTLY APPLICATION U /S 154 OF THE ACT WAS MOVED BY THE ASSESSEE POINTING OUT CERTAIN MISTAKES APPARENT FROM THE RECORD IN THE ASSESSMENT ORDER AND APPRECIATING THE SAME THE AO HAD DELETED THE DISALLOWANCE OF RS. 1,40,000/-. UNDER T HESE FACTS AND CIRCUMSTANCES WHEN THE PROVISIONS OF SECTION 40A (3 ) MUST NOT BE READ IN ISOLATION OR EXCLUSION OF RULE 6DD AS AN ESTABLISHE D POSITION, THERE WAS NO REASON TO ARRIVE AT A CONCLUSION THAT THE DISALLOWA NCE WAS DUE TO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE WAS DUE TO CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TO ATTRACT PENA L PROVISIONS. HE CITED SEVERAL DECISIONS THOSE RELIED BEFORE THE LD. CIT(A ) INCLUDING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS. RELIAN CE PETRO PRODUCTS 322 ITR 158 (SC) HOLDING THAT MERELY BECAUSE THE ASSESS EE HAD CLAIMED THE EXPENDITURE, WHICH CLAIM WAS NOT ACCEPTED OR WAS NO T ACCEPTABLE TO THE REVENUE, THAT BY ITSELF WOULD NOT ATTRACT THE PENAL TY U/S 271(1)(C) OF THE ACT. 7. LD. DR ON THE OTHER HAND TRIED TO JUSTIF Y ORDERS OF THE AUTHORITIES BELOW. 8. CONSIDERING THE ABOVE SUBMISSION WE FIND FORCE IN THE CONTENTION OF THE LD. AR THAT THE DISALLOWANCE U/S 40A(3) OF THE ACT WAS MADE BY THE AO ONLY ON THE BASIS OF DISCLOSURE MADE BY THE ASSESSE E IN THIS REGARD. THE ITA NOS. 4084,4075/DEL/2013 6 INITIAL DISALLOWANCE OF RS. 2,96,908/- U/S 40A(3) O F THE ACT REGARDING PAYMENT EXCEEDING RS. 20,000/- TO 10 PARTIES MADE B Y THE AO HAS ALSO BEEN REDUCED RS. 1,56,908/- IN ITS ORDER BY THE AO U/S 154 OF THE ACT. THE EXPLANATION OF THE ASSESSEE TO BRING ITS CASE UNDER EXCEPTIONAL CIRCUMSTANCES PROVIDED UNDER RULE 6DD WHICH MUST BE READ WITH SECTION 40A(3) FOR THE PAYMENT TO 10 PARTIES ON DIFFERENT DATES WERE INITIALLY DENIED BY THE AO DURING THE COURSE OF ASSESSMENT PR OCEEDINGS AND DISALLOWANCE U/S 40A (3) WAS MADE, BUT BEING CONVIN CED WITH THE EXPLANATION OF THE ASSESSEE DURING SECTION 154 PROC EEDINGS, THE AO HAS ACCEPTED THAT THERE WAS MISTAKE APPARENT FROM RECOR D IN THE ASSESSMENT ORDER REGARDING NON ACCEPTANCE OF EXPLANATION OF TH E ASSESSEE ABOUT THE PAYMENT MADE TO THE PARTIES EXCEPT PAYMENT MADE TO OM ADVERTISING AND MAHAVEER TIMBER. THE AO HAS DELETED THE DISALLOWANC E MADE ON ACCOUNT OF THE PAYMENT TO REMAINING 8 PARTIES. UNDER THESE CIR CUMSTANCES IT CANNOT BE INFERRED BEYOND DOUBT THAT THERE WAS CONCEALMENT O F PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE REGARDING THE PAYMENT MADE TO OM ADVERTISING AND MA HAVEER TIMBER EXPLANATION OF WHICH HAS NOT BEEN ACCEPTED BY THE A O. WE HOWEVER MENTIONED OVER HERE THAT IN THE ABOVE APPEAL PREFER RED BY THE ASSESSEE AGAINST THE DISALLOWANCE MADE ON ACCOUNT OF PAYMENT S TO THESE PARTIES, WE HAVE HELD THAT THERE WAS MISTAKE APPARENT IN THE OR DER OF THE AO IN NOT ACCEPTING THE PAYMENT MADE TO OM ADVERTISING THROUG H AN ACCOUNT PAYEE ITA NOS. 4084,4075/DEL/2013 7 CHEQUE IN SUPPORT OF WHICH BANK STATEMENT WAS ALSO FURNISHED BEFORE THE AO. THE EXPLANATION OF THE ASSESSEE REGARDING PAYM ENT MADE TO MAHAVEER TIMBER REMAINED THAT ON 5.4.2008 WHEN AN AMOUNT OF RS. 25,965/- AND RS. 26,770/- WERE PAID IT WAS SATURDAY AND BANKING HOUR WAS RESTRICTED TILL 12.30 P M AND THE TIMBER MERCHANT WAS INSISTING TO PAY THE AMOUNT IN CASH OR BY WAY OF DEMAND DRAFT AGAINST THE DELIVERY OF T HE TIMBER TO THE ASSESEE AND SINCE THE BANKING FACILITIES WERE NOT AVAILABL E DURING THOSE HOUR AFTER 12.30 P M THE ASSESSEE WAS HAVING NO OPTION BUT TO PAY THE AMOUNT IN CASH TO MAHAVEER TIMBER TO TAKE DELIVERY OF TIMBER FOR ITS BUSINESS. WITHOUT VERIFYING THIS EXPLANATION AS TO WHETHER 5.4.2008 W AS SATURDAY OR NOT IN OUR VIEW IT CANNOT BE ARRIVED AT A CONCLUSION BEYOND DO UBT THAT EXPLANATION OF THE ASSESSEE WAS FALSE. UNDER THESE CIRCUMSTANCES W E ARE OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN ATTRACTING PENAL PROVIS IONS U/S 271(1) OF THE ACT IN THE PRESENT CASE UNDER THESE FACTS AND CIRCU MSTANCES AND IN ABSENCE OF ARRIVING AT THIS FACT CLEARLY BEYOND DOU BT THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS THEREOF ON THE PART OF THE ASSESSEE TOWARDS THE DIS ALLOWANCE. WE THUS SET ASIDE THE ORDER OF THE AUTHORITIES BELOW REGARDING THE PENALTY LEVIED U/S 271(1) IN QUESTION. 9. IN THE RESULT PENALTY IS DELETED. THE GROU ND IS ACCORDINGLY ALLOWED. 10. CONSEQUENTLY APPEAL IS ALLOWED. ITA NOS. 4084,4075/DEL/2013 8 11. IN SUMMARY ITA NO. 4075/D/13 IS PARTLY ALLO WED AND ITA NO. 4084/D/13 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 7 TH FEBRUARY, 2014 . SD/- SD/- (G.D. AGRAWAL) ( I.C. SUDHIR ) VICE PRESIDENT JUDICIAL MEMBER DATED 7 TH FEBRUARY, 2014 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSISTANT REGISTRAR, ITAT