Marudhamalai Sri Dhandapani Spinning Mills, Coimbatore V. ACIT, Coimbatore

ITA 414/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8095 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 07-11-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 26-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DURAI
• Assessee Lawyers: T VASUDEVAN
• Section: 40A(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , !' . #$#% , & '' ( [BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./I.T.A. NO. 414/MDS/2015 / ASSESSMENT YEAR : 2011-2012. MARUDHAMALAI SRI DHANDAPANI SPINNING MILLS, 142B, BETTATHA PURAM PUDUR, METTUPALAYAM ROAD, KARAMADAI, COIMBATORE 641 104. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, SALARY CIRCLE, COIMBATORE -18 [PAN AAGFM 4590F ] ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI.T. VASUDEVAN, ADVOCATE /RESPONDENT BY : SHRI. DURAI PANDIAN, IRS, JCIT. /DATE OF HEARING : 07-11-2016 ! /DATE OF PRONOUNCEMENT : 16-11-2016 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER IN THIS APPEAL FILED BY THE ASSESSEE, IT ASSAILS ADDITION OF ;9,28,000/- MADE U/S.40A(3) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). ITA NO. 414/MDS/2015. :- 2 -: 2. FACTS APROPOS ARE THAT ASSESSEE DOING BUSINESS OF S PINNING MATERIAL HAD CLAIMED FREIGHT AND CARTAGE EXPENSES O F ;16,46,378/- DURING THE RELEVANT PREVIOUS YEAR. DETAILS OF THE SAID EXPENDITURE WAS SOUGHT BY THE ASSESSING OFFICER DURING THE COURSE O F ASSESSMENT PROCEEDINGS. IN THE BREAKUP FURNISHED BY THE ASSESS EE, THERE WERE SOME PAYMENTS WHICH EXCEEDED ;35,000/- PER PERSON P ER DAY AND SUCH PAYMENTS AGGREGATED TO ;9,28,000/-. EXPLANATI ON OF THE ASSESSEE FOR MAKING CASH PAYMENT WAS AS UNDER:- THE RAW MATERIALS ARE PURCHASED DURING THE COTTON SEASON WHICH IS BETWEEN THE MONTHS OF OCTOBER TO JANUARY. THE SUPPL IERS ARRANGED FOR THE LORRY WITH AN UNDERTAKING THAT THE PURCHASER HAS TO PAY THE LORRY FREIGHT, TO THE DIFF ERENT LORRY OWNERS THROUGH THEIR DRIVERS, SINCE THEY ARE IN FA R AWAY PLACES. THEY ARE ALL NOT KNOWN TO US, WHO INSIST CASH PAYME NTS, IMMEDIATELY AFTER UNLOADING. IT IS CUSTOMARY AND FOR THE SAKE OF BUSINESS EXPEDI ENCY AND UNDER EXTRAORDINARY CIRCUMSTANCES WE HAVE TO PAY THE LORR Y FREIGHT BY CASH BUT ALL THE PAYMENTS ARE ON PROPER VOUCHERS, L ORRY RECEIPTS, PURCHASE INVOICES AND WITH COMPLETE ADDRESS OF THE RECIPIENT. THE TRUCK OPERATORS ARE ALSO ASSESSED TO INCOME TAX , WHICH ARE DULY REFLECTED/PRINTED ON THE LORRY RECEIPTS. ASSESSING OFFICER WAS OF THE OPINION THAT TRUCK OPE RATORS TO WHOM ASSESSEE WAS MAKING CASH PAYMENTS WERE ASSESSED TO BOTH INCOME TAX AND SALES TAX. ACCORDING TO HIM, ASSESSEE COUL D NOT SHOW ANY REASON WHY PAYMENTS WERE REQUIRED TO BE MADE IN CAS H. FURTHER, AS PER ASSESSING OFFICER NONE OF THE EXCEPTIONAL CIRCU MSTANCES SET OUT IN ITA NO. 414/MDS/2015. :- 3 -: RULE 6DD APPLIED. HE HELD THAT SEC. 40A(3) OF THE ACT WAS ATTRACTED AND A DISALLOWANCE OF ;9,28,000/- WAS MADE. 3. ASSESSEE MOVED IN APPEAL BEFORE LD. COMMISSIONER OF INCOME TAX (APPEALS) BUT DID NOT MEET WITH ANY SUCC ESS. ACCORDING TO LD. COMMISSIONER OF INCOME TAX (APPEALS), ASSESS EE HAD MADE CERTAIN PAYMENTS TO TRUCK TRANSPORT CONTRACTORS BY CHEQUE AND THEREFORE ASSESSEE COULD NOT SAY THAT THERE WERE AN Y EXCEPTIONAL CIRCUMSTANCES WARRANTING PAYMENT IN CASH. 4. NOW BEFORE US, LD. AUTHORISED REPRESENTATIVE, STRO NGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT ASSESSEE WAS PURCHASING RAW MATERIAL S FROM OTHER STATES LIKE MAHARASTRA, ANDHRA PRADESH AND KARNATAK A. SINCE THE SELLERS WERE FROM FAR AWAY PLACES, AS PER LD. AUTHO RISED REPRESENTATIVE, FREIGHT CHARGES WERE ALWAYS ON THE HIGHER SIDE. SUBMISSION OF THE LD. AUTHORISED REPRESENTATIVE WAS THAT MAJOR PART OF THE PURCHASES WERE EFFECTED DURING THE MONTH OF OC TOBER TO JANUARY AND SUPPLIERS ARRANGED LORRY FOR TRANSPORTING THE COTTON. LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT ASSESSEE O NLY EFFECTED PAYMENTS TO THE DRIVERS OF THE LORRY AND THEY HAD I NSISTED FOR CASH PAYMENTS. CONTENTION OF THE LD. AUTHORISED REPRESE NTATIVE WAS THAT ITA NO. 414/MDS/2015. :- 4 -: SUCH PAYMENTS IN CASH WAS UNDER EXTRA ORDINARY CIRC UMSTANCES. AS PER LD. AUTHORISED REPRESENTATIVE ALL THE PAYMENTS WERE GENUINE AND NEVER DOUBTED BY THE REVENUE. RELYING ON THE JUDGME NT OF GUJARAT HIGH COURT IN THE CASE OF ANUPAM TELE SERVICES VS. ITO (2014) 366 ITR 122 , LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT PAYM ENTS IN CASH WHEN MADE AS A PRACTICAL STEP WOULD NOT ATTRAC T SEC. 40A(3) OF THE ACT. FURTHER, ACCORDING TO HIM, EXCEPTIONAL CON DITIONS IN RULE 6DD WAS NOT EXHAUSTIVE AND RULE HAD TO BE INTERPRETED L IBERALLY. 5. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE STRONG LY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE ORDERS OF THE LOWER AUTHORITIES. PAYMENTS EFFECTED BY THE ASSESSEE WHICH EXCEEDED ;35,000/- IN EACH CASE WERE TO THE F OLLOWING PARTIES. 1.TAMILNADU LORRY SERVICE OPP. ED GATA, DURGAPURA, BIRLAGRAM, NAGALA IN 53,000/- DISTRICT - UJJAIN - MADHYA PRADESH. PAN. AMPPB1125L SERVICE TAX - ST/RI NAGDA/GDA/02/07-08 LR. NO. 6096, 6097, 6098/12.07.2010 2 SHREE MEENAKSHI TRANSPORTS CO., G- 45A, TRANSPORT NAGAR, NH NO.06, JALGAON - 425003 44,000/- MAHARASTRA STATE PAN. ACZPN9621M SERVICE TAX - ACZPN9621 M S1/001 ITA NO. 414/MDS/2015. :- 5 -: LHR NO. 12298/14.10.2010 TRICHY NO. KA-05AF0709 3 SHARE MEENAKSHI TRANSPORTS CO., G- 45A, TRANSPORT NAGAR, 43,000/- NH NO.06, JALGAON - 425003 MAHARASTRA STATE PAN. ACZPN9621M SERVICE TAX - ACZPN9621 M S1/001 LHR NO. 10993, 10994, DT.22.1 0.201 0 TRICHY NO. KA-01 AG7576 4 DARSHIT ROAD LINES 43,000/- HIGHWAY TOWERS, NH NO. 06 AJANTHA CHOUFULLY NEAR MANAS HOTEL JAL GAON - 425003 MAHARASTRA PAN.BGUPS5874B ST. BGUPS5874B SD001