Dream Team Shahara, Bhubaneswar V. ITO, Ward-2(1), Bhubaneswar

ITA 423/CTK/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4351 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 05-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Keywords: Revised return
• Section: 43B; 40A(3)

Judgement Text

1 ITA NO. 423/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 423 /CTK/ 2016 ASSESSMENT YEAR : 201 1 - 2012 DREAM TEAM SHAHARA,, PLOT NO.5/538, IRC VILLAGE, NAYAPALI, BHUBANESWAR. VS. ITO, WARD 2(1), BHUBANESWAR PAN/GIR NO. AAHFD 2886 N (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI SANDEEP KUMAR JENA, AR REVENUE BY : SHRI D.K.PRADHAN, DR DATE OF HEARING : 1 2 / 0 2 / 201 8 DATE OF PRONOUNCEMENT : 1 4 / 0 2 / 201 8 O R D E R PER PAVAN KUMAR GADALE, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 2, BHUBANESWAR DATED 30.8.2016 FOR THE ASSESSMENT YEAR 2011 - 12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. FOR THAT THE DISALLOWANCE OF RS.3,25,572.00 BY INVOKING PROVISION 2(24)(X) R.W.S. 36(L)(VA) BEING CONTRIBUTION OF EPF AND ESI MADE BY THE LEARNED AO AS WELL AS CONFIRM BY CIT(A) IS NOT PROPER WITHOUT PROPER CONSIDERATION OF THE APPE LLANT CASE BY BOTH THE AUTHORITY, HENCE THIS ADDITION IS LIABLE TO BE DELETED. 2. FOR THAT THE DISALLOWANCE U/S. 40A(3) MADE BY THE LEARNED AO AND CONFIRM BY THE CIT(A) IN A NARROW PREMISE WITHOUT CONSIDERATION OF BUSINESS EXIGENCY AND REQUIREMENTS OF THE APPELLANT. BOTH THE AUTHORITIES FAILED TO ADJUDICATE THE SAME IN 2 ITA NO. 423/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 ITS PROPER PROSPECTIVE, HENCE THIS ADDITION IS ALSO LIABLE TO BE DELETED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND DERIVES INCOME FROM BUSINESS OF PLYING OF CITY BUSES UNDER THE BANNER DTS AND FILED THE RETURN OF INCOME ON 30.9.2011 DECLARING A LOSS OF RS.8,53,642/ - . SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 29.3.2011 DECLARING LOSS OF RS.9,82,554/ - . THE ASSESSING OFFICER COMPLE TED THE ASSESSMENT DETERMINING THE TOTAL INCOME AT A LOSS OF RS.3,48,050/ - , INTER ALIA, DISALLOWING ADDITION OF RS.3,25,572. - U/S.36(1)(VA) AND RS.3,08,932/ - U /S.40A(3) OF THE ACT. 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. IN RESPECT OF FIRST DISPUTED ISSUE , THE LD A.R. B RIEFLY STATED THE FACTS OF THE CASE THAT THE ASSESSING OFFICER, INTER ALIA , DID NOT ALLOW DEDUCTION OF RS.3,25,572/ - FOR EMPLOYEES CONTRIBUTION TOWARDS EPF AND ESI WHICH WAS DEPOSITED BEYOND THE PERIOD PRESCRIBED IN THE RELEVANT STATUTE BUT BEFORE THE DUE DATE OF FILING THE RETURN U/S.139(1) AND TH E LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 6 . FURTHER, B EFORE US, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE AMOUNT HAS BEEN DEPOSITED IN THE RESPECTIVE HEADS BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME U/S.139(1) OF THE ACT. LD A.R. REFERRED TO A RECENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF PR. CIT VS. 3 ITA NO. 423/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 RAJASTHAN BEVERAGE CORPORATION LTD (2017) 84 TAXMAN. COM 185, WHEREIN , THE HONBLE SUPREME COURT DISMISSED THE SLP FILED BY THE REVENUE OBSERVING THAT THE AMOUNT CLAIMED ON PAYMENT OF PF AND ESI HAVING BEEN DEPOSITED ON OR BEFORE DUE DATE OF FILING OF RETURN, SAME COULD NOT BE DISALLOWED UNDER SECTION 43B OR UNDER SECTION 3 6(1)(VA). HE ALSO FILED AN ORDER OF THE CIT(A) IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2014 - 15, WHEREIN, THE CIT(A) HAS DELETED THE SIMILAR ADDITION MADE BY THE ASSESSING OFFICER FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PR. CIT VS RAJASTHAN BEVERAGE CORPORATION LTD (SUPRA). 7 . LD D.R. COULD NOT CONTROVERT THE ABOVE SUBMISSIONS OF LD A.R. OF THE ASSESSEE. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE RECORDS OF THE CASE AND ORDERS OF LOWER AUTHORITIES. IN THE INSTANT CA SE, WE FIND THAT THE ASSESSING OFFICER DISALLOWED THE PAYMENT ON THE GROUND THAT THE EMPLOYEES CONTRIBUTIONS TO PF AND ESIC HAVE NOT BEEN DEPOSITED UNDER THE RESPECTIVE HEAD WITHIN DUE DATE, WHICH WAS CONFIRMED IN APPEAL BY THE CIT(A). WE FIND THAT THE H ONBLE SUPREME COURT IN THE CASE OF PR. CIT VS RAJASTHAN BEVERAGE CORPORATION LTD., WHICH HAS BEEN FOLLOWED BY THE CIT(A) IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2014 - 15 HAS HELD AS UNDER: SECTION 43B, READ WITH SECTION 36(1)(VA ), OF THE INCOME TAX ACT, 1961 - BUSINESS DISALLOWANCE - CERTAIN DEDUCTION TO BE ALLOWED ONLY ON 4 ITA NO. 423/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 `ACTUAL PAYMENT (PF & ESI CONSTRUCTION) - HIGH COURT BY THE IMPUGNED ORDER HELD THAT AMOUNT CLAIMED ON PAYMENT OF PF AND ESI HAVING BEEN DEPOSITED ON OR BEFORE DUE DATE OF FILING OF RETURNS, SAME COULD NOT BE DISALLOWED UNDER SE C TION 43B OR UNDER SECTION 3691)(VA) - WHETHER SLP AGAINST SAID IMPUGNED ORDER WAS TO BE DISMISSED - HELD YES (P - ARA 2) IN FAVOUR OF ASSESSEE. IN VIEW OF ABOVE, WE HOLD THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE AFORESAID DISALLOWANCE REPRESENTING THE EMPLOYEES CONTRIBUTION TO EPF AND ESIC, WHERE THE AMOUNTS WERE ADMITTEDLY PAID BEFORE THE DUE DATE U/S 139(1). WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) ON THIS DISPUTED ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.3,25,572/ - AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 9 . IN RESPECT OF SECOND DISPUTED ISSUE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS MADE PAYMENT IN CASH EXCEEDING RS.20,000/ - IN A DAY TOWARDS PURCHASE OF DIESEL OF RS.3,08,932/ - , WHICH IS IN VIOLATION OF SECTION 40A(3) OF THE ACT AND, THEREFORE, THE ASSESSING OFFICER ADDED THE SAME TO THE INCOME OF THE ASSESSEE. 1 0 . ON APPEAL, THE CIT(A) CONFIRMED THE ADDITION MADE BY T HE ASSESSING OFFICER BY OBSERVING THAT NO REASONS HAVE BEEN GIVEN BY THE ASSESSEE AS TO WHY THE PAYMENTS I N CHEQUE OR DRAFT COULD NOT BE MADE. 1 1 . BEFORE US, LD A.R. OF THE ASSESSEE SUBMITTED THAT THE A SSESSE IS OPERATING 50 TO 60 NUMBER OF CITY BUSES AND FOR INDIVIDUAL BUS ES, THE ASSESSEE HAS HANDED OVER RS. 2000/ - TO RS.3000/ - TO THE CONDUCTORS 5 ITA NO. 423/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 /SUPERVISORS IN A DAY TO FILL UP FUEL IN DIFFERENT OUTLETS AS THOSE OUTLETS ARE NOT WILLING TO RECEIVE CHEQUE ON THE PARTICULAR DATES FOR THE DIESEL AND, THEREFORE, THE PAYMENTS ARE MADE BY THE CONDUCTORS IN CASH. FURTHER OUT OF TOTAL DIESEL PURCHASE OF R S. 107,27,222.75 , ONLY RS. 3,08,932.00 WAS PAID IN CASH DUE TO UNAVOIDABLE CIRCUMSTANCES AND FURNISHED THE COPY OF THE AUDITED P&L ACCOUNT. FURTHER, T HE RECIPIENTS WHO RECEIVED CASH ARE IDENTIFIABLE, THE PAYMENTS AND TRANSACTIONS ARE GENUINE. HE SUBMITTE D THAT SECTION 40A(3) DOES NOT PROHIBIT THE ASSESSEE TO STOP THE PAYMENT IN CASH UNDER UNAVOIDABLE CIRCUMSTANCES AND THE ASSESSEE HAS MADE PAYMENT IN CASH EXCEEDING RS.20,000/ - UNDER EXCEPTIONAL CIRCUMSTANCES OWING TO THE INSISTENCE OF THE FUEL OUTLETS, WH ICH IS A USUAL BUSINESS PRACTICE. LD A.R. REFERRED TO THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO 191 ITR 667 (SC) , WHEREIN, IT HAS BEEN HELD THAT RULE 6DD (J) R.WS 40A(3) WILL NOT APPLY IF (A) THERE IS NO DOUBT AS TO THE GENUINENESS OF THE PAYMENT NOR THE IDENTITY OF THE PAYEE, (B) THE ASSESSEE WAS COMPELLED TO PAY CASH OWING TO THE INSISTENCE OF THE FUEL OUTLETS WHICH IS A USUAL BUSINESS PRACTICE, AND IF IT HAD NOT ABIDED BY THE THEIR DEMANDS, THE BUSINESS WOUL D HAVE SUFFERED & (C) THE EXCEPTIONS IN RULE 6DD ARE NOT EXHAUSTIVE AND THE RULE MUST BE INTERPRETED LIBERALLY . 1 2 . LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 1 3 . WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. PRIMA FACIE, IT IS OBSERVED 6 ITA NO. 423/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 THAT THE ASSESSEE HAS MADE PAYMENTS IN EXCESS OF RS.20,000/ - IN A DAY TO TWO PARTIES NAMELY MAHENDRA HIGH WAY ENTER PRISES AND RAJDHANI SERVICE STATION OF RS.3,08,932/ - . LD A.R. CONTENDED THAT THE PAYMENTS WERE MADE IN CASH WHILE FILLING THE DIESEL DURING THE BANKING HOLIDAYS AT THE INSISTENCE OF THE FUEL STATIONS. BUT THE LD D.R. SUBMITTED THAT THE ASSESSEE HAS NOT SPECIFIED THE DATES OF BANKING HOLIDAYS FOR WHICH, THE ASSESSEE WAS COMPELLED TO MAKE CASH PAYMENTS IN THE FUEL OUTLETS AND THE VITAL FACTS WERE NOT BROUGHT TO THE KNOWLEDGE OF THE ASSESSING OFFICER, AS EVIDENT FROM THE ASSESSMENT ORDER. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY WHETHER ON THE DATES, THE ASSESSEE WAS COMPELLED TO MAKE THE PAYMENT IN CASH, ARE BANKING HOLIDAYS. IF HE FINDS THE CONTENTION OF THE ASSESSEE IS CORRECT, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE DEDUCTION AND ALLOW THIS GROUND OF APPEAL FOR STATISTICAL PURPOSES. 1 4 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 1 4 / 0 2 /201 8 . S D / - S D / - ( N.S SAINI) ( PAVAN KUMAR GADALE) A CCOUNTANT MEMBER JUDICIALMEMBER CUTTACK; DATED 1 4 / 0 2 /201 8 B.K.PARIDA, SPS 7 ITA NO. 423/CTK/2016 ASSESSMENT YEAR : 2011 - 2012 COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : DREAM TEAM SHAHARA,, PLOT NO.5/538, IRC VILLAGE, NAYAPALI, BHUBANESWAR 2. THE RESPONDENT. ITO, WARD 2(1), BHUBANESWAR 3. THE CIT(A) - 2, BHUBANESWAR 4. PR.CIT - 2, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//