M/s. Narayan Traders, Berhampur V. ITO, Ward-2, Berhampur, Berhampur

ITA 434/CTK/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7572 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 13-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: D K SHETH
• Keywords: Reasonable cause
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N. S SAINI, ACCOUNTANT MEMBER ITA NO.434/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 M/S. NARAYAN TRADERS, DESIBEHERA STREET, BERHAMPUR VS. ITO, WARD - 2, BERHAMPUR PAN/GIR NO. AAFFN 2584 H (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI D.K.SHETH REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 2 6 /10 / 2016 DATE OF PRONOUNCEMENT : 28 /10 / 2016 O R D E R THIS I S AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A) - BERHAMPUR , DATED 14.8.2014 , FOR THE ASSESSMENT YEAR 2009 - 2010 . 2. THE FIRST ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.5,82,055/ - U/S.40A(3) OF THE ACT. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PER USED THE MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE 2 ITA NO.434/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 HAS PAID RS.5,82,055/ - IN CASH FOR TRANSPORTATION CHARGES IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE ACT TO THE FOLLOWING PARTIES: DATE OF PAYMENT LORRY NO. TO WHOM PAYMENT HAS BEEN MADE AMOUNT PAID IN A DAY 05/04/2008 CG - 04J - 3486 24, 019/ - 07/04/2008 AP - 16TW - 4447 20, 430/ - 29/04/2008 CG - 04CS - 8386 26, 400/ - 05/05/2008 CG - 04CA - 8386 26, 400/ - 21/05/2008 CG - 04JA - 5556 28, 800/ - 28/06/2008 CG - 04CQ - 9286 27, 840/ - 04/07/2008 AP - 05V - 4466 21, 750 22/07/2008 CG - 04DB - 9286 27, 680/ - 07/08/2008 CG - 04J - 9314 24, 700/ - 19/08/2008 UP - 78BT - 1448 25, 731/ - 23/08/2008 CG - 04J - 6186 26, 710/ - 03/09/2008 AP - 05Y - 9889 20, 650/ - 22/09/2008 CG - 04J - 9725 27, 360/ - 23/09/2008 AP - 07T - 2130 26, 440/ - 05/10/2008 CG - 04J - 8824 26, 610/ - 07/10/2008 CG - 04DC - 7086 26, 300/ - 16/10/2008 CG - 04JA - 8824 24, 920 22/11/2008 CG - 04JA - 0658 30, 080/ - 06/03/2009 AP - 07TW - 0126 28, 550/ - 21/03/2009 CG - 04DB - 6186 21, 200/ - 23/03/2009 CG - 04HA - 7586 28, 000/ - 28/03/2009 CG - 11Y - 8008 41, 485/ - 5, 82, 055/ - 4. THE ASSESSEE SUBMITTED THAT THE AMOUNTS WERE PAID TO DRIVERS WHO INSISTED ON CASH PAYMENT. IT WAS ALSO ARGUED THAT THERE WAS NO CONTRACT WITH THE TRANSPORTER OR THE DRIVERS EITHER ORALLY OR IN WRITING. BEING NOT SATISFIED WITH THE EXPLANATION OF THE ASS ESSEE, THE ASSESSING OFFICER OBSERVING THAT THE PAYMENT IN CASH EXCEEDING RS.20,000/ - IN A SINGLE DAY WAS IN VIOLATION OF PROVISIONS OF SECTION 40A(3) AND, THEREFORE, DISALLOWED 3 ITA NO.434/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 THE SAME AND MADE AN ADDITION OF RS.5,82,055/ - TO THE INCOME OF THE ASSESSEE. 5. ON APPEAL, LD CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAD NOT FILED ANY EVIDENCE OR GIVEN ANY REASON WHICH COULD COME UNDER THE EXCEPTIONS LISTED IN THE SAID RULE. 6. BEFORE ME, LD A.R. OF THE ASSESSEE RE LIED ON THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF A.KARUNAKAR PATRO VS ITO (ITA NO.477/CTK/2013) FOR A.Y. 2009 - 2010 ORDER DATED 28.10.2015, WHEREIN, IT WAS HELD THAT THE ASSESSEE HAD MADE PAYMENTS TO TRUCK OWNERS, WHO BRINGS THE COMMODITIES FROM ALL OVER INDIA. AS PER BERHAMPUR TRAFFIC POLICE REGULATIONS/NOTIFICATIONS, THE HEAVY GOODS CARRYING VEHICLES ARE NOT ALLOWED TO BIG BAZAR AREA OF BERHAMPUR FROM 9 AM TO 9 PM DURING THE WEEK DAYS. THE TRUCKS CARRYING GOODS ENTER THE BIG BAZAR AREA D URING LATE HOURS IN THE E VENING AFTER 9 PM AND LEAVE THE AREA AFTER UNLOADING THE GOODS DURING THE N IGHT ITSELF. NEITHER THE ASSESSING OFFICER CONSIDERED THE GENUINENESS OF THE FREIGHT EXPENSES, NOR THE LD CIT(A) IN APPEAL. THEREFORE, THE TRIBUNAL HELD T HAT THE ASSESSEE HAD A REASONABLE CAUSE FOR MAKING PAYMENT IN CASH AND ALLOWED THE GROUNDS OF APPEAL OF THE ASSESSEE. HE PRAYED THAT FOLLOWING THE SAME, THE ADDITION SHOULD BE DELETED. 4 ITA NO.434/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 7. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITI ES. 8. I FIND THAT IN THE INSTANT CASE, THE ASSESSEE HAS MADE PAYMENTS OF RS.5,82,055/ - TO TRUCK OWNERS, WHO INSISTED ON CASH PAYMENTS AFTER UNLOADING THE GOODS AT THE BUSINESS PREMISES OF THE ASSESSEE AFTER 9 PM AND LEFT BEFORE 9 AM IN THE MORNING, WHICH WAS BEYOND BANKING HOURS. THEREFORE, THE ASSESSEE, IN THE ABOVE CIRCUMSTANCES, WAS COMPELLED TO MAKE THE PAYMENTS IN CASH TO THE DRIVERS OF RS.5,82,055/ - DURING THE YEAR AND HENCE, THE FACTS OF THE ASSESSEES CASE ARE COVERED BY THE DECISION OF THIS BENC H OF THE TRIBUNAL IN THE CASE OF A.KARUNAKAR PATRO(SUPRA). I, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES BELOW AND VACATE THE DISALLOWANCE OF RS.5,82,055/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 9. THE SECOND ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.6,98,6 72/ - OF M/S. R. P IYARELALL FOODS PVT LTD., VIZAG FOR WANT OF CONFIRMATION FROM THE CREDITOR. 10. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER HAD WRITTEN LETTE R TO M/S. R. PIYARELALL FOODS PVT LTD., FOR CONFIRMATION OF THE AMOUNT OUTSTANDING IN THE BALANCE SHEET OF THE ASSESSEE IN ITS NAME OF RS.6,98,672/ - . THE SAID LETTER WAS RETURNED BACK UNSERVED BY THE POSTAL 5 ITA NO.434/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 AUTHORITIES WITH THE REMARKS NO SUCH ADDRESSEE/ INSUFFICIENT ADDRESS. THE ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHY THE CREDITORS SHOULD NOT BE TREATED AS BOGUS. THE ASSESSEE SUBMITTED THE BILLS PROVING THE PURCHASES MADE FROM THE PARTIES CONCERNED. THE ASSESSEE COULD NOT FILE CONFIRMATION FROM THE PARTY FOR THE OUTSTANDING AMOUNT. HE, THEREFORE, ADDED RS.698,672/ - TO THE INCOME OF THE ASSESSEE. 11. ON APPEAL, LD CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE COULD NOT PROVE THE CREDITOR DURING THE ASSESSME NT PROCEEDINGS BEFORE THE ASSESSING OFFICER. 12. BEFORE ME, LD A.R. OF THE ASSESSEE HAS FILED COPIES OF BILLS AND SUBMITTED THAT AS PER BILL NO.674 DATED 30.8.2008, PURCHASES OF RS.3,53,890/ - WAS MADE AND AS PER BILL NO.123 DATED 31.3.2008, PURCHASE OF RS.3,44,782/ - WAS MADE. HE SUB MITTED THAT TOTAL OF BOTH THE BILLS COME S TO RS.6,98,672/ - WHICH WAS THE TOTAL AMOUNT OF PURCHASES MADE DURING THE YEAR BY THE ASSESSEE. HE ALSO FILED COPY OF INCOME TAX RETURN TOGETHER WITH BALANCE SHEET OF THE ASSESSEE FOR THE YEAR UNDER APPEAL AND POINTED THEREFROM THAT PAYMENT OF RS.3,53,890/ - WAS MADE BY THE ASSESSEE DURING THE YEAR BY CHEQUE DRAWN ON AXIS BANK ON 24.9.2008 AND THE AMOUNT OUTSTANDING AS AT THE END OF THE YEAR WAS RS.3,06,091.50 AFTER TAKING INTO ACCOUNT THE OPENING BALANCE OF RS.5690.50. THEREFORE, IT WAS THE 6 ITA NO.434/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 SUBMISSION OF LD A.R. OF THE ASSESSEE THAT THE ADDITION MADE OF RS.6,98,672/ - AS AMOUNT OF OUTSTANDING AS ON 31.3.2009 PAYABLE BY THE ASSESSEE TO R.PIYARELALL FOOD PVT LTD., VIZAG WAS NOT JUSTIFIED. LD A.R. ALSO MADE A STATEMENT AT BAR THAT THE BALANCE AMOUNT OF RS.3,06,091.50 WAS ALSO PAID BY THE ASSESSEE BY CHEQUE IN THE SUBSEQUENT YEAR. THEREFORE, IT WAS THE SUBMISSION THAT THE ADDITION OF RS.6,98,672/ - TO THE INCOME OF THE ASSESSEE WAS NOT JUST IFIED. 13. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 14. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE , ACCORDING TO THE ASSESSING OFFICE R, RS.6,98,672/ - WAS SHOWN AS PAYABLE TO R.PIYARELALL FOOD PVT LTD., VIZAG. SINCE A LETTER SENT TO THE CREDITOR WAS RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES, HE MADE ADDITION OF THE SAME AMOUNT TO THE INCOME OF THE ASSESSEE. ON APPEAL, LD CIT(A) CONFIRMED THE SAME. BEFORE ME, BY FILING THE COPIES OF TWO BILLS FOR PURCHASE OF RS.3,53,890/ - ON 30.8.2008 FOR PURCHASE OF RS.3,44,782/ - ON 31.3.2008, THE ASSESSEE DEMONSTRATED THAT TOTAL PURCHASES DURING THE YEAR WAS RS.6,98,672/ - . THE ASSESSEE DURING THE YEAR MADE PAYMENT THROUGH AXIS BANK OF RS.3,53,890/ - AND DEMONSTRATED FROM COPY OF THE BALANCE SHEET FILED BEFORE ME THAT THE AMOUNT OUTSTANDING PAYABLE TO R.PIYARELALL FOOD PVT LTD., VIZAG 7 ITA NO.434/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 WAS ONLY RS.3,06,091.50. LD A.R. MADE A STATEMENT AT BAR THA T THIS AMOUNT WAS PAID IN THE IMMEDIATELY SUCCEEDING YEAR THROUG H BANK. THEREFORE, IT WAS PLEAD ED THAT THE ADDITION MADE OF RS.6,98,672/ - WAS REQUIRED TO BE DELETED. LD D.R. MERELY RELIED ON THE ORDERS OF LOWER AUTHORITIES BELOW AND COULD NOT CONTROVERT THE SUBMISSIONS OF LD A.R. OF THEASSESSEE. THEREFORE, I FIND FORCE IN THE ARGUMENTS OF LD A.R. OF THE ASSESSEE AND SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES ON THIS IS SUE AND DELETE THE ADDITION OF R S.6,98,672/ - . THIS GROUND IS ALLOWED. 15. IN RESPE CT OF ADDITION OF RS.12,438/ - , NO ARGUMENTS WERE ADVANCED BY LD A.R. OF THE ASSESSEE. THEREFORE, FOR WANT OF PROSECUTION, THE ADDITION OF RS.12,438/ - IS CONFIRMED. 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCE D IN TH E OPEN COURT ON 2 8 /10 /2016 . S D / - ( N. S SAINI ) A CCOUNTANT MEMBER CUTTACK; DATED 2 8 /10 /2016 B.K.PARIDA, SPS 8 ITA NO.434/CTK/2014 ASSESSMENT YEAR : 2009 - 2010 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : M/S. NARAYAN TRADERS, DESIBEHERA STREET, BERHAMPUR 2. THE RESPONDENT. ITO, WARD - 2, BERHAMPUR 3. THE CIT(A) , BERHAMPUR 4. CIT , BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//