ITO, Meerut V. M/s. Sanjeev Kumar & Others, Meerut

ITA 4357/DEL/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61630 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 12-04-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 13-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Assessee Lawyers: V K GOEL
• Keywords: Business income
• Section: 40A(3)

Judgement Text

ITA NO. 4357/DEL/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER I.T.A. NO. 4357/DEL/2009 A.Y. : 2006-07 ITO, WARD 2(3), MEERUT VS. M/S SANJEEV KUMAR & OTHERS MANAGING PARTNER SH. SANJEEV KUMAR, VILL. RASOOLPUR DHOLRI, BAGHPAT ROAD, MEERUT (PAN/GIR NO. : AATFS7457C) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. V.K. GOEL, ADV. DEPARTMENT BY : S. MOHANTY, D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: PER SHAMIM YAHYA: PER SHAMIM YAHYA: PER SHAMIM YAHYA: AM AMAM AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 11.9.2 009 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE GROUNDS RAISED READ AS UNDER :- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS JUSTIFIED IN LAW IN DELETING THE ADDITION OF ` 10,48 ,000/- IGNORING THE FACT THAT THE RELEVANT ACCOUNTS OF THE PARTIES TO WHOM PAYMENTS WERE MADE, WERE REPRODUCED IN THE ASSESSMENT ORDER ITSELF AT PP 2-4 AS ITA NO. 4357/DEL/2009 2 PER WHICH THE ASSESSEE ADMITTEDLY MADE PAYMENTS EXCEEDING ` 20,000/- IN CASH IN EACH TRANSACTION ON DIFFERENT DATES FOR ` 52,39,989/- (` 19,49,288/- TO M/S SIMBHAOLI SUGARS LTD. AND ` 32,90,761/-) TO M/S DAURALA SUGARS LTD. WHEREAS THE CONDITIONS STIPULAT ED IN RULES 6DD ALSO REMAINED TOTALLY UNSATISFIED AND HENCE THE PAYMENTS WERE CLEARLY HIT BY THE PROVISIO NS OF SECTION 40A(3) OF THE IT ACT, 1961? 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTOR ED. 3. THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF TRADING OF LIQUOR. THE ASSESSING OFFICER EXAMINED THE BOOKS OF ACCOUNTS ON TEST CHECK BASIS. ASSESSEE MADE PURCHASES OF LIQUOR FRO M M/S SIMBHAOLI SUGAR LIMITED AND M/S DAURALA SUGAR LIMITED. ASSESSEE FILED COPIES OF PURCHASE ACCOUNTS WITH BOTH THE CONCERNS. TO VER IFY THE PURCHASES, THE ASSESSING OFFICER COLLECTED INFORMATION U/S. 13 3(6) OF THE IT ACT, 1961 FROM THE TWO CONCERNS. ON THE BASIS OF THE I NFORMATION COLLECTED, THE ASSESSING OFFICER HAS LISTED PAYMEN TS MADE ON DIFFERENT DATES EXCEEDING ` 20,000/-. HE HAS LISTED 136 PA YMENTS EXCEEDING ` 20,000/- IN HIS ORDER. ON A CLARIFICATION SOUGHT, THE ASSESSEE REPLIED TO THE ASSESSING OFFICER AS UNDER:- ITA NO. 4357/DEL/2009 3 1. OUR BUSINESS IS RETAIL TRADING OF LIQUOR TOTAL SALES BEING MADE IN CASH ONLY. NATURE OF BUSINESS IS COUNTER SALE OF LIQUOR, ONE OR TWO BOTTLES PER CUSTOMER. BALANCE GOODS IN STOCK ALWAYS REMAIN VERY SHORT. SO TO MEET THE DEMAND OF CUSTOMERS, QUICK PURCHASE HAVE TO MAKE. SELLERS, WHICH ARE COMMISSION AGENTS, DO NOT ACCEPT THE CHEQUES/ DRAFT. THEY ACCEPT ONLY CASH F OR QUICK SUPPLY. IN EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES RULE 6DD OF THE INCOME TAX PERMITS US TO MAKE THE PAYMENTS IN CASH FOR PURCHASE OF GOODS TO MEET THE DEMAND IN NORMAL BEHAVIOR OF TRANSACTION. OUT BUSINESS INTEREST COULD BE SUFFERED DUE TO QUICK NON-AVAILABILITY OF GOODS. 2. OUR PRODUCT IS EXCISE PAID PRODUCT AND ALSO EXEMPT FROM VAT TAX. THIS IS TAX FREE ITEM. ITA NO. 4357/DEL/2009 4 3. RAJASTHAN HIGH COURT IN CASE OF SMT. HARSHITA CHORDIA VS. ITO (2008), 298 ITR (RAJ). HAS HELD TH AT LIST GIVEN IN RULE 6DD IS NOT EXHAUSTIVE, RULE 6DD MUS T BE INTERPRETED LIBERALLY. WHERE GENUINENESS OF TRANSACTION AND IDENTIFY OF RECEIVERS IS ESTABLISHED, PAYMENTS SHOULD NOT BE DISALLOWED. SIMILAR VIEW WAS EXPRESSED BY CALCUTTA HIGH COURT IN CASE OF GIRDHARI LAL GOENKA VS. C.I.T. 179 ITR 122 (CAL). IDENTIFY OF THE RECEIVER IS WELL IDENTIFIED BY THE DEPARTMENT. 4. ALL THE PAYMENTS WERE MADE TO AGENT AGAINST THE GOODS PURCHASES NOT OTHERWISE. PAYMENTS MADE TO AGENTS AGAINST PURCHASES IS NOT AN EXPENSES. TRANSACTIONS ARE FULLY VOUCHED ACCOUNT BOOKS MAINTAINED. ITA NO. 4357/DEL/2009 5 5. SECTION 40A(3) READ WITH RULE 6DD ALSO PERMITS, WHERE THE PAYMENT IS MADE BY ANY PERSON TO HIS AGENT WHO REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR RECEIVERS ON BEHALF OF SUCH PERSON. SO, YOUR GOODSELF IS REQUESTED THAT IN NORMAL BEHAVIOR OF TRANSACTION THE PROVISIONS OF SECTION 40A(3) OF THE IT ACT HAS NOT BEEN VIOLATED. 3.1 THE ASSESSEE ALSO STATED THAT THE LIQUOR WAS PU RCHASED THROUGH COMMISSION AGENTS WHO DID NOT ACCEPT CHEQUE OR DRAFT S AND THAT THEY ACCEPTED ONLY CASH FOR QUICK SUPPLY. ASSESSING OFFICER WAS NOT SATISFIED WITH THIS REPLY. ASSESSING OFFICER OP INED THAT ASSESSEE MADE PURCHASES FROM M/S SIMBHAOLI SUGAR LIMITED AND M/ S DAURALA SUGAR LIMITED WHICH WERE WELL ESTABLISHED GROUP. T HEY NEVER REFUSED TO TAKE PAYMENT THROUGH BANK DRAFT. HENCE, 20% OF T HE EXPENSES INCURRED IN CASH, WHICH WORKS OUT TO ` 10,48,000/- WAS DISALLOWED U/S. 40A(3) OF THE IT ACT BY THE ASSESSING OFFICER. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE ASSESSEES SUBMISSIONS. L D. COMMISSIONER OF INCOME TAX (APPEALS) OPINED THAT ASSESSING OFFI CER HAS NOT GONE BY THE AUDIT REPORT AND THE BOOKS OF ACCOUNTS OF TH E ASSESSEE ITA NO. 4357/DEL/2009 6 ADMITTEDLY EXAMINED BY HIM. HE HAS INSTEAD REFERRED TO FIGURES OF DEPOSITS MADE BY THE COMMISSION AGENTS WITH THE SUPPLI ER COMPANIES WHICH ARE NOT RELEVANT FOR THE ASSESSEE. HE HAS NOT BEEN ABLE TO MAKE OUT A CASE TO SHOW THAT THE ASSESSEE HAD MADE A NY PAYMENT EXCEEDING ` 20,000/- AT ONE TIME. LD. COMMISSIO NER OF INCOME TAX (APPEALS) GAVE A FINDING FROM THE LEDGER ACCOUNTS PR ODUCED, HE CANNOT SEE ANY PAYMENT OF MORE THAN ` 20,000/- IN CA SH. EVEN IF THERE HAD BEEN A COUPLE OF SUCH OCCASIONS, RULE 6DD WOULD HAVE COME TO THE RESCUE OF THE ASSESSEE IN VIEW OF THE N ATURE OF BUSINESS OF THE ASSESSEE AND IN VIEW OF THE RATIO OF THE CASES OF SMT. HARSHITA CHORDIA VS. ITO (2008) 298 ITR (RAJ) AND GIRDHARI LAL GOENKA VS. C.I.T. 179 ITR 122 (CAL.). ACCORDINGLY, LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE ADDITION BE DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. 7. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS GIVEN A FINDING THAT ASSESSING OFFICER HAS NOT GONE BY T HE AUDIT REPORT AND THE BOOKS OF ACCOUNTS OF THE ASSESSEE ADMITTEDLY EXA MINED BY HIM. HE REFERRED TO FIGURES OF DEPOSITS MADE BY THE COMMIS SION AGENTS WITH ITA NO. 4357/DEL/2009 7 THE SUPPLIER COMPANIES WHICH ARE NOT RELEVANT FOR T HE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER GAVE A FINDING FROM THE LEDGER ACCOUNTS PRODUCED, HE CANNOT SEE ANY PA YMENT OF MORE THAN ` 20,000/- IN CASH. HE FURTHER HELD THAT EVE N IF THERE HAD BEEN A COUPLE OF SUCH OCCASIONS, RULE 6DD WOULD HAVE COME TO THE RESCUE OF THE ASSESSEE IN VIEW OF THE NATURE OF BUSINESS OF T HE ASSESSEE. ACCORDINGLY, IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). HEN CE, WE UPHOLD THE SAME. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/4/2012. SD/- SD/- [ [[ [C.M. GARG C.M. GARG C.M. GARG C.M. GARG] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 20/4/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES