Mahabir Prasad Dhakalia, Kolkata V. ITO, WD-3(2), KOLKATA, Kolkata

ITA 475/KOL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4725 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 18-03-2016
• Court: TRIBUNAL
• Assessee Lawyers: MRS VARSHA JALAN
• Section: 40A(3)

Judgement Text

I.T.A. NO. 475/KOL./2016 ASSESSMENT YEAR: 2011-2012 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER I.T.A. NO. 475 /KOL/ 2016 ASSESSMENT YEAR: 2011-2012 MAHABIR PRASAD DHAKALIA,........................... .........................APPELLANT PROP. BHARAT SUPPLY COMPANY, 23A, N.S. ROAD, 10 TH FLOOR, ROOM NO. 34, KOLKATA-700 001 [PAN : AEJPD 9299 R] -VS.- INCOME TAX OFFICER,................................ ...............................RESPONDENT WARD-3(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 APPEARANCES BY: MRS. VARSHA JALAN, ADVOCATE, FOR THE ASSESSEE SHRI SRIDHAR BHATTACHARYA, JCIT, D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : JUNE 08, 2016 DATE OF PRONOUNCING THE ORDER : AUGUST 05, 2016 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKATA DATED 05.02.2016 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DISALLOWANCE OF RS.7,08,849/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) BY INVOKING THE PROVISION OF SECTION 4 0A(3) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L, WHO IS ENGAGED IN THE BUSINESS OF TRADING IN IRON AND STEEL IN THE NA ME AND STYLE OF HIS PROPRIETARY CONCERN M/S. BHARAT SUPPLY COMPANY. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY HIM O N 29.09.2011 DECLARING TOTAL INCOME OF RS.1,84,670/-. IN THE PRO FIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, A SUM OF RS.20,30,000/- WAS DEBITED BY THE I.T.A. NO. 475/KOL./2016 ASSESSMENT YEAR: 2011-2012 PAGE 2 OF 5 ASSESSEE ON ACCOUNT OF FREIGHT AND CARTAGE. ON VERI FICATION OF THE DETAILS OF THE SAID EXPENSES AS FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER FOUND THAT THE FOLLOWING PAYMENTS WERE MADE BY THE ASSESSEE ON ACCOUNT OF FREIGHT CHARGES IN CASH:- NAME OF THE PARTY DATE AMOUNT 1.NEW SOHAL TRANSPORT CO. 24.05.2010 40,000/- (20,000 + 20,000) - DO - 25.05.2010 46,940 (23,200 + 23,740) - DO - 11.06.2010 45,000/- (25,000 + 20000) - DO - 12.06.2010 88,276/- (18,807 + 24,469 + 20,000 + 25,000) - DO - 13.06.2010 41,400/- (23,200 + 18,200) - DO - 05.11.2010 90,000/- (30,000 + 30,000 + 30,000) - DO - 06.11.2010 95,000/- (32,000 + 20,000 + 31,000 + 12,000) NAME OF THE PARTY DATE AMOUNT 2.SURESH KUMAR GUPTA 08.06.2010 50,000/- (25,000 + 25,000) NAME OF THE PARTY DATE AMOUNT 3.DEOL LORRY BROKER 25.03.2011 58,000/- (30,000 + 28,000) -DO- 26.03.2011 67,000/- (34,000 + 33,000) -DO- 27.03.2011 51,000/- (25,500 + 25,500) -D0 28.03.2011 36,233/- (15,543 + 20,690) TOTAL RS. 7,08,849/- AS THE ABOVE PAYMENTS MADE BY THE ASSESSEE IN CASH WERE HIT BY THE PROVISION OF SECTION 40A(3), THE ASSESSEE WAS CALLE D UPON BY THE ASSESSING OFFICER TO EXPLAIN AS TO WHY THE EXPENDIT URE INCURRED BY IT ON FREIGHT CHARGES TO THE EXTENT OF RS.7,08,849/- SHOU LD NOT BE DISALLOWED BY INVOKING THE SAID PROVISION. IN REPLY, IT WAS SUBMI TTED BY THE ASSESSEE THAT NO PAYMENT IN CASH EXCEEDING RS.35,000/- HAD B EEN PAID IN A SINGLE DAY TO A SINGLE DRIVER. THIS EXPLANATION OF THE ASS ESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AS HE FOUND FROM THE VERIF ICATION OF CASH BOOK THAT THE AMOUNTS IN QUESTION WERE PAID BY THE ASSES SEE TO THE CONCERNED PARTIES IN CASH ON A SINGLE DAY. HE, THEREFORE, INV OKED THE PROVISION OF I.T.A. NO. 475/KOL./2016 ASSESSMENT YEAR: 2011-2012 PAGE 3 OF 5 SECTION 40A(3) AND MADE A DISALLOWANCE OF RS.7,08,8 49/- ON ACCOUNT OF FREIGHT CHARGES PAID BY THE ASSESSEE IN CASH. 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER U NDER SECTION 40(A)(IA) WAS CHALLENGED BY THE ASSESSEE IN THE APP EAL FILED BEFORE THE LD. CIT(APPEALS) AND THE FOLLOWING SUBMISSION WAS MADE BY THE ASSESESE IN WRITING BEFORE THE LD. CIT(APPEALS) IN SUPPORT OF H IS CASE ON THIS ISSUE: 'IN THIS REGARD IT IS STATED THAT THE ASSESSEE HAS INCURRED A SUM OF RS.20,30,000/- TOWARDS FREIGHT AND CARTAGE FOR SENDING GOODS TO CUSTOMERS FOR WHICH TRUE EXTRACT O F THE LEDGER OF FREIGHT AND CARTAGE CHARGE PAID TO VARIOU S LORRY OWNERS / DRIVERS MENTIONING THE DIFFERENT LOR RIES / DRIVERS NUMBERS AND DATE OF PAYMENTS SHOWING THAT THERE IS NOT EVEN A SINGLE PAYMENT MADE TO A SINGLE LORRY / DRIVER WHICH EXCEEDS RS.35,000/- IN A SINGLE DAY WAS SUBMITTED TO THE A.O. DURING THE COURSE OF HEARING OF THE CASE AND WE ARE AGAIN ENCLOSING HEREWITH A COPY OF THE SAME. THE ASSESSEE PURCHASES GOODS FROM VARIOUS PLA NTS AND OUR AGENT SEND GOODS THROUGH TRANSPORTERS WHO SEND GOODS THROUGH THEIR OWN TRUCKS AND ALSO THROUG H TRUCK HIRED FROM THE MARKET. WE MAKE PAYMENT OF THE FREIGHT TO THE TRUCK OWNER NOT THE TRANSPORTER AND PAYMENT OF FREIGHT TO TRUCK DRIVER HAS TO MAKE IN C ASH AS THEY DO NOT ACCEPT PAYMENT BY CHEQUE AND THEY DO NO T WAIT FOR THEIR FREIGHT FOR TWO- THREE DAYS. THEREFO RE, FREIGHT HAS TO BE PAID IN CASH TO THE TRUCK OWNERS. FURTHER IT IS STATED THAT NO PAYMENT IN CASH EXCEED ING RS.35,000/- HAS BEEN PAID IN A SINGLE DAY TO A SING LE TRUCK / DRIVER. WE HAVE PAID FREIGHTS TO DIFFERENT TRUCK AND DIFFERENT DRIVERS IN CASH NOT EXCEEDING RS.35,0 00/- IN A SINGLE DAY. THOUGH THE TRANSPORTER MAY BE THE SAME PERSON BUT THE TRUCK AND DRIVER ARE DIFFERENT THEY DO NOT BELONG TO THE TRANSPORTERS. THE TRANSPORTERS HIRE T HE TRUCK FROM THE MARKET THROUGH AGENTS AND SEND THE GOODS THROUGH THEIR CONSIGNMENT NOTE. THEREFORE THE RE IS NO VIOLATION OF SECTION 40A(3) OF THE I.T. ACT, 1961. HENCE, NO AMOUNT SHOULD BE DISALLOWED U/S. 40A(3) O F THE I.T. ACT, AS THE PAYMENT ARE MADE TO SEPARATE INDIVIDUAL TRUCK DRIVERS / OWNERS NOT THE AGENTS TRANSPORTERS. 4. THE ABOVE SUBMISSION MADE BY THE ASSESSEE DID NO T FIND FAVOUR WITH THE LD. CIT(APPEALS) AS HE FOUND THAT THE AMOU NTS IN QUESTION WERE NOT PAID BY THE ASSESESE TO DRIVERS BUT THE SAME WE RE PAID TO CONCERNED I.T.A. NO. 475/KOL./2016 ASSESSMENT YEAR: 2011-2012 PAGE 4 OF 5 TRANSPORTERS, NAMELY NEW SOHAL TRANSPORT COMPANY, S URESH KR. GUPTA, ETC. AS PER THE SPECIFIC FINDING GIVEN BY THE ASSES SING OFFICER IN THE ASSESSMENT ORDER. HE ALSO NOTED THAT ALL THE CASH P AYMENTS IN QUESTION WERE MADE TO THE CONCERNED PARTIES ON A SINGLE DAY EXCEEDING THE PRESCRIBED LIMIT OF RS.35,000/- AS PER THE FINDING GIVEN BY THE ASSESSING OFFICER. HE, THEREFORE, HELD THAT THE PROVISIONS O F SECTION 40A(3) WERE CLEARLY ATTRACTED IN THE CASE OF THE ASSESSEE AND P ROCEEDED TO CONFIRM THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 40A(3). AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESESE HAS REITERATED BEFORE ME THE SUBMISSIONS MADE BEFORE TH E LD. CIT(APPEALS) ON THIS ISSUE. THE SAID SUBMISSIONS MADE BY HER AS WEL L AS THE DOCUMENTARY EVIDENCE PLACED ON RECORD IN THE FORM OF LORRY RECE IPTS AND CASH VOUCHERS, HOWEVER, ARE NOT SUFFICIENT TO CONCLUSIVE LY ESTABLISH THAT THE AMOUNTS IN QUESTION WERE PAID BY THE ASSESSEE TO TH E DRIVERS IN CASH NOT EXCEEDING RS.35,000/- IN A SINGLE DAY. ON THE OTHER HAND, A SPECIFIC FINDING HAS BEEN GIVEN BY THE ASSESSING OFFICER IN HIS ORDER ON VERIFICATION OF THE CASH BOOK THAT THE AMOUNTS IN Q UESTION WERE PAID BY THE ASSESEE IN CASH TO THE TRANSPORTERS AND NOT TO THE DRIVERS AND THE SAME EXCEEDED THE PRESCRIBED LIMIT OF RS.35,000/- I N A SINGLE DAY. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO RELIED ON THE DEC ISION OF THE COORDINATE BENCH OF THIS TRIBUNAL AT JAIPUR IN THE CASE OF ITO VS.- RAMESH KUMAR (ITA NO. 408/JP/2012 DATED 31.12.2014) AS WELL AS T HE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ANUPAM TE LE SERVICES VS.- INCOME TAX OFFICER IN TAX APPEAL NO. 556 OF 2013 DA TED 22 ND JANUARY, 2014 IN SUPPORT OF THE ASSESSEES CASE. A PERUSAL O F THE SAID DECISION, HOWEVER, SHOWS THAT THE FACTS INVOLVED IN THE CASES CITED BY THE LD. COUNSEL FOR THE ASSESSEE ARE ENTIRELY DIFFERENT FRO M THE FACTS INVOLVED IN THE CASE OF THE ASSESSEE AND THE RATIO OF THE SAID DECISION, THEREFORE, IS OF NO HELP TO THE ASSESSEE IN THE PRESENT CASE. HAVING REGARD TO ALL THE FACTS I.T.A. NO. 475/KOL./2016 ASSESSMENT YEAR: 2011-2012 PAGE 5 OF 5 OF THE CASE AS BROUGHT OUT ON RECORD BY THE ASSESSI NG OFFICER, I AM OF THE VIEW THAT THE AMOUNT IN QUESTION TOWARDS FREIGHT CH ARGES WAS PAID BY THE ASSESSEE IN CASH IN VIOLATION OF THE PROVISION OF S ECTION 40A(3) AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BY INVOK ING THE SAID PROVISION WAS RIGHTLY CONFIRMED BY THE LD. CIT(APPE ALS). IN THAT VIEW OF THE MATTER, I UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND DISMISS THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 05, 20 16. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER KOLKATA, THE 5 TH DAY OF AUGUST, 2016 COPIES TO : (1) MAHABIR PRASAD DHAKALIA, PROP. BHARAT SUPPLY COMPANY, 23A, N.S. ROAD, 10 TH FLOOR, ROOM NO. 34, KOLKATA-700 001 (2) INCOME TAX OFFICER, WARD-3(2), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-1, KOLKAT A; (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.