V BIRD SHIPPING AGENCIES PRIVATE LIMITED , MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(3)(2), MUMBAI

ITA 5117/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2384 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 02-08-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Section: 40A(3); 143(3)

Judgement Text

F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI C.N . PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO.5117/ MUM/2017 ( / ASSESSMENT YEAR : 2014 - 15) V BIRD SHIPPING AGENCIES P RIVATE LIMITED , 03, SHALOM HERITAGE, OPP. RBK SCHOOL, PHASE 6, INDRALOK, BHAYANDAR (E), THANE - 40110 5 / V. DCIT CIRCLE - 1(3)(2) AAYAKAR BHAWAN M K ROAD MUMBAI - 400020 ./ PAN : AACCV8654Q ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: NONE REVENUE BY: SHRI RAJIV GUBGOTRA (DR) / DATE OF HEARING : 11.03.2019 / DATE OF PRONOUNCEMENT : 11 .03.2019 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY A SSESSEE, BEING ITA NO. 5117/MUM/2017, IS DIRECTED AGAINST APPELLATE ORDER DATED 27.06.2017 IN A PPEAL NO. CIT(A) - 3/IT - 157/DCIT - 1(3)(2)/ 16 - 17, PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 3, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR (AY) 2014 - 15 , THE APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM THE ASSESSMENT ORDER DA TED 30.12.2016 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FOR AY 2014 - 15 . I.T.A. NO.5117/MUM/2017 2 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - CIT(A) ERRED IN PARTLY ALLOWING OF ADDITIONS DONE BY LD. AO U/S 40A(3). 3. THE BRIED FACTS OF THE CASE ARE THAT THE ASSESSEE I S ENGAGED IN THE BUSINESS OF SHIPPING, LOGISTICS & FREIGHT FORWARDERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS CONDUCTED BY THE AO U/S 143(3) READ WITH SECTION 143(2) OF THE 1961 ACT , IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS INCURRED CASH EXPEN DITURE TOTALLING TO RS. 60,11,502/ - AS PER DATE WISE LIST SUBMITTED BY ASSESSEE. THE ASSESSEE WAS ASKED BY THE AO TO PRODUCE BILLS /INVOICES FOR THESE CASH EXPENSES. THE ASSESSEE SUBMITTED ZEROX COPIES OF PART OF SELF MADE CASH VOUCHERS TOTALLING TO RS. 12,26,7 5 7/ - . F OR REST OF THE CASH EXPENSES, THE ASSESSEE SUBMITTED SUMMARY OF CASH VOUCHERS AND CONFIRMATIONS VIDE A NNEXURE - 3, WHICH IS REPRODUCED HERE UNDER: - I.T.A. NO.5117/MUM/2017 3 3 .2 THUS, THE ASSESSEE CLAIMED BEFORE THE AO TO HAVE SUBMI T T ED DETAILS OF CASH EXPENSES OF RS. 53,16,826/ - OUT OF TOTAL CASH EXPENSES OF RS. 60,11,502/ - . FOR THE BALANCE CASH EXPENSES, IT WAS SUBMITTED THAT SOME FILES ARE MISPLACED AND THE ASSESSEE IS TRYING TO COLLATE THE DETAILS . THE LETTER FURNISHED BY THE ASSESSEE IS REPRODUCED HERE UNDER: - I.T.A. NO.5117/MUM/2017 4 3 .3 THE AO DISALLOWED CASH EXPENSES TO THE TUNE OF RS. 47,93,956/ - , OUT OF WHICH CASH EXPENSES TO THE TUNE OF RS. 37,92,591/ - WERE DISALLOWED BEING IN EXCESS OF RS. 20,000/ - INFRINGING SECTION 40A(3) OF THE 1961 ACT FOR WHICH ONLY ZEROX COPIES OF SELF MADE VOUCHERS WERE FURNISHED BY THE ASSESSEE BEFORE THE AO. THE ASSESSEE DID NOT PRODUCED BILLS/INVOICES FOR THE SAME AND AS PER THE AO IT INFRINGED SECTION 40A(3) OF THE 1961 ACT AS CASH EXPENSES EXCEEDED RS. 20000/ . THE ASSESSEE ALSO DID NOT PRODUCE D BOOKS OF ACCOUNTS BEFORE THE AO. THE DETAILS OF DISALLOWANCE OF CASH EXPENSES OF RS. 37,92,5 91/ - BY THE AO VIDE ASSESSMENT ORDER DATED 30.12.2016 PASSED U/S 143(3) OF THE 1961 ACT BY INVOKING PROVISIONS OF SECTION 40A(3) OF THE 1961 ACT, IS REPRODUCED HEREUNDER: - I.T.A. NO.5117/MUM/2017 5 3 .4 THERE WERE OTHER REASONS FOR MAKING FURTHER DISALLOWANCE S BY AO VIDE ASSESSMENT ORDER DATED 30.12.2016 PASSED U/S 143(3) OF THE 1961 ACT TOWARDS CASH EXPENSES BUT SINCE ASSESSEE GOT RELIEF FROM LD. CIT(A) ON THOSE AC COUNT AND IT IS NOT SHOWN TO US BY LEARNED DR THAT THE R EVENUE HAS FILED AN APPEAL AG AINST PART RELIEF GRANTED BY LEARNED CIT(A) , WE HAVE NOT DISCUSSED THE SAME IN THIS ORDER. 4. AGGRIEVED BY AN ASSESSMENT FRAMED BY THE AO VIDE ASSESSMENT ORDER DATED 30. 12.2016 PASSED U/S 143(3) OF THE 1961 ACT, T HE ASSESSEE FILED FIRST APPEAL BEFORE LEARNED CIT(A ). THE LD. CIT(A) WAS PLEASED TO CONFIRM THE DISALLOWANCE OF CASH EXPENSES TO THE TUNE OF RS. 37,9 2 ,591/ - , VIDE APPELLATE ORDER DATED 27.06.2017 BY HOLDING AS UNDER: - 6.2 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND FACTS OF THE CASE. THE UNDISPUTED FACT IN THE CASE IS THAT THE APPELLANT HAS MADE CASH E XPENDITURE AMOUNTING TO RS. 60,11,50 2/ - , WHICH REQUIRE CERTAIN NORMS TO BE FULFILLED AS PER THE PROVISIONS OF SECTION 40A(3 ) AND OTHER SECTIONS OF THE IT ACT. THE APPELLANT HAS NOT PRODUCED SUFFICIENT EVIDENCE AND THE CONVINCING REASONS TO INCUR A CASH PAYMENT WHICH IS NOT ALLOWABLE AS PER THE IT ACT, TO CERTAIN EXTENT. IN VIEW OF THE SAME, PAY MENT OF RS. 37,92,591/ - IN EXCESS OF RS. 20,000/ - I.T.A. NO.5117/MUM/2017 6 MADE IN CASH IN VIOLATION OF SECTION 40 A(3 ) OF THE IT ACT, NEED TO BE DISALLOWED. THEREFORE, OUT OF THE TOTAL DISALLOWANCE OF RS. 47,93,956/ - AN AMOUNT OF RS. 37,92,591/ - IS CONFIRMED AND THUS APPELLANT GET A RELIEF OF RS. 10,01,365/ - . HENCE, THE GROUND NO. 1 IS PARTLY ALLOWED. 4 .2 . BEFORE LD. CIT(A) , THE ASSESSEE FAILED TO JUSTIFY WHY DISALLOWANCE U/S. 40A(3) OF THE 1961 ACT BE NOT SUSTAINED. THE ASSESSEE CONTENDED THAT THESE CASH EXPENSES ARE FRACTIONAL AMOUNT VIS - A - VIS TURNOVER WHICH WAS REJECTED BY LEARNED CIT(A). THERE IS A CONCURRENT FINDING BY BOTH THE AUTHORITIES BELOW THAT THE ASSESSEE HAD INFRINGED PR OVISIONS OF SECTION 40A(3) OF THE 1961 ACT AND CASH PAYMENT EXCEEDING RS. 20000/ - WERE PAID TOWARDS EXPENSES IN VIOLATION OF PROVISIONS OF SECTION 40A(3) OF THE 1961 ACT . 5 . NOW , THE ASSESSEE IS AGGRIEVED BY SUSTAINING OF ADDITIONS OF CASH EXPENSES TO THE TUNE OF RS. 37,92,591/ - EXCEEDING RS. 20000/ - IN VIOLATION OF SECTION 40A(3) BY LEARNED CIT(A) AND THE ASSESSEE HAS FILED AN APPEAL BEFO RE THE TRIBUNAL. THE CASE OF THE ASSESSEE WAS FIXED FOR HEARING ON 19.11.2018, WHEREIN THE LD. COUNSEL FOR THE ASSESSEE FILED A LETTER BEFORE THE TRIBUNAL AND MADE A REQUEST FOR ADJOURNMENT , WHICH WAS GRANTED BY THE BENCH TO THE ASSESSEE AND THE APPEAL OF THE ASSE SSEE WAS FIXED FOR HEARING ON 20.11.2018. N ONE APPEARED ON BEHALF OF THE ASSESSEE ON 20 .11.2018 WHEN THE APPEAL WAS CALLED FOR HEARING BEFORE THE BENCH AND THE APPEAL WAS ADJOURNED AND FIXED BY TRIBUNAL FOR HEARING ON 19.12.2018 . WHEN THE APPEAL WAS AGAIN CALLED FOR HEARING BEFORE THE BENCH ON 19.12.2018 , AGAIN NONE APPEARED ON BEHALF OF THE ASSESSEE BE FORE THE TRIBUNAL AND THE TRIBUNAL WAS AGAIN PLEASED TO ADJOURN THE HEARING TO 24.01.2019 . WHEN AGAIN THE APPEAL WAS CALLED FOR HEARING BEFORE THE BENCH ON 24.01.2019 , N ONE APPEARED ON BEHALF OF T HE ASSESSEE AND TRIBUNAL WAS AGAIN PLEASED TO GRANT ONE MO RE OPPORTUNITY TO THE ASSESSEE AS A LAST OPPORTUNITY AND THE APPEAL WAS ADJOURN FOR HEARING TO 11.03.2019 . WHEN THIS APPEAL WAS CALLED FOR HEARING ON 11.03.2019, AGAIN NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE LAST OPPORTUNITY GRANTED TO THE ASSESSEE BY THE I.T.A. NO.5117/MUM/2017 7 BENCH ON LAST OCCASION WHEN THE APPEAL WAS FIXED FOR HEARING BEFORE THE BENCH ON 24.01.2019 . T HE LD. DR ON THE OTHER HAD STRONGLY CONTENDED THAT BOTH THE AUTHORITIES BELOW HAVE CONCURRENTLY AND CONCLUSIVELY HAVE HELD THAT THE ASSESSEE HAD INCURRED CASH EXPENSES TO THE TUNE OF RS. 37,92,591/ - WHICH WERE IN EXCESS OF RS. 20,000/ - AND ARE HIT BY SECTION 40A(3) OF THE 1961 ACT. IT WAS CONTENDED THAT KEEPING IN VIEW PROVISION OF SECTION 40A(3) OF THE 1961 ACT , ADDITION/DISALLOWANCE OF CASH EXPENSES TO T HE TUNE OF RS. 37,9 2 ,591/ - MADE U/S. 40A(3) BY THE AO AND AS SUSTAINED BY LEARNED CIT(A) BE CONFIRMED. IT WAS SUBMITTED THAT NO REASONS/JUSTIFICATION OF MAKING CASH PAYMENTS IN EXCESS OF RS. 20000/ - IN VIOLATION OF SECTION 40A(3) OF THE 1961 ACT IS SUBMITT ED BY THE ASSESSEE AND THE SAME MAY BE CONFIRMED. 6 . WE HAVE HEA R D LD. DR AND CAREFULLY CONSIDERED MATERIAL ON RECORD . W E HAVE OBSERVED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SHIPPING, L OGISTICS & FREIGHT FORWARDERS. WE HAVE OBSERVED THAT THE ASS ESSEE HAD INCURRED CASH EXPENDITURE TOTALLING TO RS. 60,11,502/ - . O UT OF THESE CASH EXPENSES , AN AMOUNT OF CASH EXPENSES TOTALLING TO RS. 37,92,591/ - WERE MADE IN EXCESS OF RS. 20,000/ - IN VIOLATION OF SECTION 40A(3), THE DETAILS FOR WHICH ARE REPRODUCED AS HERE UNDER: - I.T.A. NO.5117/MUM/2017 8 THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS BEFORE THE AUTHORITIES BELOW NOR THE ASSESSEE COULD PRODUCE INVOICES FOR THE SE CASH EXPENSES . HOW E VER, THE ASSESSEE HAD PRODUCED SELF GENERATED CASH VOUCHERS FOR THESE CASH EXPE NSES . THE ASSESSEE COULD NOT EXPLAIN REASONS AND JUSTIFICATION FOR MAKING CASH PAYMENT IN EXCESS OF RS. 20,000/ - BEFORE THE AUTHORITIES BELOW TOWARDS THESE EXPENSES . THE ASSESSEE HAS TAKEN A STAND BEFORE THE AUTHORITIES BELOW THAT THESE EXPENSES BEAR A S MALL PROPORTION TO ITS TURNOVER AND HENCE THE SAME SHOULD NOT BE DISALLOWED, WHICH CONTENTION STOOD REJECTED BY AUTHORITIES BELOW IN VIEW OF INFRINGEMENT OF SECTION 40A(3) OF THE 1961 ACT . THE ASSESSEE MADE BAL D STATEMENT THAT THERE IS NO INFRINGEMENT OF S ECTION 40A(3) AS THE EXPENSES DID NOT EXCEEDED RS. 20000/ - BUT CONCURRENTLY BOTH THE AUTHORITIES REJECTED THE SAID CONTENTION IN VIEW OF LACK OF COGENT EVIDENCES. B OTH THE AUTHORITIES BELOW HAVE COME TO THE CONCURRENT FINDING OF FACT THAT THESE CASH PAYM ENTS TOWARDS EXPENSES WERE IN EXCESS OF RS. 20,000/ - WHICH WERE HIT BY SECTION 40A(3) OF THE 1961 ACT AND HENCE THE SAME STOOD DISALLOWED . THE ASSESSEE HAS ALSO NOT FILED ANY EVIDENCES BEFORE US TO SUBSTANTIATE ITS STAND THAT NO DISALLOWANCE U/S 40A(3) IS WARRANTED . N O PAPER BOOK HAS BEEN FILED BY THE ASSESSEE BEFORE US . NOR THE ASSESSEE APPEARED BEFORE US DESPITE SEVERAL OPPORTUNITIES GRANTED TO THE ASSESSEE BY THE I.T.A. NO.5117/MUM/2017 9 TRIBUNAL , THE DETAIL OF WHICH ARE GIVEN BY US IN PRECEDING PARA S OF THIS ORDER. K EEPING IN VIEW FACTUAL MATRIX OF THE CASE AND MATERIAL ON RECORD, WE DO NOT FIND ANY JUSTIFICATION FOR INTERFERING IN THE CONCURRENT FINDING ARRIVED AT BY BOTH THE AO AS WELL LEARNED CIT(A) THAT THE ASSESSEE MADE CASH PAYMENTS TOWARDS EXPENSES EXCEEDING RS. 2000 0/ - IN VIOLATION OF SECTION 40A(3) OF THE 1961 ACT . THE ASSESSEE COULD NOT CONTRO VERT AND REBUT THE SAID FINDING OF FACT ARRIVED AT BY BOTH THE AUTHORITIES . RATHER, BEFORE US THE ASSESSEE HAS ADOPTED AN APPROACH OF NOT APP EARING BEFORE THE TRIBUNAL . THE L ITIGANTS ARE SUPPOSE D TO BE VIGILANT IN PURSING THEIR DISPUTES BEFORE THE COURTS AN D IN CASE OF NEGLIGENCE AND NON - APPEARANCES/NON CO - OPERATION BEFORE THE COURTS, THE COURTS CAN PROCEED WITH AND DECIDE THE MATTER BASED ON MATERIAL ON RECORD ON MERITS. THER E ARE S PECIAL FACTS WHICH ARE IN THE KNOWLEDGE OF THE TAXPAYER AND IF THESE SPECIAL FACTS/EVIDENCES WHICH COULD BE PRODUCED BEFORE THE COURT BUT ARE NOT PRODUCE D/WITHHELD BY THE TAXPAYER , THE PRESUMPTION CAN B E DRAWN AGAINST THE TAXPAYER THAT EVIDENCE IF P RODUCED WILL BE AGAINST THE TAX - PAYER . REFERENCE IS DRAWN TO SECTION 114(G) OF THE INDIAN EVIDENCE ACT, 1872. IN VIEW OF OUR DETAILED DISCUSSION AND REASONING, WE DO NOT FIND ANY JUSTIFICATION AND MERIT IN THE APPEAL OF THE ASSESSEE WHICH STAND DISMISSED AND THE APPELLATE ORDER PASSED BY LEARNED CIT(A) STOOD CONFIRMED/AFFIRMED. WE ORDER ACCORDINGLY. 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 5117/MUM/2017 STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 .03.2019. 11 .03.2019 S D / - S D / - ( C.N . PRASAD ) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 11.03 .2019 I.T.A. NO.5117/MUM/2017 10 NISHANT VERMA SR. PRIVATE SECRETARY COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI