M/s. Anupam Tele Services, Surat V. The Income tax Officer,Ward-9(1), Surat

ITA 524/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63317 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 12-12-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Assessee Lawyers: J P SHAH
• Keywords: Income from undisclosed sources
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI D.K. TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT ME MBER ITA NO.524/AHD/2010 A.Y. 2006-07 WITH ITA NO.654/AHD/2010 A.Y. 2006-07 M/S ANUPAM TELE SERVICES, A-109, YASH PLAZA, OPP. DHANAMAL MILL VARACHHA ROAD SURAT-395 006 ASSESSEE VS. THE INCOME TAX OFFICER, WARD-9(1), SURAT DEPARTMENT DEPARTMENT BY : SHRI T. SHANKAR, SR. D.R. ASSESSEE BY : SHRI J.P. SHAH, A.R. DATE OF HEARING : 13.12.2012 DATE OF PRONOUNCEMENT : 21.12.2012 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER THESE ARE CROSS APPEALS AGAINST THE ORDER OF LD. CI T(A)-V, SURAT DATED 12.11.2009. ITA NO.524/AHD/2010 2. THE ASSESSEE, IN THIS APPEAL, IS AGGRIEVED BY TH E ACTION OF LOWER AUTHORITIES ON ACCOUNT OF ADDITION OF RS.2,50,000/- TO THE INCOME OF THE ASSESSEE. 3. DURING THE COURSE OF ASSESSMENT PROCEEDING THE A .O. OBSERVED THAT THE CAPITAL HAS BEEN INTRODUCED IN THE NAME OF SEVERAL PARTNERS. IN RESPECT OF TWO ITA NO.524/AHD/2010, A.Y. 2006-07 WITH ITA NO.654/AHD/2010, A.Y. 2006-07 2 SPECIFIC QUERIES THE ASSESSEE SUBMITTED DETAIL OF I NTRODUCTION OF CAPITAL IN THE CASE OF THREE PARTNERS BUT FAILED TO SUBMIT THE PRO OF OF INTRODUCTION IN CASH IN RESPECT OF ONE PARTNER NAMELY SMT. CHANDRIKABEN SUK HADIA WHO INTRODUCED RS.2,50,000/- BY WAY OF CASH ON VARIOUS DATES. THE A.O. TOOK A VIEW THAT THE ASSESSEE HAS NOT DISCHARGED ITS LIABILITY TO PROVE THE SOURCE OF CREDITS INTRODUCED IN ITS BOOKS OF ACCOUNT. HE, THEREFORE, HELD THAT THE CASH CREDIT OF RS.2,50,000/- INTRODUCED BY THE PARTNER REMAINED UN EXPLAINED AND IS UNACCOUNTED INCOME OF THE ASSESSEE FIRM. THIS ACTI ON OF THE A.O. WAS CONFIRMED BY LD. CIT(A) WHEN ASSESSEE WENT IN APPEA L BEFORE HIM. FURTHER AGGRIEVED, NOW THE ASSESSEE IS IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSESS EE, AT THE OUTSET, PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. PANKAJ DYESTUFF INDUSTRIES DATED 06.07.2005 IN THE CASE OF INCOME TAX REFERENCE NO.241 OF 1999 SUBMITTED THAT AMOUNT INTR ODUCED BY THE PARTNER IN ITS CAPITAL ACCOUNT CANNOT BE TREATED AS INCOME OF THE ASSESSEE FIRM. IT CAN, AT BEST, BE CONSIDERED IN THE HANDS OF THE PARTNERS IF HE IS NOT ABLE TO SATISFY ABOUT THE SOURCE OF INVESTMENT OF CASH CREDIT IN HI S ACCOUNT. LD. D.R., HOWEVER, RELIED ON THE ORDER OF LOWER AUTHORITIES. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT THE ADDITION OF RS.2,50,000/- HAS BEEN MADE BY THE A.O. BY TREATING THE AMOUNT OF RS.2,50,000/- INTRODUCED BY ONE OF THE PARTNERS IN ITS CAPITAL ACCOUNT AS INCOME OF THE ASSESSEE FIRM WHICH IS NOT SUSTAINABL E IN VIEW OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF PA NKAJ DYESTUFF INDUSTRIES (SUPRA) WHEREIN FOLLOWING WAS HELD:- ITA NO.524/AHD/2010, A.Y. 2006-07 WITH ITA NO.654/AHD/2010, A.Y. 2006-07 3 13. APPLYING THE AFORESAID PRINCIPLES TO THE FACTS OF THE PRESENT CASE, IT IS APPARENT THAT THE ASSESSEE HAD FURNISHE D THE DETAILS WHICH WOULD DISCHARGE THE ONUS WHICH LAY ON THE ASSESSEE. IT IS NOT THE CASE OF THE REVENUE THAT THE PARTNERS OF THE ASSESS EE FIRM ARE FICTITIOUS. THE INCOME TAX OFFICER HAS NOT DISPUTE D THAT THE CREDITS IN THE ACCOUNTS OF THE PARTNERS WERE NOT DEPOSITS FROM THE PARTNERS. MOREOVER, IT IS AN ADMITTED POSITION THAT THIS WAS THE SECOND YEAR OF THE FIRM, AND THAT IT WAS RUNNING IN LOSS. IT IS T RUE THAT THE INCOME TAX OFFICER DID NOT ACCEPT THE EXPLANATION GIVEN ON BEHALF OF THE ASSESSEE IN RESPECT OF THE NEW DEPOSITS OR CASH CRE DITS IN THE ACCOUNTS OF THE PARTNERS. THE MERE NON-ACCEPTANCE O F THAT EXPLANATION DOES NOT, HOWEVER, PROVIDE MATERIAL FOR FINDING THAT THE SAID SUM REPRESENTED INCOME OF THE ASSESSEE FIRM. AS HELD BY THE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX, ALLAHABAD V. JAISWAL MOTOR FINANCE (SUPRA), IN THE ABSENCE OF ANY MATERIAL TO INDICATE THAT THERE WERE PROFITS OF THE FIRM, THE AMOUNT CREDITED TO THE PARTNERS ACCOUNTS COULD NOT BE ASS ESSED IN THE HANDS OF THE FIRM. ONCE THE PARTNERS HAVE OWNED THAT THE MONIES DEPOSITED IN THEIR ACCOUNTS ARE THEIR OWN, THE INCO ME TAX OFFICER IS ENTITLED TO AND MAY PROCEED AGAINST THE PARTNERS AN D ASSESS THE SAME IN THEIR HANDS, IF THEIR EXPLANATION IS NOT FO UND SATISFACTORY. 14. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT C ASE, BOTH THE DEPUTY CIT (APPEALS) AND THE TRIBUNAL HAVE FOUND TH AT THE ASSESSEE HAD DISCHARGED THE PRIMARY ONUS WHICH WAS ON IT BY OFFERING EXPLANATION, WHICH HAS NOT BEEN FOUND TO BE INCORRE CT OR FALSE IN ANY MANNER. THE INTEREST OF THE REVENUE IS ALSO SAFEGU ARDED AS THE INCOME TAX OFFICER HAS BEEN GIVEN THE LIBERTY TO CO NSIDER THE SAID CREDITS IN THE HANDS OF THE PARTNERS IF HE IS NOT S ATISFIED WITH THE SOURCES OF INVESTMENT OF CASH CREDITS IN THE ACCOUN TS OF THE PARTNERS. 15. IN THESE CIRCUMSTANCES, IT IS NOT POSSIBLE TO F IND THAT THE ORDER OF THE TRIBUNAL SUFFERS FROM ANY INFIRMITY WHICH WOUL D REQUIRE INTERFERENCE AT THE HANDS OF THIS COURT. ACCORDING LY, IT IS HELD THAT THE TRIBUNAL WAS RIGHT IN LAW AND ON FACTS IN DELET ING THE ADDITION OF RS.87,250/- BEING DEPOSITS IN THE ACCOUNTS OF THE P ARTNERS. THE QUESTION REFERRED TO THIS COURT IS, ACCORDINGLY, AN SWERED IN THE AFFIRMATIVE I.E. IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE. 6. IN VIEW OF THE ABOVE, THE ADDITION OF RS.2,50,00 0/- MADE BY THE A.O. AND SUSTAINED BY LD. CIT(A) IS HEREBY DELETED. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ITA NO.524/AHD/2010, A.Y. 2006-07 WITH ITA NO.654/AHD/2010, A.Y. 2006-07 4 I.T.A. NO.654/AHD/2010 8. REVENUE IN THIS APPEAL IS AGGRIEVED BY THE ACTIO N OF LD. CIT(A) IN DELETING THE ADDITION OF RS.6,95,782/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE U/S 40A(3) OF THE ACT. 9. THE ASSESSING OFFICER, DURING THE ASSESSMENT PRO CEEDING OBSERVED THAT ASSESSEE HAS MADE CASH PAYMENT TO THE FOLLOWING THR EE PARTIES:- 1) TATA TELESERVICES LTD. RS.33,10,194/- 2) RAJVI ENTERPRIE RS. 1,37,368/- 3) R.D. INFOCOM RS. 31,350/- TOTAL RS.34,78,912/- SINCE THESE PAYMENTS WERE IN VIOLATION OF SECTION 4 0A(3), THE A.O. DISALLOWED 20% OF THESE PAYMENTS AMOUNTING TO RS.6,95,782/- U/ S 40A(3) OF THE ACT. 10. BEFORE LD. CIT(A) ASSESSEE PLACED RELIANCE ON T HE FOLLOWING SUBMISSIONS:- 'WITH REFERENCE TO THE ABOVE PAYMENTS, THE ASSESSEE VIDE ITS LETTER DATED 15.12.2008 EXPLAINED THE FACTUAL POSIT ION TO THE LEARNED INCOME-TAX OFFICER. THE XEROX COPY OF LETTER DATED 15.12.2008 ENCLOSE. THE ASSESSEE SUBMITS THE XEROX COPIES OF THE LETTER S DATED 13 TH AUGUST, 2005, AUGUST 22, 2005 AND 01.09.2005 TO ALL THE CHANNEL PARTNERS/DISTRIBUTORS BY TATA TELESERVICES LTD., DURING THE PERIOD UNDER CONSIDERATION, THERE WERE R OUND ABOUT 200 CHANNEL PARTNERS/ DISTRIBUTORS IN THE WHOLE OF GUJARAT. THESE ABOVE STATED LETTERS AND TERMS AND CONDITIONS WERE APPLICABLE TO ALL THE CHANNEL PARTNERS/DISTRIBUTORS OF THE TATA TELES ERVICES LTD. AFTER RECEIVING THESE LETTERS, ALL THE CHANNEL PARTNERS/D ISTRIBUTORS ACTED ACCORDINGLY. ONLY THE ASSESSEE WAS NOT ACTED LIKE T HIS BUT ALL THE CHANNEL PARTNERS/DISTRIBUTORS OF WHOLE GUJARAT FOLL OWED THE LETTERS. NORMALLY, THE PERSONS WHO WANTED TO DO BUSINESS, HA D TO ACT COMPULSORILY, WITH THE TERMS AND CONDITION OF SUCH A REPUTED COMPANY I.E. TATA - TELESERVICES LTD. THE TATA TELE SERVICES LTD. INSISTED ON CASH PAYMENTS AND THE TRANSACTION ARE G ENUINE, THE PAYMENT IS DEDUCTIBLE AS HELD IN SO MAY JUDGMENTS O F TRIBUNALS, HIGH COURTS AND SUPREME COURT. ITA NO.524/AHD/2010, A.Y. 2006-07 WITH ITA NO.654/AHD/2010, A.Y. 2006-07 5 THE COPY OF LETTER DATED 13 TH AUGUST, 2005 OF THE TATA TELESERVICES LTD. INFORMED THE 'PROCESS FOR ISSUE O F CARDS TO DISTRIBUTORS FROM PO OFFICE'. MINUTES OF THE PROCESS MEETING: FOR DELIVERY THROUGH PO, FOLLOWING PROCESS WILL BE FOLLOWED. ONE OF THE CONDITIONS IS AS UNDER: 'DISTRIBUTOR WILL PAY ONLY THROUGH DD OF THE NATION ALIZED BANKS OR THROUGH BANK DEPOSIT SLIP.' THE ASSESSEE'S BANK ACCOUNT IS WITH THE SARASWAT CO OPERATIVE BANK LTD,. THIS IS NOT A NATIONALIZED BANK AND HENCE THE ASSESSEE HAD TO PAY CASH TO PUBLIC OF FICER, (II) THE LETTER DATED 22 ND AUGUST, 2005 FROM THE TATA TELESERVICES LTD. STATES THE PROCESS NOTE FOR SALE OF RECHARGE V OUCHERS THROUGH PUBLIC OFFICE. IN THAT LETTER, THE NAME OF THE ASSE SSEE I.E. ANUPAM - RAJVI @ YAHOO. COM. SPECIFICALLY MENTIONED. THE SCA NNED COPY OF PROCESS NOTE FOR SALE OF RECHARGE VOUCHERS THROUGH PUBLIC OFFICES. THIS PROCESS WILL BE IMPLEMENTED W.E.F. 22 AUGUST - 05 REQUEST TO CASCADE THE SAME TO ALL CONCERNED INDIVIDUALS AND D ISTRIBUTORS. (III) THIS LETTER DATED 01.09.2005, SPECIFICALLY TO ANUPAM TELESERVICES, SURAT STATES AS UNDER: 'WE FURTHER INTIMATE YOU THAT YOUR BANK IS 'THE SAR SWAT CO- OPERATIVE BANK LTD.,. WE TREAT D.D./ PAY ORDER FROM YOUR BANK AS A CHEQUE AND YOUR INVOICE PROCESSES DONE AFTER CREDIT BALANCE IN COMPANY'S ACCOUNT. IT WILL TAKE 4/5 DAYS. IT WILL S UFFER OUR BUSINESS. SO PLEASE DEPOSIT CASH AT PUBLIC OFFICE OF COMPANY IN SURAT AND GET IMMEDIATELY DELIVERY TO AVOID SUFFERING OF MARKET. WE WILL DEPOSIT YOU CASH IN OUR BANK ON BEHALF OF YOU. YOU ARE VERY WELL KNOWN THAT WE CAN NOT SUFFER OUR BUSINESS AT ANY COST'. PAYMENT OF RS.1,37,368 MADE TO RAJVI ENTERPRISE AND PAYMENT OF RS.31,350 MADE TO R.D. INFOCOM:- SMT. CHANDRIKABEN BIMALBHAI SUKHADIA IS ASSESSED TO INCOME- TAX SINCE 1996-97 AND BEARING P.A/C. NO. AIEPS 5952 K/SRT WARD- 9(L). SMT C.B. SUKHADIA IS ALSO ONE OF THE PARTNERS OF M/S. ANUPAM TELESERIVES, SMT. C.B. SUKHADIA IS ALSO ASSESSED BY THE SAME INCOME-TAX OFFICER WHO IS THE ASSESSING OFFICER OF M/S. ANUPAM TELESERVICES. SHRI RUPESH ALIAS RUPAL DINESHCHANDRA VORA IS DEALING AS R.D. INFOCOM. HIS P.A/C. NO. IS AANPV 6168 P/SRT . - WARD-6(3). HE IS ASSESSED TO INCOME-TAX SINCE LAST MORE THAN 1 5 YEARS. ONE PAYMENT OF RS.20,900 MADE TO RAJVI ENTERPRISE O N 15.08.05. RRULE 6DD(J) STATES AS UNDER: 'RULE 6DD STATES AS UNDER: 'RULE 6DD(J) : WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON A CCOUNT OF HOLIDAY OR STRIKE.' RULE 6DD MUST BE INTERPRETED LIBERALLY. WHERE GENUI NENESS OF TRANSACTION AND IDENTITY OF RECEIVERS IS ESTABLISHE D, PAYMENTS SHOULD NOT BE DISALLOWED. RAJASTHAN HIGH COURT IN THE CASE OF SMT. HARSHILA CHORDIA VS. NO [2008] 298 ITR 349 (RAJ.) AND CALCUT TA HIGH COURT IN ITA NO.524/AHD/2010, A.Y. 2006-07 WITH ITA NO.654/AHD/2010, A.Y. 2006-07 6 THE CASE OF GIRDHARILAL GOENKA VS. CIT 179 ITR (CAL ), HAVE HELD SIMILAR VIEW. THE ASSESSEE SUBMITS THE COPY OF ACCOUNTS OF RAJVI ENTERPRISE AND R.D. INFOCOM IN THE BOOKS OF M/S. ANUPAM TELESE RVICES. THE ASSESSEE FURTHER SUBMITS THE CONTRA ACCOUNT OF ANUP AM TELESERVICES IN THE BOOKS OF ACCOUNTS OF RAJVI ENTERPRISES. REGA RDING R.D. INFOCOM, THE ASSESSEE SUBMITS THE CONFIRMATION OF A CCOUNT BY R.D. INFOCOM WITH MENTIONING P.A/C.NO. ALSO. THE ASSESSEE FURTHER SUBMITS THE COPY OF ACCOUNTS O F TATA TELESERVICES LTD, AND THE SARASWAT CO.OPERATIVE BAN K LTD. IN THE BOOKS OF M/S ANUPAM TELESERVICES LTD. THE ASSESSE E SUBMITS THE COPY OF BANK STATEMENT OF THE, SARASWAT CO.OP. BANK LTD. THE BANK STATEMENT AND COPY OF TATA TELESERVICES SHOW THE PA YMENT UP TO 24.08.2005 WAS DONE THROUGH BANKS ACCOUNT PAYEE CHE QUES ONLY. THEREAFTER, ON AND FROM 28.08.2005 DUE TO TATA TEL ESERVICES LTD. INSTRUCTED TO DEPOSIT CASH AT PUBLIC OFFICE OF THE COMPANY AND GET IMMEDIATE DELIVERY TO AVOID SUFFERING OF MARKET. YO U ARE VERY WELL KNOWN THAT WE CANNOT SUFFER OUR BUSINESS AT ANY COS T. THUS, SECTION 40A(3) IS NOT ABSOLUTE IN ITS TERMS. ACCORDINGLY W HERE THERE IS A FINDING THAT SELLER HAS INSISTED ON CASH PAYMENT AN D THE PAYMENT IS GENUINE, AMOUNT CANNOT BE DISALLOWED. CIT VS. CHAND HARY & CO. (1996) 217 ITR 431 (ALL)' 11. LD. CIT(A), AFTER TAKING INTO CONSIDERATIO N THE SUBMISSIONS OF THE ASSESSEE DELETED THIS ADDITION BY OBSERVING AS UNDE R:- I HAVE GONE THROUGH THE SUBMISSION OF THE APPELLAN T AND THE OBSERVATIONS OF THE ASSESSING OFFICER. THE FACT OF CASH PAYMENT IS NOT DISPUTED. IT IS A FACT THAT TATA TELESERVICES LTD. HAD INTIMATED THAT THE DD/PAYEE ORDER ISSUED BY THE ASSESSEE'S BANKER NAMELY SARASWAT COOPERATIVE BANK LTD. WOULD BE ACCEPTED AS A CHEQUE AND EFFECT DELIVERY AFTER THE CHEQUES ARE CLEARED WHICH WILL TAKE 4/5 DAYS. THIS DELAY MIGHT ADVERSELY AFFECT THE BUSINES S OF THE ASSESSEE. THE ASSESSEE IS A DISTRIBUTOR OF TATA TELESERVICES LTD, AND CAN OBTAIN THE RECHARGE FACILITIES ONLY AFTER PAYMENT MADE TO THE PRINCIPAL COMPANY. THEREFORE, THE TATA TELESERVICES INSISTED THE COMPANY TO PAY IN CASH AND GET IMMEDIATE DELIVERY TO AVOID DEL AY AND SUFFERING IN THE MARKET. FROM 28.08.2005, IN ACCORDANCE WITH THE INSTRUCTION OF TATA TELESERVICES LTD, THE AMOUNTS WERE PAID IN CASH. SUCH CIRCUMSTANCES NEED TO BE KEPT IN MIND. THE FACTUM O F PAYMENT MADE TO TATA TELESERVICES LTD. IS NOT DISPUTED. THE TRANSACTIONS ARE GENUINE. THE ASSESSEE HAS FILED A COPY OF ACCOUNT O F TATA TELESERVICES LTD, WHICH CLEARLY SUPPORTS THAT THE P AYMENTS WERE ITA NO.524/AHD/2010, A.Y. 2006-07 WITH ITA NO.654/AHD/2010, A.Y. 2006-07 7 MADE. IT HAS BEEN HELD BY THE VARIOUS COURTS THAT W HERE GENUINENESS OF TRANSACTIONS AND IDENTITY OF RECEIVE RS IS ESTABLISHED THE PAYMENTS SHOULD NOT BE DISALLOWED. IT IS NOT TH E CASE OF THE ASSESSING OFFICER THAT THE TRANSACTIONS ARE NOT GEN UINE NOR THE PAYMENTS WERE NOT MADE. CONSIDERING THE CIRCUMSTANC ES, THE ASSESSEE TOOK A VERY PRACTICAL STEP IN MAKING THE P AYMENT TO STAY IN BUSINESS IN A COMPETITIVE ENVIRONMENT. IT IS NOT A CASE WHERE BY MAKING SUCH PAYMENTS THE OBJECTIVE UNDERLINED IN SE CTION 40A(3) HAS BEEN FRUSTRATED. THE OBJECTIVE OF SECTION 40A(3 ) REQUIRING SUCH PAYMENTS TO BE MADE BY CROSSED CHEQUES OR DRAFTS HA S BEEN REPEATEDLY STRESSED BY THE COURTS AS PER EXAMPLE IN WALFORD TRANSPORT (EASTERN INDIA) VS. CIT (1990) 240 ITR 90 2 (GAU) AS UNDER: FROM A PERUSAL OF THE DECISIONS OF DIFFERENT HIGH COURTS REFERRED TO ABOVE, IT CLEARLY EMERGES THAT THE PURP OSE OF SECTION 40A(3) OF THE ACT IS NOT TO PENALIZED THE A SSESSEE FOR MAKING CASH PAYMENT OF AN AMOUNT OF RS.2,500 OR ABO VE. THE PURPOSE IS ONLY PREVENTIVE AND TO CHECK EVASION OF TAX AND FLOW OF UNACCOUNTED MONEY OR TO CHECK TRANSACTIONS WHICH ARE NOT GENUINE AND MAY BE PUT AS CAMOUFLAGE TO EVADE TAX B Y SHOWING FICTITIOUS OR FALSE TRANSACTIONS. AGGRIEVED BY THIS ORDER OF LD. CIT(A) NOW REVENUE I S IN APPEAL BEFORE US. 12. AT THE TIME OF HEARING LD. D.R. SUBMITTED THAT LD. CIT(A), WHILE GIVING RELIEF TO THE ASSESSEE, HAS PLACED RELIANCE ON OLD RULE 6DD OF THE INCOME TAX RULES AND HAS ALSO FOLLOWED THE DECISION OF THE JUR ISDICTIONAL HIGH COURT IN THE CASE OF HASANAND PINJOMAL VS. CIT (112 ITR 134) IN WHICH OLD PROVISIONS OF RULE 6DDJ WERE INTERPRETED. SINCE RULE 6DDJ HAS BE EN AMENDED WITH EFFECT FROM 01.04.1996, THE HONBLE TRIBUNAL OF PUNE BENCH DECISION IN THE CASE OF R.S. NAYYAR VS. JCIT REPORTED IN 108 ITD 424 IS MOR E RELEVANT BECAUSE IT HAS INTERPRETED NEW RULE 6DDJ AS REGARDS ITS DATE OF AP PLICABILITY. LD. D.R. ALSO PLACED RELIANCE ON THE DECISION OF SPECIAL BENCH, C ALCUTTA IN THE CASE OF ITO VS. KENARAM SAHA & SUBHASH SAHA [2009] 116 ITD 1 ( KOL.) (SB) WHEREIN IT WAS HELD THAT AN ASSESSEE WILL GET THE E XEMPTION FROM THE RIGORS OF ITA NO.524/AHD/2010, A.Y. 2006-07 WITH ITA NO.654/AHD/2010, A.Y. 2006-07 8 SECTION 40A(3) IF HE IS ABLE TO ESTABLISH THAT HIS CASE FALLS WITHIN ANY OF THE CLAUSES (A) TO (M) OF RULE 6DD OF INCOME TAX RULE. THE BURDEN WOULD BE UPON THE ASSESSEE TO ESTABLISH UNDER WHICH PARTICUL AR CLAUSE HIS CASE FALLS. SINCE IN THIS CASE ASSESSEE HAS NOT BEEN ABLE TO ES TABLISH THAT HIS CASE FALLS IN ANY OF THE CLAUSES MENTIONED IN CLAUSE RULE 6DD, LD . CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.6,95,782/- MADE BY T HE A.O. HE, THEREFORE, PRAYED THAT THE ORDER PASSED BY LD. CIT(A) MAY KIND LY BE SET ASIDE AND THAT OF THE A.O. BE RESTORED. 13. LD. COUNSEL OF THE ASSESSEE, ON THE OTHER HAND SUBMITTED THAT THE DECISION OF THE SPECIAL BENCH CALCUTTA IN THE CASE OF KENARAM SAHA & SUBHASH SAHA (SUPRA) IS AGAINST THE SPIRIT OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT AS THE RULES CANNOT OVERRIDE THE PROVISIONS OF THE ACT. HE, THEREFORE, RELYING ON THE SUBMISSIONS OF THE ASSESS EE BEFORE LD. CIT(A) PRAYED THAT THE ORDER PASSED BY LD. CIT(A) DELETING THE AD DITION OF RS.6,95,782/- MAY KINDLY BE UPHELD. 14. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD WE FIND THAT LD. CIT(A), WHILE GIVING RELIEF TO THE ASSESSEE HAS PLA CED RELIANCE ON OLD RULE 6DD WHICH READS AS UNDER:- 6DD. NO DISALLOWANCE UNDER SUB-SECTION (3) OF SECT ION 40A SHLL BE MADE WHERE ANY PAYMENT IN A SUM EXCEEDING TWO THOUS AND FIVE HUNDRED RUPEES IS MADE OTHERWISE THAN BY A CROSSED CHEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT IN THE CASES A ND CIRCUMSTANCES SPECIFIED HEREUNDER, NAMELY:- (J) IN ANY OTHER CASE, WHERE THE ASSESSEE SATISFIES THE INCOME-TAX OFFICER THAT THE PAYMENT COULD NOT BE MADE BY A CRO SSED CHEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT- (1) DUE TO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES , OR ITA NO.524/AHD/2010, A.Y. 2006-07 WITH ITA NO.654/AHD/2010, A.Y. 2006-07 9 (2) BECAUSE PAYMENT IN THE MANNER AFORESAID WAS NOT PRACTICABLE , OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PA YEE, HAVING REGARD TO THE NATURE OF THE TRANSACTION AND THE NECESSITY FOR EXPEDITIOUS SETTLEMENT THEREOF, AND ALSO FURNISHES EVIDENCE TO THE SATISFACTION OF THE INCOME-TAX OFFICER AS TO THE GENUINENESS OF THE PAYMENT AND TH E IDENTITY OF THE PAYEE. 15. WE FURTHER FIND THAT RULE 6DDJ HAS BEEN AMENDED WITH EFFECT FROM 01.04.1996 AND NOW READS AS UNDER:- 6DD. NO DISALLOWANCE UNDER SUB-SECTION (3) OF SECT ION 40A SHALL BE MADE WHERE ANY PAYMENT IN A SUM EXCEEDING TOW THOUS AND FIVE HUNDRED RUPEES IS MADE OTHERWISE THAN BY CROSSED CH EQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT IN THE CASES AND CIRCUMSTANCES SPECIFIED HEREUNDER, NAMELY:- (J) WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HO LIDAY OR STRIKE . THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F HASANAND PINJOMAL (SUPRA) HAD INTERPRETED THE OLD PROVISIONS OF RULE 6DD ONLY. THE DECISION OF THE SPECIAL BENCH, CALCUTTA IN THE CASE OF KENARAM SAHA & SUBHASH SAHA ( SUPRA) IS THE LATEST DECISION ON THE APPLICABILITY OF THE PROVISIONS OF SECTION 40A(3) AND IS SQUARELY APPLICABLE TO THE FACTS OF T HIS CASE ACCORDING TO WHICH THE ASSESSEE CAN GET EXEMPTION FROM THE PROVISION O F SECTION 40A(3) ONLY IF HE IS ABLE TO SHOW THAT HIS CASE FALLS WITHIN ANY O F THE CLAUSES OF RULE 6DD OF THE INCOME TAX RULES. IT HAS FURTHER BEEN HELD IN THAT CASE THAT BURDEN TO ESTABLISH UNDER WHICH PARTICULAR CLAUSE HIS CASE FA LLS IS ALSO ON THE ASSESSEE. SINCE THE LOWER AUTHORITIES HAVE NOT EXAMINED THE I SSUE IN HAND IN THE LIGHT OF THIS DECISION, WE ARE OF THE CONSIDERED OPINION THA T THE MATTER SHOULD GO BACK ITA NO.524/AHD/2010, A.Y. 2006-07 WITH ITA NO.654/AHD/2010, A.Y. 2006-07 10 TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION TO D ECIDE THE ISSUE IN THE LIGHT OF THE DECISIONS OF KENARAM SAHA & SUBHASH SAHA (SUPRA). THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 16. IN THE COMBINED RESULT, ASSESSEES APPEAL IS AL LOWED AND REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 21.12.2012 SD/- SD/- (ANIL CHATURVEDI) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY N.K. CHAUDHARY, SR. P.S. COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD 6. THE GUARD FILE BY ORDER AR,ITAT,AHMEDABAD