The Assistant Commissioner of Income Tax, Jammu V. Sh. Darshan Kumar Mahajan, Pathankot

ITA 566/ASR/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7982 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 15-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA
• Assessee Lawyers: J S BHASIN
• Keywords: Business income; Depreciation; Search and seizure; Onus to prove
• Section: 40A(3); 143(3); 37(1); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 566(ASR)/2016 AS SESSMENT YEAR: 2013-14 PAN: ADJPM7623B ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1, JAMMU. VS. SH. DARSHAN KUMAR MAHAJAN, PROP. M/S R. D. BROTHERS, GALLA MANDI, PATHANKOT. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. A. N. MISHRA (D. R.) RESPONDENT BY: SH. J. S. BHASIN (ADV.) DATE OF HEARING: 23.01.2018 DATE OF PRONOUNCEMENT: 18.04.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE AGITATING THE ORDE R BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, AMRITSAR ('CIT(A)' FOR S HORT) DATED 02.07.2016, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING HIS ASSES SMENT U/S. 143(3) OF THE INCOME TAX ('THE ACT' HEREINAFTER) FOR ASSESSMENT YEAR (AY ) 2013-14 BY THE ASSESSING AUTHORITY VIDE ORDER DATED 28.03.2016. 2. THE PRINCIPAL ISSUE ARISING IN THE INSTANT APPEA L IS THE SUSTAINABILITY OF THE DISALLOWANCE U/S. 40A(3) EFFECTED BY THE ASSESSING OFFICER (AO) IN ASSESSMENT, SINCE DELETED BY THE LD. CIT(A). THE SAME HAS TWO A SPECTS - ONE OF INVOCATION OF SECTION 40A(3) PER SE AND, TWO, THE COMPUTATION OF THE DISALLOWANCE THER E-UNDER. ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 2 3. THE ASSESSEE-INDIVIDUAL, ENGAGED IN TRADING OF C OAL, SOURCED BOTH FROM WITHIN AND OUTSIDE INDIA (UNDER THE NAME AND STYLE M/S. R. D. BROTHERS), WAS DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVE D TO HAVE CLAIMED RS. 1907.96 LACS (IN THE COMPUTATION OF BUSINESS INCOME U/S. 28 ) ON ACCOUNT OF FREIGHT AND TOLL, INCURRED IN CASH. ON BEING QUESTIONED QUA THE APPLICABILITY OF SECTION 40A(3), READING AS UNDER, IT WAS EXPLAINED BY THE ASSESSEE THAT THERE WAS NO VIOLATION OF SECTION 40A(3) AS THE PAYMENT OF ROAD FREIGHT - WHI CH AGGREGATED TO RS. 661.83 LACS (THE BALANCE FREIGHT BEING TO RAILWAYS, EXCEPT ED UNDER RULE 6DD OF THE INCOME TAX RULES, 1962 - THE RULES HEREINAFTER), WAS STAGGERED OVER A PERIOD OF ONE TO FIVE DAYS, SO THAT THE PAYMENT TO EACH TRUCK ER, I.E., FOR EACH CONSIGNMENT, ON ANY SINGLE DAY, DID NOT EXCEED THE PRESCRIBED TH RESHOLD LIMIT OF RS. 35,000: EXPENSES OR PAYMENTS NOT DEDUCTIBLE IN CERTAIN CIR CUMSTANCES. 40A. (1) THE PROVISIONS OF THIS SECTION SHALL HAVE EFFEC T NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER PROVISION OF THIS ACT RELAT ING TO THE COMPUTATION OF INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PR OFESSION. (2). (3) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RE SPECT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT , EXCEEDS TWENTY THOUSAND RUPEES, NO DEDUCTION SHAL L BE ALLOWED IN RESPECT OF SUCH EXPENDITURE. (3A) WHERE AN ALLOWANCE HAS BEEN MADE IN THE ASSESS MENT FOR ANY YEAR IN RESPECT OF ANY LIABILITY INCURRED BY THE ASSESSEE FOR ANY EXPENDIT URE AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR (HEREINAFTER REFERRED TO AS SUBSEQUENT YEAR) T HE ASSESSEE MAKES PAYMENT IN RESPECT THEREOF, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, THE PAYMENT SO MADE SHALL BE DEEMED TO BE TH E PROFITS AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS INCOME OF THE SUBSEQUENT YEAR IF THE ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 3 PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON I N A DAY, EXCEEDS TWENTY THOUSAND RUPEES: PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER S UB-SECTION (3) AND THIS SUB-SECTION WHERE A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON I N A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUES DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAND RUPEES, IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY B E PRESCRIBED , HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILAB LE, CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS: PROVIDE FURTHER THAT IN THE CASE OF PAYMENT MADE FOR PLYING, HIRING OR LEASING GOODS CARRIAGES, THE PROVISIONS OF SUB-SECTIONS (3) AND ( 3A) SHALL HAVE EFFECT AS IF FOR THE WORDS TWENTY THOUSAND RUPEES, THE WORDS THIRTY-FIVE TH OUSAND RUPEES HAD BEEN SUBSTITUTED. (EMPHASIS, OURS) IN FACT, THE ACTUAL PAYMENT TO THE TRUCKERS INCLUDE D ANOTHER RS. 135.40 LACS ON ACCOUNT OF TOLL, WHICH WORKS TO 17% OF THE TOTAL PA YMENT (TO THE TRUCKERS), BEING AT A TOTAL OF RS. 797.23 LACS. AS THERE WAS NO SEGREGA TION OF THE AMOUNT PAID (TO A TRUCKER, I.E., AS BETWEEN TOLL AND FREIGHT), THE TO LL AMOUNT, AS PER THE ASSESSEE, WAS TO BE CONSIDERED AS COMPRISING 17% OF EACH PAYMENT, I.E., AS MADE ON ANY (PARTICULAR) DAY. IT WAS NOT THE CASE, IT WAS FURTH ER EXPLAINED BY HIM (IN THE ASSESSMENT PROCEEDINGS), THAT A TRUCK DRIVER WAS RE TAINED BEYOND THE TIME TAKEN FOR THE DELIVERY OF A CONSIGNMENT, WHICH IS TO BRICK KI LN OWNERS (BKOS), LOCATED AT VARYING DISTANCES (FROM THE ASSESSEES LOCATION), E NTAILING TIME, BESIDES THE TIME LOST ON ACCOUNT OF LOGISTIC REASONS. THE SAME THUS CONSUMED FROM A LOW OF ONE DAY (I.E., THE SAME DAY) TO NORMALLY THREE DAYS, STRETC HING TO EVEN FIVE DAYS IN SOME CASES, OVER WHICH PERIOD THE DRIVER IS PAID IN INST ALLMENTS, NOT EXCEEDING RS. 35,000 PER DAY, BY THE ASSESSEES PERSON WHO NORMAL LY ACCOMPANIES THE TRUCK TO ENSURE PROPER DELIVERY OF THE COAL. IN OTHER WORDS, THE VERY PROCESS OF DELIVERY OF ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 4 GOODS, WHICH IS THE ASSESSEES RESPONSIBILITY, TAKE S TIME, SUFFICIENT FOR THE ASSESSEE TO STAGGER THE PAYMENTS AND, THUS, ESCAPE THE RIGOR OF THE PROVISION. IT CANNOT AFTER ALL BE FAULTED FOR SPREADING THE CASH PAYMENTS OVER THE TIME TAKEN TO EFFECT DELIVERY, BEING AT THE CUSTOMERS LOCATION. THAT AT THE ASSESSEES DUMPS - TWO IN NUMBER, AND FROM WHICH SUPPLIES ARE MADE TO PARTIES IN THE VICINITY, ARE NO DOUBT UNLOADED INVARIABLY ON THE SAME DAY. HOWEVER, THESE CONSIGNMENTS ARE SMALL, INVOLVING FREIGHT COMPONENT BELOW THE THRESHOLD LIM IT PRESCRIBED BY THE PROVISION. IN THE VIEW OF THE AO, WHILE THE CONSIGNMENTS COULD POSSIBLY TAKE UP TO THREE DAYS FOR DELIVERY, THAT BEYOND THE SAID PERIO D IS ONLY WITH A VIEW TO ESCHEW SECTION 40A(3), I.E., DOES NOT CORRESPOND WITH THE BUSINESS REALITY. ACCORDINGLY, PAYMENTS OSTENSIBLY MADE THIRD DAY ONWARDS WERE C ONSIDERED AS HAVING BEEN MADE ON THE THIRD DAY ITSELF, AND EXCEEDING RS. 35, 000, DISALLOWED. FURTHER, THE PAYMENT ON THE FIRST DAY WAS CONSIDERED AS MADE, FI RSTLY, TOWARD TOLL, AND THE BALANCE ONLY TOWARD FREIGHT. THE PAYMENT THIRD DAY ONWARDS WAS THUS WHOLLY TOWARD FREIGHT, AS AGAINST BEING AT 83 PER CENT THE REOF, AS CONTENDED BY THE ASSESSEE. THE DISALLOWANCE U/S. 40A(3) WAS EFFECTED ACCORDINGLY. IN FIRST APPEAL, THE ASSESSEE FOUND FAVOUR WITH THE LD. CIT(A) ON TH E BASIS THAT SECTION 40A(3) IS NOT ABSOLUTE IN ITS TERMS, AND THAT CONSIDERATIONS OF BUSINESS EXPEDIENCY AND RELEVANT FACTORS ARE NOT EXCLUDED. IT WAS THUS OPEN FOR THE ASSESSEE TO JUSTIFY THE CIRCUMSTANCES UNDER WHICH THE PAYMENT WAS NOT PRACT ICABLE, OR WOULD HAVE CAUSED A GENUINE DIFFICULTY TO THE PAYEE, EVEN AS NOTED BY THE HON'BLE APEX COURT IN ATTAR SINGH GURMUKH SINGH [1991] 191 ITR 677 (SC), TO WHICH, AS ALSO TO THE BOARD CIRCULAR NO. 220, DATED 31.05.1977 (REPORTED AT [1 977] 108 ITR (ST.) 8), REFERENCE WAS MADE BY THE HON'BLE JURISDICTIONAL HIGH COURT I N GURDAS GARG VS. CIT(A) (IN ITA NO. 413 OF 2014, DATED 16.07.2015), HOLDING THA T WHERE THEREFORE THE GENUINENESS OF THE PAYMENT IS NOT IN DOUBT AND A CA SE OF BUSINESS EXPEDIENCY ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 5 MADE OUT, SECTION 40A(3) CANNOT BE INVOKED. THERE W AS NO DISPUTE AS TO THE GENUINENESS OF THE PAYMENTS AS TO FREIGHT, BEING TO IDENTIFIABLE PERSONS, SO THAT NO DISALLOWANCE U/S. 40A(3) COULD BE MADE. RELIANCE WA S ALSO PLACED BY HIM ON DECISIONS IN ANUPAM TELE SERVICES [2014] 366 ITR 122 (GUJ) AND HARSHILA CHORDIA V. ITO [2008] 298 ITR 349 (RAJ). 4. BEFORE US, BOTH PARTIES RELIED ON THE ORDER OF T HE AUTHORITIES BELOW AS FAVOURABLE TO THEM. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE IMPUGNED ORDER GRANTS RELIEF TO THE ASSESSEE O N THE GROUND OF INAPPLICABILITY OF SECTION 40A(3) OF THE ACT WHERE THE GENUINENESS OF THE (CASH) PAYMENT/S IS NOT IN DOUBT OR DISPUTE, AS IN THE PRE SENT CASE. EQUAL EMPHASIS STANDS ALSO PLACED BY THE LD. CIT(A) ON THE GENUINENESS OF THE RELEVANT EXPENDITURE, SO THAT IT IS BOTH THESE FACTORS IN UNISON, COUPLED WI TH THE CASE LAW, THAT PREVAILED WITH HIM. WE ARE THEREFORE OBLIGED TO CONSIDER BOTH THES E ASPECTS, I.E., THE GENUINENESS OF THE PAYMENT - IN DISCHARGE OF THE EXPENDITURE, A S WELL AS OF THE EXPENDITURE ITSELF, BEING NOT IN DISPUTE, FOR THE VALIDITY OF T HE LEGAL INFERENCE DRAWN. WE ARE AFRAID, WE DO NOT FIND ANY BASIS IN THE CLEAR AND A MBIGUOUS LANGUAGE OF THE PROVISION, REPRODUCED SUPRA, FOR THE SAID CONSTRUCT ION. ON THE CONTRARY, SECTION 40A(3) GETS ATTRACTED - UNDER THE CIRCUMSTANCES SPE CIFIED THEREIN, ONLY WHERE THE GENUINENESS OF THE EXPENDITURE IS NOT IN DOUBT, AND THE SAME (EXPENDITURE) IS THEREFORE OTHERWISE ALLOWABLE. A NON-GENUINE EXPEND ITURE WOULD GET OUSTED (FOR ADMISSIBILITY) AT THE THRESHOLD. THIS IS AS IT WOUL D STAND TO BE DISALLOWED UNDER THE RELEVANT SECTION GRANTING DEDUCTION ITSELF, AS SECT ION 37(1) IN THE INSTANT CASE, SO THAT THERE IS NO OCCASION TO TRAVEL TO THE NON OBSTANTE PROVISION OF SECTION 40A(3), WHICH SEEKS TO IMPOSE AN ADDITIONAL CONDITION AS TO THE MODE OF PAYMENT WHERE IT ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 6 EXCEEDS A SPECIFIED SUM (ON A SINGLE DAY) FOR ITS A LLOWABILITY. IN THAT SENSE, IT IS A FISCAL MEASURE INTENDED TO DISCOURAGE PAYMENTS IN C ASH OR, ALTERNATIVELY, ENCOURAGE TRANSMISSION OF FUNDS HAVING INCOME IMPLICATION - ONE MANS EXPENDITURE BEING THE OTHER MANS INCOME , THROUGH THE BANKING CHANNEL. HOW COULD THEN, ONE MAY ASK, ITS TERMS, WHICH ARE PLAIN, BE CONSTRUED TO ME AN THAT IT BARS ONLY NON-GENUINE EXPENDITURE, SO AS TO HOLD THAT IT SHALL NOT APPLY WHERE THE GENUINENESS (OF THE EXPENDITURE) IS NOT IN DOUBT. THE SECTION, CLEARLY, HAS NOTHING DIRECT TO DO WITH THE GENUINENESS OF THE EXPENDITURE, BUT IS ONLY A FISCA L MEASURE REGULATING THE MODE OF PAYMENT (OF A GENUINE EXPENDITURE), WITH THE VIEW T O FACILITATE THE IDENTIFICATION OF THE MONEY TRAIL AND VERIFICATION OF THE REPORTING O F INCOME IN ITS RESPECT. A NON GENUINE PAYMENT/EXPENDITURE, AS AFORE-NOTED, STANDS OUSTED AT THE THRESHOLD, I.E., EVEN OTHERWISE, AND WITHOUT RECOURSE TO SECTION 40A (3). IT IS THEN SAID THAT THE CASH PAYMENT/S UNDER REFER ENCE HAS BEEN ACCEPTED AS GENUINE, OR ITS GENUINENESS HAS NOT BEEN DOUBTED AN D, THEREFORE, SECTION 40A(3) CANNOT HOLD, LITTLE REALIZING THAT IT IS ONLY ON TH AT BASIS, I.E., PAYMENT OF AN OTHERWISE GENUINE AND, THUS, ALLOWABLE EXPENDITURE IN CASH (I.E., OTHER THAN THROUGH THE BANKING CHANNEL PER THE PRESCRIBED MODE/S) THAT THE DISABLING PROVISION OF SECTION 40A(3) (OR SECTION 40A(3A)) GETS ATTRACTED. IT MAY BE NOTED THAT IT IS THE COMPLEXITY AS WELL AS THE CUMBERSOME NATURE OF THE VERIFICATION, WHERE EVEN THE IDENTITY OF THE PAYEE/S TENDS TO GET BLURRED, WHILE A TRANSFER FROM A BANK ACCOUNT TO ANOTHER AUTOMATICALLY CONFIRMS THE IDENTITY OF THE PAYER AND THE PAYEE, THAT HAS UNDERSTANDABLY FORCED THE PARLIAMENT TO PROVIDE THI S LEGISLATIVE MEASURE. THE GATE-WAY STANDS PROVIDED IN THE FORM OF THE PRE SCRIBED CASES AND CIRCUMSTANCES, PER RULE 6DD OF THE RULES, PARAMETER S FOR WHICH, BEING DELEGATED LEGISLATION, VIZ. CONSIDERATION OF SPREAD OF BANKIN G FACILITIES; BUSINESS EXPEDIENCY; AND OTHER RELEVANT FACTORS, ALSO STAND PROVIDED FOR PER THE ACT ITSELF. CLEARLY, OTHER RELEVANT FACTORS HAVE TO BE REGARDED AS THOSE THAT HAVE A DIRECT BEARING ON THE ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 7 ABILITY OF A PERSON TO PAY ANOTHER PER THE PRESCRIB ED MODE/S. THE TERMS OF THE EXTANT PROVISION ARE NOT ABSOLUTE, AS WAS ALSO THE CASE FOR THE ASSESSMENT YEARS FOR WHICH THE PROVISION WAS EXAMINED BY THE HON'BLE APE X COURT IN ATTAR SINGH GURMUKH SINGH (SUPRA), EVEN AS IT HAS UNDERGONE SEVERAL AMENDMEN TS FROM TIME TO TIME, EVEN GETTING SUBSTITUTED BY FINANCE ACT, 2008 W.E.F. 01/4/2009, WITH SECTIO N 40A(3A) (ALSO CO-OPTED ALONG WITH). A PROFILE OF TH E AMENDMENTS TO THE PROVISION, CO-OPTED ON THE STATUTE BY FINANCE ACT, 1968 (W.E.F . 01/4/1968), OVER TIME, READ ALONG WITH RULE 6DD, AS IT IS TO BE (REFER: ATTAR SINGH GURMUKH SINGH (SUPRA)), SHOWS A GRADUAL PHASING OUT OF THE AVENUES WHERE A BREACH OF THE MONETARY LIMIT IMPOSED (FOR CASH PAYMENTS, OR PER OTHER THAN THE PRESCRIBED MODE/S) WAS ALLOWED, I.E., THE EXCEPTING CIRCUMSTANCES, IN VIEW OF THE BUSINESS EXIGENCIES; THE PECULIAR PRACTICE/S IN A PARTICULAR TRADE/SECTOR OF ECONOMY - AS AGRICULTURE, ANIMAL HUSBANDARY, ETC.; THE INCREASING SPREAD OF AND ACCE SSIBILITY TO BANKING IN THE ECONOMY, ET. AL. THE PROVISION, WHICH INITIALLY PER MITTED PAYMENTS THROUGH A NEGOTIABLE INSTRUMENT, WAS IN TIME LIMITED TO ACCOU NT PAYEE INSTRUMENT ONLY, PRESUMABLY TO ENABLE TRACKING. RESPONDING TO A PRAC TICE OF SPLITTING A PAYMENT INTO SEVERAL (ON THE SAME DAY), EACH BELOW THE PRESCRIBE D LIMIT, THE RESTRICTION WAS AMENDED WITH REFERENCE TO THE AGGREGATE OF PAYMENTS MADE DURING A DAY. EXPENDITURE COULD THUS BE PAID IN CASH (OR OTHER PR OSCRIBED MODES) OVER SEVERAL DAYS, I.E., WITHOUT ATTRACTING THE PROVISION . WHY, THE LIMIT OF RS. 35,000 (PER DAY) FOR FREIGHT PAYMENTS IS ITSELF A DEPARTURE FROM THE NORM OF RS. 20,000 (SCALED DOWN TO RS. 10,000 PER DAY FROM AY 2018-19 ONWARDS), CON SIDERING THE REQUIREMENT OF THE TRADE. FURTHER, ALL THIS, AGAIN, DISPELS ANY DO UBT, IF ANY, OF THE PROVISION BEING APPLICABLE ONLY TO NON-GENUINE EXPENDITURE / PAYMEN TS, A CONSIDERATION / FACTOR SOUGHT TO BE INTRODUCED. REFERENCE IN THIS REGARD M AY BE MADE TO THE DECISION BY THE SPECIAL BENCH OF THE TRIBUNAL IN ITO V. KENARAM SAHA & SUBASH SAHA [2008] ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 8 116 ITD 1 (KOL)(SB), PARAS 13.3 & 15 OF WHICH CONTA INING THE GIST OF THE DECISION, WE REPRODUCE AS UNDER FOR READY REFERENCE: FROM THE PLAIN READING OF S. 40A(3) ITSELF IT IS E VIDENT THAT IT WOULD BE APPLICABLE WHERE THE ASSESSEE INCURS ANY EXPENDITURE EXCEEDING RS. 20,00 0 OTHERWISE THAN BY A CROSSED CHEQUE OR BY A CROSSED BANK DRAFT. IN SUCH CIRCUMSTANCES, 20 PER CENT OF SUCH EXPENDITURE SHALL BE DISALLOWED. THERE IS NO AMBIGUITY IN THE LANGUAGE O F S. 40A(3) AND, THEREFORE, THE SECTION IS TO BE INTERPRETED BY GIVING LITERAL MEANING TO THE LANGUAGE USED IN THE SECTION ITSELF. IN VIEW OF THE ABOVE, THE PURPOSE BEHIND THE ENACTMENT OF S . 40A(3) IS NOT RELEVANT. WHAT IS RELEVANT IS THE ENACTMENT ITSELF, I.E. S. 40A(3). THE IT AUT HORITIES HAVE TO GIVE EFFECT TO THE SECTION AS ENACTED BY THE PARLIAMENT. CONTENTION THAT THE SECO ND PROVISO TO S. 40A(3) IS A SUBSTANTIVE PROVISION OF THE LAW, FULL EFFECT TO WHICH SHOULD B E GIVEN AND THEREFORE, EVEN IF THE FACTS OF THE CASE OF AN ASSESSEE ARE NOT SQUARELY COVERED BY ANY OF THE CLAUSES OF R. 6DD, STILL THE EXEMPTION FROM THE RIGOR OF S. 40A(3) CAN BE ALLOWE D IN VIEW OF THE PROVISIONS OF SECOND PROVISO TO S. 40A(3), IS NOT SUSTAINABLE. IT IS NOT POSSIBLE TO AGREE WITH THE CONTENTION OF THE COUNSEL. THE MANDATE OF THE SECOND PROVISO IS TO EX EMPT THE PAYMENT IN VIOLATION OF PROVISIONS OF S. 40A(3) IN SUCH CASES AND UNDER SUC H CIRCUMSTANCES AS MAY BE PRESCRIBED. THE LAST SENTENCE OF THE PROVISO, I.E., 'HAVING REG ARD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE, CONSIDERATIONS OF BUSINESS EX PEDIENCY AND OTHER RELEVANT FACTORS', IS THE GUIDELINE FOR THE AUTHORITY WHO HAS TO PRESCRIBE TH E CASES AND CIRCUMSTANCES UNDER WHICH THE DISALLOWANCE UNDER S. 40A(3) WILL NOT BE MADE DESPI TE THE PAYMENT EXCEEDING RS. 20,000 OTHER THAN BY CROSSED CHEQUE/BANK DRAFT. IN PURSUAN CE TO THIS PROVISO, R. 6DD HAS BEEN BROUGHT INTO THE STATUTE. THIS RULE HAS BEEN AMENDE D FROM TIME TO TIME. THE ASSESSEE WILL GET THE EXEMPTION FROM THE RIGORS OF S. 40A(3) IF HE IS ABLE TO ESTABLISH THAT HIS CASE FALLS WITHIN ANY OF THE CLS. (A) TO (M) OF R. 6DD. BURDEN WOULD BE UPON THE ASSESSEE TO ESTABLISH UNDER WHICH PARTICULAR CLAUSE HIS CASE FALLS. CIT VS. TARA AGENCIES [ 2007 ] 292 ITR 444 (SC) AND CIT VS. ANJUM M.H. GHASWALA & ORS . [ 2001 ] 252 ITR 1 (SC) RELIED ON. CLAUSE (J) OF RULE 6DD WAS ORIGINALLY CAST IN GENER AL TERMS, EXCEPTING GENUINE CIRCUMSTANCES WARRANTING PAYMENT IN OTHER T HAN THE PRESCRIBED MODE. THE APEX COURT ALLUDED TO THIS RULE WHILE UPHOLDING THE CONSTITUTIONALITY OF THE PROVISION IN ATTAR SINGH GURMUKH SINGH (SUPRA). THE RULE HAS SINCE BEEN AMENDED IN WAKE OF THE UBIQUITOUS BANKING, AND NOW READS AS UNDER: (J); WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAY OR STRIKE; SECTION 40A(3) IS NO DOUBT OPEN TO CHALLENGE IN VIE W OF THE PROVISION GETTING MORE RESTRICTIVE. WHETHER IT CONSTITUTES MORE THAN A REA SONABLE RESTRAINT ON TRADE - PERMISSIBLE UNDER ARTICLE 19(1)(G) OF THE CONSTITUT ION, IS FOR A CONSTITUTIONAL COURT ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 9 TO EXAMINE AND DECLARE IN APPROPRIATE PROCEEDINGS B EFORE IT. GIVEN THE CONSTITUTIONALITY OF THE PROVISION, THE SAME HAS TO BE READ ON ITS TERMS, EVEN AS THE EXPLAINED BY THE HON'BLE APEX COURT IN IPCA LABORATORY LTD. V. DY. CIT [2004] 266 ITR 521(SC) IN THE CONTEXT OF A BENEFICIAL PROV ISION, I.E., S. 80HHC. THE LAW OF INTERPRETATION OF STATUTES IS CLEAR, AS CLARIFIE D ONCE AGAIN BY IT IN AJMERA HOUSING CORPORATION VS. CIT [2010] 326 ITR 642 (SC) IN THE FOLLOWING WORDS: A TAXING STATUTE IS TO BE CONSTRUED STRICTLY; IN A TAXING STATUTE ONE HAS TO LOOK MERELY AT WHAT IS SAID IN THE RELEVANT PROVISION. THERE IS NO PRES UMPTION AS TO A TAX. NOTHING IS TO BE READ IN, NOTHING IS TO BE IMPLIED. THERE IS NO ROOM FOR ANY INTENDMENT. THERE IS NO EQUITY ABOUT A TAX. IN INTERPRETING A TAXING STATUTE THE COURT MUST LOO K SQUARELY AT THE WORDS OF THE STATUTE AND INTERPRET THEM. CONSIDERATIONS OF HARDSHIP, INJUSTI CE AND EQUITY ARE ENTIRELY OUT OF PLACE IN INTERPRETING A TAXING STATUTE. REFERENCE IN THIS REGARD MAY ALSO BE MADE TO CIT VS. CALCUTTA KNITWEARS [2014] 362 ITR 673 (SC), CLARIFYING THAT THE FOREMOST PRIN CIPLE OF INTERPRETATION OF FISCAL STATUTES IN EVERY SYSTEM OF INTERPRETATION, IS TH E RULE OF STRICT INTERPRETATION, WHICH PROVIDES THAT WHERE THE WORDS OF THE STATUTE ARE AB SOLUTELY CLEAR AND UNAMBIGUOUS, RECOURSE COULD NOT HAD TO THE PRINCIPLES OF INTERPR ETATION OTHER THAN THE LITERAL RULE. THAT HARDSHIP AND INCONVENIENCE CANNOT ALTER THE ME ANING OF THE LANGUAGE EMPLOYED BY THE LEGISLATURE IF SUCH MEANING IS CLEA R AND APPARENT. A DEPARTURE FROM THE LITERAL RULE SHOULD THEREFORE ONLY BE IN V ERY RARE CASES, AND ORDINARILY THERE SHOULD BE JUDICIAL RESTRAINT TO DO SO. THE REASON I S SIMPLE. IF NOT IN THE CLEAR WORDS EMPLOYED BY THE LEGISLATURE, WHERE IS ITS INTENT TO BE FOUND? THIS IN FACT REPRESENTS TRITE LAW, AS ALSO EXPLAINED BY THE HONBLE APEX CO URT TIME AND AGAIN, TO SEVERAL BY WHICH REFERENCE STANDS MADE BY IT IN CALCUTTA KNITWEARS (SUPRA). HOW COULD, THEN, WE WONDER, THE PROVISION BE READ AS NOT ATTRA CTED WHERE THE PAYMENT OF THE EXPENDITURE DOES NOT FALL WITHIN ANY ONE OF THE EXC EPTING CLAUSES OF RULE 6DD, ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 10 ENLISTING THE PRESCRIBED CIRCUMSTANCES REFERRED TO IN THE FIRST PROVISO TO THE MAIN PROVISIONS ? WE HAVE ALREADY DELINEATED THE LEGISLATIVE INTENT, WHICH IS TO BE THE FOUNDATIONAL BASIS OF ANY INTERPRETATIVE EXERCISE ( CIT V. BABY MARINE EXPORTS [2007] 290 ITR 323 (SC)), EVEN AS ITS LANGUAGE MAKE S THE PROVISION UNAMBIGUOUSLY CLEAR. IT IS THE MODE OF PAYMENT UNDE R OTHER THAN THE PRESCRIBED MODES, WHICH IS THE BASIS ON WHICH THE LAW BECOMES APPLICABLE. SAVING IN THE FORM OF EXCEPTING CIRCUMSTANCES, PRECLUDING SS. 40A(3)/( 3A), IS PROVIDED PER FIRST PROVISO THERETO READ WITH THE RELEVANT RULE (R. 6DD), WHICH IS TO BE THEREFORE STRICTLY ADHERED TO . THE SAME ARE BASED ON CONSIDERATIONS OF AVAILABIL ITY OF BANKING FACILITIES; BUSINESS EXPEDIENCY; AND OTHER RELEVANT FACTORS. THESE CIRCUMSTANCES, DESPITE THE SAME PARAMETRIC CONSIDERATIONS (WHICH I NCLUDE BUSINESS EXIGENCIES), GUIDING THEIR ENUMERATION BY WAY OF DELEGATED LEGIS LATION (R. 6DD), HAVE WITNESSED CHANGES FROM TIME TO TIME DURING THE LONG HISTORY O F THE PROVISION. HOWEVER, EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES; IMPRA CTICABILITY OF PAYMENT; OR GENUINE DIFFICULTY, PRESENT EARLIER PER R. 6DD (J ), OBTAIN NO LONGER. THESE, THEREFORE, CANNOT BE READ INTO THE CLEAR ENUMERATIO N OF SPECIFIED CIRCUMSTANCES, AS HAS BEEN BY THE LD. CIT(A). CONSIDERATIONS OF EQUIT Y CANNOT BE IMPORTED, PARTICULARLY IN A SITUATION AS THE PRESENT CASE WHE RE THE SAME OPERATE TO DEFEAT THE VERY PURPOSE OF OR THE OBJECT THAT THE PROVISION ST ANDS TO ACHIEVE/ATTAIN. IN FACT, WE OBSERVE NO EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCE, NOR ANY STANDS EVEN CONTENDED AT ANY STAGE, INCLUDING IMPRACTICABILITY OR GENUINE DIFFICULTY; THE ASSESSEESS CASE THROUGHOUT BEING OF GENUINENESS OF EXPENDITURE . GENUINENESS OF EXPENDITURE OR GENUINENESS OF PAYMENT THEREOF ARE, AS AFORE-STATED, PREREQUISITES FOR DEDUCTION OF AN EXPENDITURE IN COMPUTING INCOME , WHICH FALLS TO BE CONSIDERED EVEN DE HORS AND INDEPENDENT OF SECTION 40A(3), WHICH ONLY SEEK S TO REGULATE ITS MODE OF PAYMENT. WHY, WOULD A NON-GENUINE EXPENDITU RE STAND TO BE ALLOWED ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 11 WHERE PAID IN CASH IN INSTALLMENTS WHICH DO NOT BRE ACH THE PRESCRIBED LIMIT OR PAID PER ACCOUNT PAYEE CHEQUE (DRAWN ON A BANK) OR A BAN K DRAFT? RECENT DEMONETIZATION OF NOVEMBER, 2016 HAS BROUGHT FORTH THE FACT OF CURRENCY IN CIRCULATION IN INDIAN ECONOMY, AS A RATIO OF GDP, A S ONE OF THE HIGHEST IN THE WORLD. THE LATEST SCALING DOWN OF THE LIMIT U/S. 40 A(3), REFERRED TO EARLIER, COULD POSSIBLY HAVE BEEN GUIDED BY THOSE AND SUCH LIKE CO NSIDERATIONS, BESIDES OF COURSE PROMOTING PAYMENT THROUGH THE BANKING SECTOR/ELECTR ONICALLY. THE RECENT MOVE BY THE GOVERNMENT OF INDIA TO LINK ADHAAR (IDENTITY) W ITH THE BANK ACCOUNTS IS ONE MORE ATTEMPT TO LINK PAYMENT THROUGH BANKING CHANNE L WITH IDENTITY. HERE IT IS PERTINENT TO NOTE THAT THE PROVISION DURING ITS LON G HISTORY HAS WITNESSED A DISALLOWANCE IN FRACTION (20%) TO - FOR MOST PART, A TOTAL DISALLOWANCE, I.E., WHERE THE PROVISION GETS ATTRACTED. THE DECISION BY THE HON'BLE JURISDICTIONAL HIGH COU RT IN GURDAS GARG (SUPRA) WAS RENDERED ON THE BASIS OF THE EARLIER RU LE 6DD(J) WHICH, AS WAS DISCOVERED SUBSEQUENT TO THE PRONOUNCEMENT OF THE J UDGMENT IN THE OPEN COURT BY THE HON'BLE COURT, NO LONGER EXISTENT. IT THUS CORR ECTLY OBSERVED THEREIN THAT SECTION 40A(3) IS NOT ABSOLUTE IN ITS TERMS AND, THEREFORE, EXCLUDES EXPENDITURE, GENUINENESS OF WHICH IS NOT IN DOUBT AND THE PAYEE/ S IS IDENTIFIABLE, I.E., WHERE MADE UNDER A BUSINESS EXIGENCY. THE SAME IS IN FACT IN CONSONANCE WITH THE DECISION IN ATTAR SINGH GURMUKH SINGH (SUPRA) AS WELL AS THE BOARD CIRCULAR 220 (SUPRA). THE ISSUE ARISES ONLY DUE TO THE AMENDMENT S TO THE PROVISION SINCE, WHICH MAKES IT MATERIALLY DIFFERENT FROM THE PROVISION BE FORE THE APEX COURT AS WELL AS THE HON'BLE JURISDICTIONAL HIGH COURT. THE HON'BLE COURT ADMITS THIS ON THE SAID DISCOVERY, YET, REFRAINS FROM VARYING ITS DECISION, PRONOUNCED IN THE OPEN COURT, NOTING THAT THE PARTIES MAY TAKE APPROPRIATE PROCEE DINGS, AND THAT IT WAS NOT EXPRESSING ANY VIEW ON THE AMENDED LAW. REFERENCE I N THIS REGARD MAY BE MADE TO PARAS 9 THRO 15 (EXCLUDING PARAS 11 14) OF THE J UDGMENT. HOW COULD THEN, ONE ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 12 MAY ASK, THE SAID DECISION BE CONSTRUED AS AN AUTHO RITY ON THE AMENDED LAW, OR AS A BINDING JUDICIAL PRECEDENT QUA THE SAID LAW ? IN FACT, AS WE SUBSEQUENTLY DISCOVER, THE DECISION HAS SINCE BEEN RECALLED BY THE HONBLE HIGH COURT FOR FRESH ADJUDICATION (VIDE ORDER DATED 30/9/2016 / COPY ON RECORD), SO THAT IT EXISTS NO MORE. AS REGARDS THE DECISION BY THE OTHER HON'BLE HIGH COURTS, THE SAME, AS NOTED BY THE HON'BLE JURISDICTIONAL HIGH COURT, WERE ALSO LED THROUGH A WRONG (SINCE AMENDED) PROVISION. WE HAVE ALREADY NOTED, WITH REF ERENCE TO RULE OF INTERPRETATION, AS ELUCIDATED BY THE APEX COURT, TH AT THERE IS NO SCOPE FOR TRAVELLING OUTSIDE THE SCOPE OF THE PROVISION WHERE ITS LANGUA GE IS CLEAR AND UNAMBIGUOUS, AS IN THE INSTANT CASE, BESIDES BEING NON OBSTANTE , OR OF READING IT DOWN, BY DRAWING ON CONSIDERATION OF GENUINENESS OF EXPENDITURE OR O F A BUSINESS EXIGENCY, NOT SPECIFICALLY PROVIDED, I.E., GIVEN THE CLEAR TERMS OF THE PROVISION, WHICH HAS HAD A LONG JOURNEY, AND WHICH IS ITSELF INDICATIVE OF THE LEGISLATIVE INTENT, AND RELEVANT. THAT A DECISION BY A NON-JURISDICTIONAL HIGH COURT IS EVEN OTHERWISE NOT A BINDING PRECEDENT FOR THE TRIBUNAL, IS WELL SETTLED (REFER: SURESH DESAI & ASS. V. CIT [1998] 230 ITR 912 (DEL); GEOFFERY MANNERS & CO. LTD. V. CIT [1996] 221 ITR 695 (BOM); CIT V . THANE ELECTRICITY SUPPLY LTD. [1994] 206 ITR 797 (BOM); PATIL VIJAYAKUMAR V. UNION OF INDIA [1985] 151 ITR 48 (KAR)). THERE ARE, ON THE CONTRARY, DECISIONS GALORE, RENDERED DURING THE LON G HISTORY OF THE PROVISION, CLARIFYING THAT, SAVE AS PROVIDED U/R. 6DD, THE BRE ACH OF THE MONETARY LIMIT FOR CASH (OR OTHER THAN THE PRESCRIBED MODES OF) PAYMENT WOU LD ATTRACT THE RIGOR OF S. 40A(3). IN FACT, SEVERAL, INCLUDING TWO BY THE HON BLE JURISDICTIONAL HIGH COURT, WERE REFERRED TO BY THE HONBLE APEX COURT IN ATTAR SINGH GURMUKH SINGH (SUPRA) (AT PAGE 674 OF THE REPORTS). THERE IS IN FACT ABUN DANT REFERENCE TO CASE LAW BY THE SPECIAL BENCH OF THE TRIBUNAL IN KENARAM SAHA & ORS. (SUPRA). ALL THESE DECISIONS ARE RELEVANT, AND RELIED UPON. ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 13 WE, ACCORDINGLY, FIND LITTLE MERIT IN THE DISREGARD OF THE CLEAR AND UNAMBIGUOUS PROVISION OF LAW BY THE LD. CIT(A). SEC TION 40A(3), IN VIEW OF THE BREACH OF THE MONETARY LIMIT SPECIFIED THEREIN, REA D WITH R. 6DD, PROVIDING FOR THE EXCEPTING CASES AND CIRCUMSTANCES, NONE FOUND APPLI CABLE, SHALL THEREFORE APPLY. 6. WE NEXT PROCEED TO ADJUDICATE ON THE MERITS OF THE CASE, WITH A VIEW TO DETERMINE THE EXTENT OF THE APPLICABILITY OF S. 40A (3). AT THE OUTSET, WE FIND IT IMMENSELY ODD THAT THE C ONSIGNMENTS UNLOADED AT THE ASSESSEES DUMPS, WHICH ARE STATED TO BE INVARI ABLY ON THE SAME DAY, SHOULD HAVE A FREIGHT COMPONENT BELOW RS. 35,000 IN-AS-MUC H AS THEY ARE ADMITTEDLY NOT DIRECTED TO DISTANT BKOS, WHICH ENTAILS TIME FOR DE LIVERY. WE SAY SO AS A CONSIGNMENT, TO OPTIMIZE FREIGHT COST (PER UNIT COA L TRANSPORTED), WOULD, IRRESPECTIVE OF THE MANNER OF ITS DISTRIBUTION (I.E ., AT THE ASSESSEES DUMPS OR BKO), CARRY (ALMOST) THE SAME (PAY) LOAD AND, THUS, ALMOS T THE SAME FREIGHT. AGAIN, IT IS OUT OF SYNC WITH BUSINESS REALITY, AND DOES NOT RIN G TRUE THAT THE ASSESSEES EMPLOYEE/S WITH CASH (IN NO INSUBSTANTIAL SUM) IS D ISPATCHED ALONG WITH THE TRUCK, TO BE GIVEN TO THE TRUCKER EACH DAY IN A SUM BELOW THE THRESHOLD LIMIT. THIS IS AS MANPOWER HAS A COST ASSOCIATED WITH IT, AND MAKING PAYMENTS TO THE TRUCKER COULD NOT BE THE ONLY PURPOSE OF SENDING ITS EMPLOYEE AL ONG WITH. THE DELIVERY IN ANY CASE IS TO BE TAKEN BY THE BKO, ONLY ON RECEIPT BY WHICH - ON THE BASIS OF GROSS AND TARE WEIGHT OF THE DELIVERING TRUCK, WOULD THE TRUCKER BE ENTITLED TO FREIGHT, WHICH MAY OTHERWISE STAND TO BE ADJUSTED AGAINST TH E SHORTAGE IN GOODS. WHY, THERE COULD BE MORE THAN ONE SUCH TRUCK ON A GIVEN DAY/S, SO THAT MORE THAN ONE EMPLOYEE (OF THE ASSESSEE) WOULD HAVE TO BE SPARED FOR THE PURPOSE, INCREASING THE MANPOWER COST OF TAKING DELIVERY, THE PRIME RESPONS IBILITY OF WHICH IS IN ANY CASE OF THE CONCERNED BKO. AGAIN, IT WILL, IN THAT CASE, HAVE TO NECESSARILY GIVE THE TOTAL AMOUNT (OF FREIGHT & TOLL) TO THE EMPLOYEE ON DAY 1 AND, THEREFORE, THE AVAILABILITY OF CASH SHALL HAVE TO BE RECKONED ON THAT BASIS. ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 14 THE EXPLANATION, DESPITE THE ODDITIES AFORE-REFERRE D, HAS HOWEVER BEEN ACCEPTED BY THE AO, AND WE MUST SAY, VERY FAIRLY. T HOUGH HER ORDER IS NOT BINDING ON US, WE ARE DISINCLINED TO INTERFERE WITH THE SAI D ACCEPTANCE AS, CLEARLY, THE DELIVERY TO THE BKOS COULD BE OVER DAYS, EXTENDING BEYOND A SINGLE DAY. BESIDES, AN ASSESSEE IS ENTITLED TO ARRANGE HIS AFFAIRS IN A MANNER THAT THE RIGOR OF THE PROVISION IS AVOIDED. THE AOS STANCE THAT IT CANNO T BE ACCEPTED THAT EACH PAYMENT WOULD COMPRISE TOLL AND FREIGHT TO THE EXTENT OF 17 % AND 83% RESPECTIVELY, I.E., THE SAME RATIO AS OBTAINS IN THE AGGREGATE PAYMENT FOR THE YEAR, AS CANVASSED BY THE ASSESSEE BEFORE HER, IS ALSO TO BE UPHELD. EACH CON SIGNMENT WOULD, FIRSTLY, HAVE A DIFFERENT RATIO, AND BEING A MATTER OF FACT, THE TO LL AND FREIGHT PAYMENT WOULD HAVE TO BE ADOPTED AS OBTAINING FOR THAT CONSIGNMENT. TW O, THERE IS NO REASON FOR NOT REIMBURSING THE TOLL AMOUNT IN THE FIRST INSTANCE, EXCEPT WHERE THERE IS A DOUBT WITH REGARD TO THE PAYMENT ITSELF OR (SAY) SHORTAGE OF C ASH ON THAT DATE. PAYMENT OF TOLL, EVEN IF IN EXCESS OF RS. 20,000 PER DAY, WOULD STAN D EXCEPTED U/S. 40A(3) READ WITH RULES 6DD (B), WHICH READS AS UNDER: (B) WHERE THE PAYMENT IS MADE TO THE GOVERNMENT AN D, UNDER THE RULES FRAMED BY IT, SUCH PAYMENT IS REQUIRED TO BE MADE IN LEGAL TENDER; FURTHER, THE AOS STAND THAT THE PAYMENT, EVEN IF STAGGERED OVER THE TIME TAKEN TO EFFECT DELIVERY, COULD NOT EXCEED THREE DA YS, ON WHICH (THIRD DAY) THEREFORE THE ENTIRE BALANCE FREIGHT STANDS PAID, WOULD SEEM TO US AS AD HOC IN-AS-MUCH AS EACH CONSIGNMENT WOULD TAKE TIME DEPENDING ON THE V AGARIES OF THE SITUATION ON THE GROUND. THAT IS, THE MATTER IS PURELY FACTUAL . A TRUCK MAY GET STUCK UP FOR SEVERAL HOURS/DAYS DUE TO TRAFFIC BLOCKAGE, OR FOR WHATEVER REASON. ANOTHER MAY GET HELD UP FOR UNLOADING AT THE SITE, SO ON AND SO FORTH. THE ONUS TO ESTABLISH FACTS THOUGH IS CLEARLY ON THE ASSESSEE . IT SEEMS HIGHLY IMPROBABLE THAT EACH CONSIGNMENT SHOULD TAKE AS MUCH TIME (DAYS) FOR DEL IVERY, I.E., GIVEN THE VARIABLES OF PAY LOAD; DISTANCE; ROAD AND WEATHER CONDITIONS; ETC., IMPACTING THE SAID TIME, AS ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 15 REQUIRED TO MAKE THE PAYMENT PER DAY WITHIN THE PRE SCRIBED LIMIT! THAT IS, THE ASSESSEES CLAIM THAT THE PAYMENT HAS BEEN MADE, IN EACH INDIVIDUAL CASE, OVER THE TIME ACTUALLY TAKEN TO EFFECT DELIVERY (FOR THAT CO NSIGNMENT), VALID IN PRINCIPLE, WOULD REQUIRE BEING PROVED BY IT. THIS IS AS IT IS UNTENABLE AND NOBODYS CASE THAT A TRUCK IS HELD UP, I.E., AFTER DELIVERY, ONLY TO ENA BLE DISCHARGE OF THE BALANCE AMOUNT IN INSTALLMENTS, SO AS TO ESCHEW SECTION 40A(3). TH E ARRIVAL OF A TRUCK AT THE ASSESSEES SITE OR, AS THE CASE MAY BE, POINT/STATI ON FROM WHERE IT IS ROUTED TO ITS DESTINATION, CO-OPTING ASSESSEES EMPLOYEE IN CREW (TO OVERSEE DELIVERY AND MAKE PAYMENTS IN CASH INSTALLMENTS); ITS JOURNEY ACROSS VARIES TOLLS/OCTROI POSTS/CHECK POINTS ON THE WAY; ARRIVAL AT ITS DESTINATION (AND WEIGHMENT - GROSS AND TARE); UNLOADING AT SITE; JOURNEY BACK TO THE ASSESSEES P REMISES/WORK STATION, ETC. WOULD ALL STAND TO BE EVIDENCED. SUBJECT TO THIS FACTUAL VERIFICATION, WE APPROVE THE ASSESEES CLAIM, I.E., IN PRINCIPLE. THE BURDEN TO PROVE ITS RETURN, AND THE CLAIMS PREFERRED THEREBY, IS ONLY ON THE ASSESSEE ( CIT V. VENKATASWAMY NAIDU [1956] 29 ITR 529 (SC); CIT V. CALCUTTA AGENCY LTD. [1951] 19 ITR 191 (SC)). THE ASSESSING OFFICER SHALL, ACCORDINGLY, ADJUDICATE TH E MATTER, ISSUING DEFINITE FINDINGS OF FACT, ON THE BASIS OF THE MATERIAL ON R ECORD, AND AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY TO SUBSTANTIATE I TS CASE. WE DECIDE ACCORDINGLY. 7. GROUND 2 BY THE REVENUE IS IN RESPECT OF A DISAL LOWANCE AT RS.94,000/-, BEING 1/7 TH OF THE TOTAL EXPENDITURE (OF RS.6.56 LACS) UNDER S EVERAL HEADS OF EXPENDITURE, VIZ. ENTERTAINMENT; LANGER; FESTIVAL E XPENSES; LABOUR WELFARE; ETC., INCURRED IN CASH AND SUPPORTED BY SELF-MADE VOUCHER S, SO THAT THE EXPENDITURE WAS NOT FULLY VERIFIABLE. RELIEF STANDS ALLOWED BY THE FIRST APPELLATE AUTHORITY ON THE GROUND THAT NO SPECIFIC DEFECT STANDS POINTED OUT B Y THE AO. THE REVENUES GRIEVANCE IS THAT IT HAS NOT BEEN APPRECIATED THAT THE EXPENDITURE STANDS INCURRED IN CASH PER SELF-MADE VOUCHERS, SO THAT IT IS NOT FULL Y VERIFIABLE. LIKE CONTENTIONS WERE ITA NO.566 (ASR)/2016(AY 2013-14) ASST. CI T V DARSHAN KUMAR MAHAJAN 16 RAISED BEFORE US. WE FIND SOME MERIT IN THE CASE OF EITHER PARTY. AN EXPENDITURE DOES NOT BECOME UN-GENUINE MERELY BECAUSE IT STANDS INCURRED IN CASH. AT THE SAME TIME, CASH EXPENDITURE PER SELF-MADE VOUCHERS IS NO T AMENABLE TO VERIFICATION. THE TWO CONSIDERATIONS ARE TO BE BALANCED, AND THE REVE NUES CASE, AS WE UNDERSTAND, IS ONE OF INFLATION (OF EXPENDITURE), WHICH IT ESTI MATES AT 1/7 TH OF THE TOTAL EXPENDITURE. WE DIRECT IT AT 1/10 TH , AND THE REVENUE GETS PART RELIEF. 8. GROUND 3 IS TOWARD DISALLOWANCE FOR RS.92,000/-, AT THE RATE OF 1/5 TH OF EXPENDITURE ON VEHICLES, VIZ. REPAIR AND MAINTENANC E, DEPRECIATION, ETC., ON ACCOUNT OF PERSONAL, I.E., NON-BUSINESS USER, WHICH COULD N OT BE DENIED IN THE ABSENCE OF LOG RECORDS. THE LD. CIT(A) HAS REDUCED IT TO 1/10 TH . WE FIND NO CAUSE FOR INTERFERENCE. WE DECIDE ACCORDINGLY. 9. IN THE RESULT, THE REVENUES APPEAL IS PARTLY AL LOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 .04.2018 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 18.04.2018. GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: DARSHAN KUMAR MAHAJAN (2) THE ASST. CIT, JAMMU (3) THE CIT(A)-2, AMRITSAR (4) THE CIT, AMRITSAR (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER