Gali Subba Raju, Dowleswaram V. The Assistant Commissioner of Income Tax, Circle-1(1), Rajamahendravaram

ITA 610/VIZ/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 6788 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-02-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 22-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Keywords: Agreed addition; Condonation of delay; Set aside
• Section: 40A(3); 201; 20

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM , . . , BEFORE SHRI N.K.CHOUDHRY, HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH, HONBLE ACCOUNTANT MEMBER ./ I.T. A.NO. 6 10 /VIZ/20 19 ( / A SSESSMENT Y EAR : 20 15 - 16 ) GALI SUBBA RAJU D.NO.18 - 140/9 OLD NPCC YARD DOWLESWARAM [PAN : A DVPG0370K ] VS . ASST. COMMISSIONER OF INCOME TAX CIRCLE - 1(1) RAJAHMUNDRY ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI, AR / RESPONDENT BY : S MT.SUMAN MALIK , DR / DATE OF HEARING : 23 . 0 3 .202 1 / DATE OF PRONOUNCEMENT : 07 . 0 4 . 202 1 / O R D E R P ER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : CONDONATION OF DELAY : TH IS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)[ CIT (A ) ] , RAJAMAHENDRAVARAM IN ITA . NO. 1 0081 / 201 7 - 18/CIT(A)/ RJY DATED 0 1 . 0 7 .20 1 9 FOR THE ASSESSMENT YEAR (A.Y.) 20 15 - 16 WITH THE DELAY OF 6 DAYS. THE ASSESSEE HAS FILED THE 2 I.T.A. NO . 6 10 /VIZ/20 19 , A.Y.20 15 - 16 GALI SUBBA RAJU , DOWLESWARA M PETITION FOR CONDONATION OF DELAY STATING THAT THE ASSESSEE ALONG WITH HIS FAMILY MEMBERS WERE ON PILGRIMAGE OUT OF THE COUNTRY AND RETURNED TO INDIA ON 18.10.2019 AND HENCE THE APPEAL COULD NOT BE FILED BEFORE THE DUE DATE. HE FURTHER STATED THAT THE DELA Y WAS NEITHER INTENTIONAL NOR DELIBERATE AND IT WAS DUE TO NO INTIMATION , HENCE , REQUESTED TO CONDONE THE DELAY . WE HAVE HEARD BOTH THE PARTIES AND CONDONE THE DELAY AND ADMIT THE APPEAL. 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ADDITION MADE BY THE ASSESSING OFFICER (AO) U/S 40A(3) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) W HICH WAS SUSTAINED BY THE LD.CIT(A). THE ASSESSEE FILED THE RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.15,53,860/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE AO FOUND THAT THE ASSESSEE HAS MADE THE LABOUR PAYMENT OF RS.18,00,000/ - ON 22.12.2014 IN CASH IN VIOLATION OF THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND HENCE MADE THE DISALLOWANCE U/S 40A(3) OF THE ACT. 3. AGAINST THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) AND SUBMITTED THAT THE PAYMENT OF RS.18,00,000/ - RECORDED ON 22.12.2014 WAS THE EXPENSES INCURRE D IN PROJECT SITE S , WHEREIN LOT OF L ABOUR CHARGES WERE PAID TO NUMBER OF LABOURERS WORKING IN THE PROJECT SITE S . IT WAS NOT TH E PAYMENT MADE ON 22.12.2014 TO A SINGLE PERSON AND IT 3 I.T.A. NO . 6 10 /VIZ/20 19 , A.Y.20 15 - 16 GALI SUBBA RAJU , DOWLESWARA M WAS A TRANSFER ENTRY F OR LABOUR CHARGES PAID TO VARIOUS WORKMEN AT SITE . IN SUPPORT OF THE ASSESSEES CLAIM, THE ASSESSEE HAS PRODUCED THE SITE LEDGER DETAI LS OF LABOUR PAYMENTS , BEFORE THE AO AS WELL AS THE CIT(A). THE LD.CIT(A) EXAMINED THE ATTENDANCE REGISTER AND LEDGER COPY OF LABOUR CHARGES A ND OBSERVED FROM THE LEDGER COPIES THAT ALL THE PAYMENTS WERE MADE BELOW RS.20,000/ - PER TRANSACTION , HOWEVER, TH E LD.CIT(A) COULD NOT FIND THE VALID REASON FOR PAYMENT OF THE SUM OF RS.18,00,000/ - O N A SINGLE DAY I.E. ON 22/12/2014 . , THEREFORE, CONFIRMED THE ADDITION MADE BY THE AO. 4. AGAINST THE ORDER OF THE LD.CIT(A), THE ASSESSEE FILED APPEAL BEFORE THIS TRIBU NAL. DURING THE COURSE OF APPEAL PROCEEDINGS, THE LD.AR SUBMITTED THAT PAYMENT OF RS.18,00,000/ - WAS MADE TO LABOURERS WORKING THROUGHOUT THE MONTH AT THE PROJECT SITE S ON VARIOUS DATES. THE ASSESSEE HAS FURNISHED THE ATTENDANCE REGISTER , THE ACQUAINTANC E REGISTER, VOUCHERS FOR MAKING THE INDIVIDUAL PAYMENT WHICH SHOWS THAT IT WAS LESS TH A N RS.20,000/ - TO EACH INDIVIDUAL . THE PAYMENTS WERE MADE TO VARIOUS LABOURERS, WHO WE RE STATED TO BE ENGAGED IN CONSTRUCTION OF HOSTEL BUILDING AT GOVT.JUNIOR COLLEGE, RAJAVOMMANGI AND MUSURUMILLI . THE LD.AR SUBMITTED THAT IT WAS THE PAYMENT MADE AT SITE BY THE SITE MANAGER AND SUBMITTED THAT THE AO WAS NOT CORRECT IN MAKING THE ADDITION OF 4 I.T.A. NO . 6 10 /VIZ/20 19 , A.Y.20 15 - 16 GALI SUBBA RAJU , DOWLESWARA M RS.18,00,000/ - AS AGREED ADDITION, SINCE THE AR HA D NEVER ACCEPTED FOR ADDITION . THE LD.AR FURTHER STATED THAT THE ASSESSEE HAS UNDERTAKEN THE CIVIL WORKS DURING THE F.Y.2014 - 15 IN THE AGENCY AREA OF RAJAVOMMANGI AND MUSURUMILLI OF EAST GODAVARI DIST AND THERE IS NO EASY ACCESS TO REACH THE PLACE, AND THE LABOUR FORCE D ID NOT ACCEPT PAYMENTS OTHER THAN CASH. THOUGH THE PAYMENT WAS RELATED TO MULTIPLE SITES AND NUMBER OF LABOUR ERS , THE ACCOUNTANT HAS MADE THE SINGLE TRANSFER ENTRY ON 22.12.2014, INSTEAD OF MAKING ENTRIES IN SUBSIDIARY BOOKS IN RESPECT OF TWO SITES AT RAJAVOMMANGI AND MUS URUMILLI, EAST GODAVARI DIST. THEREFORE, SUBMITTED THAT SINCE THE PAYMENT IS GENUINE AND SUBSTANTIATED BY THE EVIDENCES SUCH AS ATTENDANCE REGISTER AS WELL AS THE ACQUAINTANCE REGISTER AND THE EACH PAYMENT WAS LESS THAN RS.20,000/ - TO EACH INDIVIDUAL , THE QUESTION OF DISALLOWANCE U/S 40A(3) DOES NOT ARISE AND HENCE REQUESTED TO SET ASIDE THE ORDER OF THE LD.CIT(A) AND TO DELETE THE ADDITION MADE BY THE AO. 5. ON THE OTHER HAND, THE LD.DR HEAVILY PLACED RELIANCE ON THE ORDERS OF THE LOWER AUTHORITIES. 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. THE AO MADE THE DISALLOWANCE U/S 40A(3) OF THE ACT. THE AO DID NOT DISBELIEVE THE GENUINENESS OF THE EXPENDITURE. THE 5 I.T.A. NO . 6 10 /VIZ/20 19 , A.Y.20 15 - 16 GALI SUBBA RAJU , DOWLESWARA M GRIEVANCE OF THE AO WAS ONLY FOR MAKING THE PAYM ENT OF RS.18,00,000/ - ON A SINGLE DAY ON 22.12.2014. THE ASSESSEE HAS STATED THAT THE ENTIRE PAYMENT WAS NOT MADE ON THE SAME DAY AND IT WAS ONLY THE TRANSFER ENTRY OF THE PAYMENTS MADE AT THE SITES . THE ASSESSEE HAS PRODUCED THE ATTENDANCE REGISTER AS WE LL AS THE ACQUAINTANCE REGISTER, WHEREIN, IT IS SEEN THAT THE PAYMENT WAS MADE TO SEVERAL LABOURERS WHICH WAS DULY ACKNOWLEDGED BY THE RECIPIENT ON RS.1/ - REVENUE STAMP. AL L THE PAYMENTS WERE BELOW RS.20,000/ - TO EACH INDIVIDUAL. THE ASSESSEE HAS STATED T HAT THE CASH PAYMENT WAS MADE AT AGENCY AREA TO LABOURERS , WHERE FREE MOBILITY IS NOT AVAILABLE. THE DISALLOWANCE U/S 40A(3) ATTRACTS , IF THE ASSESSEE MAKES THE PAYMENT IN EXCESS OF RS.20,000/ - IN A DAY TO ANY PERSON WITH REGARD TO THE EXPENDITURE INCURRE D. SINCE EACH PAYMENT WAS LESS THAN RS.20,000/ - , THE QUESTION OF APPLICATION OF SECTION 40A(3) DOES NOT ARISE. THE LOWER AUTHORITIES COULD NOT FIND ANY DEFECT IN THE BOOKS OF ACCOUNTS OR IN THE ATTENDANCE REGISTER AND THE LABOUR PAYMENTS. S INCE THE AO H AS NOT SUSPECTED THE GENUINENESS OF THE PAYMENT AND THE PAYMENT MADE TO EACH INDIVIDUAL IS LESS THAN RS.20,000/ - , SECTION 40A(3) DOES NOT APPLY IN THIS CASE, HENCE WE DELETE THE ADDITION MADE BY THE AO AND ALLOW THE APPEAL OF THE ASSESSEE. 6 I.T.A. NO . 6 10 /VIZ/20 19 , A.Y.20 15 - 16 GALI SUBBA RAJU , DOWLESWARA M 7 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH APRIL , 2021. SD/ - SD/ - ( ) ( . . ) (N.K.CHOUDHRY) (D.S.SUNDER SINGH) / JUDICIAL MEMBER / ACCOUNTANT MEMBER DATED : 07 .0 4 .2021 L.RAMA, SPS / COPY OF THE ORDER FORWARDED TO : - 1 . / THE ASSESSEE GALI SUBBA RAJU, D.NO.18 - 140/9, OLD NPCC YARD DOWLESWARAM 2 . / THE REVENUE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 1(1) RAJAHMUNDRY 3. THE PR.COMMISSIONER OF INCOME TAX, RAJAMAHENDRAVARAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS), RAJAMAHENDRAVARAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM