J.V.PATANWALA & CO., MUMBAI V. ACIT-21(1), MUMBAI

ITA 6290/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7674 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2012-2013
• Appeal Filed On: 17-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Opportunity of being heard
• Section: 40A(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI RAMIT KOCHAR , ACCOUNTANT MEMBER ITA NO. 6290 / MUM . /2017 ( ASSESSMENT YEAR : 20 12 13 ) J.V. PATANWALA & CO. PLOT NO.8, 8A, MAHIM RETI BUNDER MAHIM CAUSEWAY, MAHIM WEST MUMBAI 400 016 PAN AACFJ6230F . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 21(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI SUNIL SINGH [EMPLOYEE OF SHRI AJAY SEKHRI] REVENUE BY : SHRI RAJEEV GUBGOTRA DATE OF HEARING 31 . 12 .2018 DATE OF ORDER 09.01.2019 O R D E R PER SAKTIJIT DEY, J.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 5 TH JULY 2107, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 33, MUMBAI, FOR THE ASSESSMENT YEAR 20 12 13 . 2 . THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE DISALLOWANCE OF ` 29,21,586, UNDER SECTION 40A(3A) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ). 2 J.V. PATANWALA & CO. 3 . B RIEF FACTS ARE, THE ASSESSEE, A PARTNERSHIP FIRM IS STATED TO BE ENGAGED IN THE BUSINESS OF TRADING IN TIMBERS, BAMBOOS, PLYWOOD, ETC. A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED IN ASSESSEES BUSINESS PREMISES ON 24 TH JANUARY 2012. DURING THE SUR VEY OPERATION, IT WAS FOUND THAT THE ASSESSEE HAS MADE CASH PAYMENT ` 50,99,626, TO TRANSPORTERS IN VIOLATION OF SECTION 40A(3) OF THE ACT. SUBSEQUENTLY, THE ASSESSEE ON 27 TH SEPTEMBER 2012, FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF ` 1,73,15,36 2. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WHILE EXAMINING THE COMPUTATION OF INCOME FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME NOTICED THAT OUT OF THE AMOUNT OF ` 50,99,626, PAID IN CASH TO TRANSPORTERS IN VIOLATION OF SECTION 40A(3) OF THE ACT , THE ASSESSEE HAS CLAIMED DEDUCTION FOR AN AMOUNT OF ` 29,21,586 UNDER SECTION 40A(3A) OF THE ACT . TO VERIFY THE GENUINENESS OF ASSESSEES CLAIM THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO PRODUCE THE CORRESPONDING VOUCHERS /INVOICES AND TRANSPORTATION CONFIRMATION S . AS ALLEGED BY THE ASSESSING OFFICER, THE ASSESSEE FAILED TO SUBSTANTIATE THE CLAIM OF DEDUCTION UNDER SECTION 40A(3) AND 40A(3A) OF THE ACT FOR INVOICES TOTALING TO ` 29 , 21 , 58 6 WITH INDIVIDUAL PAYMENT TO ONE PART Y IN ONE DAY NOT EXCEEDING TO ` 35,000. ACCORDINGLY, HE DISALLOWED THE AMOUNT OF ` 29,21,586. BEING AGGRIEVED OF SUCH DISALLOWANCE, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3 J.V. PATANWALA & CO. 4 . THE LEARNED COMMI SSIONER (APPEALS), HOWEVER, SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON THE REASONING THAT THE ASSESSEE FAILED TO SUBSTANTIATE THAT THE PAYMENT COMES WITHIN THE EXCEPTION PROVIDED UNDER RULE 6DD OF THE I.T. RULES, 1962. 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. ON A READING OF OBSERVATIONS OF THE ASSESSING OFFICER IN PARA 5 OF THE ASSESSMENT ORDER, IT APPEARS THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS CLAIM THAT INDIVIDUAL PAYMENT TO ONE PARTY PER DAY HAS NOT EXCEEDED ` 35,000 IN RESPECT OF INVOICES TOTALING TO ` 29 , 21 , 58 6 . 6 . . IN THAT EVENT, WE ARE UNABLE TO UNDERSTAND HOW THE ENTIRE AMOUNT OF ` 29,21,586, WAS DISALLOWED BY THE ASSESSING OFFICER. FURTHER, FROM THE WRITTEN SUBMISSIONS FILED BEFORE THE FIRST APPELLATE AUTH ORITY AS REPRODUCED IN PARA 8 OF THE APPEAL ORDER IT IS VERY MUCH CLEAR THAT THE SPECIFIC PLEADING OF THE ASSESSEE WAS TO THE EFFECT THAT THE PAYMENTS MADE TO THE TRANSPORTERS WERE MUCH LESS THAN THE THRESHOLD LIMIT OF ` 35,000, HENCE, ALLOWABLE UNDER SECT ION 40A(3) AND 40A(3A) OF THE ACT. HOWEVER, THE LEARNED COMMISSIONER (APPEALS) WHILE SUSTAINING THE DISALLOWANCE HAS NOT ONLY OBSERVED THAT THE ASSESSEE FAILED TO SUBSTANTIATE THAT THE CASH PAYMENTS MADE COME WITHIN ANY OF THE EXCEPTIONS PROVIDED UNDER RUL E 6DD OF THE RULES BUT HE HAS ALSO OBSERVED THAT IN THE WRITTEN SUBMISSIONS THE ASSESSEE HAS 4 J.V. PATANWALA & CO. ADMITTED THAT IT HAS MADE PAYMENT IN CASH EXCEEDING ` 35,000 TOTALING TO ` 29,21,586, DURING THE YEAR UNDER CONSIDERA TION. THE AFORESAID OBSERVATION OF THE LEARNED COMMISSIONER (APPEALS) APPEAR S TO BE CONTRARY TO THE FACTS STATED IN THE WRITTEN SUBMISSION FILED BY THE ASSESSEE BEFORE HIM. THEREFORE, SINCE THE PRIMARY FACTS RELATING TO THE ISSUE WHETHER THE CASH PAYMENTS MADE BY THE ASSESSEE EXCEEDS THE THRESHOLD LIMIT OF ` 35,000, HAS NOT BEEN ESTABLISHED PROPERLY EITHER BY THE ASSESSEE OR BY THE DEPARTMENTAL AUTHORITIES, IT IS NECESSARY TO FACTUALLY VERIFY ASSESSEES CLAIM THAT THE CASH PAYMENTS COME WITHIN THE EXCEPTIONS PROVIDED UNDER THE SECOND PROVISO TO SECTION 40A(3A) OF THE ACT. IN VIEW OF THE AFORESAID, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR DE NOVO ADJUDI CATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE PRIMARY ONUS IS ON THE ASSESSEE TO BRING SUBSTANTIVE EVIDENCE ON RECORD TO ESTABLISH ITS CLAIM THAT THE CASH PAYMENT S COME WITHIN THE EXCEPTION PROVIDED UNDER THE SECOND PROVISO TO SECTION 40 A(3A) OF THE ACT. IN CASE, IT IS FOUND THAT CASH PAYMENTS ARE NOT COVERED UNDER THE SECOND PROVISO TO SECTION 40A(3A) OF THE ACT, THE ONUS IS AGAIN ON THE ASSESSEE TO PROVE THAT SUCH CASH PAYMENTS WERE REQUIRED TO BE MADE DUE TO BUSINESS EXIGENCIES AND THE Y COME WITHIN THE EXCEPTION S PROVIDED UNDER RULE 6DD OF THE RULES. WITH THE AFORESAID OBSERVATIONS, GROUNDS RAISED ARE ALLOWED FOR STATISTICAL PURPOSES. 5 J.V. PATANWALA & CO. 7 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 09.01.2019 SD/ - RAMIT KOCHAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 09.01.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI