M/s.K.K.R. Agro Mills P.Ltd, Aluva V. ITO, Cochin

ITA 78/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68930 (ITAT-COCHIN)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-07-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 13-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R KRISHNA IYER
• Assessee Lawyers: S VIJAYAPRABHA
• Section: 40A(3)

Judgement Text

1 ITA NO.78 & 130/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T.A NO. 78/COCH/2013 (ASSESSMENT YEAR 2009-10) K.K.R. AGRO MILLS (P) LTD VS ITO, WD.1(1) 111/678, KKR BLDG KOCHI OKKAL, KALADY PAN : AABCK6542K (APPELLANT) (RESPONDENT) I.T.A NO. 130/COCH/2013 (ASSESSMENT YEAR 2009-10) A.C.I.T. CIR.1(2) VS K.K.R. AGRO MILLS (P) LTD KOCHI OKKAL, KALADY (APPELLANT) (RESPONDENT) ASSESSEE BY : SMT. S VIJAYAPRABHA REVENUE BY : SHRI R KRISHNA IYER DATE OF HEARING : 15-07-2013 DATE OF PRONOUNCEMENT : 23-08-2013 O R D E R PER N.R.S. GANESAN (JM) BOTH THE ASSESSEE AND THE REVENUE HAVE FILED THE P RESENT APPEALS AGAINST THE ORDER OF THE CIT(A)-II, KOCHI DATED 04 TH DECEMBER, 2012 FOR THE ASSESSMENT YEAR 2009-10. THEREFORE, WE HEARD THE S AME TOGETHER AND DISPOSE OF THEM BY THIS COMMON ORDER. 2 ITA NO.78 & 130/COCH/2013 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS IS THE DISALLOWANCE U/S 40A(3) OF THE ACT. 3. SMT. S VIJAYAPRABHA, THE LD.DR SUBMITTED THAT TH E ASSESSEE HAS PAID LORRY CHARGES EXCEEDING RS.20,000 IN A DAY. T HEREFORE, THE ASSESSING OFFICER BY APPLYING THE PROVISIONS OF SEC TION 40A(3) DISALLOWED THE PAYMENTS WHICH WERE IN EXCESS OF RS.20,000 A DA Y. HOWEVER, ON APPEAL, THE CIT(A) DISALLOWED ONLY 10% OF THE PAYME NT MADE AND DELETED THE REMAINING PORTION OF THE ADDITION. ACCORDING T O THE LD.DR WHEN THE PAYMENT EXCEEDED RS.20,000 BY CASH, THE ENTIRE EXPE NDITURE CLAIMED BY THE ASSESSEE HAS TO BE DISALLOWED. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCE TO 10% OF THE TOTAL EX PENDITURE. 4. ON THE CONTRARY, SHRI R KRISHNA IYER, THE LD.REP RESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS A CONTRACT OR WITH STATE CIVIL SUPPLIES CORPORATION FOR RECEIVING THE PADDY FROM T HE FARMERS AS PER ALLOTMENT, TRANSPORTING, STORING, PARBOILING, MILLI NG OF PADDY AND PACKING, DELIVERY OF RICE TO THE AUTHORIZED WHOLESALE DEALER S AS PER RELEASE ORDERS. THE ASSESSEE MADE ARRANGEMENTS FOR TRANSPORT OF PAD DY FROM VARIOUS AGRICULTURISTS THROUGH LORRIES. IN ADDITION TO TRA NSPORT CHARGES, THE ASSESSEE HAS TO PAY LOADING CHARGES, GUNNY CHARGES, KETTU COOLI, ETC. THE 3 ITA NO.78 & 130/COCH/2013 ASSESSEE HAS EMPLOYED NEARLY 596 LORRIES FOR TRANSP ORTATION OF THE PADDY FROM THE FARMERS TO THE GODOWN. THE ASSESSEE HAS F ILED THE ENTIRE DETAILS OF PAYMENT MADE TO VARIOUS LORRY OWNERS ALONG WITH LORRY NUMBER, AMOUNT, DETAILS OF PAYMENT, ETC. THE CIT(A) CALLED FOR REM AND REPORT FROM THE ASSESSING OFFICER. THOUGH THE ASSESSING OFFICER HA S NOT DENIED THAT THE PAYMENT MADE TO EACH INDIVIDUAL FARMERS DOES NOT EX CEED RS.20,000, THE LD.REPRESENTATIVE POINTED OUT THAT THE ASSESSING OF FICER SIMPLY CLAIMS THAT THE SPECIFICATION OF THE LORRY COULD NOT BE VERIFIE D AND THE PAYMENTS WERE NOT ESTABLISHED BEYOND DOUBT. ACCORDING TO THE LD. REPRESENTATIVE, THE ASSESSING OFFICER HAS ONLY MADE THE DISALLOWANCE AN D NOT DOUBTED THE GENUINENESS OF THE TRANSACTION IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT IS ONLY WHEN THE ASSESSEE FURNISHE D DETAILS BEFORE THE CIT(A) RAISING ADDITIONAL GROUNDS, THE ASSESSING OF FICER WHILE FILING THE REMAND REPORT HAS DOUBTED THE GENUINENESS. THEREFO RE, THE CIT(A) RESTRICTED THE DISALLOWANCE AT 10%. ACCORDING TO T HE LD.REPRESENTATIVE, WHEN THE GENUINENESS OF THE PAYMENT IS NOT IN DISPU TE, THE CIT(A) IS NOT JUSTIFIED IN RESTRICTING THE DISALLOWANCE AT 10%. ACCORDING TO THE LD.REPRESENTATIVE, HE OUGHT NOT TO HAVE RESTRICTED THE DISALLOWANCE AT 10%. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING T HE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DISAL LOWED THE PAYMENT 4 ITA NO.78 & 130/COCH/2013 ONLY ON THE GROUND THAT THE ASSESSEE HAS PAID AMOUN TS IN CASH EXCEEDING RS.20,000. IT IS NOT IN DISPUTE THAT THE ASSESSEE FILED DETAILS OF THE PAYMENT AND THE DETAILS OF THE PERSON WITH LORRY NU MBER TO SHOW THAT THE PAYMENT TO ONE PERSON DOES NOT EXCEED RS.20,000 ON ANY PARTICULAR DAY. ON THE BASIS OF THE DETAILS FILED BY THE ASSESSEE A ND THE ADDITIONAL GROUND RAISED, THE CIT(A) CALLED FOR REMAND REPORT. THE R EMAND REPORT FILED BY THE ASSESSING OFFICER IS EXTRACTED IN THE ORDER OF THE CIT(A). AS RIGHTLY SUBMITTED BY THE LD.REPRESENTATIVE FOR THE ASSESSEE , THE ASSESSING OFFICER HAS NOT WHISPERED ANYTHING ABOUT THE SPECIFIC CONTE NTION OF THE ASSESSEE THAT THE PAYMENT DOES NOT EXCEED RS.20,000 A DAY. HE SIMPLY SAYS THAT HE COULD NOT VERIFY THE SPECIFICATION OF THE VEHICL E AND THAT THE PAYMENTS MADE TO INDIVIDUAL PARTIES CANNOT BE ESTABLISHED BE YOND REASONABLE DOUBT. THE VERY FACT THAT THE DISALLOWANCE WAS MADE U/S 40 A(3) SHOWS THAT THE PAYMENT IS GENUINE. APART FROM THAT THE DEPARTMENT BEFORE THIS TRIBUNAL CLAIMS THAT THE CIT(A) OUGHT TO HAVE DISALLOWED THE ENTIRE EXPENDITURE U/S 40A(3) OF THE ACT. THEREFORE, IT IS OBVIOUS THAT T HE DEPARTMENT HAS NOT DOUBTED THE GENUINENESS OF THE PAYMENT AT ANY POINT OF TIME. THE ONLY CONTENTION OF THE DEPARTMENT IS THAT THE PAYMENT WA S MADE IN EXCESS OF RS.20,000 TO ONE PERSON ON A PARTICULAR DAY. THIS CONTENTION OF THE ASSESSING OFFICER WAS DISPROVED BY THE ASSESSEE BY GIVING THE DETAILS OF THE PAYMENTS WHICH CLEARLY SHOWS THAT THE PAYMENTS MADE BY THE ASSESSEE IN CASH TO ONE PARTICULAR INDIVIDUAL DOES NOT EXCEED RS.20,000 5 ITA NO.78 & 130/COCH/2013 ON A PARTICULAR DAY. WHEN THIS FACT IS ESTABLISHED BY THE ASSESSEE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT( A) OUGHT TO HAVE ALLOWED THE ENTIRE EXPENDITURE CLAIMED BY THE ASSESSEE INST EAD OF RESTRICTING THE SAME TO 10%. THIS TRIBUNAL FINDS NO JUSTIFICATION IN THE ORDER OF THE CIT(A) IN RESTRICTING THE DISALLOWANCE AT 10% OF THE TOTAL EXPENDITURE. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE A ND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE ENTIRE CLAIM OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.78/COCH/2013 IS ALLOWED AND THE APPEAL FILED BY THE REVENUE IN ITA NO.130/COCH/2013 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD AUGUST, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 23 RD AUGUST, 2013 PK/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH