Emkey Cold Storage , Kheda V. The DCIT, Kheda circle, Nadiad

ITA 80/AHD/2021

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9196 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC-3
• Next Hearing Date: 13-10-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE SHRI PRAMOD M. JAGTAP, VICE PRESIDENT & Ms. MADHUMITA ROY, JUDICIAL MEMBER आयकर अपील सं./I. T. A. No . 80/Ahd/202 1 ( नधा रण वष / A ss es sment Year : 2012-13) E mk e y C o ld S to ra ge N at io n a l H i gh Wa y No .- 8 , V il la ge - G u t al, N ad i ad , D i st.-K he da बनाम/ Vs . D.C.I.T. Kh ed a C ir cl e , N a dia d थायी लेखा सं./जीआइआर सं./P A N/ G I R N o . : A A B FE 5 6 3 5 Q (अपीलाथ /Appellant) . . ( यथ / Respondent) अपीलाथ ओर से /Appellant by : Shri S. N. Divatia, A.R. यथ क ओर से/Respondent by : Shri Rakesh Jha, Sr. D.R. स ु नवाई क तार ख / D a t e o f H e a r i ng 14/10/2022 घोषणा क तार ख /D a t e o f P ro n o u nc e me n t 02/11/2022 O R D E R PER Ms. MADHUMITA ROY - JM: The instant appeal filed by the assessee is directed against the order dated 05.03.2021 passed by the National Faceless Appeal Centre (NFAC), Delhi arising out of the order dated 27.12.2019 passed by the DCIT, Kheda Circle, Nadiad under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’) for Assessment Year 2012-13. ITA No. 80/Ahd/2021 (Kheda Cold Storage vs. DCIT) A.Y.– 2012-13 - 2 - 2. The issue involved in this particular matter is this as to whether the disallowance of Rs.8,09,287/- invoking the provision of Section 40A(3) of the Act is justified in regard to the payment of electricity charges made to the Gujarat Electricity Board. 3. We have heard the rival submissions made by the respective parties. We also perused the materials available on record. 4. The case of the assessee before us is this that the amount has been paid in cash to statutory body. The reason for making such payment by cash has also been explained by the assessee as he was unable to make the payment through banking channel which was not available in the village where the cold storage is situated. However, since the same has been paid to the Government Authority being statutory body and the identity of the receiver whereof has not been questioned, neither the genuineness of the transactions and addition invoking Section 40A(3) is not called for. In this regard, he has relied upon certain judgments including the judgment passed in the matter of CIT vs. SRC Aviation Pvt. Ltd., reported in 218 Taxmann 62 (Mag.), Delhi. The judgment passed by the Hon’ble Karnataka High Court in the matter of CIT vs. Devendrappa M. Kalal, reported in 219 Taxmann 122 and the judgment passed by the Hon’ble Gujarat High Court in the case of CIT vs. Arvind Mill, reported in 52 Taxmann.com 475. Alongwith explanation, the assessee duly relied upon these judgments before the authorities below. However, the same was not found to be acceptable and the addition was made by the Ld.AO, which was, in turn, confirmed by the Appellate Authority. Hence, the instant appeal before us. 5. We find that Ld.AO has held that Rule 6DD does not exempt the payment in cash to govern subsidiary company. The Gujarat Electricity Board has been ITA No. 80/Ahd/2021 (Kheda Cold Storage vs. DCIT) A.Y.– 2012-13 - 3 - considered the subsidiary company by the authorities below. We find that the same is also autonomous statutory body which has been created alongwith foundation of Gujarat State in 1960 under Section 5 of the Electricity (Supply) Act, 1948. Surprisingly, we find that the Ld. CIT(A) accepted the view taken by the different High Courts in the matter referred hereinbefore, wherein all the payments were made through statutory bodies, firstly, SRC Aviation Pvt. Ltd., secondly, Railway and thirdly Transport Company. The plea taken by the Ld. CIT(A) in not applying the ratio laid down in those judgments passed by the Hon’ble High Courts in the instant case, therefore, not found to be acceptable by us. Further that, we find that in an identical situation when the payment in cash has been made by the assessee to the Gujarat Electricity Board, the Co-ordinate Bench in ITA Nos. 2844 & 2845/Ahd/2006 passed order granting relief to the assessee upon deletion of addition made by the authorities below invoking Section 40A(3) of the Act. While dealing with the identical situation, the Co- ordinate Bench has been pleased to observe as follows: “15. We have heard rival submissions and considered the material available on record. The proviso to section 40A(3) of the I.T. Act, 1961 relevant to the Assessment Year under appeal provides as under:- "Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under this sub-section where any payment in a sum exceeding twenty thousand rupees is made otherwise than by an account payee cheque drawn on a bank or account payee bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors." 16. The Hon'ble Madras High Court in the case of CIT vs. K.K.S.K. Leather Procesor P.Ltd. 292 ITR 669 (Mad) considering its earlier decision in the case of Chrome Leather Company P.Ltd.(supra), held as under:- "Rule 6DD of the Income-tax Rules, 1962, provides that an assessee can be exempted from the payment by a crossed cheque or crossed bank draft in the circumstances specified in the rule. The Central Board of Direct Taxes has issued certain guidelines giving certain circumstances and those circumstances are illustrative and not exhaustive and the underlying idea of the circular is that if the identity of the payee is known, it would be possible for the Income- tax Officer to cross check whether the transaction had in fact taken place." ITA No. 80/Ahd/2021 (Kheda Cold Storage vs. DCIT) A.Y.– 2012-13 - 4 - 17. Considering the facts and circumstances above noted that it is clear that assessee has made cash payment to GEB and the genuine payment is not in dispute. The ld. counsel for the assessee explained that since payment through SBI only is insisted, therefore, the cash payment was made. Since in this case, the genuine payment is not in dispute and the assessee has explained the reasons for making the cash payment which is one of the relevant factors as is noted in the proviso to section 40A(3) of the I.T. Act, 1961. Therefore, it would be relevant to consider the case of the assessee under the main proviso of section 40A(3) of the I.T. Act, itself, instead of considering the same under Rule 6DD(j) of the IT Rules, 1962. Considering the explanation of the assessee in light of the proviso to section 40A(3) of the I.T. Act, 1961 and order of ITAT above, we are of the view that disallowance is unjustified in the matter. Accordingly, we set aside the orders of the authorities below and delete the addition of Rs.7,05,623/-. We do not find any reason to deviate from the stand taken by the Co- ordinate Bench on the identical situation and thus, respectfully relying upon the same, we delete the addition made by the Revenue considering the disallowance unjustified. 6. In the result, assessee’s appeal is allowed. This Order pronounced on 02/11/2022 Sd/- Sd/- (P. M. JAGT AP) (MADHUMITA ROY) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 02/11/2022 True Copy S. K. SINHA आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं%धत आयकर आय ु 'त / Concerned CIT 4. आयकर आय ु 'त(अपील) / The CIT(A)- 5. *वभागीय -त-न%ध, आयकर अपील य अ%धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड3 फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपील$य अ%धकरण, अहमदाबाद / ITAT, Ahmedabad