The ITO-Ward-3(1)(5), Vadodara V. Smt. Rupal Paresh Amin, Vadodara

ITA 849/AHD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5873 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 05-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Retrospective amendment
• Section: 40A(3); 143(3); 194C; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I S. S. GODARA , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE ITO, WARD - 3(1)(5), ROOM NO. 508, 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, VADODARA - 390007 (APPELLANT /RESPONDENT ) VS SMT. RUPAL PARESH AMIN, PROP. OF SHREEJI TRANSPORT, 46B, KARELIBAUG HOUSING SOCIET Y, KARELIBAUG, VADODARA - 390018 PAN: ADBPA4236C (RESPONDENT /CROSS OBJECTOR ) REVENUE BY : S H RI PRASOON KABRA , SR. D . R. ASSESSEE BY: S H RI SAKAR SHARMA , A.R. DATE OF HEARING : 09 - 02 - 2 018 DATE OF PRONOUNCEMENT : 23 - 03 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL AND ASSESSEE S CROSS OBJECTION FOR A.Y. 2007 - 08 , AR ISE FROM THE ORDER OF THE CIT(A) - 1, VADODARA DATED 29 - 01 - 2016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 196 1; IN SHORT THE ACT . 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(APPEALS) ERRED IN DELETING THE DISALLOWANCE OF RS.52,70,069/ - MADE U/S 40(A|(IA) OF THE ACT. I T A NO . 849 & CO 64 / A HD/ 20 16 A SSESSMENT YEAR 200 7 - 08 I.T.A NO.849 & CO NO. 64 /AHD/20 16 A.Y. 2007 - 08 PAGE NO ITO VS. SMT. RUPAL PARESH AMIN 2 2. THE LD. CIT(A) ERRED IN HOLDING THAT THAT AMENDMENT MADE BY THE FINANCE ACT, 2010 W.E.F. 01.04.2010 IN SECTION 40(A)(IA) OF THE ACT IS HAVING RETROSPECTIVE EFFECT WITHOUT APPRECIATING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF VIRT UAL SOFT SYSTEM LTD. VS CIT 289 ITR 83 (SC) HOLDING THAT IT IS WELL - SETTLED LEGAL POSITION THAT AN AMENDMENT CAN BE CONSIDERED TO BE DECLARATORY AND CLARIFICATORY ONLY IF THE STATUE ITSELF EXPRESSLY AND UNEQUIVOCALLY STATES THAT IT IS A DECLARATORY AND CLA RIFICATORY PROVISION. IF THERE IS NO SUCH CLEAR STATEMENT IN THE STATUE ITSELF, THE AMENDMENT WILL NOT BE CONSIDERED TO BE MERELY DECLATORY OR CLARIFICATORY. 3. THE ASSESSEE HAS FILED RETURN OF INCOME DECLARING INCOME OF RS. 2 , 88 , 700/ - ON 31 ST OCTOBER, 2 007. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) ON 19 TH SEPTEMBER, 2008. ON SCRUTINY, THE ASSESSING OFFICER NOTICED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS PAID AN AMOUNT OF RS. 57,46,145/ - AS T RANSPORT CHARGE TO VARIOUS PERSONS . FROM THE DETAILS OF PAYMENT S TO TRANSPORTERS , THE ASSESSING OFFICER HAS WORKED OUT PAYMENT IN EXCESS OF RS. 20 , 000/ - OR AGGREGATE OF RS. 50 , 000 PAID BY THE ASSESSEE AS UNDER: - SR. NO. NAME OF THE TRANSPORTER AMOUNT P AID FROM 01. 04. 2006 TO 28.02.2007 AMOUNT PAID DURING MARCH, 2007 1 G. THAKORLAL NIL RS. 2,16,947 2 GURUKKRUPA TANSPORT RS. 11,79,847 RS. 27,440 3 JALARAM TRANSPORT RS. 2,60,680 N IL 4 SHIV TRANSPORT RS. 8,49,000 RS. 2,31 ,609 5 V.M. ENTERPRISE RS. 17,02,265 N IL 6 JAY JALARAM TANSPORT RS. 2,78,250 N IL TOTAL RS.52,70,069 RS.4,75,996 TOTAL RS.57,46,065 4. THEREAFTER T HE ASSESSING OFFICER OBSERVED THAT AS P ER SECTION 194C OF THE ACT, THE ASSESSEE IS REQUIRED TO DEDUCT TAX ON THE ABOVE PAYMENT WHILE CR E DITING THE ACCOUTS OF THE PAYEES . THE ASSESSEE HAS FURTHER SUBMITTED THAT T HE HON BLE GUJARAT IN THE CASE OF CIT VS. RANOLI INVE STMENT PVT. LTD. 235 ITR 433 HELD THAT THE STATUTE HAS TAKEN CARE OF THE LIABILITY TO PAY THE TAX BY SPECIFICALLY PROVIDING IN I.T.A NO.849 & CO NO. 64 /AHD/20 16 A.Y. 2007 - 08 PAGE NO ITO VS. SMT. RUPAL PARESH AMIN 3 SECTION 191 THAT THE ASSESSEE WOULD BE LIABLE TO PAY THE TAX DEDUCTIBLE AT SOURCE DIRECTLY IF IT IS NOT S O DEDUCTED. THE ASSESSI NG OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE . THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS VIOLATED THE PROVISION OF SECTION 40(A)(AI) AND DISALLOWED THE CLAIM OF THE ASSESSEE. 5 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE . 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. T HE A SSESSEE HAD PAID AN AMOUNT OF RS. 52,70,069/ - TO 6 TRANSPORTERS BETWEEN THE PERIOD 01.04.2006 TO 28.02.2007 AND HA D ALSO DEDUCTED TDS ON THIS AMOUNT , HOWEVER, THE TDS SO DEDUCTED HAD BEEN DEPOSITED TO THE GOVERNMENT ACCOUNT ON 05.04.2007. THEREFORE , THE AO INVOKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND HELD THIS AMOUNT AS DISALLOWABLE. THE HON'BLE HIGH COUR T OF GUJARAT IN ITS DECISION IN THE CASE OF STANDARD BUILDERS 41 TAXMAN.COM 155 (GUJ) HAS HELD THAT THE AMENDMENT MADE BY THE FINANCE ACT, 2010 W.E.F. 01.04.2010 IN SECTION 40(A)(IA) OF THE IT ACT IS HAVING RETROSPECTIVE EFFECT, AND THEREFORE, IF THE TAX D EDUCTED IS DEPOSITED BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME, THE SAME I S REQUIRED TO BE GIVEN CREDIT IN THE VERY ASSESSMENT YEAR. THE RELEVANT PART OF THE ABOVE CITED DECISION OF THE JURISDICTIONAL HIGH COURT IS REPRODUCED A S UNDER: - ' IT IS NOT IN DISPUTE THAT THE TDS ON VARIOUS EXPENDITURE WAS DEDUCTED BY THE ASSESSEE BUT AN AMOUNT OF RS.30,71,212/ - WAS CREDITED TO THE GOVERNMENT ACCOUNT ON 06/04/2006. THE ASSESSING OFFICER MADE THE ADDITION OF RS.30,71,212/ - IN THE INCOME O F THE ASSESSEE FOR THE RELEVANT YEAR ON THE GROUND THAT THE SAME WAS DEPOSITED BY THE ASSESSEE AFTER EXPIRY OF THE PRESCRIBED TIME LIMIT BUT BEFORE THE DUE DATE OF FILING OF THE RETURN I.E. 31/12/2006. WHILE DELIVERING THE JUDGMENT IN TAX APPEAL NO. 412/20 13 AND ALLIED APPEALS, WE HAVE HELD THAT AMENDMENT UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT BROUGHT OUT BY FINANCE ACT, 2010 WITH EFFECT FROM 01/04/2010 IS HAVING RETROSPECTIVE EFFECT AND, THEREFORE, IF THE TAX DEDUCTED IS DEPOSITED BY THE ASSESSEE BE FORE THE DUE DATE OF FILING THE RETURN, THE SAME IS REQUIRED TO BE GIVEN CREDIT IN THE VERY ASSESSMENT YEAR ' . I.T.A NO.849 & CO NO. 64 /AHD/20 16 A.Y. 2007 - 08 PAGE NO ITO VS. SMT. RUPAL PARESH AMIN 4 7. WE HAVE ALSO NOTICED THAT THE JURISDICTIONAL HON'BLE COURT IN THE CASE OF ASHOK T PATEL 43 TAXMANN.COM 27 (GUJ) HELD THAT AMENDMENT IN SECTION 40 (A)(IA) BY FINANCE ACT, 2010 WOULD APPLY RETROSPECTIVELY . IN VIEW OF THE ABOVE FACTS AND JUDICIAL FINDING WE OBSERVED THAT IF TAX DEDUCTED IS DEPOSITED BY ASSESSEE BEFORE DUE DATE OF FILING RETURN OF INCOME, SAME IS REQUIRED TO BE GIVEN CREDIT IN VERY SAME ASSESSMENT YEAR . THEREFORE , THE ISSUE IS NOW COVERED IN FAVOUR OF THE ASSESSEE BY TH E DECISION OF THE JURISDICTIONAL HIGH COURT AND ACCORDINGLY, WE ARE INCLINED WITH THE DECISION OF THE LEARNED CIT APPEAL DIRECTING THE ASSESSING TO DELETE THE DISALLOWANCE MADE U/S 4 0(A)(IA). THEREFORE THE APPEAL OF THE REVENUE ON THIS ISSUE IS DISMISSED. CROSS OBJECTION NO. 64/AHD/2016 8 . THE ASSESSEE HAS RAISED FOLLOWING GROUND IN CROSS OBJECTION: - 1. THE LD. CIT (A) ERRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF RS. 2,50,000/ - I.E. EQUIVALENT TO 20% OF RS. 12,50,000/ - PAID IN CASH TO THE TRANSPORTERS U/S 40A(3) OF THE ACT. 7. 9. IN THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE PAID BUSINESS EXPENSES IN EXCESS OF RS.20,0 00 OTHERWISE THAN BY AN ACCOUNT PAY CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT. THE ASSESSEE HAS CLAIMED BEFORE THE ASSESSING OFFICER THAT THE PAYMENT HAD BEEN MADE TO THE TRANSPORT PARTIES BY BEARING CHEQUE AS PER THE PERSONAL REQUEST FOR URGENT NEED OF THE PARTIES. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND D ISALLOW ED 20% OF SUCH EXPENSES TO THE AMOUNT OF RS. 2 ,50,000/ - THE LD. CIT(A) HAS SUSTAINED THE AFORESAID ADDITION BY STATING T H AT THE ASSESSEE HAD NOWHERE E XPLAINED AS T O WHY THE PART OF THE PAYMENT WAS MADE IN CASH WHEREAS BALANCE PAYMENT S WERE MADE IN ACCOUNT PAYEE CHEQUE. I.T.A NO.849 & CO NO. 64 /AHD/20 16 A.Y. 2007 - 08 PAGE NO ITO VS. SMT. RUPAL PARESH AMIN 5 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PER USE D THE MATERIAL O N RECORD CAREFULLY. WE FIND FROM THE FACTS ON RECORD THAT T HE ASSESSEE HAS FAILED TO ESTABLISH ANY EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES FOR MAKING PAYMENT IN CASH INSTEAD CROSS CHEQUE . T HE ASSESSEE IS NOT COVE RED BY THE EXCEPTION PROVIDED UNDER RULE 6DD(J) OF THE ACT. THE PROVISION OF RULE 6DD O F THE IT RULE IS REPRODUCED HERE AS UNDER: - ' NO DISALLOWANCE UNDER SUB - SECTION (3) OF SECTION 40A SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSION UNDER SUB - SECTION (3A) OF SECTION 40A WHERE A PAYMENT 59 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 60 IN THE CASES AND CIRCUMSTANCES SPECIFIED HEREUNDER, NAMELY : 61 ( A ) WHERE THE PAYMENT IS MADE TO ( I ) THE RESERVE BANK OF INDIA OR ANY BANKING COMPANY 62 AS DEFINED IN CLAUSE ( C ) OF SECTION 5 OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); ( II ) THE STATE BANK OF INDIA OR ANY SUBSIDIARY BANK 63 AS DEFINED IN SECTION 2 OF THE STATE BANK OF INDIA (SUBSIDIARY BANKS) ACT, 1959 (38 OF 1959); ( III ) ANY CO - OPE RATIVE BANK OR LAND MORTGAGE BANK; ( IV ) ANY PRIMARY AGRICULTURAL CREDIT SOCIETY OR ANY PRIMARY CREDIT SOCIETY AS DEFINED UNDER SECTION 56 OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); ( V ) THE LIFE INSURANCE CORPORATION OF INDIA ESTABLISHED UNDER SECTION 3 OF THE LIFE INSURANCE CORPORATION ACT, 1956 (31 OF 1956); 64 ( B ) WHERE THE PAYMENT IS MADE TO THE GOVERNMENT AND, UNDER THE RULES FRAMED BY IT, SUCH PAYMENT IS REQUIRED TO BE MADE IN LEGAL TENDER 64A ; ( C ) WHERE THE PAYMENT IS MADE BY ( I ) ANY LETTER OF CREDIT ARRANGEMENTS THROUGH A BANK; ( II ) A MAIL OR TELEGRAPHIC TRANSFER THROUGH A BANK; ( III ) A BOOK ADJUSTMENT FROM ANY ACCOUNT IN A BANK TO ANY OTHER ACCOUNT IN THAT OR ANY OTHER BANK; ( IV ) A BILL OF EXCHANGE MADE PAYABLE ONLY TO A BANK; ( V ) THE USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT; ( VI ) A CREDIT CARD; ( VII ) A DEBIT CARD. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE AND CLAUSE ( G ), THE TERM BANK MEANS ANY BANK, BANKING COMPANY OR SOCIETY REFERRED TO IN SUB - CLAUSES ( I ) TO ( IV ) OF CLAUSE ( A ) AND INCLUDES ANY BANK [NOT BEING A BANKING COMPANY 65 AS DEFINED IN CLAUSE ( C ) OF SECTION 5 OF THE BANK ING REGULATION ACT, 1949 (10 OF 1949)], WHETHER INCORPORATED OR NOT, WHICH IS ESTABLISHED OUTSIDE INDIA; 66 ( D ) WHERE THE PAYMENT IS MADE BY WAY OF ADJUSTMENT AGAINST THE AMOUNT OF ANY LIABILITY INCURRED BY THE PAYEE F OR ANY GOODS SUPPLIED OR SERVICES RENDERED BY THE ASSESSEE TO SUCH PAYEE; 67 ( E ) WHERE THE PAYMENT IS MADE FOR THE PURCHASE OF ( I ) AGRICULTURAL OR FOREST PRODUCE; OR ( II ) THE PRODUCE OF ANIMAL HUSBANDRY (INCLUD ING LIVESTOCK, MEAT, HIDES AND SKINS) OR DAIRY OR POULTRY FARMING; OR ( III ) FISH OR FISH PRODUCTS 68 ; OR ( IV ) THE PRODUCTS OF HORTICULTURE OR APICULTURE, I.T.A NO.849 & CO NO. 64 /AHD/20 16 A.Y. 2007 - 08 PAGE NO ITO VS. SMT. RUPAL PARESH AMIN 6 TO THE CULTIVATOR, GROWER OR PRODUCER OF SUCH ARTICLES, PRODUCE OR PRODUCTS; ( F ) WHERE THE PAYMENT IS MADE FOR THE PURCHASE OF THE PRODUCTS MANUFACTURED OR PROCESSED WITHOUT THE AID OF POWER IN A COTTAGE INDUSTRY, TO THE PRODUCER OF SUCH PRODUCTS; 69 ( G ) WHERE THE PAYMEN T IS MADE IN A VILLAGE OR TOWN, WHICH ON THE DATE OF SUCH PAYMENT IS NOT SERVED BY ANY BANK, TO ANY PERSON WHO ORDINARILY RESIDES, OR IS CARRYING ON ANY BUSINESS, PROFESSION OR VOCATION, IN ANY SUCH VILLAGE OR TOWN; ( H ) WHERE ANY PAYMENT IS MADE TO AN E MPLOYEE OF THE ASSESSEE OR THE HEIR OF ANY SUCH EMPLOYEE, ON OR IN CONNECTION WITH THE RETIREMENT, RETRENCHMENT, RESIGNATION, DISCHARGE OR DEATH OF SUCH EMPLOYEE, ON ACCOUNT OF GRATUITY, RETRENCHMENT COMPENSATION OR SIMILAR TERMINAL BENEFIT AND THE AGGREGA TE OF SUCH SUMS PAYABLE TO THE EMPLOYEE OR HIS HEIR DOES NOT EXCEED FIFTY THOUSAND RUPEES; ( I ) WHERE THE PAYMENT IS MADE BY AN ASSESSEE BY WAY OF SALARY TO HIS EMPLOYEE AFTER DEDUCTING THE INCOME - TAX FROM SALARY IN ACCORDANCE WITH THE PROVISIONS OF SECT ION 192 OF THE ACT, AND WHEN SUCH EMPLOYEE ( I ) IS TEMPORARILY POSTED FOR A CONTINUOUS PERIOD OF FIFTEEN DAYS OR MORE IN A PLACE OTHER THAN HIS NORMAL PLACE OF DUTY OR ON A SHIP; AND ( II ) DOES NOT MAINTAIN ANY ACCOUNT IN ANY BANK AT SUCH PLACE OR SH IP; 70 ( 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; ( K ) WHERE THE PAYMENT IS MADE BY ANY PERSON TO HIS AGENT 71 WHO IS REQUIRED TO MAKE PAYMENT IN CASH FOR GOODS OR SERVICES ON BEHALF OF SUCH PERSON; ( L ) WHERE THE PAYMENT IS MADE BY AN AUTHORISED DEALER OR A MONEY CHANGER AGAINST PURCHASE OF FOREIGN CURRENCY OR TRAVELLERS CHEQUES IN THE NORMAL COURS E OF HIS BUSINESS. EXPLANATION. FOR THE PURPOSES OF THIS CLAUSE, THE EXPRESSIONS AUTHORISED DEALER OR MONEY CHANGER MEANS A PERSON AUTHORISED AS AN AUTHORISED DEALER OR A MONEY CHANGER TO DEAL IN FOREIGN CURRENCY OR FOREIGN EXCHANGE UNDER ANY LAW F OR THE TIME BEING IN FORCE.] ' 11 . THE ASSESSEE COULD NOT ESTABLISH THAT HIS CASE IS COVERED BY ANY OF THE EXCEPTION PROVIDED IN THE RULE 6DD OF THE IT RULE. WE OBSERVED A PART FROM THE ABOVE, THE ASSESSEE HAS NOT PLACED ANY MATERIAL WHICH SHOW S THAT THER E WERE A N Y EXIGENCIES WHICH WARRANTED PAYMENT BY NON - ACCOUNT PAYEE CHEQUES . THEREFORE, IT IS CLEAR THAT NONE OF THE CONDITIONS STIPULATED IN RULE 6DD ARE PRESENT HERE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES , WE DO NOT FIND ANY ERROR IN THE DECISION OF LEARNED CIT(A), THE REFOR E , THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS DISMISSED. 12 . IN THE RESULT , APPEAL OF THE REVENUE AND THE C ROSS OBJECTION OF THE ASSESSEE BOTH ARE DISMISSED. SD/ - SD/ - ( S.S. GODARA ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 23 /03 /2018 I.T.A NO.849 & CO NO. 64 /AHD/20 16 A.Y. 2007 - 08 PAGE NO ITO VS. SMT. RUPAL PARESH AMIN 7 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,