GAYATRI JENA, BALASORE V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE, BALASORE, BALASORE

ITA 85/CTK/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2694 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 27-02-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 154; 40A(3)

Judgement Text

sआयकर अऩीऱीय अधधकरण, “एस.एम.सी” न्यायऩीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH CUTTACK श्री जाजज माथन, न्याययक सदस्य के समक्ष । BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER आयकर अऩीऱ सं/ITA No.85/C TK/2024 (ननधाारण वषा / Asses s m ent Year :2017-2 018) Gayatri Jena, At: Santia, PO: Jaleswar, District : Balasore-756032 Vs ACIT, Circle Balasore, Balasore PAN No. :AJJPJ 7839 C (अऩीऱाथी /Appellant) .. (प्रत्यथी / Respondent) ननधााररती की ओर से /Assessee by : Shri P.K.Mishra, Advocate राजस्व की ओर से /Revenue by : Shri S.C.Mohanty, Sr. DR स ु नवाई की तारीख / Date of Hearing : 30/04/2024 घोषणा की तारीख/Date of Pronouncement : 30/04/2024 आदेश / O R D E R This is an appeal filed by the assessee against the order of the ld CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 09.02.2024 in DIN & Order No.ITBA/APL/S/250/2023-24/1060729557(1) for the assessment year 2014-2015. 2. The only issue raised in this appeal is with regard to the disallowance made by the AO u/s.40A(3) of the Act by alleging that the assessee has made the cash payments to the various persons, is found recorded in the cash book. Ld. CIT(A) dismissed the appeal of the assessee by observing that these are the entry in the books of accounts where double entry system is followed by the assessee and against every payment there is an expenditure in the books of accounts of the assessee, therefore, this contention of the assessee is not correct. ITA No.85/CTK/2024 2 3. Before us, ld. AR of the assessee submitted that these are the payments made to various persons as the assessee is running a petrol pump and during the course of regular business, on the request of the certain parties, advances were given to their drivers etc. which was recovered later on. Since it is neither a revenue expenditure nor capital expenditure nor the assessee claimed any expenses in profit and loss account of any such payment, therefore, the provisions of Section 40A(3) of the Act do not apply to the present case of the assessee. Accordingly, the ld. AR prayed that the addition so made by the AO and as confirmed by the ld. CIT(A) deserves to be deleted. 4. Per Contra, ld. Sr. DR supported the order of both the lower authorities and stated that in double entry system, there must be a nominal account, where the entry of expenses should be made against which these cash payments have been made and finally in the books of accounts, expenses was effected with this cash payments, therefore, the provisions of Section 40A(3) of the Act is completely applicable to the case of the assessee, and prayed for upholding the orders of the lower authorities. 5. I have considered the rival submissions. From perusal of the assessment order, it is seen that the AO himself has accepted that the payments were made to the various parties as recorded in the cash book of the assessee and no expenses account was debited. Merely because the payments were made in the cash as recorded in the cash book which seems to be in the nature of advances, no provisions under Section ITA No.85/CTK/2024 3 40A(3) of the Act are attracted. The provisions of Section 40A(3) of the Act reads as under:- Expenses or payments not deductible in certain circumstances '40A. (1) ******** (2) ********* (3) Where the assessee incurs any expenditure in respect of, which payment is made, after such date (not being later than the 31st day of March, 1969) as may be specified in this behalf by the Central Government by notification in the Official Gazette, in a sum exceeding two thousand five hundred rupees otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, such expenditure shall not be allowed as a deduction: Provided that where an allowance has been made in the assessment for any year not being an assessment year commencing prior to the 1st day of April, 1969 in respect of any liability incurred by the assessee for any expenditure and subsequently during any previous year the assessee makes any payment in respect thereof in a sum exceeding two thousand five hundred rupees otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, the allowance originally made shall be deemed to have been wrongly made and the Income-tax Officer may recompute the total income of the assessee for the previous year in which such liability was incurred and make the necessary amendment, and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the assessment year next following the previous year in which the payment was so made: Provided further that no disallowance under this sub-section shall be made where any payment in a sum exceeding two thou-sand five hundred rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed 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.'. 6. From perusal of the above provision of Section 40A (3) of the Act, it is evident that the above provision is applicable only on the expenditure in respect of which payment made to an extent of Rs.20,000/- and claimed in profit and loss account. In this case, admittedly no expenditure is claimed against such cash payments, therefore, the provisions of Section 40A(3) of the Act, cannot be applicable in the present case of the assessee. In view of these facts and circumstances of the case, the ITA No.85/CTK/2024 4 disallowance made by the ld. AO and as confirmed by the ld. CIT(A) is hereby deleted. 7. In the result, appeal of the assessee is allowed. Order dictated and pronounced in the open court on 30/04/2024. Sd/- (जाजज माथन) (GEORGE MATHAN) न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 30/04/2024 Prakash Kumar Mishra, Sr.P.S. आदेश की प्रनतलऱपऩ अग्रेपषत/Cop.y of the Order forwarded to : आदेशान ु सार/ BY ORDER, (Assistant Registrar) आयकर अऩीऱीय अधधकरण, कटक/ITAT, Cuttack 1. अऩीऱाथी / The Appellant- Gayatri Jena, At: Santia, PO: Jaleswar, District : Balasore-756032 2. प्रत्यथी / The Respondent- ACIT, Circle Balasore, Balasore 3. आयकर आय ु क्त(अऩीऱ) / The CIT(A), 4. आयकर आय ु क्त / CIT 5. ववभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR, ITAT, Cuttack 6. गार्ज पाईऱ / Guard file. सत्यावऩत प्रयत //True Copy//