Calcutta South Transport Co., Kolkata V. I.T.O.Ward-56(1), Kolkata

ITA 851/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7083 (ITAT-KOLKATA)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 02-01-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 22-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MANISH TIWARI
• Keywords: Set aside
• Section: 40A(3); 133A; 2

Judgement Text

ITA NO. 851/KOL/2019 ASSESSMENT YEAR: 2011-2012 CALCUTTA SOUTH TRANSPORT CO., KOLKATA 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT I.T.A. NO. 851/KOL/2019 ASSESSMENT YEAR: 2011-2012 CALCUTTA SOUTH TRANSPORT CO.,...................... ..........................APPELLANT 21A, SAGAR DUTTA LANE, 3 RD FLOOR, TIRITY BAZAR, KOLKATA-700073 [PAN: AAGFC8448Q] -VS.- INCOME TAX OFFICER,................................ ................................RESPONDENT WARD-56(1), KOLKATA, 3, GOVERNMENT PLACE WEST, KOLKATA-700001 APPEARANCES BY: SHRI MANISH TIWARI, FCA, FOR THE APPELLANT SHRI JAYANTA KHANRA, JCIT, SR. D.R., FOR THE RESPON DEN T DATE OF CONCLUDING THE HEARING : JANUARY 02, 2020 DATE OF PRONOUNCING THE ORDER : FEBRUARY 05, 2020 O R D E R THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-12, KOLKATA DA TED 03.01.2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATES TO THE DISALLOWANCE OF RS.15,84,600/- MADE BY THE ASSESSING OFFICER AND CO NFIRMED BY THE LD. CIT(APPEALS) UNDER SECTION 40A(3) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF TRANSPORTATION. THE RETU RN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 29.09.2 011 DECLARING TOTAL INCOME OF RS.11,68,805/-. AS REVEALED DURING THE CO URSE OF SURVEY CARRIED OUT UNDER SECTION 133A OF THE INCOME TAX ACT, 1961, THE ASSESSEE-FIRM HAD MADE PAYMENTS IN CASH EXCEEDING RS.35,000/- ON ACCOUNT OF TRANSPORTATION CHARGES AGGREGATING TO RS.15,84,600/ - DURING THE YEAR UNDER CONSIDERATION. SINCE THE SAID PAYMENTS WERE H IT BY THE PROVISIONS ITA NO. 851/KOL/2019 ASSESSMENT YEAR: 2011-2012 CALCUTTA SOUTH TRANSPORT CO., KOLKATA 2 OF SECTION 40A(3) OF THE ACT, THE ASSESSEE WAS REQU IRED TO SHOW-CAUSE AS TO WHY THE EXPENDITURE OF RS.15,84,600/- SHOULD NOT BE DISALLOWED BY INVOKING THE SAID PROVISION. IN REPLY, THE FOLLOWIN G EXPLANATION WAS OFFERED BY THE ASSESSEE:- THE ASSESSEE-FIRM IS TRANSPORT CONTRACTOR. IT CARR IES GOODS FROM KOLKATA TO VARIOUS PARTS OF SOUTH INDIA INCLUDING SOME REMOTE BRANCHES. THE AVERAGE FREIGHT CHARGES FROM KOLKATA TO SOUTH INDIA IS RS.45,000.00 . THE TRUCK DRIVER CARRIES THE GOODS FROM KOLKATA TO SOUT H INDIA RUNNING APPROXIMATELY 2000 KILOMETER. THE ASS ESEE HAS TO MAKE CASH PAYMENT TO TRUCK DRIVER FOR MEETIN G TOWARDS EXPENSES LIKE TOLL TAX, REPAIRING CHARGES, FUEL COST ETC. AS THE TRUCK DRIVER DOES NOT ACCEPT DRAFT/CHEQ UE AS THEY DO NOT HAVE ANY BANK ACCOUNT. THEY UTILIZE MAX IMUM FREIGHT AMOUNT DURING JOURNEY FROM KOLKATA TO VARIO US PARTS OF SOUTH INDIA. THE ASSESSEE WOULD NOT HAVE M ADE CASH PAYMENT TO TRUCK DRIVER IN COURSE OF SHORT DESTINATION. THE ASSESSEE IS HAVING BRANCH IN SOUTH INDIA AND IT HAS NO OPTION BUT TO MAKE THE FREIGHT PAYMEN T IN CASH. THE INCOME TAX RULES STATES THAT THE ASSESSEE CAN MAKE PAYMENT IN CASH TO TRUCK DRIVER WHO DO NOT MAINTAIN ANY BANK ACCOUNT. THE FREIGHT PAYMENT EXCEEDING RS.35,000/- IS MADE TO TRUCK DRIVER WHO A RE RESIDING IN SOUTH INDIA CARRYING GOODS FROM SOUTH I NDIA TO KOLKATA AND CARRYING GOODS FROM KOLKATA TO SOUTH INDIA ON RETURN TRIP. THE TRUCK DRIVERS DO NOT MAIN TAIN ANY BANK ACCOUNT AS THEY ARE ON THE ROAD THROUGH EN TIRE JOURNEY FROM KOLKATA TO SOUTH INDIA. THEY RECEIVED CASH EXCEEDING RS.35,000/- TO MAINTAIN ROAD EXPENSES LIK E TOLL TAX, ENTRY TAX REPAIRING CHARGES AND FUEL EXPENSES. THE TRUCK DRIVER HAS TO MAKE THESE EXPENSES IN CASH. THEREFORE, THE ASSESESE FIRM FAILS UNDER EXCEPTIONA L CATEGORY UNDER RULES 6DD. THE PROVISION OF RULE 6DD(5)(B) STATES THAT NO DISALLOWANCE SHALL BE MADE IN RESPECT OF PAYMENT MADE IN THE ASSESSEE TO TRUCK DR IVERS WHO DO NOT HAVE ANY BANK ACCOUNT. THEY ARE CARRYING TRUCK ON THE ROAD DURING ENTIRE JOURNEY. YOU ARE REQUESTED TO KINDLY REFER CIRCULAR NO. 34 DATED 5.3 .1970 WHICH CLEARLY SAYS THAT PAYMENT OF RREIGHT CHARGES EXCEEDING RS.35000/- IN CASH UNDER EXCEPTIONAL CIRCUMSTANCES SHALL NOT BE DISALLOWED. THIS EXCEPTI ONAL CIRCUMSTANCES CASE WAS DECIDED IN FAVOUR OF THE ASS ESSEE IN CASE OF CIT VS.- AHMED HUSSAIN (1984) 150 ITR 373(ALL.). THE ASSESSEE FIRM IS FALLING UNDER EXCEP TIONAL CATEGORY AND THEREFORE THE PROVISION OF SECTION 40A (3) SHALL NOT BE APPLICABLE IN CASE OF THE ASSESSEE FIR M. ITA NO. 851/KOL/2019 ASSESSMENT YEAR: 2011-2012 CALCUTTA SOUTH TRANSPORT CO., KOLKATA 3 3. THE EXPLANATION OF THE ASSESSEE AS ABOVE WAS NOT FOUND ACCEPTABLE BY THE ASSESSING OFFICER. ACCORDING TO HIM, THE PAY MENTS WERE MADE BY THE ASSESSEE REGULARLY TO THE TRUCK OWNERS AND NOT TO THE TRUCK DRIVERS AND IT WAS FOR THE TRUCK OWNERS TO TAKE CARE OF THE EXPENSES MADE BY THE DRIVERS DURING THE TYPE OF JOURNEY AND NOT FOR THE ASSESSEE. HE, THEREFORE, INVOKED THE PROVISIONS OF SECTION 40A(3) AND MADE A DISALLOWANCE OF RS.15,84,600/-. ON APPEAL, THE LD. CIT(APPEALS) CON FIRMED THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER AS THE S UBMISSION REITERATED ON BEHALF OF THE ASSESSEE IN SUPPORT OF ITS CASE WA S NOT FOUND ACCEPTABLE BY HIM. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEA LS), THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. I HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS SUBMITTED THAT ALL THE PAYMENTS IN CASH WERE MADE B Y THE ASSESSEE THROUGH AGENT M/S. JAIN RELIANCE COMPANY AND THE SA ME, THEREFORE, WERE COVERED BY CLAUSE (K) OF RULE 6DD AS HELD BY THIS T RIBUNAL IN THE CASE OF DCIT VS.- MARUTI FREIGHT MOVERS LIMITED (ITA NO. 4 82/KOL/2014 DATED 05.04.2017) AND IN THE CASE OF KRISHNA PRASAD POTNU RI VS.- ITO (ITA NO. 450/KOL/2018 DATED 03.08.2018). THE LD. D.R., ON TH E OTHER HAND, HAS CONTENDED THAT THIS STAND NOW TAKEN ON BEHALF OF TH E ASSESSEE WAS NEVER TAKEN BY THE ASSESSEE EITHER BEFORE THE ASSESSING O FFICER OR BEFORE THE LD. CIT(APPEALS). HE HAS CONTENDED THAT AN OPPORTUNITY MAY, THEREFORE, BE GIVEN TO THE ASSESSING OFFICER TO VERIFY THE SAME. I FIND MERIT IN THE CONTENTION OF THE LD. D.R. THE IMPUGNED ORDER OF TH E LD. CIT(APPEALS) ON THIS ISSUE IS ACCORDINGLY SET ASIDE THE MATTER IS R ESTORED TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTE R VERIFYING THE NEW STAND TAKEN ON BEHALF OF THE ASSESSEE IN THE LIGHT OF THE DECISIONS OF THE TRIBUNAL IN THE CASE OF M/S. MARUTI FREIGHT MOVERS LIMITED (SUPRA) AND KRISHNA PRASAD POTNURI (SUPRA). ITA NO. 851/KOL/2019 ASSESSMENT YEAR: 2011-2012 CALCUTTA SOUTH TRANSPORT CO., KOLKATA 4 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 05, 2020. SD/- (P.M. JAGTAP) VICE-PR ESIDENT) KOLKATA, THE 5 TH DAY OF FEBRUARY, 2020 COPIES TO : (1) CALCUTTA SOUTH TRANSPORT CO., 21A, SAGAR DUTTA LANE, 3 RD FLOOR, TIRITY BAZAR, KOLKATA-700073 (2) INCOME TAX OFFICER, WARD-56(1), KOLKATA, 3, GOVERNMENT PLACE WEST, KOLKATA-700001 (3) COMMISSIONER OF INCOME TAX (APPEALS)-12, K OLKATA; (4) COMMISSIONER OF INCOME TAX- , KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.