Sanjaya Kumar Nanda, Sundergarh V. ITO, Jharsuguda

ITA 86/CTK/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3839 (ITAT-CUTTACK)
• Duration Of Justice: 2 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 25-04-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 27-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: M UDAYAPURIAB AGARWAL
• Keywords: Depreciation
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH , CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND KULDIP SINGH JUDICIAL MEMBER ITA NO. 86/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 SANJAY KUMAR NANDA, M/S. MATARANI TRANSPORT, MISSION CHOWK, SUNDARGARH VS. ITO, WARD - 1, JHARSUGUDA PAN/GIR NO. ACVPN 1075 D (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI M.UDAYAPURIA/B.AGARWAL, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 25 /04/ 2017 DATE OF PRONOUNCEMENT : 18 /05 / 2017 O R D E R PER N.S.SAINI, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 28.11.2014 FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. IN GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER DISALLOWING RS.11,28,518/ - , RS.14,65,333/ - AND RS.14,08,153/ - ALLEGING VIOLATION OF SECTION 40A(3) OF THE ACT FOR PAYMENTS MADE TO TRUCK OWNERS WITHIN LIMITS OF R S.20,000/ - . 2 ITA NO. 86/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 3. THE BRIEF FACTS OF THE CAS E ARE THAT THE ASSESSING OFFICER, ON VERIFICATION OF BOOKS OF ACCOUNT, OBSERVED THAT THE ASSESSEE HAD PAID TRANSPORTATION PAYMENT OF RS.11,28,518/ - TO M/S. GAYATRI TRANSPORT, RS.14,65,333/ - TO SRI BHAWANI PRASAD MAJHI AND RS.14,08,153/ - TO SUB - CONTRACTOR M/S. YKGN TRANSPORT VIOLATING THE PROVISIONS OF SECTION 40(3) OF THE ACT. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THE SAME WILL NOT BE DISALLOWED. IN REPLY, IT WAS SUBMITTED BY THE ASSESSEE THAT THE ASSESSEE IS IN THE BUSINESS OF TRANSPORTAT ION OF COAL FROM MAHANADI COALFIELDS LTD., TO DIFFERENT PLANTS OF JHARSUGUDA, SUNDARGARH. THE MODUS OPERANDI OF THIS BUSINESS IS THAT LOT OF SMALL TRUCK OWNERS AND TRANSPORTERS ARE WORKING UNDER BIG TRANSPORTER. THESE SMALL TRANSPORTERS USED TO TRANSPORT MATERIAL ON BEHALF OF BIG TRANSPORTER AND SUBMIT BILLS TO THEM GIVING TRUCK WISE DETAILS. THE BIG TRANSPORTER AFTER GETTING PAYMENT FROM PARTY DIRECTLY PAY TO TRUCK OWNERS AND DEBIT THE ACCOUNT OF THESE SMALL TRANSPORTER. THE ASSESSING OFFICER DID NOT AC CEPT THE EXPLANATION OF THE ASSESSEE AND DISALLOWED DEDUCTION OF RS.11,28,518/ - , RS.14,65,333/ - AND RS.14,08,153/ - ALLEGING VIOLATION OF SECTION 40A(3) OF THE ACT FOR PAYMENTS MADE TO TRUCK OWNERS MORE THAN THE LIMITS OF RS. .20,000/ - . 4. ON APPEAL, THE CI T(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. BEFORE US, LD A.R. OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND RELIED ON THE DECISION OF HONBLE GUJARAT 3 ITA NO. 86/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 HIGH COURT IN THE CASE OF ANUPAMA TE LESERVICES VS ITO (2014) 268 CTR (GUJ) 121, WHEREIN, IT HAS BEEN HELD THAT TH E ASSESSEE WAS COMPELLED TO MAK E CASH PAYMENT ON ACCOUNT OF PECULIAR SITUATION ON INSISTENCE UPON BY THE PRINCIPAL AND GENUINENESS AND IDENTITY OF THE PAYEE NOT BEING IN DISPUTE, THE DISALLOWA NCE U/S.40A(3) OF THE ACT WAS NOT SUSTAINABLE. HE ALSO RELIED ON THE DECISION OF CUTTACK BENCH OF THIS TRIBUNAL IN THE CASE OF VEER GHESE JOY GEE VS ITO IN ITA NO.28/CTK/2014 FOR ASSESSMENT YEAR 2009 - 2010 ORDER DATED 16.11.2016, WHEREIN, THE TRIBUNAL HAS DELETED THE DISALLOWANCE MADE U/S.40A(3) OF THE ACT ON SIMILAR FACTS AND CIRCUMSTANCES. 6. LD D.R. RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF TRANSPORTING COAL FROM MAHANADI COALFIELDS LTD., TO DIFFERENT PLANTS OF JHARSUGUDA, SUNDARGARH. THE MODUS OPERANDI OF THIS BUSINESS WAS THAT LOT OF SMALL TRUCK OWNERS AND TRANSPORTERS WERE WORKING UNDE R BIG TRANSPORTER AND UNDER INSTRUCTION OF BIG TRANSPORTER, THE SMALL TRANSPORTERS USED TO TRANSPORT THE MATERIALS AND SUBMIT BILLS TO THEM GIVING TRUCK WISE DETAILS . THE CONTENTION OF THE LD A.R. OF THE ASSESSEE IS THAT THE TRUCKS OWNERS INSISTED CASH PA YMENT DURING TRAN SPORTATION. T HE HONBLE GUJARAT HIGH COURT IN THE CASE OF ANUPAMA TELESERVICES VS ITO 2014) 268 CTR (GUJ) 121, HAS HELD THAT WHEN THE 4 ITA NO. 86/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 ASSESSEE WAS COMPELLED TO MAKE CASH PAYMENT ON ACCOUNT OF PECULIAR SITUATION ON INSISTENCE UPON BY THE PRINCIPAL AND GENUINENESS AND IDENTITY OF THE PAYEE NOT BEING IN DISPUTE, THE DISALLOWANCE U/S.40A(3) OF THE ACT WAS NOT SUSTAINABLE. THE CONTENTION O F THE A.R. OF THE ASSESSEE IS T HAT ALL THE PAYMENTS MADE ARE ACCOUNTED FOR BY THE ASSESSEE IN ITS BOOKS OF ACCOUNT. WE FIND THAT T HE GENUINENESS OF THE PAYMENT MADE OR THE EXPENDITURE INCURRED BY THE ASSESSEE BY MAKING SUCH PAYMENT IS NOT IN DISPUTE OR DE BATE. THEREFORE, THE DECISION OF HONBLE GUJRAT HIGH COURT IN THE CASE OF ANUPAMA TELESERVICES(SUPRA) IS SQUARELY APPLICABLE TO THE FACTS OF THE CASE. THEREFORE, THE LD CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS. RS.11,28,518/ - , RS.14,65,3 33/ - AND RS.14,08,153/ - BEING PAYMENTS WERE MADE TO DIFFERENT TRUCK - OWNERS U/S.40A(3) OF THE AC T. WE , THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AN D DELETE THE DISALLOWANCE OF RS.RS.11,28,518/ - , RS.14,65,333/ - AND RS.14,08,153/ - U /S.40A(3) AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE . 8. GROUND NO.2 IS DIRECTED AGAINST THE ORDER OF THE CIT(A) IN CONFIRMING THE PART DISALLOWANCE OF DEPRECIATION OF RS.1,09,270/ - ALLEGING VIOLATION OF SECTION 40A(3) OF THE ACT. 9. FROM A BARE PERUSAL OF THE ORDER OF THE CIT(A), WE FIND THAT THIS GROUND DOES NOT ARISE OUT OF THE ORDER OF THE CIT(A) AND, THER EFORE, THIS GROUND OF APPEAL OF THE ASSESSEE IS DISMISSED. 5 ITA NO. 86/CTK/2015 ASSESSMENT YEAR : 2010 - 2011 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRO NOUNCED IN THE OPEN COURT ON 18 /05 /2017 IN THE PRESENCE OF PARTIES. (KULDIP SINGH) ( N.S SAINI) JUDICIAL MEMBER A CCOUNTANT MEMBER CUTTACK; DATED 18 /05 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : SANJAY KUMAR NANDA, M/S. MATARANI TRANSPORT, MISSION CHOWK, SUNDARGARH 2. THE RESPONDENT. ITO, WARD - 1, JHARSUGUDA 3. THE CIT(A) CUTTACK 4. PR.CIT , SAMBALPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//