ITO Ward IX (1), CHENNAI V. B.Saravanan, CHENNAI

ITA 9/CHNY/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7103 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: V SUBBARAYAN
• Keywords: Non-deduction of tax
• Section: 40A(3); 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ' $ % , & ' BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T.A.NO.9/MDS/2013 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER, WARD-IX(1), CHENNAI. VS MR. B.SARAVANAN, PROP. M/S. SHRIPAL IMPEX, 231/111, LINGHI CHETTY STREET, CHENNAI-600 001. PAN: APSPS4200B ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.DAS GUPTA, JCIT /RESPONDENT BY : MR. V.SUBBARAYAN, A.R. / DATE OF HEARING : 21 ST JULY, 2014 /DATE OF PRONOUNCEMENT : 8 TH AUGUST, 2014 / O R D E R PER CHALLA NAGENDRA PRASAD , JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-IX, CHENNAI DA TED 28.09.2012 FOR THE ASSESSMENT YEAR 2009-10. 2. THE FIRST ISSUE IN THE APPEAL OF THE REVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELET ING ADDITION MADE UNDER SECTION 40A(3) OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE APPRECIATED THE FACT THAT DURING THE APPEAL PROCEED INGS NO 2 ITA NO.9 /MDS/2013 EVIDENCE WAS FILED BY THE ASSESSEE TO SHOW THAT ALL THE PAYMENTS MADE WERE BELOW ` 20,000/-. THE ASSESSEE, PROPRIETOR OF SHRIPAL IMPEX ENGAGED IN EXPORT OF RE ADYMADE GARMENTS FILED RETURN OF INCOME DECLARING LOSS OF ` 10,63,040/-. ASSESSMENT WAS COMPLETED UNDER SECTIO N 143(3) OF THE ACT ON 29.12.2011DETERMINING INCOME A T ` 1,56,13,215/-. WHILE COMPLETING THE ASSESSMENT THE ASSESSING OFFICER MADE DISALLOWANCE OF ` 1,65,44,149/- UNDER SECTION 40A(3) OF THE ACT ON THE GROUND THAT ASSESSEE HAS MADE CASH PAYMENTS OVER AND ABOVE ` 20,000/- AND ABOVE TOWARDS PURCHASES. ON APPEAL, COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE DISALLOWANCE MADE UNDER SECTION 40A(3) OF THE ACT AGAINST WHICH THE REVENU E IS IN APPEAL BEFORE US. 3. DEPARTMENTAL REPRESENTATIVE REFERRING TO THE ASSESSMENT ORDER SUBMITS THAT THERE WAS AN ENQUIRY BY INVESTIGATION UNIT AND DURING THE ENQUIRY SUMMONS W ERE ISSUED TO THE ASSESSEE AND A STATEMENT WAS RECORDED . IN THE COURSE OF ENQUIRY SWORN STATEMENT WAS RECORDED AND THE ASSESSEE IN ANSWERING TO QUESTION NO.9 STATED THAT OUT OF 3 ITA NO.9 /MDS/2013 ` 2,91,62,538/- 10% I.E. 30 LAKHS WOULD HAVE BEEN MAD E BY MAKING CHEQUE PAYMENTS. BALANCE AROUND ` 2.6 CRORES PURCHASES ARE MADE BY CASH PAYMENTS. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSING OFFICER ON V ERIFICATION OF ACCOUNTS AND PERUSAL OF CASH BOOK, BANK PASSBOOK AND BANK STATEMENT, PURCHASE LEDGER ACCOUNT CAME TO KN OW THAT OUT OF TOTAL PURCHASES OF ` 2,91,62,538/- ASSESSEE MADE PAYMENTS THROUGH CHEQUES/BANK TO THE EXTENT OF ` 58,85,836/-. FURTHER OUT OF BALANCE PURCHASE OF ` 2,32,76,702/- ASSESSEE MADE CASH PAYMENTS OR THROUG H BEARER CHEQUES TO THE EXTENT OF ` 1,65,44,149/- AND BALANCE PURCHASES OF ` 67,32,553/- ARE OUTSTANDING AND WERE SHOWN AS SUNDRY CREDITORS AS ON 31.3.2009. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSEE HAS NOT PRO DUCED ANY EVIDENCE FOR THE CASH PAYMENTS MADE TOWARDS PURCHASES TO THE TUNE OF ` 1,65,44,149/- AND NO EVIDENCES HAVE BEEN FILED SHOWING THAT ALL THE PAYMENTS MADE ARE BELOW ` 20,000/-. REFERRING TO THE ASSESSMENT ORDER, DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITS THAT A SSESSING OFFICER OBSERVED THAT ASSESSEES BOOKS OF ACCOUNTS ARE NOT AUDITED BY AN AUDITOR UNDER SECTION 44AB OF THE ACT EVEN 4 ITA NO.9 /MDS/2013 THOUGH THE TURNOVER EXCEEDED ` 40,00,000/-. THEREFORE, IN THE ABSENCE OF ANY AUDIT REPORT AND DEPENDING UPON LEDG ER ACCOUNTS AND IN THE ABSENCE OF MATERIAL EVIDENCES F OR CASH PAYMENTS, IT IS NOT POSSIBLE TO SAY THAT THESE PAYM ENTS ARE ALL MADE AT BELOW ` 20,000/- AND THEREFORE, THE ASSESSING OFFICER DISALLOWED THE SAID CASH PAYMENTS TO THE T UNE OF ` 1,65,44,149/- UNDER SECTION 40A(3) OF THE ACT. DEPA RTMENTAL REPRESENTATIVE SUBMITS THAT IN SUCH CIRCUMSTANCES COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN DELETING THE DISALLOWANCE BASED ON THE WRITTEN SUBM ISSIONS AND THE BANK ACCOUNT COPIES FURNISHED BY THE AR OF THE ASSESSEE BEFORE HIM STATING THAT ASSESSING OFFICER HAS NOT GONE THROUGH THE DETAILS AT THE TIME OF SCRUTINY A SSESSMENT. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT COMMISSIO NER OF INCOME TAX (APPEALS) SHOULD HAVE GIVEN AN OPPORTUNI TY AND SHOULD HAVE CALLED FOR REMAND REPORT BEFORE DECIDIN G THE ISSUE BASED ON THE MATERIALS FURNISHED BY THE ASSES SEE IN THE COURSE OF APPEAL PROCEEDINGS. 4. COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING TH E ADDITION AND HE SUBMITS THAT ALL THE DETAILS WERE FURNISHED 5 ITA NO.9 /MDS/2013 BEFORE THE ASSESSING OFFICER . REFERRING TO PAGES 2 8 TO 49 OF THE PAPER BOOK FILED BEFORE US, COUNSEL FOR THE ASS ESSEE SUBMITS THAT ASSESSEE HAS FILED RETURN OF INCOME AL ONG WITH TAX AUDIT REPORT IN FORM 3CB WHICH IS AT PAGE 38 O F THE PAPER BOOK. HE THEREFORE SUBMITS THAT OBSERVATIONS OF THE ASSESSING OFFICER THAT THERE IS NO AUDIT REPORT UND ER SECTION 44AB IS MISPLACED. COUNSEL FURTHER SUBMITS THAT DET AILS OF PAYMENTS MADE TOWARDS PURCHASES AND DETAILS OF BAN K ACCOUNTS WERE FURNISHED BEFORE THE ASSESSING OFFICE R TO PROVE THAT PURCHASES ARE GENUINE. 5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSME NT DISALLOWED CASH PURCHASES TO THE EXTENT OF ` 1,65,44,149/- ON THE GROUND THAT ASSESSEE HAS NOT PRODUCED ANY CORROBORATIVE EVIDENCE TO SHOW THAT CASH PURCHASES MADE WERE ALL LESS THAN ` 20,000/- AND NO VOUCHERS WERE PRODUCED AND NO REPORT UNDER SECTION 44AB OF THE ACT WAS FUR NISHED. BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS), TH E ASSESSEE SUBMITTED THAT DETAILS REGARDING CASH PURC HASES WERE FURNISHED BEFORE THE ASSESSING OFFICER, THE AU DIT REPORT 6 ITA NO.9 /MDS/2013 WAS ALSO FURNISHED ALONG WITH RETURN OF INCOME. BEF ORE US, REFERRING TO PAGE 28 TO 49 OF THE PAPER BOOK WHICH IS COPY OF RETURN AND 44AB REPORT COUNSEL SUBMITS THAT RETURN ALONG WITH AUDIT REPORT WAS FURNISHED AND DETAILS REGARDI NG CASH PURCHASES WERE FURNISHED BEFORE THE ASSESSING OFFIC ER . ON HEARING BOTH THE PARTIES, WE ARE OF THE CONSIDERED VIEW THAT THIS ISSUE HAS TO BE RE-EXAMINED AFRESH IN DETAIL WITH REFERENCE TO THE FINDINGS GIVEN BY THE ASSESSING OF FICER AND ALSO SUBMISSIONS OF THE ASSESSEES COUNSEL AND ALS O WITH REFERENCE TO EVIDENCES PRODUCED BEFORE US. IN THE CIRCUMSTANCES, WE REMIT THIS ISSUE TO THE FILE OF T HE ASSESSING OFFICER, WHO SHALL EXAMINE THE ISSUE AFRESH IN ACCO RDANCE WITH LAW, AFTER PROVIDING ADEQUATE OPPORTUNITY TO T HE ASSESSEE. 6. THE NEXT ISSUE IN THE GROUNDS OF APPEAL OF THE R EVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE DISALLOWANCE MADE UNDER SECTION 40(A)( IA) OF THE ACT ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE BY THE ASSESSEE IN RESPECT OF TRANSPORT CHARGES. THE ASSES SING OFFICER DISALLOWED ` 88,696/- REPRESENTING TRANSPORT CHARGES 7 ITA NO.9 /MDS/2013 PAID BY THE ASSESSEE ON THE GROUND THAT TDS WAS NOT DEDUCTED BY THE ASSESSEE AND THEREFORE THEY ARE DIS ALLOWED INVOKING PROVISIONS OF SECTION 40(A)(IA) OF THE ACT . ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISION OF THE SPECIAL BENCH OF THIS TRIBUNAL IN T HE CASE OF MERILYN SHIPPING AND TRANSPORT VS. ADDITIONAL CIT HELD THAT SINCE THE PAYMENTS WERE NOT OUTSTANDING AND THEY WE RE ALL PAID BEFORE THE END OF ACCOUNTING YEAR, NO DISALLOW ANCE UNDER SECTION 40(A)(IA) IS WARRANTED. 7. THE DEPARTMENTAL REPRESENTATIVE RELIED ON THE O RDER OF THE ASSESSING OFFICER WHEREAS COUNSEL FOR THE A SSESSEE RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME T AX (APPEALS). 8. ON HEARING BOTH THE PARTIES AND ON A PERUSAL OF THE ORDERS OF LOWER AUTHORITIES, WE ARE OF THE VIEW THA T THIS MATTER SHOULD BE EXAMINED BY THE ASSESSING OFFICER IN THE LIGHT OF THE LATEST DECISIONS OF VARIOUS HIGH COURTS ON THIS ISSUE. THUS, WE REMIT THIS ISSUE ALSO BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE IT AFRESH IN THE LIGHT OF THE LATEST 8 ITA NO.9 /MDS/2013 DECISIONS OF VARIOUS HIGH COURTS, AFTER PROVIDING A DEQUATE OPPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY , THE 8 TH DAY OF AUGUST, 2014 AT CHENNAI. SD/- SD/- ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDR A PRASAD ) . ( ' )* ) ACCOUNTANT MEMBER / , JUDICIAL MEMBER/ ) , ) /CHENNAI, - /DATED, 8 TH AUGUST, 2014 SOMU /0 10 /COPY TO: 1. APPELLANT 2. /RESPONDENT 3. 2 () /CIT(A) 4. 2 /CIT 5. 0 6 /DR 6. /GF .