SHRI Arun Kumar Yadav, Khargone V. THE ACIT, Khandwa

ITA 921/IND/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5802 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 05-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N AGRAWAL
• Assessee Lawyers: MOHD JAVED DR
• Section: 40A(3)

Judgement Text

SHRI ARUN KUMAR YADAV ITA NO. 921/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIB UNAL, INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER .../ I.T.A. NO. 921/IND/2016 / ASSESSMENT YEAR: 2012-13 ARUN KUMAR YADAV KHARGONE PAN AAGPY 8532M :: / APPELLANT ASSTT. COMMR. OF INCOME TAX 1(1), KHANDWA :: / RESPONDENT ! ' # $ / REVENUE BY SHRI S.N. AGRAWAL & SHRI PANKAJ MOGRA %& ' # $ / ASSESSEE BY SHRI MOHD. JAVED - DR ' ( ' &) DATE OF HEARING 2 3 .2.2017 *+,- ' &) DATE OF PRONOUNCEMENT 2 8 .2.2017 / O R D E R PER SHRI C.M. GARG, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-II, INDORE, DATED 30.6.20 16 IN SHRI ARUN KUMAR YADAV ITA NO. 921/IND/2016 2 FIRST APPEAL NO. IT-642/14-15/111 FOR THE ASSESSMENT YEAR 2012-13. 2. THE SOLE EFFECTIVE GROUND RAISED BY THE ASSESSEEAP PELLANT READS AS FOLLOWS :- THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN MAINTAINING DISALLOWANCE U/S 40A(3) OF THE ACT OF RS.2,35,550/- WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE FILED THE RIO ON 18.9.2012 DECLARING TOTAL INCOME AT RS.1,15,71,960/ - AND AGRICULTURAL INCOME OF RS. 37,57,038/-. THE ASSESS EE DERIVES INCOME FROM DEALERSHIP OF HERO HONDA MOTOR CYCLES, SPARES & ACCESSORIES, NURSERY AND PETROL PUMP BUSINESS. THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS AND NOTICE U/S 1 43(2) OF THE ACT WAS ISSUED ON 6.8.2013 WHICH WAS DULY SERVED UPON T HE ASSESSEE. THEREAFTER, NOTICE U/S 143(2) OF THE ACT WAS ISSUED ALONG WITH QUESTIONNAIRE, IN RESPONSE TO WHICH THE ASSESSEE AT TENDED AND FURNISHED THE REQUISITE DETAILS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE HAD MADE PAYMENTS TO THE TRANSPORTER IN CASH FOR MORE T HAN THE LIMIT PRESCRIBED U/S 40A(3) OF THE ACT. HE FURTHER OBSER VED THAT IN SHRI ARUN KUMAR YADAV ITA NO. 921/IND/2016 3 VRINDAVAN NURSERY, THE ASSESSEE CLAIMED EXPENSES ON TRANSPORTATION IN CASH THE DETAILS OF WHICH ARE AS UNDER :- M/S M.P. ANDHRA TRANSPORT COMPANY 35,000 28.6.2011 TRANSPORTATION CHARGES ON BILTY 35,700 16.7.201 M/S NEW GOODWILL TRANSPORT CO. 45650 16.7.2011 M/S NEW GOODWILL TRANSPORT CO. 36800 27.7.2011 M/S NEW GOODWILL TRANSPORT CO. 46040 6.8.2011 M/S NEW GOODWILL TRANSPORT CO. 36360 6.8.2011 TOTAL 2,35,550 THE ASSESSING OFFICER NOTED THAT THE ABOVE PAYMENTS WERE MADE IN CASH. HE, THEREFORE, DISALLOWED RS. 2,35,550/- U/S 40A(3) OF THE ACT. 4. BEING AGGRIEVED WITH THE ABOVE DISALLOWANCE MADE BY THE ASSESSING OFFICER, THE ASSESSEE PREFERRED FIRST APP EAL BEFORE THE LEARNED CIT(A). BEFORE THE LEARNED CIT(A), THE MAI N SUBMISSIONS OF THE ASSESSEE WAS THAT THE CASH PAYMENT HAS BEEN MAD E BY THE ASSESSEE IN REGARD TO THE TRANSACTIONS IN NURSERY B USINESS WHICH IS IN THE NATURE OF AGRICULTURAL INCOME. THE LEARNED C IT(A) ON CONSIDERATION OF THE FACTS OF THE CASE IN VIEW OF T HE SUBMISSIONS OF SHRI ARUN KUMAR YADAV ITA NO. 921/IND/2016 4 THE ASSESSEE OBSERVED THAT THE TRANSACTIONS ARE TO BE CONSIDERED IN TOTALITY OF THE BUSINESS AND NOT AS A UNIT. HE, THE REFORE, UPHELD THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE CLAIM OF THE ASSESSEE U/S 40A(3) OF THE ACT. 5. AGGRIEVED WITH THE ORDER OF THE LEARNED CIT(A), THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNA L. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD OF T HE TRIBUNAL, INTER-ALIA, WRITTEN SYNOPSIS AND PAPER BOOK FILED B Y THE ASSESSEE SPREAD OVER 58 PAGES AND THE ORDERS OF THE AUTHORIT IES BELOW. 7. FROM THE ASSESSMENT ORDER, IT IS CLEARLY DISCERN IBLE THAT THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SEC TION 40A(3) OF THE ACT (FOR SHORT ACT), DISALLOWED THE PAYMENT OF RS . 2,35,550/- AND AS PER THE LEARNED COUNSEL FOR THE ASSESSEE, THIS E XPENSE WAS INCURRED BY THE ASSESSEE TOWARDS TRANSPORTATION IN RESPECT OF VRINDAVAN NURSURY. FROM THE COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME IT IS ALSO VIVID THAT THE ASSESSEE HAS CLAIMED AGRICULTURAL INCOME OF RS.37,57,038/- OUT O F WHICH THE ASSESSEE HAS SHOWN NURSING INCOME OF RS.4,60,705/-. HENCE, THIS SHRI ARUN KUMAR YADAV ITA NO. 921/IND/2016 5 IS UNDISPUTED THAT THE TRANSPORTATION CHARGES PAID BY THE ASSESSEE WERE INCURRED AGAINST THE NURSERY INCOME. 8. THE LEARNED COUNSEL FOR THE ASSESSEE PLACING REL IANCE ON THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF U.P. HARDWARESTORE VS. CIT;104 ITR 664 (ALL) SUBMITTED T HAT THE PROVISIONS OF SECTION 40A(3) OF THE ACT HAVE BEEN M ADE ONLY TO REGULAR THE BUSINESS ACTIVITIES AND TO PREVENT UNAC COUNTED MONEY BEING USED FOR UNACCOUNTED TRANSACTIONS AND THIS RE STRICTION CANNOT BE INVOKED ON THE EXPENDITURE WHICH HAS BEEN INCURRED FOR EARNING EXEMPT AGRICULTURAL INCOME. THE LEARNED COU NSEL FOR THE ASSESSEE DREW OUR ATTENTION TO SUB-SECTION (1) OF S ECTION 40A OF THE ACT AND SUBMITTED THAT THE PROVISIONS OF THIS SECTI ON SHALL HAVE EFFECT RELATING TO THE COMPUTATION OF INCOME UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS OR PROFESSION. 9. REPLY TO THE ABOVE, THE LEARNED DR STRONGLY SUPP ORTED THE ACTION OF THE ASSESSING OFFICER AS WELL AS ITS CONF IRMATION BY THE LEARNED CIT(A). HOWEVER, THE LEARNED DR COULD NOT CONTROVERT THIS FACT AS NOTED BY THE ASSESSING OFFICER IN PARA 4 OF THE ASSESSMENT ORDER THAT THE IMPUGNED EXPENDITURE HAS BEEN CLAIME D BY THE ASSESSEE TOWARDS TRANSPORTATION EXPENSES ON VRINDAV AN NURSERY SHRI ARUN KUMAR YADAV ITA NO. 921/IND/2016 6 AND THE ASSESSEE HAS SIMULTANEOUSLY SHOWN THE AGRIC ULTURAL INCOME OF RS. 4,60,705/- AS PER COMPUTATION OF INCOME SUBM ITTED ALONG WITH THE RETURN OF INCOME (ASSESSEES PAPER BOOK PA GES 5 & 6). 10. IN VIEW OF LETTER AND SPIRIT OF SECTION 40A (1) & (3) OF THE ACT, IT IS CLEARLY DISCERNIBLE THAT THIS PROVISION CAN B E INVOKED BY THE ASSESSING OFFICER PERTAINING TO THE COMPUTATION OF INCOME UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS OR PROFESSION A ND WHEN THE ASSESSING OFFICER HIMSELF HAD ACCEPTED THE INCOME O F THE ASSESSEE FROM VRINDAVAN NURSERY AS AGRICULTURAL INCOME AND A LLOWED THE SAME AS EXEMPT THEN THE PROVISIONS OF SUB-SECTION ( 3) OF SECTION 40A OF THE ACT CANNOT BE INVOKED FOR MAKING THE DIS ALLOWANCE OF EXPENDITURE WHICH HAS BEEN INCURRED TOWARDS EARNING THE EXEMPT AGRICULTURAL INCOME FROM VRINDAVAN NURSERY. 11. IN VIEW OF THE ABOVE DISCUSSION, WE REACH TO T HE LOGICAL CONCLUSION THAT THE DISALLOWANCE MADE BY THE ASSESS ING OFFICER AND UPHELD BY THE LEARNED CIT(A) IS NOT SUSTAINABLE AND THUS WE DELETE THE SAME. 12. ACCORDINGLY, THE SOLE GROUND OF THE ASSESSEE IS ALLOWED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED WITH THE DIRECTION TO THE ASSESSING OFFICER TO DELETE THE AD DITION. SHRI ARUN KUMAR YADAV ITA NO. 921/IND/2016 7 THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 28 TH FEBRUARY, 2017. SD/- SD/- $) ! ! (O.P.MEENA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER FEBRUARY 28 TH , 2017. DN/