Shri Altafhusen M. Siddiki, Ahmedabad V. The Income Tax Officer, Ward-9(4), Ahmedabad

ITA 969/AHD/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8870 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 18-09-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Business expenditure; Opportunity of being heard; Non-deduction of tax; TDS; Set aside
• Section: 40A(3); 143(3); 142(1); 40(a)(ia); 194C; 201; 143(2); 191; 68

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ./ ITA NO.577/AHD/2012 / ASSESSMENT YEAR: 2008-09 & ./ ITA NO.969/AHD/2015 { / ASSESSMENT YEAR: 2010-11 SHRI ALTAFHUSEN M. SIDDIKI, PROP OF SUNMOON ROADWAYS 6/D/1, PURSOTTAM ESTATE, NR. COZY HOTEL, RANIPUR PATIA, SARKHEJ ROAD, NAROL, AHMEDABAD-382405 PAN NO.ARSPS3765P VS DCIT, CIRCLE-9 AHMEDABAD ! / (APPELLANT) '# ! / (RESPONDENT) APPELLANT BY : SHRI TEJ SHAH, AR REVENUE BY : SHRI VINOD TANWANI, CIT- DR / DATE OF HEARING : 18 /09/2019 / DATE OF PRONOUNCEMENT: 20 /09/2019 $%/ O R D E R PER SHRI MANISH BORAD, A.M: THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE O F ASSESSEE PERTAINING TO ASSESSMENT YEARS 2008-09 & 2 010-11 ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XV (IN SHORT LD.CIT(A)], AHMEDABAD DATED 29.12.2011 & 23.02.2015 WHICH ARE ARISING OUT OF TH E ORDER U/S 143(3) OF THE ACT, 1961 DATED 29.12.2010 & 21.0 3.2013 RESPECTIVELY FRAMED BY DCIT, AHMEDABAD. ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 2 2. AS THE ISSUES RAISED IN THESE APPEALS ARE COMMON THESE WERE HEARD TOGETHER AND THEREFORE ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR SAKE OF CONVENIENCE AND BREVITY. 3. WE WILL FIRST TAKE UP ITANO.577/AHD/2012 RELEVAN T TO A.Y. 2008-09. 4. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINE SS OF TRANSPORTER AND FLEET OWNER AND TRUCK REPAIRING JOB WORK. E- RETURN OF INCOME FILED ON 23.09.2009, DECLARING INC OME AT RS.18,36,470/- ALONG WITH TAX AUDIT REPORT U/S 44AB OF THE IT. ACT. CASE SELECTED FOR SCRUTINY UNDER CASS, FOLLOWE D BY SERVING NOTICES U/S 143(2) & 142(1) OF THE ACT. THE ASSESSE ES TURN OVER FOR THE YEAR DECLARED AT RS.10,05,59,163/- AND NET PROFIT RATE IS 1.85% AFTER EXAMINING THE RECORDS AND CONSIDERING V ARIOUS SUBMISSIONS FILED BY THE ASSESSEE, LD. AO MADE FOLL OWING ADDITION: I. UNDER STATEMENT OF GROSS RECEIPTS AT RS.34,358/- II. DISALLOWANCE U/S 40A(3) OF THE ACT AT RS.2,42,9 8,279/- WHICH WERE CLAIMED BY THE ASSESSEE TO BE GENUINE BUSINESS EXPENDITURE AND CASH PAYMENTS MADE DUE TO POOR CREDITABILITY IN THE MARKET. DETAILED LIST OF SUCH PAYMENTS IS AT ANNEXURE-A FORMING PART OF THE ASSES SMENT ORDER. ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 3 III. DISALLOWANCE U/S 40(A)(IA) OF THE ACT AT RS.45 ,42,816/- FOR NON DEDUCTION OF TAX AT SOURCE U/S 194A/194C OF THE ACT. IV. ADDITION U/S 68 FOR UNEXPLAINED CASH CREDIT OF RS.78,13,987/- V. DISALLOWANCE OF VEHICLE EXPENSES AT RS.27,050/- & TELEPHONE/MOBILE EXPENSES AT RS.19,515/- AFTER MAKI NG ABOVE ADDITION INCOME OF RS.3,85,72,470/- 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A) AND PARTLY SUCCEEDED. 6. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L RAISING FOLLOWING GROUNDS OF APPEAL: BEING AGGRIEVED AND DISSATISFIED BY THE ORDER PASS ED BY THE LD. CIT(A), THE APPELLANT BEGS TO PREFER THIS A PPEAL TO YOUR HONOUR ON THE FOLLOWING AMONGST OTHER GROUNDS: 1. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN SUSTAINING THE ADDITION OF RS.2,43,98,279/- U/S 40 A(3) OF THE ACT. 2. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN SUSTAINING THE DISALLOWANCE/ADDITION OF RS.34,71,554/- U/S 40 (A)(IA) OF THE ACT. 3. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN SUSTAINING THE ADDITION OF RS.78,13,987/- ON ACC OUNT OF UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT. 4. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN SUSTAINING THE ADDITION OF RS.27,050/- BEING 10% OF THE INTEREST ON VEHICLE LOAN AND DEPRECIATION ON SU CH VEHICLE. ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 4 5. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN SUSTAINING THE ADDITION OF RS.19,515/- BEING 10% OF TELEPHONE EXPENSES AS PERSONAL USE. 6. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN CHARGING INTEREST U/S 234A/B/C OF THE ACT. 7. ANY OTHER GROUND WHICH MAY BE URGED BEFORE OR DURIN G THE TIME OF HEARING. 7. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE REQU ESTED FOR NOT PRESSING GROUND NOS.4 & 5 OF THIS APPEAL. LD. DEPAR TMENTAL REPRESENTATIVE (DR) DID NOT OPPOSE TO THIS REQUEST. WE, THEREFORE, DISMISS GROUND NO.4 & 5 AS NOT PRESSED. APROPOS TO GROUND NO.1 RELATING TO DISALLOWANCE MADE U/S 40A(3 ) OF THE ACT. 8. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROVISIONS OF SECTION 40A(3) OF THE ACT PROVIDES FOR ALLOWING CLA IM OF SUCH EXPENSES PAID IN CASH WHICH HAVE BEEN INCURRED FOR BUSINESS EXPEDIENCY. HE SUBMITTED THAT ALL THE TRUCKS OWNED BY THE ASSESSEE WERE UNDER HIRE PURCHASE AGREEMENT WITH BANK/FINANCIAL INSTITUTION. DUE TO POOR LIQUIDITY O N VARIOUS OCCASIONS THE CHEQUES ISSUED BY THE ASSESSEE BOUNCE D AND FOR THIS REASON WAS ASKED TO MAKE PAYMENT IN CASH TO TH E FINANCE COMPANIES. 9. LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE BANK AND FINANCIAL INSTITUTIONS SEIZED THE TRUCKS FOR FA ILING IN PAYMENT OF INSTALLMENTS WHICH HAMPERED THE GOOD WIL L OF THE ASSESSEE DUE TO WHICH CHEQUES WERE NOT ACCEPTED. HE ALSO SUBMITTED THAT THE ALLEGED DISALLOWANCE INCLUDED PA YMENTS ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 5 MADE MOSTLY FOR THE DIESEL EXPENSES, TRANSPORTATION CHARGES, ROADS TAXES, INSTALLMENTS PAID TO FINANCE COMPANIES . FURTHER, THE GENUINENESS OF EXPENSES HAS NOT BEEN DOUBTED AN D AFTER MAKING THE DISALLOWANCE THE NET PROFIT OF THE ASSES SEE WILL SURGE TO ABNORMAL LEVEL WHICH IS PRACTICALLY NOT PO SSIBLE IN THIS TRADE. IN SUPPORT OF HIS CONTENTION THAT IF CASH EX PENDITURE IS INCURRED FOR BUSINESS EXPEDIENCY, NO DISALLOWANCE U /S 40A(3) OF THE ACT IS CALLED FOR, RELIANCE WAS PLACED IN THE F OLLOWING JUDGMENTS: 1. CIT VS. RAJA PAL AUTOMOBILES (2010) 2 TAXMANN.CO M 284(ALLAHABAD) HIGH COURT OF ALLAHABAD. 2. SHRI ALTAFHUSEN MAHEMUDUL HASAN SIDDIKIN VS. ACI T, ITA NO.2889/AHD/2010, ITAT, AHMEDABAD 3. ITO VS PRANAY TOWERS (2017) 88 TAXMANN.CM 783, I TAT, DELHI 4. GURDAS GARG V. CIT (2015) 63 TAXMANN.COM 289 (PU NJAB & HARYANA HIGH COURT 10. PER CONTRA LD. DR VEHEMENTLY ARGUED SUPPORTING THE FINDING OF BOTH THE LOWER AUTHORITIES AND SPECIAL E MPHASIS WAS MADE ON THE FOLLOWING FINDING OF LD. CIT(A): 11 RELIANCE ON BOARD CIRCULAR NO.220 OF 1977 MISPLA CED: THE APPELLANT HAS RELIED UPON BOARD CIRCULAR 220 DA TED 31 ST MAY 1977 FOR STATING THAT WHERE THERE ARE EXCEPTIO NAL OR UNAVOIDABLE CIRCUMSTANCES THE PAYMENT CAN BE MAD E IN CASH. FIRST OF ALL THIS BOARD CIRCULAR IS OF 1977 ( WHEN THE LIMIT FOR CASH PAYMENTS WAS JUST RS.2.500) SINCE THEN SECTION 40A(3) HAS UNDERGONE MANY CHANGES. THEN THI S BOARD CIRCULAR STATES THAT THE ASSESSEE SHOULD FURN ISH EVIDENCE TO THE SATISFACTION OF THE ITO AS TO THE G ENUINENESS ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 6 OF THE PAYMENT AND IDENTITY OF THE PAYEE. IN THIS C ASE NO SUCH EVIDENCE WERE FURNISHED BEFORE THE AO DURING T HE ASSESSMENT PROCEEDINGS NOR DURING THE REMAND REPORT STAGE PROCEEDINGS. THE CASE OF THE APPELLANT IS NOT COVERED BY THE BOARD CIRCULAR NO.220 OF 1977. 11.12. EVEN AT THE REMAND REPORT STAGE THE APPELLAN T COULD NOT SUBSTANTIATE HIS CLAIM: IN THE REMAND REPORT THE AO HAS OBSERVED AS UNDER: '(B) DISALLOWANCE U/S.40A(3) AMOUNTING TO RG.2.42.98.279 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, FOUND THAT THE ASSESSEE HAS MADE CASH PAYMENTS EXCEEDING RS.20,000 ON CONTRAVENTION OF PROVISIONS OF SECTION 40A(3) OF THE ACT. AFTER GOING THROUGH RIVAL SUBMISSION, D ETAILED VERIFICATION AND ON RECEIPT OF REPLY TO SHOW-CAUSE NOTICE , A.O. DISALLOWED RS.2,42,98,279 U/S.40 A(3) OF THE I.T. ACT' THE ASSESSEE, VIDE HIS ABOVE SUBMISSION, OBJECTED T HE ADDITION MADE. THE ASSESSEE AT THE TIME OF ASSESSME NT HAS ALSO OBJECTED THIS ADDITION AND WHATSOEVER SUBMISSI ON MADE BEFORE THE A.O. HAS ALSO BEEN MADE BEFORE YOUR HONOUR. THE ASSESSEE HIMSELF ADMITTED THAT ASSESSEE HAD MAD E PAYMENTS EXCEEDING RS.20,000 IN CASH WHICH VIOLATES THE PROVISIONS OF SECTION 40A(3) OF THE I.T. ACT. IN TH E ASSESSMENT ORDER THE A.O. CLEARLY POINTED OUT THAT THE ASSESSEE'S CASE IS NOT COVERED BY ANY EXCEPTION AS PROVIDED IN RULE 6DD(J) OF THE I.T.RULES. CONSIDERI NG THE HUGE AMOUNT INVOLVED, THE ASSESSEE'S CLAIM THAT TO RUN THE BUSINESS HE HAS PAID THE CREDITORS IN CASH IS NOT S OUND GROUND FOR MAKING PAYING IN CASH. THE ASSESSEE ALSO FURNISHED THE BOARD'S CIRCULAR NO.220 FOR HIS SUPPO RT. HOWEVER, THE CIRCULAR CLEARLY MENTIONED ABOUT THE E XCEPTION OR UNAVOIDABLE CIRCUMSTANCES FOR WHICH ASSESSEE CAN MAKE PAYMENT IN EXCESS OF RS.20,000/-. THE ASSESSEE DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS COULD NOT SUBSTANT IATE HIS CLAIM TO THE SATISFACTION OF THE A.O. MOREOVER, IN THE AUDIT REPORT THE AUDITOR HAS CLEARLY POINTED OUT TH E SAID VIOLATION. ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 7 IN VIEW OF DETAILED DISCUSSION MADE IN THE ASSESSME NT ORDER AND NO FURTHER EVIDENCE OR ARGUMENT PUT FORTH BY THE ASSESSEE, THE ADDITION MADE U/S.40A(3) IS JUSTIFIED .' THE AO HAS CORRECTLY POINTED OUT THAT THE APPELLANT COULD NOT SUBSTANTIATE HIS CLAIM. THE AO HA STATED THAT THE ARGUMENT OF THE APPELLANT THAT CASH PAYMENTS HAD TO BE MADE TO PAY THE CREDITORS IS OF NO USE BECAUSE HE I S NOT COVERED BY THE EXCEPTIONAL CIRCUMSTANCES ENUMERATED IN RULE 6DD(J) OF INCOME TAX RULES. THE, AO HAS ALSO EMPHASIZED THAT 40A(3) VIOLATION HAS BEEN POINTED O UT BY THE AUDITORS IN FORM 3CD REPORT FILED WITH THE RETU RN. 12. AFTER GOING THROUGH RIVAL SUBMISSIONS IT IS SEE N THAT THE APPELLANT IS NOT COVERED BY RULE 6DD CASES OR CIRCUMSTANCES. THE APPELLANT HAS NOT CITED ANY SUB- CLAUSE OF RULE 6DD UNDER WHICH HE IS COVERED. THE HUGE CAS H PAYMENTS AT TIMES IN LACS IN ONE DAY DO NOT SHOW TH AT THE APPELLANT WAS FACING LIQUIDITY CRUNCH. THE HUGE FRE IGHT RECEIPTS SHOWN ABOVE RS.10 CRORE IN THE RETURN DO N OT SUPPORT THE CONTENTION OF LIQUIDITY CRUNCH. THUS FOR THE REASONS SUMMARIZED IN PARA 11 ABOVE TH E ADDITION MADE BY THE AO U/S.40A(3) OF RS.2,42,98,27 9 IS UPHELD. , IT IS PERTINENT TO POINT OUT HERE THAT TH IS AMOUNT RS. 2,42,98,279 OF CASH PAYMENTS EXCEEDING RS. 20,000 IS JUST A SMALL PERCENTAGE OF RS. 10,37,22,648 DEBITED IN THE P&L ACCOUNT AS EXPENSES . 11. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US AND CAREFULLY GONE THROUGH JUDGMEN TS REFERRED AND RELIED BY THE ASSESSEE. THE ISSUE FOR CONSIDERA TION BEFORE US IS THAT WHETHER THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE U/S 40A(3) OF THE ACT AT RS.2,42,98,27 9/-. BEFORE PROCEEDING FURTHER WE WOULD LIKE GO THROUGH THE PRO VISIONS OF U/S 40A(3) OF THE ACT WHICH READS THAT; WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPE CT OF WHICH A PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 8 PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAND RUPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE. 12. IT IS IMPORTANT TO NOTE THE FOLLOWING PROVISO T O THE SECTION; PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSI NESS OR PROFESSION UNDER SUB-SECTION (3) AND THIS SUB-SECTI ON WERE A PAYMENT OR AGGREGATE OF PAYMENT MADE TO A PERSON IN A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK ON ACCOUNT PAYEE BANK DRAFT EXCEEDS TWENTY THOUSAND RU PEES, IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE P RESCRIBED, HAVING REGARD TO THE NATURE AND EXTENT OF BANKING F ACILITIES AVAILABLE, CONSIDERATIONS OF BUSINESS EXPEDIENCY AN D OTHER RELEVANT FACTORS. 13. FURTHER RULE 6DD OF THE IT. RULES PROVIDES FOR THE CASES AND CIRCUMSTANCES UNDER WHICH THE ASSESSEE IS ALLOW ED TO MAKE PAYMENT IN CASH. 14. IN THE CASE BEFORE US AFTER HEARING BOTH THE PA RTIES WE FIND THAT THERE IS NO DISPUTE RAISED BY THE ASSESSEE THA T THE ALLEGED PAYMENTS HAVE BEEN MADE IN CASH AND THEY DO NOT FAL L IN THE INSTRUCTION PROVIDED IN RULE 6DD OF THE RULES. THE ONLY CONTENTION BEFORE US IS THAT THE ALLEGED AMOUNT HAS BEEN INCURRED IN CASH FOR BUSINESS EXPEDIENCY. ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 9 15. NOW WHETHER THE ALLEGED PAYMENTS ARE IN CONSIDE RATION OF THE BUSINESS EXPEDIENCY NEEDS TO BE EXAMINED IN THE GIVEN FACTS OF THE CASE. THE ASSESSEE IS INTO TRANSPORT B USINESS AND OWNS MANY TRUCKS AND ALSO DO THE JOB WORK OF TRUCK REPAIRING. THE TURNOVER FOR THE YEAR HAS COME DOWN TO 10.60 CR ORES (APPROX) FORM 12.04 CRORES (APPROX) IN THE PRECEDI NG YEARS. FROM GOING THROUGH THE BANK STATEMENT OF THE ASSESS EE RUNNING WITH VIJAYA BANK PLACED AT PAGE NO.2 TO 110 OF PAPER BOOK-2, WE FIND THAT REGULAR BUSINESS TRANSACTIONS ARE CARRIED OUT BUT ON NUMEROUS OCCASIONS THE ASSESSEE HAS PAID CHEQUE RETURN CHARGES DUE TO IN SUFFICIENT BALANCE IN THE BANK. THIS SHOWS THAT THERE WAS POOR LIQUIDITY WITH THE ASSESS EE DUE TO WHICH HE FAILED TO HONOUR THE CHEQUES. 16. FURTHER FROM PERUSAL OF THE DOCUMENTS PLACED A T PAGES 112 TO 128 OF PAPER BOOK-2 WE OBSERVE THAT THE ASSESSEE WAS ISSUED NOTICES FROM VARIOUS FINANCE COMPANIES WHICH GAVE L OANS TO THE ASSESSEE FOR THE DEFAULT IN PAYING THE INSTALLMENT. LEGAL NOTICES AND TERMINATION NOTICE WERE ISSUED TO THE ASSESSEE. IN ONE OF SUCH NOTICE ISSUED BY THE GE CAPITAL, THE ASSESSEE WAS ASKED TO IMMEDIATELY PAY THE OUTSTANDING DEMAND OF RS.8,3 8,523/- WITHIN 5 DAYS ELSE THE COMPANY SHALL BECOME ENTITLE D TO REPOSSESSION OF THE VEHICLE IN QUESTION. SIMILAR L ETTERS WERE ALSO ISSUED BY KOTAK MAHINDRA BANK, ICICI BANK, FOR RECALLING THEIR LOANS DUE TO DEFAULT IN PAYMENTS OF LOANS AMO UNT WHICH SHOWS THAT THE ASSESSEE WAS NOT ABLE TO PAY THE INS TALLMENT ON TIME, SINCE THE POST DATED CHEQUES ISSUED BY HIM WE RE RETURNED ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 10 BY THE BANK. THE ASSESSEE HAS MADE PAYMENT IN CASH ON VARIOUS OCCASIONS TO THE FINANCE COMPANIES. 17. WE FURTHER OBSERVE THAT THE ASSESSEE IS HAVING RUNNING ACCOUNT WITH PETROL PUMP DEALERS THROUGH WHICH THE ASSESSEE PURCHASED DIESEL FOR ITS VEHICLES. THE BUSINESS OF THE ASSESSEE IS RUNNING UNDER HIS SELF NAME AS WELL AS UNDER SOL E PROPRIETORSHIP CONCERN M/S SUN MOON ROADWAYS. AT PA PER BOOK PAGES 109 TO 297 OF PAPER BOOK NO.3 DATED 10.0 7.2017 CONTAINS DATE-WISE DETAILS OF DIESEL SOLD BY M/S RA JMOTI PETROLEUM AND INDIVIDUAL PURCHASE ITEMS ARE BELOW T HE LIMIT OF 20,000/-. PERIODIC PAYMENT IS MADE WITH M/S RAJMOTI PETROLIUM WHICH IS THROUGH BANK AS WELL AS IN CASH AS PER THE VOUCHERS. HOWEVER, THE DETAILS OF THE PAYMENTS ARE ENTERED IN THE BOOKS OF SUN MOON ROADWAYS WHEREAS THE LEDGER A CCOUNT ISSUED BY THE M/S RAJMOTI PETROLIUM FOR DAY TO DAY SALE OF DIESEL IS MAINTAINED UNDER THE NAME OF ALTAF BHAI ( RS). SO THE CASH AMOUNT PAID TO M/S RAJMOTI PETROLEUM IS FOR TH E PURCHASE OF DIESEL I.E. FOR BUSINESS PURPOSES. 18. SIMILARLY IN CASE OF THE TRANSACTIONS ENTERED I NTO BETWEEN SUN MOON ROADWAYS (ASSESSEE) AND M/S. LAXMINARAYAN AUTOMOBILES PLACED AT PAGES 100 TO 106 OF THE PAPER BOOK, WE FIND THAT THERE IS A RUNNING ACCOUNT OF DIESEL. NOR MALLY FOR EACH MONTH THE TOTAL AMOUNT OF SALES IS ENTERED IN THE L EDGER ACCOUNT. REGULAR PAYMENTS WERE RECEIVED THROUGH ACC OUNT PAYEE CHEQUES FROM THE ASSESSEE. BUT ON FEW OCCASIO NS WHEN THE CHEQUES ISSUED WERE RETURNED, THE ASSESSEE HAD MADE THE ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 11 CASH PAYMENT. FOR INSTANCE CHEQUE NO.788247/ AND 78 248 ISSUED ON 25.11.2007 WAS RETURNED AS UNPAID DUE TO WHICH ON 28.11.2007 ITSELF THE ASSESSEE MADE A CASH PAYMENT OF RS.3 LACS. SIMILARLY AGAINST THE CHEQUE NO.704438 AT RS. 3 LAC DATED 04.02.2008 RETURNED UNPAID THE ASSESSEE PAID CASH O F RS.3,00,000/-. SO THE CASH PAYMENTS MADE TO SHRI LAXMINARAYAN AUTOMOBILE WERE ALSO TOWARDS BUSINESS EXPENDITURE. 19. SIMILARLY, AGAINST VARIOUS BILLS ISSUED BY MIST RY KALYANBHAI BHANABHAI RUNNING PAGE NO. 7 TO 78, THE ASSESSEE MA DE A CASH PAYMENT FOR THE REPAIRING JOB WORK. THE ABOVE INSTA NCE AND DISCUSSION GIVES IMPRESSION THAT THE ASSESSEE WHO I S REGULARLY CARRYING ON THE BUSINESS OF TRANSPORTATION RECEIVED /PAID CASH ON NUMEROUS OCCASIONS FOR BUSINESS PURPOSES FOR WHI CH THE DISALLOWANCES U/S 40A(3) OF THE ACT HAS BEEN SUSTAI NED BY THE LD. CIT(A). 20. IT IS INTERESTING TO NOTE THAT THE ASSESSEE WHO IS REGULARLY GETTING HIS ACCOUNTS AUDITED IS WELL WORSED WITH TH E PROVISION OF LAW, THAT FOR SUCH CASH PAYMENTS PROVISIONS OF SECT ION 40A(3) OF THE ACT CAN BE INVOKED. EVEN AFTER KNOWING THIS PROVISION HE HAS INCURRED CASH EXPENDITURE OF THIS MAGNITUDE JUS T FOR KEEPING HIS BUSINESS RUNNING. THE REVENUE HAS NOT D OUBTED THE GROSS RECEIPTS OF THE ASSESSEE. IN THE PAST ALSO SA ME BUSINESS HAS BEEN CARRIED OUT AND REGULAR ASSESSMENTS WERE C OMPLETED U/S 143(3) OF THE ACT AND THE NET PROFITS DECLARED BY THE ASSESSEE HAVE BEEN ACCEPTED. EVEN IN THIS YEAR WHEN THE GROSS ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 12 RECEIPTS IS NOT IN DISPUTE WHICH IS FROM SAME BUSIN ESS TRANSPORTATION AND JOB WORK AND NO OTHER SOURCES OF REVENUE HAS BEEN FOUND THEN FOR RUNNING THE BUSINESS, THE A SSESSEE NEEDS TO BE ALLOWED THE CLAIM OF EXPENDITURE INCURR ED FOR RUNNING SUCH BUSINESS. IN THE PROVISO TO SECTION 40 A(3) OF THE ACT CLEARLY SPECIFY THAT IF THE ASSESSEE PROVE THAT THE EXPENDITURE HAS BEEN INCURRED FOR BUSINESS EXPEDIEN CY; THEN THE PROVISIONS SHOULD BE APPLIED LIBERALLY AND NO D ISALLOWANCE U/S 40A(3) OF THE ACT SHOULD BE MADE. 21. HONBLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. RAJA PAL AUTOMOBILES (SUPRA) CONFIRM THE VIEW OF THE TRI BUNAL WHICH FOUND THAT THE ASSESSEE HAD FULLY EXPLAINED DETAILS OF PAYMENT MADE IN CASH; THAT ENTIRE EVIDENCE IN FORM OF BILLS , CASH MEMOS ETC. HAS BEEN FURNISHED BY ASSESSEE AND THAT DEPART MENTAL AUTHORITIES HAD NOT DISPUTED GENUINENESS OF TRANSAC TIONS NOR IDENTITY OF PERSON/SELLER TO WHOM PAYMENTS HAD BEEN MADE- TRIBUNAL HELD THAT IN SUCH CIRCUMSTANCES, IF PAYMEN TS WERE MADE IN CASH, SAME WOULD FELL WITHIN EXCEPTION PROV IDE UNDER RULE 6DD AND SUCH TRANSACTIONS COULD NOT BE DISALLO WED . 22. SIMILARLY IN THE CASE OF ITO VS. PRANAY TOWERS (SUPRA) COORDINATE BENCH DELHI OBSERVED THAT WHERE THE SELLER OF GOODS INSISTED FOR CASH PAYMENTS BECAUSE HE DOUBTED CREDI BILITY OF ASSESSEE AND FURTHER, ASSESSEE PURCHASED GOODS THRO UGH AGENT AND CASH PAYMENTS THEREFORE WERE ALSO MADE THROUGH AGENT, THERE BEING NO DOUBT ABOUT GENUINENESS OF TRANSACTI ON, CASH ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 13 PAYMENTS WERE COVERED BY EXCEPTION LAID DOWN IN CLA USE(K) OF RULE 6DD . 23. WE FURTHER OBSERVE THAT HONBLE PUNJAB AND HARY ANA HIGH COURT IN THE CASE OF GURDAS GARG VS. CIT(SUPRA) DEC IDED IN FAVOUR OF THE ASSESSEE CALLING FOR NO DISALLOWANCE U/S 40A(3) OF THE ACT FOLLOWED THE FOLLOWING FINDING OF HONBLE S UPREME COURT IN THE CASE OF ATTAR SINGH SURMUKH SINGH V. ITO (19 91) 191 ITR 667 WHEREIN HONBLE APEX COURT AFTER REFERRING TO R ULE 6DD OF THE RULES HELD AS FOLLOWS: 7. IN OUR OPINION, THERE IS LITTLE MERIT IN THIS CONTENTION. SECTION 40A(3) MUST NOT BE READ IN ISOLATION OR TO THE EXCLUSION OF RULE 6DD. THE SECTION MUST BE READ ALONG WITH THE RULE. IF READ TOGETHER, IT WILL BE CLEAR T HAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT THE BUSINES S ACTIVITIES. THERE IS NO RESTRICTION ON THE ASSESSEE IN HIS TRADING ACTIVITIES. SECTION 40A(3) ONLY EMPOWERS THE ASSESSING OFFICER TO DISALLOW THE DEDUCTION CLAIMED AS EXPENDITURE IN RESPECT OF WHICH PAYMENT IS NOT MADE BY CROSSED CHEQUE OR CROSSED BANK DRAFT. THE PAYMENT B Y CROSSED CHEQUE OR CROSSED BANK DRAFT IS INSISTED ON TO ENABLE THE ASSESSING AUTHORITY TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF THE IN COME FROM DISCLOSED SOURCES. THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE. CONSIDERATION OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS ARE NOT EXCLUDED. THE GENUINE AND BONA FIDE TRANSACTIONS ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN TO THE ASSESSEE TO FURNISH TO T HE SATISFACTION OF THE ASSESSING OFFICER THE CIRCUMSTA NCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED TH E CASH PAYMENT. RULE 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSS ED ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 14 CHEQUE OR CROSSED BANK DRAFT IN THE CIRCUMSTANCES S PECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISION S OF SECTION 40A(3) AND RULE 6DD THAT THEY ARE INTENDED TO REGULATE TH E BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLAC K- MONEY FOR BUSINESS TRANSACTIONS.. IF THE PAYMENT IS MADE BY A CROSSED CHEQUE DRAWN ON A BANK OR A CROSSED BA NK DRAFT THEN IT WILL BE EASIER TO ASCERTAIN, WHEN DED UCTION IS CLAIMED, WHETHER THE PAYMENT WAS GENUINE AND WHETHE R IT WAS OUT OF THE INCOME FROM DISCLOSED SOURCES. IN INTERPRETING A TAXING STATUTE THE COURT CANNOT BE O BLIVIOUS OF THE PROLIFERATION OF BLACK-MONEY WHICH IS UNDER CIR CULATION IN OUR COUNTRY. ANY RESTRAINT INTENDED TO CURB THE CHANCES AND OPPORTUNITIES TO USE OR CREATE BLACK-MONEY SHOU LD NOT BE REGARDED AS CURTAILING THE FREEDOM OF TRADE OR B USINESS. 24. FROM PERUSAL OF THE ABOVE JUDGMENT WE INFER THA T THE ASSESSEE SHOULD NOT BE SUBJECT TO THE RIGOROUS PROV ISION OF U/S 40A(3) OF THE ACT IF HE HAS INCURRED THE EXPENDITUR E FOR BUSINESS EXPEDIENCY AND IF GENUINENESS OF SUCH EXPE NDITURE IS NOT IN DISPUTE. IN THE INSTANT CASE IF ALLEGED DISA LLOWANCE IS ADDED TO THE PROFITS OF THE ASSESSEE RESULTANT FIGU RE WILL BE VERY ABNORMAL AND THE NET PROFIT RATE OF THE ASSESSEE WI LL SURGE TO AROUND 27% WHICH CANNOT BE PRACTICALLY POSSIBLE IN THIS TYPE OF BUSINESS. ALSO LOOKING TO THE CONSISTENCY OF NE T PROFIT EARNED BY THE ASSESSEE IN THE PRECEDING YEARS WHICH IS 1.8 5% IN THE YEAR UNDER APPEAL AS AGAINST 1.33% IN THE PRECEDING YEAR, THE OBJECT OF THE ASSESSING OFFICER SHOULD BE TO TAX TH E INCOME OF THE ASSESSEE EARNED DURING THE YEAR. CERTAINLY THIS WIL L NOT APPLY TO THE UNEXPLAINED CAPITAL/REVENUE RECEIPTS OR UNEXPLA INED INVESTMENTS BUT SO FAR AS THE YEAR TO YEAR BUSINESS TRANSACTIONS IS CONCERNED THE PRINCIPAL OF RES JUDICATA SHOULD BE APPLIED TO ESTIMATE THE PROFITS OF THE ASSESSEE. LD . AO HAS NOT ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 15 REJECTED THE BOOKS OF ACCOUNT U/S 145(3) OF THE ACT WHICH SHOWS THAT HE WAS SATISFIED WITH THE BOOK RESULTS A ND GROSS REVENUE IS NOT IN DISPUTE. 25. WE, HOWEVER, IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE AND LOOKING TO THE NATURE OF EXPENDITURE INCUR RED BY THE ASSESSEE WHICH IS PURELY FOR THE BUSINESS EXPEDIENC Y NOT RAISING ANY DOUBT OF GENUINENESS BUT CERTAINLY THE ASSESSEE COULD HAVE AVOIDED TO MAKE CASH PAYMENT AT CERTAIN POINT OF TIME. BUT STILL TO MEET THE END OF JUSTICE AND BEIN G FAIR TO BOTH THE PARTIES AND WITHOUT SETTING A PRECEDENT, WE DI RECT THE LD. AO TO SUSTAIN DISALLOWANCE U/S 40A(3) TO THE EXTENT OF 5% OF THE ALLEGED AMOUNT. SO THE DISALLOWANCE U/S 40A(3) OF THE ACT AT RS.2,42,98,279/- WILL BE SUSTAINED TO RS.12,14,9 14/-. IN THE RESULT GROUND NO.1 IS PARTLY ALLOWED. 26. APROPOS GROUND NO.2 FOR THE DISALLOWANCE U/S 40 (A)(IA) OF THE ACT AT RS.34,71,554/- WHICH IS PAID TO VARIOUS FINANCE COMPANIES. AT THE OUTSET, LD. COUNSEL FOR THE ASSES SEE REQUESTED FOR SETTING ASIDE THE ISSUE TO THE FILE O F LD. AO FOR CONDUCTING NECESSARY INQUIRY BY CALLING FOR INFORMA TION FROM VARIOUS FINANCE COMPANIES, AAS TO WHETHER THE AMOUN T PAID BY THE ASSESSEE HAVE BEEN OFFERED TO TAX IN THEIR RES PECTIVE INCOME TAX RETURNS. 27. LD. DR DID NOT OPPOSE TO THIS REQUEST. 28. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. WE FIND THAT THE FOLLOWING PAYMEN TS WERE ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 16 CLAIMED AS FINANCE CHARGES DURING THE YEAR ON WHICH TAX WAS NOT DEDUCTED AT SOURCE U/S 194A OF THE ACT. 1. CHOLAMANDALAM FINANCES LTD. RS.14,35,944/- 2. TATA MOTORS LTD. RS.3,60,572/- 3. G E CAPITAL RS.9,69920/- 4. G MAC FINANCE SERVICE RS.98,828/- 5. INDIA BULLS FINANCE SEC. LTD. RS.52,084/- 6. MAGMA SHARACHIN FIN LTD. RS.5,17,058/- 7. OTHERS RS.37,148/- TOTAL RS.34,71,554/- 29. IN THE ABOVE LIST NO INFORMATION IS PROVIDED BY THE ASSESSEE FOR THE AMOUNT PAID AT RS.37,148/-. SO THE DISALLOW ANCE U/S 40(A)(IA) OF THE ACT FOR THE AMOUNT OF RS.37,148/- STANDS CONFIRMED. AS REGARDS THE REMAINING AMOUNTS WHICH A RE PAID TO NON- BANKING FINANCE COMPANY, WE OBSERVE THAT WHEN A PERSON TAKEN LOANS FROM THESE COMPANIES POST DATED CHEQUES ARE ISSUED FOR THE INSTALLMENT WHICH COMPRISES OF THE PRINCIPLE AS WELL AS THE INTEREST COMPONENT. MANY TIMES THE I NSTALLMENT ARE PAID AS CHEQUES ALREADY STANDS ISSUED BUT THE C REDIT OF TDS IS NOT PASSED ON TO THE ASSESSEE FOR BEING DEPOSITE D IN THE BANK ACCOUNT AS TAX DEDUCTED AT SOURCE. 30. IN THE INSTANT CASE, SINCE THE ASSESSEE WAS IN DEFAULT ON MULTIPLE OCCASIONS, THE AMOUNTS WERE PAID LUMP SUM TO PREVENT THE VEHICLE FROM BEING DETAINED. THOUGH THE PROVISIONS ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 17 ARE VERY CLEAR WITH REGARD TO U/S 40(A)(IA) OF THE ACT THAT IF ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE BUT HE IS A BLE TO PROVIDE THE CERTIFICATE FROM THE CHARTERED ACCOUNTA NT, SPECIFYING THAT THE PAYEE HAVE OFFERED THE AMOUNT R ECEIVED AS REVENUE IN THE REGULAR RETURN OF INCOME AND PAID TA XES THEREON, THEN, THE ASSESSEE SHOULD NOT BE DEEMED TO BE A PE RSON IN DEFAULT FOR NON-DEDUCTION OF TAX AT SOURCE. 31.THOUGH THE ASSESSEE HAS NOT PLACED ANY SUCH CERT IFICATE ON RECORD BUT STILL ON THE REQUEST OF THE ASSESSEE AN D IN THE INTEREST OF JUSTICE WE SET ASIDE THIS ISSUE TO THE FILE OF LD. AO FOR DECIDING IT AFRESH FOR THE AMOUNTS OF RS.34,34,406/ - PAID TO SIX FINANCE COMPANIES OF WHICH THE DETAILS SHALL BE PRO VIDED BY THE ASSESSEE ALONG WITH ADDRESS. THE LD. AO SHOULD CALL FOR INFORMATION FROM THESE COMPANIES WITH REFERENCE TO THE DETAILS TO BE PROVIDED BY THE ASSESSEE THAT WHETHER THEY HA VE RECEIVED ALLEGED AMOUNT AND HAVE SHOWN IT AS THE REVENUE. TH E LD. AO IF SATISFIED, MAY DECIDE IN ACCORDANCE WITH LAW AND G IVE RELIEF TO THE ASSESSEE, IF ELIGIBLE. NEEDLESS TO MENTION THAT PROPER OPPORTUNITY OF BEING HEARD TO BE PROVIDED TO THE AS SESSEE. ACCORDINGLY GROUND NO.2 IS PARTLY ALLOWED FOR STATI STICAL PURPOSES. 32. APROPOS TO GROUND NO.3 CHALLENGING THE UNEXPLAI NED CASH CREDIT U/S 68 OF THE ACT AT RS. 78,13,987/-, WE OBS ERVE THAT FOR THE ALLEGED AMOUNT RECEIVED AS LOAN, THE ASSESSEE W AS UNABLE TO SATISFY THE LD. AO AND HE TREATED IT AS UNEXPLAINED CASH CREDIT. THE ASSESSEE FAILED TO GET ANY RELIEF BY THE LD. CI T(A) WHO AFTER ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 18 CALLING FOR THE REMAND REPORT HARDLY FIND ANY MERIT IN THE CONTENTIONS OF THE ASSESSEE. 33. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL. 34. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT MOS T OF THE LOANS TAKEN DURING THE YEAR WERE REPAID BY ACCOUNT PAYEE CHEQUE. FEW LOANS WHICH WERE TAKEN IN THE PRECEDING YEAR HAVE BEEN ADDED AS UNEXPLAINED CASH CREDIT DURING THE YE AR. ADDRESS AND PAN NO. WERE PROVIDED BUT NO INQUIRY WA S CONDUCTED BY THE LD. AO. 35. PER CONTRA LD. DR SUPPORTED THE ORDER OF LOWER AUTHORITIES. 36. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. THE ASSESSEE HAS CHALLENGED THE A DDITION FOR UNEXPLAINED CASH U/S 68 OF THE ACT AT RS. 78,13,987 /- RECEIVED FROM FOLLOWING PARTIES SR. NO. NAME OF PARTY AMOUNT 1 ASHAPURA CARRIERS DABBA LOAN RS.15,00,000 2 BHIKHABHAI RS.12,00,000 3 HAND LOAN IRSHABHAI RS.10,000 4 RAJMOTI ROAD MOVERS DABBA LOAN RS.22,95,000 5 RAJMOTI ROAD MOVERS HAND LOAN RS.21,28,987 6 KRISHNA TRADERS RS.1,40,000 7 DILIP TRANSPORT RS.5,40,000 TOTAL RS.78,13,987 ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 19 37. IT IS CONTENDED BEFORE US BY LD. COUNSEL FOR TH E ASSESSEE THAT IN THE ABOVE LIST THE LOAN AT RS.15,00,000/- F ROM ASHAPURA CARRIERS DABBA LOAN & RS.22,95,000 FROM RAJMOTI RO AD MOVERS DABBA LOAN WERE ACTUALLY TAKEN DURING THE F. Y. 2006- 07 I.E. A.Y. 2007-08. IN THE YEAR UNDER APPEAL THE AMOUNTS WERE BIFURCATED IN TWO PARTS BUT THE ACTUAL LOAN WA S RECEIVED IN EARLIER YEAR ONLY. THE COPY OF LEDGER ACCOUNT HAS B EEN PLACED ON RECORD. 38. IN OUR CONSIDERED VIEW THIS CLAIM OF THE ASSESS EE NEEDS VERIFICATION AT THE END OF THE LD AO. WE ACCORDINGL Y, DIRECT THE LD. AO TO EXAMINE THIS CONTENTION OF THE ASSESSEE A ND IF IT IS FOUND THAT UNSECURED LOAN OF RS.15,00,000/- AND RS.22,95,000/- ALLEGED TO HAVE BEEN RECEIVED FROM A SHAPURA CARRIERS DABBA LOAN & RAJMOTI ROAD MOVERS DABBA LO AN IN THE EARLIER YEAR, THEN NO ADDITION WILL BE CALLED F OR U/S 68 OF THE ACT FOR UNEXPLAINED CASH CREDIT DURING THE YEAR UND ER APPEAL. 39. IN THE ABOVE LIST RS.10,000/- LOAN HAS BEEN SHO WN AS HAND LOAN IRSHABHAI, ASSESSEE FAILED TO PROVIDE ANY DETA IL AT ANY STAGE SO THE ADDITION U/S 68 IS CONFIRMED. AS REGAR D THE REMAINING AMOUNTS OF RS.12,00,000/- RS, 21,28,987/- , RS.1,40,000/- & RS.5,40,000/-, THE ASSESSEES CONTE NTION IS THAT THE NAME, ADDRESS, PAN NO. OF THE CASH CREDITO RS WERE PROVIDED, MOST OF THESE LOANS WERE REPAID DURING TH E YEAR THROUGH ACCOUNT PAYEE CHEQUE WHICH PROVES THE GENUI NENESS OF THE TRANSACTIONS. HOWEVER, FOR PROVIDING FURTHER IN FORMATION TO PROVE CREDITWORTHINESS AND GENUINENESS OF THE OTHER LOANS ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 20 REQUEST WAS MADE FOR ONE MORE OPPORTUNITY TO APPEAR BEFORE LD. AO WHO WOULD BE FREE TO ISSUE SUMMONS TO THESE PARTIES IF NECESSARY. WE IN THE INTEREST OF JUSTICE ACCEPT THE REQUEST AND DIRECT THE LD AO TO EXAMINE THAT WHETHER THE ALLEGE D AMOUNT OF LOAN HAS BEEN REPAID BACK DURING THE YEAR AND IF SA TISFIED WITH THE IDENTITY, GENUINENESS AND CREDITWORTHINESS SHOU LD DECIDE IN ACCORDANCE WITH LAW, AFTER PROVIDING REASONABLE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT GROUND N O.3 OF THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 40. GROUND NO.6 IS CONSEQUENTIAL AND GROUND NO.7 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 41. NOW WE TAKE UP ITANO. 969/AHD/2015 FOR A.Y. 201 0-11, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : BEING AGGRIEVED AND DISSATISFIED BY THE ORDER PAS SED BY THE LD. CIT(A), THE APPELLANT BEGS TO PREFER THIS A PPEAL TO YOUR HONOUR ON THE FOLLOWING AMONGST OTHER GROUNDS: 1. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN SUSTAINING THE ADDITION OF RS.16,47,203/- DISALLOWANCE OF INTEREST PAYMENT OF NBFCS U/S 40 (A )(IA) OF THE ACT. 2. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN SUSTAINING THE DISALLOWANCE/ADDITION OF RS.4,55, 802/- OF FREIGHT PAYMENT U/S 40 (A)(IA) OF THE ACT. 3. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN SUSTAINING THE ADDITION OF RS.8,39,747/- ON FREI GHT EXPENSE. 4. THAT THE CIT(A) ERRED IN LAW AND ON THE FACTS OF TH E CASE IN CHARGING INTEREST U/S 234A/B/C OF THE ACT. ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 21 5. ANY OTHER GROUND WHICH MAY BE URGED BEFORE OR DURIN G THE TIME OF HEARING. 42. APROPOS GROUND NO.1 RELATING TO DISALLOWANCE OF INTEREST PAYMENT TO NONBANKING FINANCE COMPANIES AT RS.16,47 ,203/-. WE FIND THAT THE FOLLOWING THREE AMOUNTS WERE PAID: 1.GE FINANCE RS.9,66,045/- 2. MAGMA SARACHI FINANCE LTD. RS.5,68,442/- 3. TATA MOTORS LTD. RS.1,12,716/- TOTAL RS.16,47,203/- 43. THE TAX WAS NOT DEDUCTED ON THE ABOVE PAYMENTS WE HAVE DEALT SIMILAR ISSUE IN THE CASE OF ASSESSEE FOR A.Y . 2008-09 AND HAVE SET ASIDE THE ISSUE TO THE FILE OF LD. AO FOR CONDUCTING NECESSARY VERIFICATION WITH THE ASSISTANCE OF THE A SSESSEE WHO SHOULD PROVIDE SUFFICIENT DOCUMENTARY EVIDENCES TO THE LD. AO FOR CONDUCTING VERIFICATION. WE ACCORDINGLY, ALLOW GROUND NO.1 FOR STATISTICAL PURPOSES. 44. APROPOS GROUND NO.2 FOR THE DISALLOWANCE U/S 40 (A)(IA) OF FREIGHT PAYMENT OF RS.4,55,802/- AFTER HEARING THE RIVAL CONTENTIONS WE OBSERVE THAT THE ALLEGED AMOUNT WAS PAID AS FREIGHT CHARGES AT RS.41,204/- TO SHARIFBHAI AND RS .4,14,598/- TO KAUSHIK MEHTA. IT IS CONTENDED BEFORE US THAT TH E PAN NO. OF KAUSHIK MEHTA IS ACGPM2776E AND AS PER THE PROVISIO N OF SECTION 194C NO DEDUCTION U/S 194C WAS CALLED FOR. HOWEVER, WITH REGARD TO THE FREIGHT DISALLOWANCE OF RS.41,20 4/- GENERAL REPLY HAS BEEN SUBMITTED. ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 22 45. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE CONFIRM THE DISALLOWANCE U/S 40(A)(IA) FOR FRE IGHT PAYMENT OF RS.41,204/- AND FOR THE REMAINING AMOUNT OF RS.4 ,14,598/-, WE DIRECT THE LD. AO TO VERIFY THE PAN NO. AND IF C ONTENTION OF THE ASSESSEE IS FOUND TO BE CORRECT THEN SHOULD DEC IDE IN ACCORDANCE WITH LAW. THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 46. APROPOS TO GROUND NO.3 RELATING TO DISALLOWANCE OF FREIGHT EXPENSE OF RS. 8,39,747/-, LD. COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE PAYMENT WAS MADE THROUGH BANKING CHANNEL. PAN NO. OF THE ONE OF THE PAYEE MR. RANCHH ODBHAI WAS PROVIDED. SINCE SOME OF THE ISSUES RELATING TO FREIGHT PAYMENT HAS BEEN SET ASIDE TO THE FILE OF LD. AO FO R AFRESH EXAMINATION, WE DEEM IT FIT APPROPRIATE TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO SATISFY THE LD. AO F OR THE CLAIM OF FREIGHT EXPENSES AFTER BEING PROVIDED NECESSARY EVI DENCES. NEEDLESS TO MENTION THAT PROPER OPPORTUNITY OF BEIN G HEARD TO BE PROVIDED TO THE ASSESSEE. ACCORDINGLY GROUND NO. 3 IS ALLOWED FOR STATISTICAL PURPOSES. 47. GROUND NO.4 IS CONSEQUENTIAL WHICH NEEDS NO ADJ UDICATION. 48. GROUND NO.5 IS GENERAL IN NATURE, WHICH NEEDS N O ADJUDICATION. ITA NOS.577/AHD/2012 & ITANO.969/AHD/2015 ALTAFHUSEN M. SIDDIKI FOR AY 2008-09 & 2010-11 23 49. IN THE RESULT, APPEALS FILED BY THE ASSESSEE I. E ITA NO.577/AHD/2012 AND ITA NO.969/AHD/2015 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 20.09.2019. SD/- SD/- (AMARJIT SINGH) JUDICIAL MEMBER ( MANISH BORAD) ACCOUNTANT MEMBER AHMEDABAD; DATED 20 /09/2019 PATEL, PS $% & ''() *$)' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ! / CONCERNED CIT 4. ! ( ) / THE CIT(A)- XV, AHMEDABAD 5. $%& '' , , )*++ / DR, ITAT, AHMEDABAD 6. &,- . / GUARD FILE. $% + / BY ORDER, TRUE COPY ,/ - ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABA