Shri G.Karunaianandan, CHENNAI V. ACIT, CHENNAI

MA 125/CHNY/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8955 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-09-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 08-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: G BASKAR
• Section: 40A(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER .. M.P. NO. 125/MDS/2012 (IN I.T.A. NO. 133/MDS/2012) ASSESSMENT YEAR : 2004-05 SHRI G. KARUNAIANANDAN, NEW NO.43 (OLD NO.16), TELUGU CHETTY STREET, OLD WASHERMANPET, CHENNAI - 600 021. PAN : ACJPK0296P (PETITIONER) V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(4), CHENNAI - 600 034 . (RESPONDENT) PETITIONER BY : SHRI G. BASKAR, ADVOCATE RESPONDENT BY : SHRI S. DAS GUPTA, CIT DATE OF HEARING : 28.09.2012 DATE OF PRONOUNCEMENT: 28.09.2012 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS MISCELLANEOUS PETITION FILED BY THE ASSES SEE, ITS GRIEVANCE IS THAT TRIBUNALS FINDING REGARDING LEDG ER ACCOUNTS FILED BY THE ASSESSEE AT THE TIME OF HEARING AND THAT APPEND ED TO THE ASSESSMENT ORDER TO BE ENTIRELY DIFFERENT, IS NOT C ORRECT. AS PER THE M.P. NO. 125/MDS/12 2 ASSESSEE, THE CIT(APPEALS) HAD DECIDED THE CASE AFT ER GOING THROUGH THE ENTIRE LEDGER ACCOUNT AND, SPECIFIC SUBMISSIONS MADE IN RESPECT OF EACH PAYMENT ON WHICH SECTION 40A(3) OF INCOME-T AX ACT, 1961 (IN SHORT 'THE ACT') WAS APPLIED, FOR MAKING THE DISALL OWANCE, WAS NOT ADJUDICATED. 2. THE GRIEVANCE RAISED BY THE REVENUE IN ITS APPEA L WAS REGARDING THE DELETION OF ADDITION OF ` 29,02,509/- MADE BY THE ASSESSING OFFICER UNDER SECTION 40A(3) OF THE ACT. THIS WAS A SOLE ISSUE ADJUDICATED BY THE TRIBUNAL. AFTER CONSIDERI NG THE SUBMISSIONS OF BOTH THE PARTIES, IT WAS HELD BY THE TRIBUNAL AT PARAS 6 AND 7 OF ITS ORDER, AS UNDER:- 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL SUBMISSIONS. NO DOUBT, CIT(APPEALS) HAS GIVEN AS A NNEXURES TO HIS ORDER COPIES OF THE ACCOUNTS OF M/S KALEESWARI OIL STORES, M/S KALLEESUWARI REFINERY PVT. LTD. AND M/S GMS TRADERS , IN THE BOOKS OF THE ASSESSEE. BUT, WHAT WE FIND IS THAT THESE A RE ALL SUMMARIZED SUMS AND DO NOT SHOW THE DETAILED TRANSA CTIONS. ASSESSEE HAS FILED BEFORE US COPIES OF LEDGER PAGES OF ALL THE THREE PARTIES AS APPEARING IN ITS BOOKS. THOUGH IT HAS BEEN SIGNED BY ASSESSEES AUTHORIZED REPRESENTATIVE, THERE IS N O CERTIFICATE TO THE EFFECT THAT THESE WERE PART OF RECORDS PRODUCED BEFORE THE ASSESSING OFFICER IN THE COURSE OF ORIGINAL ASSESSM ENT PROCEEDINGS. ASSESSING OFFICER HIMSELF HAS ANNEXED TO THE ASSESSMENT ORDER, COPIES OF THE LEDGER ACCOUNTS OF THESE THREE ENTITIES IN ASSESSEES BOOKS. WE FIND THAT WHAT AS SESSEE HAS PRODUCED BEFORE US NOW IS IN SUBSTANTIAL VARIANCE W ITH THE LEDGER M.P. NO. 125/MDS/12 3 ACCOUNT COPIES ANNEXED BY THE ASSESSING OFFICER TO THE ASSESSMENT ORDER. IN THE ABSENCE OF A CERTIFICATE BY THE ASSESSEE OR ITS AUTHORIZED REPRESENTATIVE THAT THES E LEDGER COPIES, WHICH ARE NOW PRODUCED BEFORE US, WERE THE SAME THAT WERE PRODUCED BEFORE THE ASSESSING OFFICER, COPIES OF LEDGER PAGES OF THE THREE ENTITIES ANNEXED TO THE ASSESSME NT ORDER ALONE CAN BE RELIED UPON. ASSESSEE HAS NOT SUBMITTED AT ANY POINT OF TIME THAT THESE LEDGER PAGES, WHICH FORMED PART OF THE ASSESSMENT ORDER, WERE INCORRECT OR WERE NOT TAKEN FROM THE BOOKS PRODUCED BY THE ASSESSEE. ASSESSEE HAD MAINT AINED ITS BOOKS IN TALLY SOFTWARE AND THEREFORE, AT ANY POINT OF TIME, IT COULD READJUST ITS ENTRIES, SO AS TO SUIT ITS CASE. THERE IS NO CASE FOR THE ASSESSEE THAT IT WAS NOT MAKING ANY PURCHAS ES FROM THESE THREE ENTRIES. THEREFORE, PAYMENTS MADE TO SUCH EN TITIES CLEARLY WITHIN THE AMBIT OF SECTION 40A(3) OF THE ACT. HON BLE APEX COURT IN THE CASE OF ATTAR SINGH GURMUKH SINGH (SUP RA) HAS HELD AS UNDER:- 8. AS TO THE SECOND QUESTION, IT MAY BE STATED THA T THE WORD EXPENDITURE HAS NOT BEEN DEFINED IN THE ACT. IT IS A WORD OF WIDE IMPORT. SECTION 40A(3) REFERS TO TH E EXPENDITURE INCURRED BY THE ASSESSEE IN RESPECT OF WHICH PAYMENT IS MADE. IT MEANS ALL OUTGOINGS ARE BROUGH T UNDER THE WORD EXPENDITURE FOR THE PURPOSE OF THE SECTI ON. THE EXPENDITURE FOR PURCHASING THE STOCK-IN-TRADE IS ON E OF SUCH OUTGOINGS. THE VALUE OF THE STOCK-IN-TRADE HA S TO BE TAKEN INTO ACCOUNT WHILE DETERMINING THE GROSS PROF ITS UNDER SECTION 28 OF THE ACT ON PRINCIPLES OF COMMER CIAL ACCOUNTING. THE PAYMENTS MADE FOR PURCHASES WOULD ALSO BE COVERED BY THE WORD EXPENDITURE AND SUCH PAYME NTS CAN BE DISALLOWED IF THEY ARE MADE IN CASH IN THE S UMS EXCEEDING THE AMOUNT SPECIFIED UNDER SECTION 40A(3) . WE HAVE EARLIER OBSERVED THAT RULE 6DD HAS TO BE READ ALONG WITH SECTION 40A(3). THE RULE ALSO CONTEMPLATES PA YMENTS MADE FOR STOCK-IN-TRADE AND RAW MATERIALS. THIS RU LE IS IN ACCORDANCE WITH THE TERMS OF SECTION 40A(3). THE R ULE PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENTS OF PAYMENT BY CROSSED CHEQUE OR A CROS SD M.P. NO. 125/MDS/12 4 BANK DRAFT WHERE THE PURCHASES ARE MADE OF CERTAIN AGRICULTURAL OR HORTICULTURAL COMMODITIES OR FROM A VILLAGE WHERE THERE IS NO BANKING FACILITY. SECTION 40A(3) IS, THEREFORE, ATTRACTED TO PAYMENTS MADE FOR ACQUIRING STOCK-IN-TRADE AND OTHER MATERIALS. THIS IS ALSO T HE VIEW TAKEN BY SEVERAL HIGH COURTS SAJOWANLAL JAISWAL V . CIT [1976] 103 ITR 706 (ORI), U.P. HARDWARE STORE V. CI T [1976] 104 ITR 664 (ALL), RATON UDYOG V. ITO [1977] 109 ITR 1 (ALL), PH. TEXTILES V. CIT [1980] 121 ITR 237 (KER.), CIT V. KISHAN CHAND MAHESWARI DASS [1980] 121 ITR 2 32 (PUNJ. & HAR.), KANTI LAL PURSHOTTAM & CO. V. CIT [ 1985] 155 ITR 519 (RAJ.), CIT V. NEW LIGHT TIN MFG. CO. [1980 ] 121 ITR 229 (PUNJ. & HAR.), FAKRI AUTOMOBILES V. CIT [1 986] 160 ITR 504 (RAJ.), VENKATA SATYANARAYANA TIMBER DE POT V. CIT [1987] 165 ITR 253 (AP), AND AKASH FILMS V. CIT [1991] 190 ITR 32 (KAR.). THE DECISIONS OF THE HIG H COURTS OF ANDHRA PRADESH, ORISSA, ALLAHABAD, KERALA, KARNA TAKA, PUNJAB & HARYANA, RAJASTHAN AND PATNA ARE TO THE EF FECT THAT THE PAYMENTS MADE FOR PURCHASING STOCK-IN-TRAD E OR RAW MATERIALS SHOULD ALSO BE REGARDED AS EXPENDITUR E FOR THE PURPOSE OF SECTION 40A(3). THE ONLY DISCORDANT NOTE STRUCK ON THIS ASPECT IS BY THE GAUHATI HIGH COURT IN CIT V. HARDWARE EXCHANGE [1991] 190 ITR 61. THE GAUHATI H IGH COURT HAS OBSERVED THAT SECTION 40A(3) APPLIES ONLY TO PAYMENTS MADE ON ACCOUNT OF EXPENDITURE INCURRED AND THE PAYMENT MADE FOR PURCHASE OF STOCK-IN-TRADE CAN NOT BE TERMED AS EXPENDITURE INCURRED SINCE MONEY DOE S NOT GO IRRETRIEVABLY IN SUCH CASES. WE ARE UNABLE TO A GREE WITH THE VIEW TAKEN BY THE GAUHATI HIGH COURT. 7. HONBLE JURISDICTIONAL HIGH COURT HAS ALSO CLEAR LY HELD IN THE CASE OF A.D. JAYAVEERAPANDIA NADAR & SONS (SUPRA) T HAT PAYMENTS BEING MADE TO AN ASSOCIATE CONCERN WAS NOT A JUSTIF IABLE REASON FOR DELETING THE DISALLOWANCE UNDER SECTION 40A(3) OF THE ACT. IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THE CIT(APPEALS) FELL IN ERROR IN DELETING THE DISALLOWANCE MERELY O N THE SUBMISSION OF THE ASSESSEE, IGNORING THE LEDGER COPIES ANNEXED TO THE ASSESSMENT ORDER BY THE ASSESSING OFFICER HIMSELF. THE M.P. NO. 125/MDS/12 5 PAYMENTS WERE ALL EFFECTED IN CASH AND EACH OF SUCH PAYMENT EXCEEDED ` 20,000/-. WE ARE, THEREFORE, OF THE OPINION THAT THE ASSESSING OFFICER HAD RIGHTLY MADE DISALLOWANCE UND ER SECTION 40A(3) OF THE ACT. WE SET ASIDE THE ORDER OF CIT(A PPEALS) AND REINSTATE THE ADDITION MADE BY THE A.O. UNDER SECTI ON 40A(3) OF THE ACT. 3. THE DISALLOWANCE MADE BY THE ASSESSING OFFICER W AS HELD TO BE JUSTIFIED IN VIEW OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. A.D. JAYAVEERAPANDIA NADAR & SONS (2007) 207 CTR 428. THE TRIBUNAL HAD GIVEN THE FINDING AFTER GOING THRO UGH THE RECORDS, INCLUDING THE LEDGER COPIES ANNEXED TO THE ASSESSME NT ORDER. NOW, THE ARGUMENT OF THE ASSESSEE IS THAT THE LEDGER COP IES APPENDED TO THE ASSESSMENT ORDER SHOWED ONLY SUMMARY OF CASH TR ANSACTIONS AND THIS ASPECT WAS NOT CONSIDERED BY THE TRIBUNAL. IN THE FIRST PLACE, THIS SUBMISSION IS ON THE FACE OF THE RECORD INCORR ECT SINCE THE ANNEXURES TO THE ASSESSMENT ORDER CLEARLY MENTION T HE DATES OF THE TRANSACTIONS AND HENCE CANNOT BE PRESUMED AS SUMMAR IES. IN THE SECOND PLACE, ASSESSEE IS SEEKING A REVIEW OF THE O RDER OF THIS TRIBUNAL AND ASKING FOR RE-APPRECIATION OF THE EVID ENCE ON RECORD. WE ARE OF THE OPINION THAT THE TRIBUNAL HAVING DECI DED THE MATTER ON MERITS, THERE IS NO MISTAKE WHATSOEVER ON RECORD WH ICH WOULD WARRANT INVOCATION OF POWER VESTED UNDER SECTION 25 4(2) OF THE ACT. THIS TRIBUNAL IS NOT HAVING ANY POWER TO REVIEW. O NLY GLARING AND M.P. NO. 125/MDS/12 6 APPARENT MISTAKE IS SUSCEPTIBLE FOR RECTIFICATORY P ROCEEDINGS UNDER SECTION 254(2) OF THE ACT. WE, THEREFORE, FIND NO MERIT IN THIS MISCELLANEOUS PETITION FILED BY THE ASSESSEE. 4. IN THE RESULT, MISCELLANEOUS PETITION FILED BY T HE ASSESSEE IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON FRIDAY, TH E 28 TH OF SEPTEMBER, 2012. SD/- SD/- (VIKAS AWASTHY) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 28 TH SEPTEMBER, 2012. KRI. COPY TO: (1) PETITIONER (2) RESPONDENT (3) CIT(A) (4) CIT (5) D.R. (6) GUARD FILE