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Luxmi Chand Goel, C/o Prem Parkash, Advocate, Raj Complex, Mahavir Chowk, Muzaffarnagar (UP) VS. Income Tax Officer, Ward 1(2), Muzaffarnagar Uttar Pradesh
July, 04th 2014
                                                           ITA NO. 4297/Del/2012

                       DELHI BENCH "D", NEW DELHI

                          I.T.A. No. 4297/DEL/2012
                                 A.Y. : 2009-10
Luxmi Chand Goel,              VS.                   Income Tax Officer,
C/o Prem Parkash,                                    Ward 1(2),
Advocate,                                            Muzaffarnagar
Raj Complex, Mahavir                                 Uttar Pradesh
Muzaffarnagar (UP)
(APPELLANT)                                          (RESPONDENT)

          Assessee by                 :    Sh. None
         Department by                :    Sh. SN Bhatia

     This appeal by the Assessee is directed against the order of the
Ld. Commissioner of Income Tax (Appeals), Muzaffarnagar                 dated
22.5.2012 pertaining to assessment year 2009-10 wherein following
two effective grounds have been raised.

           "1.     The Ld. AO was wrong in disallowing payments of
                   freight u/s. 40A(3) as each expense is below Rs.
                   20,000/- and payment for two or more expenses at
                   a time is not to be considered whether the same is
                   above Rs. 20,000/-.

           2.      That the AO was wrong in applying the provisions of
                   Section 40A(3) to the truck transport charges

                                                           ITA NO. 4297/Del/2012

                  payments as the same are not covered by                  this

2.      The facts of the case in brief are that the assessee is an

individual, deriving income from trading of match boxes and biris.

Return declaring income of Rs.2,35,200/- was filed on 8.9.2009.

During the course of assessment proceedings, from the examination

of the    accounts, it was     gathered by the Assessing Officer that

assessee had made payment           of Rs. 4,30,579/-      under the head

"freight and cartage" on different dates to the transporters. Out of

which the amount aggregating to Rs. 4,12,579/- was paid in

contravention of provisions of section 40A(3) of the Act as the

payments exceeded Rs. 20,000/- to a single person on a day and

without deducting any tax at source. Thus, it was held by the AO

that the provisions of section 40a(i) were violated. In light of the

above facts and in the absence of any explanation,                   the AO

disallowed the amount of Rs. 4,12,579/- which was added to the

income of the assessee.

3.      Aggrieved by the Order of the AO, assessee took the matter in

the appeal and raised various contentions and relied upon different

case laws, citing relevant provisions of law and pleaded for deletion

of addition made by the AO. Ld. CIT(A) while noting the contention

raised by the Ld. AR of the assessee during the hearing of appeal,

after    reproducing   the    relevant   provisions   of   law    and    after

                                                     ITA NO. 4297/Del/2012

considering the remand report of the AO and the rejoinder of the

assessee has concluded to give part relief to the assessee as per

last paragraph   at Pages 14 to 16 of the order of the CIT(A) as


                    "The facts of the case, submissions made by
                    the appellant, remand report of the AO and
                    rejoinder of the appellant have been carefully
                    considered.       It is observed that the AO had
                    made addition of Rs. 4,12,579/- on the ground
                    that the appellant had made payment of Rs.
                    4,30,579/- on account of freight and cartage
                    on different dates to the transporters. Out of
                    which the aggregate of sums of Rs. 4,12,579/-
                    were paid in contravention of provisions of
                    section 40A(3) of      the Act as the payments
                    made exceeded Rs.20,000/- to a single person
                    on a single date. On the other hand it has
                    been contended that each payment made to
                    the transporter is a single payment' which
                    does not exceed Rs.20,000/- and as such,
                    provision of section 40A(3) is not applicable.
                    To decide the impugned issue let us go
                    through the relevant provisions of the Act.

                    Section 40A(3) of the Act says -

                    "   ....   Where     the   assessee   incurs     any
                    expenditure in respect of which a payment or.
                    aggregate of payments made to a person in a
                    day, otherwise than by an account payee

                               ITA NO. 4297/Del/2012

cheque drawn on a bank or account payee
bank draft, exceeds twenty thousand rupees,
no deduction shall be allowed in respect of
such expenditure ..... "

(emphasis supplied)

It is amply clear that provisions of section
40A(3) of the Act are attracted in a. case
where assessee has incurred any expenditure
iI respect of which a payment or aggregate of
payments are made to a person in a day
exceed Rs.20,000/-.

     The Range JCIT in her report dated 20-
04-2012     has    pointed    that     payments
aggregating to Rs. 1,43,449/- were made to
R.P. Lorry in violation to section 40A(3) of the
Act. The Range JCIT has also furnished details
of such payments in the shape of chart which
is reproduced as above. The appellant his
rejoinder has submitted that the decision of
the Hon'ble Madhya Pradesh High Court in the
case of Shri Radhika Parkashan vs. CIT 172
CTR (MP) 463(2002) is distinguishable to the
facts of the case under consideration. The
appellant' has also placed reliance on         the
decisions of various Hon'ble Courts in support
of his contention. However, it is observed that
the appellant has not been able to controvert
the findings of the Range JCIT to the effect
that no case of exceptional or unavoidable

                                                            ITA NO. 4297/Del/2012

                      circumstances for making the payment in cash
                      has been made out by the appellant. The
                      finding recorded by the Range JCIT is that the
                      assessee had consciously split up the payment
                      in several payments so that each payment
                      does      not       exceed   Rs.20,000/-       only     to
                      circumvent the provisions of law. Further, the
                      appellant has also not been able to establish
                      that the payments made to the extent of
                      Rs. 1,43,449/- were covered under any clause
                      of Rule 6DD of the I.T. Rules, 1962. In light of
                      the above facts it is held that the AO was
                      justified to make addition to the extent of Rs.
                      1,43,449/- u/s. 40A(3) of the Act and the same
                      is hereby confirmed. The appellant has himself
                      admitted that Rs. 22,990/- paid on 12.5.2008
                      as freight in cash violated the provisions of
                      section    40A(3)       of   the    Act.   Thus       total
                      disallowance u/s. 40A(3) amounting to Rs.
                      1,66,439/- (Rs. 1,43,449 + Rs. 2,46,140/-) is
                      directed to be deleted.            Grounds of appeal
                      nos. 1 to 3 are partly allowed."

4.   Still aggrieved assessee has come up in further appeal and

while reiterating the submissions as made before the Ld. CIT(A), it

was pleaded for deletion of the entire addition made by the AO and

to the extent confirmed by the CIT(A), citing ITAT decision of the `B'

Bench, Delhi in the case of Hindustan Vacuum Glass Ltd. vs. ACIT

(1995) 52 TTJ (Del.) 384 and other case law cited before Ld. CIT(A).

                                                       ITA NO. 4297/Del/2012

5.   Ld. DR while relying upon the orders of the AO and the CIT(A)

has pleaded for confirmation of the impugned order. It was further

contended that whatever relief was available / could be granted to

the assessee,   has already been granted by the CIT(A) and since

assessee has not been able to substantiate its claim for          further

relief, therefore, order of the CIT(A) should be confirmed and appeal

of the assessee may be accordingly dismissed.

6.   None appeared on behalf of the assessee, but from the record

we find that written submissions from assessee's side are there in

which it is contended to follow the decision of ITAT in Hindustan

Vacuum Glass Ltd. vs. ACIT (Supra), to delete the impugned addition

as made by the AO and to the extent confirmed by the Ld. CIT(A).

7.   We have heard the Ld. DR's submissions, written submissions

of assessee and relevant provisions of law as well as case laws cited

before the Ld. CIT(A) and before this Bench.         On perusing the

material on record, we find that assessee has not been able to

substantiate its claim for further relief in as much as relief allowable

to the assessee has already been granted by the ld. CIT(A) and case

law cited is distinguishable and not relevant. Therefore, we do not

find any reasonable basis to give any further relief, as such, while

considering the entirety of the facts and circumstances of the case

and material on record, in light of the case laws cited, we uphold

                                                    ITA NO. 4297/Del/2012

the order of the Ld. CIT(A) in this regard and dismiss the appeal of

the assessee.

8.    In the result, the Appeal filed by the Assessee           stands

      Order pronounced in the Open Court on 02/7/2014.

                Sd/-                                  Sd/-

   [T.S. KAPOOR]                                          BEDI]
                                                  [U.B.S. BEDI]
ACCOUNTANT MEMBER                               JUDICIAL MEMBER

Date 02/7/2014

Copy forwarded to: -
1.    Appellant
2.    Respondent
3.    CIT
4.    CIT (A)
5.    DR, ITAT

                           TRUE COPY
                                                By Order,

                                                Assistant Registrar,
                                                ITAT, Delhi Benches

    ITA NO. 4297/Del/2012

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