ITA NO. 4297/Del/2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "D", NEW DELHI
BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER
AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
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
Chowk,
Muzaffarnagar (UP)
(PAN:AAPG8460D)
(APPELLANT) (RESPONDENT)
Assessee by : Sh. None
Department by : Sh. SN Bhatia
ORDER
PER U.B.S. BEDI : JM
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
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payments as the same are not covered by this
section."
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
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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
under:-
"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
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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
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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).
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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
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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
dismissed.
Order pronounced in the Open Court on 02/7/2014.
Sd/- Sd/-
KAPOOR]
[T.S. KAPOOR] BEDI]
[U.B.S. BEDI]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 02/7/2014
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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