Income Tax Appellate Tribunal - Delhi
Luxmi Chand Goel, Muzaffarnagar vs Assessee on 2 July, 2014
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 1 ITA NO. 4297/Del/2012 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 2 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 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 3 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 4 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). 5
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 6 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 dismissed.
Order pronounced in the Open Court on 02/7/2014.
Sd/- Sd/-
[T.S. KAPOOR]
KAPOOR] [U.B.S. BEDI]
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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ITA NO. 4297/Del/2012
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