Income Tax Appellate Tribunal - Delhi
Sikka Promoters Private Ltd., Delhi vs Assessee on 7 February, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH : G: NEW DELHI
BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT
AND
SHRI I. C. SUDHIR, JUDICIAL MEMBER
ITA Nos. 4084,4075/Del/2013
Assessment Year: 2009- 2010
Sikka Promoters Private Ltd. vs. DCIT
C-260, Sikka House Circle-8(1)
Main Vikas Marg, Preet Vihar New Delhi.
Delhi- 110 092
(PAN AAACS2759P)
(Appellant) (Respondent)
Appellant by : Shri K.R. Manjani, Advocate
Respondent by : Smt. Renuka Jain Gupta, Sr. DR
ORDER
PER I.C. SUDHIR, JUDICIAL MEMBER
ITA No. 4075/D/2013
The assessee has questioned first appellate order on the ground that Ld. CIT(A) has erred in rejecting application u/s 154 even though the payment was made through account payee cheque or on the day when it was holiday or for salary and labour payment made on one day.
2. In support of the ground the Ld. AR submitted that the payment in cash exceeding Rs. 20,000/- made to different parties on account of some bonafide reason does not attract provisions of section 40A(3) of the Act. He 2 ITA Nos. 4084,4075/Del/2013 submitted that the AO had disallowed the payments made in cash exceeding Rs. 20,000/- also in cases of some parties where it was through account payee cheque or due to some bonafide reason. It was pointed out in its application moved u/s 154 of the Act that payment to OM Advertising was made through account payee cheque and bank statement was submitted alongwith the application. Regarding the payment made to Timber merchant it was submitted that when the payment made on 5.4.2008 it was Saturday and bank was also closed at 12.30 pm. The timber merchant was not agreeing to sell timber to the assesee without having cash or demand draft. The only option left with the assessee at that time was to pay by cash or demand draft could not be made due to end of the closure of bank hour that day. Likewise on 7.5.2008 payment of Rs. 22,000/- was made to Shri S.K. Singh, an employee of the assessee, as his wife was hospitalised in nursing home and he was in urgent need of money. He submitted further that on 5.8.2008 payment of Rs. 30,000/- was given to Shri Ghanshyam who has to distribute the same amongst the labourers and the amount was not only pertain to him which could have been provided through the voucher on which the name of all the labourers were mentioned. Ld. AR submitted further that the AO while rejecting the application filed u/s 154 of the Act did not consider the request of the assessee for deleting the addition of Rs. 1,56,908/- u/s 154 of the Act. This action of the AO has been upheld by the Ld. CIT(A). He submitted that the 3 ITA Nos. 4084,4075/Del/2013 assessee had also filed documents in support of its application moved u/s 154 of the Act.
3. The Ld. DR on the other hand tried to justify the orders of the authorities below and reiterated the contents of those orders.
4. Considering the above submission we find that appreciating the mistake apparent from record in the assessment order as pointed out by the assessee in its application u/s 154 of the Act before the AO, the AO had already accepted the submission of the assessee regarding the payment made for the printing and stationery to Shri S.K. Singh, Shri S.S. Chauhan and others except the payment made to OM Advertising of Rs. 2,66,74/- on 1.4.2008, Mahavir Timber of Rs. 25,965/- and Rs. 26,770/- on 5.4.2008 on the basis that no documentary evidence was furnished in support thereof. About the explanation of the assesee regarding payment of Rs. 26,674/- made to Om Advertising on 1.4.2008 that it was made through account payee cheque No. 127225 drawn on Indus Ind Bank in favour of OM advertising, we are of the view that non consideration of the same was mistake apparent from record in the order passed u/s 154 of the Act by the AO. In the case of Mahavir Timber to whom payment of Rs. 25,965/- and Rs. 26,770/- on 5.4.2008 were made the submission of assessee before us remained that payment was mad as bank was closed by 12.30 p.m. as the date was Saturday and the said Timber merchant was insisting for cash payment or payment through draft. We do not find that in the application 4 ITA Nos. 4084,4075/Del/2013 u/s 154 of the Act made before the AO such explanation was made before the AO or any evidence was filed in support to this explanation. The first appellate authority to this extent has thus rightly approved the action of the AO in this regard. The Ld. CIT(A) was however not justified in approving the assessment order that there was no mistake apparent from record in the assessment order regarding denial of explanation towards the payment made to OM Advertising at Rs. 26674/-. The mistake was apparent and the AO was supposed to rectify it while rectifying the other mistake pointed out in the application. The AO is directed to allow the same. The ground is thus partly allowed.
4. In the result appeal is partly allowed.
ITA No. 4084/Del/13
5. The assessee has questioned first appellate order on the ground that Ld. CIT(A) has erred in sustaining the penalty for concealment for the disallowance made u/s 40A(3) even though this addition was also rectified by the AO u/s 154 and the assessee had filed full particulars.
6. In support of the ground Ld. AR submitted that the Ld. CIT(A) has dismissed the appeal of the assessee without considering the written arguments and evidence filed during the course of appellate proceedings. He submitted that all the necessary information regarding the cash payment exceeding Rs. 20,000/- made to different parties under different circumstances were furnished before the AO. On the basis of which only he 5 ITA Nos. 4084,4075/Del/2013 made disallowance of RS. 296908/- u/s 40A (3) regarding the payment made on different dates. Subsequently application u/s 154 of the Act was moved by the assessee pointing out certain mistakes apparent from the record in the assessment order and appreciating the same the AO had deleted the disallowance of Rs. 1,40,000/-. Under these facts and circumstances when the provisions of section 40A (3) must not be read in isolation or exclusion of Rule 6DD as an established position, there was no reason to arrive at a conclusion that the disallowance was due to concealment of particulars of income or furnishing inaccurate was due to concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee to attract penal provisions. He cited several decisions those relied before the Ld. CIT(A) including the decision of Hon'ble Supreme Court in the case of CIT vs. Reliance Petro Products 322 ITR 158 (SC) holding that merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to the revenue, that by itself would not attract the penalty u/s 271(1)(c) of the Act.
7. Ld. DR on the other hand tried to justify orders of the authorities below.
8. Considering the above submission we find force in the contention of the Ld. AR that the disallowance u/s 40A(3) of the Act was made by the AO only on the basis of disclosure made by the assessee in this regard. The 6 ITA Nos. 4084,4075/Del/2013 initial disallowance of Rs. 2,96,908/- u/s 40A(3) of the Act regarding payment exceeding Rs. 20,000/- to 10 parties made by the AO has also been reduced Rs. 1,56,908/- in its order by the AO u/s 154 of the Act. The explanation of the assessee to bring its case under exceptional circumstances provided under Rule 6DD which must be read with section 40A(3) for the payment to 10 parties on different dates were initially denied by the AO during the course of assessment proceedings and disallowance u/s 40A (3) was made, but being convinced with the explanation of the assessee during section 154 proceedings, the AO has accepted that there was mistake apparent from record in the assessment order regarding non acceptance of explanation of the assessee about the payment made to the parties except payment made to Om Advertising and Mahaveer Timber. The AO has deleted the disallowance made on account of the payment to remaining 8 parties. Under these circumstances it cannot be inferred beyond doubt that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee regarding the payment made to OM Advertising and Mahaveer Timber explanation of which has not been accepted by the AO. We however mentioned over here that in the above appeal preferred by the assessee against the disallowance made on account of payments to these parties, we have held that there was mistake apparent in the order of the AO in not accepting the payment made to OM Advertising through an account payee 7 ITA Nos. 4084,4075/Del/2013 cheque in support of which bank statement was also furnished before the AO. The explanation of the assessee regarding payment made to Mahaveer Timber remained that on 5.4.2008 when an amount of Rs. 25,965/- and Rs. 26,770/- were paid it was Saturday and banking hour was restricted till 12.30 p m and the timber merchant was insisting to pay the amount in cash or by way of demand draft against the delivery of the timber to the assesee and since the banking facilities were not available during those hour after 12.30 p m the assessee was having no option but to pay the amount in cash to Mahaveer Timber to take delivery of timber for its business. Without verifying this explanation as to whether 5.4.2008 was Saturday or not in our view it cannot be arrived at a conclusion beyond doubt that explanation of the assessee was false. Under these circumstances we are of the view that the AO was not justified in attracting penal provisions u/s 271(1)© of the Act in the present case under these facts and circumstances and in absence of arriving at this fact clearly beyond doubt that there was concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee towards the disallowance. We thus set aside the order of the authorities below regarding the penalty levied u/s 271(1)© in question.
9. In the result penalty is deleted. The ground is accordingly allowed.
10. Consequently appeal is allowed.
8
ITA Nos. 4084,4075/Del/2013
11. In summary ITA No. 4075/D/13 is partly allowed and ITA No. 4084/D/13 is allowed.
The order is pronounced in the open court on 7th February, 2014 . sd/- sd/-
(G.D. AGRAWAL) ( I.C. SUDHIR )
VICE PRESIDENT JUDICIAL MEMBER
Dated 7th February, 2014
Veena
Copy of order forwarded to:
1. Appellant
2. Respondent
3. CIT(A)
4. CIT
5. DR
By Order
Assistant Registrar, ITAT