Income Tax Appellate Tribunal - Chandigarh
Sh. Pardeep Kumar, Kurukshetra vs Acit, Circle , Kurukshetra on 1 August, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, च डीगढ़ I N T H E I NC OM E T A X A P PEL L A TE T RI B U N AL D I V I SI O N B E NC H , ' SM C ' , CH A N DI G A RH ी संजय गग , या यक सद य B E F OR E S H R I S A N J A Y G A R G, J U D I C I A L M E M B E R आयकर अपील सं./ ITA No. 4 2 / C H D / 2 0 1 9 नधा रण वष / Assessment Year : 2015-16 Shri Pradeep Kumar, Vs. The ACIT, H.No. 2124, Sector 5, बनाम Circle Kurukshetra, Kurukshetra, Kurukshetra Haryana थायी लेखा सं./PAN NO: DMZPK9317 अपीलाथ /Appellant यथ /Respondent नधा रती क ओर से/Assessee by : S/Shri B.S. Monga & Shri Rohit Kaura, Advocates राज व क ओर से/ Revenue by : Sh. Manjit Singh, CIT DR सन ु वाई क तार%ख/Date of Hearing : 22.07.2019 उदघोषणा क तार%ख/Date of Pronouncement : 01.08.2019 आदे श/Order The present appeal has been preferred by the assessee against the order dated 25.10.2018 of the Commissioner of Income Tax (Appeals), Karnal [hereinafter referred to as 'CIT(A)'].
2. The assessee in this appeal has taken following grounds of appeal:-
1. That the order of Learned CIT(A), is against the law and facts of the case.
2. That the Ld. CIT (A) is not justified while confirming the addition of Rs. 17,00,000/-, without appreciating that payments are made to Government organization and totally ignoring Rule 6DD and the proviso to section 40A(3).
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3. That the Ld. CIT (A) has erred while confirming the addition of Rs. 17,00,000/-, more so when, neither the AO nor the CIT(A) has disbelieved the genuineness of the transactions and business expediency.
4. That the Ld. CIT (A) is not justified while dismissing the appeal of the assessee on account of mismatch of purchases of Rs. 6,64,108/- as per 26AS, totally ignoring the authentic documentary evidences.
3. Ground No.1: Ground No.1 is general in nature and does not require any specific adjudication.
4. Ground Nos. 2 & 3: Vide these grounds, the assessee has agitated the action of the lower authorities in making / confirming the addition of Rs. 17,00,000/- u/s 40A(3) of the Income Tax Act, 1961 (in short 'the Act') for making in the payment in cash.
5. The brief facts relating to the issue are that the assessee is engaged in the business of sale of liquor for the state of Haryana. The assessee during the year purchased liquor from Rajasthan State Beverages Corporation Ltd. (in short 'RSBCL'), which is a undertaking of Government of Rajasthan. The Ld. Counsel for the assessee has relied on the Rule 6DD(b) of the Income Tax Rules, 1962 to submit that since the payments were made to a Government organization, hence, the disallowance u/s 40A(3) of the Act was not attracted. In the alternative, it was argued that this was the first year of the inception of the business of the assessee. Since the assessee is in the retail business ITA No. 42-Chd-2019- Shri Pardeep Kumar, Kurukshetra 3 of liquor, the amount on the sale of liquor was received in cash from the customers which was further deposited as such on regular basis with 'RSBCL' for unrestricted supply of the liquor for further retail sale. Since the amount was paid to the Government organization and the nature of the business was such that it requires immediate payment for the quick release of the liquor from the organization for further sale to the customers, the source of the amount deposited with the seller organization was out of the cash sale consideration received from the customers, which were promptly got deposited with the 'RSBCL', hence, the assessee under the compelling circumstances had deposited the amount in cash with the seller organization which otherwise is a Government organization.
6. The Ld. DR, on the other hand, has submitted that the payment was made to the 'RSBCL' which is a Corporation registered under the Companies Act, hence, it cannot be said to fall in the definition of the Government. That the assessee, thus, has violated the provisions of section 40A(3) in making the payment in cash instead of banking channels.
7. I have considered the rival contentions. Though the 'RSBCL' (Seller) is stated to be Government organization but it does not strictly fall in the definition of the Government as it is a distinct entity registered as Company under the Companies Act. However, it is not disputed that the said organization is a Government undertaking formed ITA No. 42-Chd-2019- Shri Pardeep Kumar, Kurukshetra 4 under the Excise policy of the Govt. of Rajasthan to regulate the sourcing / pricing of the liquor in the State of Rajasthan. The assessee, thus, under the bonafide belief taking it as a Government, made the payment in cash. There is also force in the contention of the assessee that because it was the first year of the inception of business of the assessee and the source of funds of the assessee was out of the sale of liquor in retail, which was received in cash, and was further deposited with the said organization 'RSBCL' to ensure uninterrupted and quick supply of liquor to the assessee for further distribution and sale at its retail outlet. That the nature of the business of the assessee was such that the assessee was having business compulsion to promptly deposit the amount with 'RSBCL'. Further that the genuineness of the transaction being made with the Government organization was not disputed. It is not a case where either the seller corporation or the assessee could have concealed their income or avoided the payment of taxes relating to the transaction under consideration.
8. In view of the above circumstances, and considering the bonafide of the assessee as well as compulsion of the assessee in making the payments in cash, I do not think it a fit case for disallowance u/s 40A(3) of the Act and the same is accordingly ordered to be deleted.
9. Ground No.4: Vide this ground the assessee has agitated the action of the lower authorities in making the addition of Rs. 6,64,108/- on amount of mismatch of purchases as per From 26AS.
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10. The Ld. Counsel for the assessee has submitted that the assessee has reconciled the purchases and has dully tallied the same with the books of account. The Ld. Counsel has submitted that the assessee may be given opportunity to present the reconciled statements before the Assessing Officer for further verification.
11. Considering the interest of justice, this issue is restored to the file of the Assessing Officer for adjudication afresh after considering the reconciled statements submitted by the assessee in this respect.
In view of this, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the Open Court on 01.08.2019.
Sd/-
(संजय गग / SANJAY GARG)
या यक सद य/ Judicial Member
Dated : 01.08.2019
"आर.के."
आदे श क त,ल-प अ.े-षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु/त/ CIT
4. आयकर आयु/त (अपील)/ The CIT(A)
5. -वभागीय त न2ध, आयकर अपील%य आ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar ITA No. 42-Chd-2019-
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