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Income Tax Appellate Tribunal, PATNA BENCH AT KOLKATA
Before: SRI SANJAY GARG & SRI RAJESH KUMAR
order
: July 13th, 2023 ORDER
Per Rajesh Kumar, Accountant Member:
The only issue raised in the grounds of appeal is against the deletion of addition of Rs. 1,35,56,279/- by Commissioner of Income Tax (Appeals)-1, Patna [in short Ld. 'CIT(A)'] as disallowed and added by Ld. AO u/s 40A(3) of the Act.
I.T.A. No.: 86/PAT/2020 Assessment Year: 2016-17 India Carriers Pvt. Ltd.
The facts in brief are that during the course of assessment proceedings, Ld. AO observed that the assessee has made payment on account of transportation charges to Sh. Sanjay Singh during FY 2015-16 to the tune of Rs. 1,09,90,000/- in cash which did not exceed Rs. 35,000/- per day. Ld. AO also noted that the assessee could not produce any credible evidences to prove that the balance of Rs. 2,45,46,279/- was paid other than by cash mode and accordingly the difference between the two figures was disallowed on the ground payments in contravention of section 40A(3) of the Act and added the same to the income of the assessee.
In the appellate proceedings, Ld. CIT(A) allowed the appeal of the assessee by holding as under: “I have gone through the assessment order and submissions made by the appellant in the course of the appellate proceeding and given careful consideration to the facts and circumstances of the case. It is matter of record that the appellant company had got its books of account audited. In its report, the auditor had not pointed out any defect in the maintenance of books of account nor was the same brought on record by the AO in the assessment proceeding of the case. In the course of assessment proceeding, the AO accepted that the assessee had made payment to Sri Sanjay Singh, on a single day not exceeding Rs. 35,000/- payment to transporter provided by the section 40A(3) of the Act. Thereafter the AO himself quotes the provision of section 40A(3) of the Act and the full text of Rule 6DD in his order including the proviso that where the payment to a person is such that the same is made for plying, hiring or leasing goods carriages then the said payment can be upto Rs. 35,000/-per day in cash instead of Rs. 20,000/-. Thus the AO is contradicting himself by accepting that no payment in excess of Rs. 35,000/- in cash has been made on a day yet disallowing this expenditure u/s 40A(3) of the Act, and therefore I am of the opinion that the conclusion drawn by the AO is erroneous in view of the fact and specific provision of law and am inclined to accept I.T.A. No.: 86/PAT/2020 Assessment Year: 2016-17 India Carriers Pvt. Ltd. the contention of the appellant. The disallowance of Rs. 1,35,56,279/- u/s 40A(3) of the Act is therefore deleted.”
3. After hearing rival contentions and perusing the material on record, we find that Ld. CIT(A) has given a very cogent finding that on each day the payment did not exceed the maximum limit as provided u/s 40A(3) of the Act which was Rs. 35,000/- per day. We further noted that Ld. AO was aware of this fact and Ld. AO has in fact also discussed the same in the assessment order. We note that Ld. CIT(A) has deleted the disallowance by holding that observations of Ld. AO were contradictory as Ld. AO himself has accepted that no payment in excess of Rs. 35,000/- was made in cash on a single day, however, at the same time disallowed a sum of Rs. 1,35,56,279/- u/s 40A(3) of the Act. The Ld. CIT(A) has also recorded a finding that the books were audited and the auditors have not pointed out any discrepancy of that sort. The AO has made the addition on basis of conjectures and surmises without corroborating the fact of cash payments having been made exceeding limits provided by section 40A(3) of the Act. Accordingly, we do not find any infirmity in the order of Ld. CIT(A) and the same is upheld dismissing the appeal of the Revenue.