USMAN GANI HAROON BARA,MUMBAI vs. ITO, WARD-30(1)(1), OLD CHARGE HOLDER ITO, WRD-17(3)(5), MUMBAI
What did the Tribunal hold?
The Tribunal held that the cash payment of Rs. 83,175/- for transport charges was made under emergency circumstances and business expediency. The truckers insisted on cash payment due to their immediate need to return, and the payment was made when the bank was closed.
What were the facts?
The assessee, engaged in the transport business, filed its return of income. The CPC made an addition of Rs. 1,75,643/- for various disallowances, including Rs. 83,175/- for cash payments exceeding Rs. 10,000/-. The CIT(A) partly allowed the appeal.
What were the issues?
Whether cash payments exceeding Rs. 10,000/- for transport charges, made under circumstances of business expediency and emergency, are disallowable under Section 40A(3) of the Income Tax Act.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI AMARJIT SINGH
Per : Kuldip Singh, Judicial Member:
The appellant, Shri Usman Gani Haroon Bara (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 09.05.2023 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2018-19 on the grounds inter-alia that :- “1) On the facts and circumstances of the case, the Ld. CIT (A)-NFAG erred in upholding the order passed by the CPC - ITR Ld. A0 u/s 143(3) regarding dis-allowances of cash payments exceeding Rs. 10,000/- without considering material evidence [Payee identified with PAN) and the submissions made by the appellant and placing heavy 2 Shri Usman Gani Haroon Bara reliance on the technicalities of the law without considering the commercial expediency factor. 2) The Ld. CIT (A) - NFAC erred in not making any further enquiry by himself and/or directing the AO to make further inquiry and report the result of the same to him before disposal of this impugned appeal even though the powers of the CIT (A) were co- terminus with that of the Ld. AO. 3) The Ld. CIT (A) - NFAC erred in not passing a speaking order on the matter relating to charge of interest under sec. 234A only on the income returned and not on the assessed income where the tax liability had been duly discharged on the returned income before the original due date of the filing of the return under sec. 139(1). 4) The Ld CIT (A)- NFAC failed to give an opportunity of personal hearing by presenting a guide which contained steps different from the one stated in the Annexure to the notice and as such even after numerous attempts made by the Appellant he was not successful in doing the video conferencing on which an adverse opinion/view has been expressed in the order under appeal. The opportunity of personal hearing was merely a ritualistic exercise with no sincere appreciation and understanding of the appellants problems. 5) The Appellant craves leave to add, alter, amend, modify, substitute, and delete one or more grounds of appeal
at any time before or during the course of hearing of the appeal.”
2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee is an individual tax payer carrying on the business of transport, filed its return of income declaring total income of Rs.11,24,290/-, which was processed under section 143(1) of the Income Tax Act, 1961 (for short ‘the Act’) by making addition of Rs.1,75,643/- by making disallowance as under: “GST return late filing fee Rs.2000/- Electricity Rs.76,978/- Transport Charges Rs.83,175/- Office equipment Rs.13,490/- Rs.1,75,643/-” Total
3. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has partly allowed the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the 3 Shri Usman Gani Haroon Bara assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
The sole issue raised by the assessee in this case is challenging the addition of Rs.83,175/- on account of cash payment by violating the provisions contained under section 40A(3) of the Act.
Undisputedly the assessee has made the payment of Rs.83,175/- in cash to SARCO Road Lines who has further paid the same to six truckers as is evident from ledger maintained by SARCO Road Lines available at last page of the synopsis filed by the assessee. It is also not in dispute that as per proviso to section 40A(3) the cash payment towards transport charges is restricted to an amount of Rs.30,000/- in a day for the convenience of tax payers and due to certain expenses related to transport.
In the backdrop of the aforesaid undisputed facts when we consider the contention raised by the Ld. A.R. for the assessee that the cash payment was made under emergency circumstances because the truckers were insisting upon to take the cash payment as they had to go back on the same day, the contention is sustainable. Because in the transport business when individual truckers are there it is for their convenience and for the convenience of the business sometimes cash payment is made as insisted upon. 4 Shri Usman Gani Haroon Bara 8. Furthermore, it is contended by the Ld. A.R. for the assessee that the payment was made at 4:30 P.M. when bank was not opened at that time, the cash was paid due to business expediency. This contention is also tenable in the practical circumstances being faced by the truckers and the small businessmen otherwise they would lose their business/bread and butter if all the time they insist upon making the payment through banking channel to the truckers. The assessee is having turnover of Rs.6,00,00,000/- and in view of the matter this is the small amount paid by the assessee in cash. Moreover, it is not the case of the Revenue that the cash payment made by the assessee is an unaccounted cash or black money and there is nothing on the file to show any dishonesty and impropriety on the part of the assessee to make such payment.
So in view of what has been discussed above, we are of the considered view that the cash payment made by the assessee to the SARCO Road Lines who had further paid the same to six truckers as transport charges was under emergency circumstances and business expediency and by taking lenient view the AO is directed to delete the addition of Rs.83,175/-.
Resultantly, the appeal filed by the assessee is hereby allowed.
Order pronounced in the open court on 31.10.2023.
More judgments on Section 40A(3)
- Rekha Agarwal, Jaipur vs ITO WD 4(1), JaipurITA 844/JPR/2025[2021-22]Status: Disposed21 Oct 2026AY 2021-22
- Infra Developers, Shivpuri vs Income Tax Officer, AshoknagarITA 454/AGR/2026[2014-15]Status: Disposed16 Oct 2026AY 2014-15
- Saiyed Zaharul Alam, Murshidabad vs I.T.O., Ward - 42(1), MurshidabadITA 2233/KOL/2026[2013-2014]Status: Disposed16 Oct 2026AY 2013-2014
- M/S Sadana Electric Store, Lucknow vs DCIT Range-6, LucknowITA 283/LKW/2024[2014-15]Status: Disposed30 Sept 2026AY 2014-15
- Nagendra Prasad, Patna vs ITO Ward -5(3) Patna, Dak BanglowITA 362/PAT/2026[2016-17]Status: Disposed29 Sept 2026AY 2016-17
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