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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri A. Mohan Alankamony & Shri S.S. Godara
O R D E R Per S. S. Godara, J.M. This assessee’s appeal for A.Y 2009-10 arises from the Commissioner of Income Tax (Appeals)-1, Hyderabad’s order dated 15.11.2016, in case No.0081/CIT(A)-1/Hyd/2015-16/2-16-17, involving proceedings under section 143(3) r.w.s. 263 of Income Tax Act, 1961 (in short, “the Act”).
Heard both the parties. Case file perused.
Coming to the assessee’s first and foremost substantive ground that the CIT(A) has erred in law and on facts in invoking section 40A(3) disallowance regarding cash payment of Rs.4 lakhs incurred for purchase of Bitumen, we note that the lower appellate discussion to this effect reads as under :
5. Ground No.1: Disallowance of Rs. 4 lakhs u/s 40A(3): 5.1 During the course of assessment proceedings, the Assessing Officer noticed that the assessee had paid a sum of Rs.4,00,000/- in cash to M/s. Total Infra on 10.03.2009 u/s 40A(3). Assessing Officer on verification of the ledger account found that the assessee had been purchasing Bitumen regularly from MIs. Total Infra on credit basis and made payments through cheque. Only in respect of Bill No. 277 dt 10.03.2009 for an invoice value of Rs.3,84,088/. The assessee had paid Rs.4,00,000/- in cash on 13.03.2009. Assessee submitted before the Assessing Officer that the payment made to M/s. Total Infra was in the normal course of business and the payments were genuine. However, the Assessing Officer followed the following case laws • Attar Singh Gurumukhi Sing Etc. Vs ITO 191 667 (SC). • Medium Oil Co., Vs. ITO 92 ITR 519 (AP). A portion of the order of Medium Oil Co Vs ITO" was quoted, and is being reproduced as under: "The terms of section 40A(3) are not absolute. Consideration of business expediency and other relevant factors are not excluded. The genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the Assessing Officer. " The Assessing Officer has not accepted the contentions of the assessee, for the reason doesn't come under any clause of Rule 600 and pointed that the following payments were made by cheque are as follows:
It was also noticed by AO that the payments in respect of the bills raised in the month of February, 2009 had been paid in the month of April, 2009. When the assessee was adopting the procedure of paying the outstanding bills as per the dates raised. AO concluded, there was no reason as to why 2 the bill raised on 10.03.2009 was paid in cash on 13.03.2009. The assessee could not offer any reason for the above. Also The cash payment of Rs.4,00,000/- made on 13.03.2009 towards outstanding bill was not covered by any of the exceptions mentioned in Rule 600. Therefore, Assessing Officer disallowed the cash payment of Rs.4,00,000/- made on 13.03.2009. 5.2 Before me, the applicant submitted copy of the invoices raised for Total Infra which they had to pay.
When applicant was asked to produce evidence for the payment in cash, the applicant submitted before me, that Mis. Total Infra doesn't exist anymore hence no confirmation could be produced. Applicant was then asked to submit purchase bills of the party (Total Infra) along with ledger and bank payments. Applicant submitted copies of 13 invoices mentioned above. As seen from the Xerox copies of the bills submitted before me, no proper postal address, PAN Number or Phone number exists in the invoice. Bills has been issued on a continuous invoice number. Applicant was unable to confirm whether cash to the party were received by Mis. Total Infra or not. The genuineness of the cash transaction with Mis. Total Infra could not be proved by the applicant before me.
In scenario where payment in cash is doubted hence transaction are doubted. The applicant also has not come up with any reason as to why cash payment was made to a party whom they have claimed to be their regular supplier of the Bitumen, before the Assessing Officer and me. I uphold the addition made on this ground as applicant has failed justify payment of cash in contravention of the section 40A(3). -Ground dismissed”
Mr. Anil Kumar vehemently contended during the course of hearing that the impugned disallowance pertains to a very penalty sum of Rs. 4 lakhs regarding Bitumen purchase in cash wherein both the learned lower authorities have already allowed the corresponding claims qua the very payee. He also pleaded overwhelming genuineness element therein in light of case laws Attar Singh Gurmukh Singh etc Vs. ITO 191 667 (SC) and Anupam Teleservices Vs ITO (2014) 366 ITR 122 (Guj). We find no merit in the assessee’s instant argument since it could nowhere submit the explanation; much less a cogent one, in support of the case that there existed some cogent reasons for making the impugned cash payments regarding bitumen purchase. We thus hold that it is failed to explain the exigencies involved in cash payments which has constrained the learned lower authorities to invoke the impugned section 40A(3) disallowance. The same stands upheld therefore.
Next comes section 40(a)(ia) disallowance of Rs.71,70,700/-. Learned counsel states very fairly that the CIT(A) has restored the instant issue back to the Assessing Officer in light of section 40(a)(ia) 2nd proviso inserted in the Act by the Finance Act, 2012 w.e.f. 01.04.2013 held curative in nature having retrospective effect as per hon’ble Delhi high court’s judgment in PCIT Vs. Ansal Landmark Township (P) Ltd (2015) 377 ITR 635. We thus find that although section 251(1)(a); as amended w.e.f. 01.06.2001, has taken away the CIT(A)’s jurisdiction “to set aside” the issue back to the Assessing Officer, the fact remains that the clinching aspect as to whether the corresponding payee(s) stands assessed or not qua the same, indeed requires factual verification. We thus reverse the learned CIT(A)’s direction in principle to adopt the very course of action and restore the issue back to the Assessing Officer in light of section 40(a)(ia) 2nd proviso to be finalized within three effective opportunities of hearing. No other ground has been pressed before us. 5. This assessee’s appeal is partly allowed for statistical purposes in above terms.
Order pronounced in the Open Court on 16th December, 2021.