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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: SHRI MAHAVIR PRASAD & SHRI WASEEM AHMED
This appeal filed by the Assessee is directed against the order of the Commissioner of Income Tax (‘hereinafter called CIT(A)’) order no. CAB/4-20/2016-17 order dated 24/06/2017 arising out of assessment order dated 23/03/2016. Assessee has taken following grounds of appeal:
2 . A.Y. 2013-14 1. The Ld. CIT (A) has grossly erred in law and on facts in dismissing the appeal. He ought to have allowed the appeal fully in accordance with the grounds of appeal raised by the appellant before him. I. Disallowance u/s. 40A(3) of the Act - Rs. 11.55,540-
1. The Ld. CIT (A) has erred in law and on facts in confirming the addition of Rs. 11,55,540/- u/s. 40A(3) of the I. T. Act.
2. The Ld. CIT (A) as well as the A.O failed to properly consider the fact that appellant company has duly accounted the cash withdrawals from the bank account and there is no cash payment for any expenses in excess of the limit provided u/s. 40A(3) of the Act.
3. The Ld. CIT (A) has erred in law and on facts in failing to consider appellant company's submissions and judicial pronouncements relied upon by the appellant company.
Facts of the case are that assesse is a Private Company and derives income from manufacturing of transformers tanks.
During the course of assessment proceedings, while going through submission made by the assesse, it came to notice, the ld. A.O. that assesse has made various payments to a person in a day more than 20,000/- otherwise than by an account payee cheque drawn on a bank or account payee bank draft etc.
S No. Date of payment To -whom paid Amount(Rs.) 1 06/04/2012 Bhavesh Panchal 75,000- 2 07/04/2012 Bhavesh Panchal 3,22,000- 3 18/04/2012 A KPatel 27,000- 4 04/05/2012 AKPatel 90,500- 5 09/05/2012 Bhavesh Panchal 25,000- 6 21/06/2012 Hussain U Multani 25,000- 7 21/06/2012 Alpeshbhai Patel 25,000- 3 . A.Y. 2013-14
8 20/09/2012 Pratik Patel 50,000- 9 20/09/2012 50,000- Jai Prakash Kvshwaha 10 20/09/2012 Pratik Patel 50,000- 11 20/09/2012 50,000- Jai Prakash Kushwaha Ravikant Sharma 12 04/10/2012 50,000- 13 11/10/2012 K VPatel 50,000- 14 20/11/2012 Kamlesh VPatel 43,000- 15 04/02/2013 Bhavesh B Panchal 2,00,000- 16 07/02/2013 Mahesh Jadhav 23,040- Total 11,55,540-
And Ld. A.O. held that assesse has violated the provisions of section 40A(3) by making these payments otherwise than account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees to a person in a day and made addition of Rs. 11,55,540/-.
Against the said order, assesse preferred first statutory appeal before the Ld. CIT(A) who confirmed the order of the Ld. A.O. holding that appellant could not discharge onus which lay upon it by adducing any cogent evidence to support the bona fides of the claim.
We have heard both the parties and gone through the relevant record. Ld. A.R. filed a paper book containing 149 pages and Ld. A.R. drawn out attention towards the payment withdrawal made by the staff of the assesse. Paper book page no. 34 wherein detailed reply was submitted by the assesse before the lower authorities and 4 . A.Y. 2013-14 at page no. 69, 271, 272, 278, 279 & 281 entries of withdrawal are tally from the bank statement and out of 11,55,540/- Rs. 8,32,500/- has been withdrawn from the bank and for remaining payment of Rs. 3,23,040/- was made through cash payment or bearer cheque to the payer.
The assessee’s contention is that when payments were made on next day, there was holidays of continuous four days and those payments were made for the business expediencies and assesse was compel to make cash payment under peculiar circumstances as principal company to which asessee was a distributor, and recipient of the cash payment insisted assesse to make payment in cash as realization takes a longer time. And payments were effected for outstanding amount as requested keeping in mind next four coming holidays being Thursday Rath Yatra, Friday, Saturday and Sunday the clearing was not available as per the ledger account submitted by the asessee. So in our considered opinion, no disallowance can be made u/s. 40A(3) and benefit of rule 6DD(j) will be given to the assesse therein it is contemplated that if payment of Rs. More than Rs. 20,000/- paid in cash “where the payment was required to be made on a day on which banks were closed on account of holiday or strike.” It is pertinent to note here that assesse took this plea which was not accepted by the lower authorities so to our mind same is amounting to miscarriage of justice.
So in view of the above discussion, we allow appeal of the assesse.
In the result, appeal filed by the Assessee is allowed. Order pronounced in Open Court on 12 - 03- 2021