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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: SRI SANJAY GARG & DR. MANISH BORAD
order
: March 28th, 2023 ORDER
Per Manish Borad, Accountant Member:
This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2014-2015 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income Tax (Appeal)-NFAC, Delhi [in I.T.A. No.: 717/KOL/2022 Assessment Year: 2014-2015 Bandel Thermal Power Employees Cooperative Stores Ltd. short “ld. CIT(A)”] dated 15.10.2022 arising out of the Assessment Order framed u/s 143(3) of the Act dated 29.12.2016.
The assessee is in appeal before this Tribunal raising the following grounds: “
1. That the addition of Rs.2,58,498/- under Section 40A(3) and subsequent confirmation by the Appellate Authority is unjustified and bad in law.
2. That the addition of Rs.2,20,163/- under Section 36(l)(va) and subsequent confirmation by the Appellate Authority is unjustified and bad in law.
3. That an inadvertent mistake of the assessee due to non-availability of sufficient balance in their bank account and in order to get early supply should not initiate an unnecessary punitive measures which is totally unjustified and unwanted and should be deleted.
4. That the appellant /petitioner craves leave to file any further grounds of appeal and /or amend /alter any grounds of appeal in any time or at the time of hearing stage.”
3. Ld. Counsel for the assessee has not pressed ground no. 2, therefore, the same is dismissed as not pressed.
4. Ground no. 1 relates to disallowance u/s 40A(3) of the Act at Rs. 2,58,498/- for the alleged payments exceeding Rs. 20,000/- in cash. Ld. Counsel for the assessee submitted that the assessee regularly purchased stationery items from the M/s. Pradip Supply Agency and normally the payments are made in cash and they are below the prescribed limit of Rs. 20,000/-. The alleged disallowance is towards expenses genuinely incurred and there is no dispute regarding the same and therefore, prayed for deleting the said disallowance.
I.T.A. No.: 717/KOL/2022 Assessment Year: 2014-2015 Bandel Thermal Power Employees Cooperative Stores Ltd.
On the other hand, ld. D/R vehemently argued supporting the orders of both the lower authorities.
We have heard rival contentions and perused the records placed before us.
Ground no. 1 relating to disallowance u/s 40A(3) of the Act at Rs. 2,58,498/- is in challenge before us. We notice that the assessee is a cooperative society registered under West Bengal Cooperative Societies Act. It is running a cooperative store for doing business of sale of household commodities including dealership of Indian Oil Corporation for cooking gas. This society purchases essential commodities from M/s. Pradip Supply Agency under regular basis and payments are made through cheque and cash. We have perused the ledger account of M/s. Pradip Supply Agency placed at page 6 & 7 of the paperbook and find that there are regular purchases of stationery and grocery items round the year and payments are also made regularly. Prima facie we find that these are genuine expenses and payments are made regularly. Though it is not in dispute that the alleged disallowance has been made for payment exceeding Rs. 20,000/-, however, considering the genuineness of the expenditure as well as the payments being made to a party which is having regular business transactions with the assessee do not seem it to be a case of claiming bogus expenditure for reducing the tax liability.
We, therefore, in view of the judicial pronouncements as held by this Tribunal in case of Sri Manoranjan Raha vs. ITO in order dated 18.11.2015, Attar Singh Gurmukh Singh vs. ITO reported in (1991) 191 ITR 667 (SC), CIT vs. CPL Page 3 of 5 I.T.A. No.: 717/KOL/2022 Assessment Year: 2014-2015 Bandel Thermal Power Employees Cooperative Stores Ltd. Tannery reported in (2009) 318 ITR 179 (Cal) and considering the facts that the alleged sum has been paid towards business expediency obligation and the transactions are genuine, set aside the finding of ld. CIT(A), direct the ld. AO to delete the disallowance of Rs. 2,58,498/- made u/s 40A(3) of the Act. Our this decision should not be taken as a precedence for other cases of disallowance made u/s 40A(3) of the Act since our view is purely based on the facts of the instant case. Thus, ground no. 1 raised by the assessee is allowed.
Ground nos. 3 & 4 are general and consequential in nature which need no adjudication.