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Income Tax Appellate Tribunal, AHMEDABAD – BENCH ‘SMC’
Before: SHRI RAJPAL YADAV
Assessee is in appeal before Tribunal against order of the ld.CIT(A)-3, Ahmedabad dated 9.2.2015 passed for the Asstt.Year 2010-11. 2. The assessee has taken eight grounds of appeal, but the ld.counsel for the assessee has pressed only ground no.
In ground no.5, the assessee has pleaded that the ld.CIT(A) has erred in confirming the disallowance of Rs.27,723/- out of telephone and petrol expenses. The ld.counsel for the assessee did not press this ground of appeal.
In ground no.6, grievance of the assessee is that the ld.CIT(A) has erred in confirming charging of interest under ITA No.1181 /Ahd/2015
section 234B to 234C. The ld.counsel for the assessee admitted that it is consequential issue and therefore did not advance any arguments. Hence, this ground of appeal is rejected.
Ground Nos.1, 3, 4, 7 and 8 are general grounds of appeal. Hence, no specific finding is required to be recorded. Now I take ground no.2, which is substantial ground, which has been pressed by the ld.counsel for the assessee.
Grievance of the assessee is that the ld.CIT(A) has erred in confirming the disallowance of Rs.89,000/- which was made by the AO under section 40A(3) of the Income Tax Act, 1961. 6. Brief facts of the case are that the assessee has filed his return of income on 10.10.2010 electronically declaring total income at Rs.23,73,266/-. The AO has observed that a survey was carried out at the business premises of the assessee on 27.8.2009. The assessee at the relevant time was running a proprietorship concern in the name and style of M/s.Bafna Transport Company. The AO has issued a show cause notice asking explanation of the assessee that a payment of Rs.1.46 crores was made in the F.Y.2009-10 in violation of section 40A(3) of the Income Tax Act, 1961. In response to the show cause notice, it was contended by the assessee that payment of Rs.1.46 crores was sum of all three firms i.e. Rs.80.47 lakhs for Kapil Road Lines; Rs.64.64 lakhs for Bafna Roadlines whereas M/s.Bafna Transport Company is concerned i.e. for the proprietorship is concerned, no payment was made, and therefore, no disallowance ought to be made. The ld.AO observed that except a ITA No.1181 /Ahd/2015
sum of Rs.89,000, rest of the payments were attributable to other two transport companies, and were disallowed under section 40A(3). Therefore, the residual payment of Rs.89,000/- out of the total Rs.1.46 crores has been disallowed in the hands of the assessee. Appeal to the CIT(A) did not bring any relief to the assessee.
The ld.counsel for the assessee contended that Shri Kunal Prashbhai Bafna, Proprietor of Kapil Roadlines and Smt.Pravesh Bafna proprietor of Bafna Roadlines disputed disallowance in their hands and the matter travelled upto the Tribunal in ITA No.1179/Ahd/2015 as well as 1180/Ahd/2015. The Tribunal has deleted the disallowance of alleged Rs.1.46 crores except Rs.89,000/-. He placed on record copy of the Tribunal’s order in both the cases. The finding of the Tribunal in the case of Bafna Roadlines reads as under:
“5. We have gone through the relevant record an impugned order assessee is engaged in the transport business and giving her regular services to M/s. Nirma Ltd. and assessee has made cash payment of Rs. 64,64,030/- to the transporters for making cash payment of more than Rs. 20,000/- to the other transporters. Ld. AR contention is that in transport business cash payment is very much prevalent as truck drivers or owner insist for cash as they need the same for their onward journey expenditure towards diesel, toll tax, tyre, repair, TA/DA etc.
In the past several transport units made a representation to the Government and in Finance Act 2009 Government has brought an amendment for the benefit of transporters w.e.f. 01.10.2009 that in case payment made for plying, hiring or leasing goods carriers, the provision of sub-section (3) and (3A) shall have effect and words Rs.
ITA No.1181 /Ahd/2015
10,000/- has been substituted by word 35,000/- meaning thereby that if any payment made to any transporter for plying, hiring or leasing goods carriages that cash payment limit is increased to Rs. 35,000/-. As we can see from the paper book at one go no payment has been made for more than 35,000/-. Since above amendment is applicable in the case of the assessee, we allow this ground of the assessee.”
On due consideration of the above facts and circumstances, I am of the view that the AO sought to disallow Rs.1.46 crores in the hands of three proprietorship concerns. He disallowed major portion in the hands of two proprietorships. The residual payment of Rs.89,000/- has been disallowed in the hands of the assessee. The disallowance of major payments has been deleted by the Division Bench of the ITAT in the case of other two concerns. Thus, the issue in dispute is squarely covered in favour of the assessee by the decision of the ITAT in the case of other two proprietorship concerns. Respectfully following the order of the Division Bench, I allow this ground of appeal and delete the disallowance of Rs.89,000/-.
In the result, the appeal of the assessee is partly allowed.
Order pronounced in the Court on 2nd April, 2019. (RAJPAL YADAV) JUDICIAL MEMBER
Ahmedabad; Dated 02/04/2019
आदेश क" ""त"ल"प अ"े"षत/Copy of the Order forwarded to :