VRINDAVAN LAL GUPTA,JAIPUR vs. ITO, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR Jh HkkxpUn] ys[kk lnL; ,o Jh dqy Hkkjr] U;kf;d lnL; ds le{k BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM vk;dj vihy la-@ITA No. 321/JP/2017 fu/kZkj.k o"kZ@Assessment Year: 2014-15 cuke Shri Vrindavan Lal Gupta The ITO Vs. 760, Barkat Nagar, Pushpanjali Marg Ward- 6 (2) Tonk Road, Jaipur Jaipur

LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFCPG5046 F vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@Assessee by: Shri S.L. Poddar, Advocate jktLo dh vksj ls@ Revenue by:Shri Jagdish Chandra Kulhari, JCIT - DR

lquokbZ dh rkjh[k@ Date of Hearing : 25/01/2018 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 25 /01/2018 vkns'k@ ORDER PER BHAGCHAND, AM The assessee has filed an appeal against the order of the ld. CIT(A)-2, Jaipur dated 21-03-2017 for the assessment year 2014-15 raising following ground of appeal:- ‘’That the ld. CIT(A) had not allowed the payments made in cash to Jaipur Zila Dugdh Utpadak Sahakari Sangh Limited (Saras Dairy) which is Government Cooperative Society of Rs. 59,30,000/- disallowed by the AO u/s 40A(3) of the I.T. Act, 1961.

2.1 Apropos solitary ground of the assessee, the facts as emerges from

the order of the ld. CIT(A) is as under:-

‘’2.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. It is noted that payments of a total amount of Rs. 1,14,64,000/- were made in cash to M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd (Saras Dairy), Jaipur in violation of section 40A(3) of the I.T. Act, 1961. The assessee supplies milk to the Jaipur Daiary Booths from Saras at a price fixed by M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd. on a contractual basis. It was contended that since the assessee is dealing in milk products, the same are exempted under rule 6DD(e) and alternatively some payments have been made on Sundays and bank holidays also, hence were exempted from the provisions of section 40A(3) of the I.T. Act, 1961. The Assessing Officer allowed the payments of an amount of Rs. 55,34,000/- made on bank holidays but did not allow the amounts paid on other days under rule 6DD(e). The Authorized Representative reiterated the same submissions in the present proceedings. It is seen that both the assessee and M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd have bank account and payments are being made through the same. Further Rule 6DD (e) would be applicable when the payments is made to the producers of the dairy products which is not the case in hand, payments are made to the government corporations. In view of the above, the payments are covered by the provisions of section 40A(3), the disallowance made by the Assessing Officer is confirmed. The ground of appeal is dismissed.’’

2.2 During the course of hearing the ld.AR of the assessee prayed that

the lower authorities have erred in disallowing the cash payments of Rs.

59.30lacs made to M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd

u/s 40A(3) of the Act by the assessee. The ld.AR of the assessee filed the

written submission which has been taken into consideration.

2.3 On the other hand, the ld. DR supported the orders of the lower

authorities.

2.4 We have heard the rival contentions and perused the materials

available on record. In this case, the AO observed that the assessee made

payments of Rs. 1,14,64,000/- on various dates (page 2 of assessment

order) to M/s. Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd (Saras

Diary), Jaipur in violation of provisions of section 40A(3) of the I.T. Act,

1961. The AO further noted that assessee made payments of Rs.

55,34,000/- on bank holidays which are excluding the purview of sec

40A(3) of the I.T. Act, 1961. The AO thus disallowed the payments of

Rs. 59.30 lacs in violation of provisions of sec 40A(3) of the Act and

added the same to the total income of the assessee by observing as under:-

‘’Considering the facts of the case and Rule 6DD of the Act, the exemption is only allowed for the day on which the banks were closed either on account of holiday or strike.

Further the plea of the assessee depositing the cash on Monday is not considered as the Monday has not been considered in exclusion. In the light of the above, following expenses in excess of twenty thousand in a day incurred in cash is disallowed and added to the total income of the assessee u/s 40A(3):-

S.N. Date of payment Amount Paid 1. 20-05-2013 500000 2. 27-05-2013 300000 3. 03-06-2013 600000 4. 24-06-2013 550000 5. 15-07-2013 300000 6. 22-07-2013 450000 7. 16-08-2013 250000 8. 09-09-2013 700000 9. 01-10-2013 480000 10. 7-10-2013 600000 11. 14-10-2013 600000 12. 18-10-2013 600000 5930000

In first appeal, the ld. CIT(A) has confirmed the action of the AO. The

assessee is an individual and is engaged in transporting milk from M/s.

Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd (Saras ) to various Saras

Dairy booths on commission basis i.e. @ Rs.49.90 per litre. The work of

the assessee included in taking milk from Saras Dairy and distribution of

the same to various Saras Dairy booths and also collection of money from booths and paying the same to Saras Dairy. On such collection of

money, the assessee was entitled for commission @ Rs. 49.90 per litre. It

is noted that in the case of the assessee the identity of the recipient M/s.

Jaipur Zila Dugdh Utpadak Sahakari Sangh Ltd (Saras Dairy) is well

established to whom the entire payment of Rs. 59.30 lacs has been made

by the assessee. It is noted that in the entire assessment order there is not

a single word doubting the genuineness of payments or questioning the

payments in any other way. The assessee collected payments from the

dairy booths and got commission @ Rs. 49.90 paise per litre. Thus the

assessee was in fact working as an agent on commission basis.

Therefore, the payments did not require to be disallowed in his hands.

There is no iota of doubt regarding the genuineness of the payments. The

Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia vs

ITO (2008) 298 ITR 349 held as under:-

Held: (i) that there was no dispute about the genuineness of the transactions and the payment and identity of the receiver were established. The conclusion reached by the Commissioner (Appeals) was correct and the Tribunal by ignoring the scope of clause (j) of rule 6DD as explained by the Board’s Circular had erred in reversing the finding reached by the Commissioner (Appeals). The addition of Rs. 40,13,000/- could not be made under section 40A(3).’’

In the case of Anupam Tele Services vs ITO (2014), 366 ITR 122, the

Hon'ble Gujarat High Court observed as under:-

‘’The terms of section 40A(3) are not absolute and other relevant factors are not excluded. Genuine and bonafide transactions are taken out of the sweep of the section.’’

Moreover, the contract of this work is in existence since 2006 but no such

disallowance was made in earlier years. Taking into consideration the

above facts and circumstances of the case and the case laws in the case

of Smt. Harshila Chordia vs ITO and Anupam Tele Services vs ITO

(supra), it is observed that the ld. CIT(A) has erred in disallowing the

payment of Rs. 59.30 lacs to the assessee. Thus the solitary ground of the

assessee is allowed.

3.0 In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 25 -01-2018. Sd/- Sd/- ¼dqy Hkkjr½ ¼HkkxpUn½ (KUL BHARAT) (Bhagchand) U;kf;d lnL; /Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 25 /01/ 2018 *Mishra आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Vrindavan Lal Gupta, Jaipur 1. 2. izR;FkhZ@ The Respondent- The ITO, Ward- 6 (2), Jaipur vk;dj vk;qDr¼vihy½@ CIT(A). 3. 4. vk;dj vk;qDr@ CIT, विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 321/JP/2017) 6. vkns'kkuqlkj@ By order, सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत