ASTT.COMMISSIONER OF INCOME TAX,AMRAVATI CIR.AMRAVATI, AMRAVATI vs. SHRI AKASH RAMESHWAR PANPALIA,

PER BENCH This appeal by Revenue is arising out of the order of Ld.CIT(A)-II, Nagpur

vide Order No.CIT(A)-II/517/2010-11 dated 02.07.2014. The assessment was

framed by ACIT, Amravati Circle, Amravati u/s 143(3) of the Income Tax Act,

1961 (in short “Act”) for A.Y. 2008-09 vide his order dated 28.12.2010.

deleting the disallowance of expenses made by the Assessing Officer by

applying the provision of section 40A(3) of the Act i.e. making cash payment in

excess of Rs.20,000/–. For this, the Revenue has raised the following ground:–

ITA No. 446/NAG/2014

day in cash, contravening section 194C and 40A(3) of the I.T.Act, 1961 respectively.” 3. It is clarified that the Revenue has raised the issue for contravention of

provision of section 194C for making disallowance as the payments are made

without deduction of TDS and also for making cash payment in excess of

Rs.20,000/– in a single day in violation of provision of section 40A(3) of the Act.

But we have gone through the assessment order, and it is noticed that the

Assessing Officer has not invoked the provision of section 40(a)(ia) of the Act for

making disallowance and hence the issue remains the applicability of the

provision of section 40A(3) of the Act.

its books of accounts and audited the same under section 44AB of the Act.

The assessee has produced books of accounts and verified by the Assessing

Officer. According to the Assessing Officer, the assessee has made payment of

Rs.1,19,18,353/– on account of labour charges for F.Y 2007–08 relevant to the

A.Y 2008–09 to 52 persons. Before the Assessing Officer, the assessee claimed

that he has paid labour charges directly to the group (Sardars) and the group

in turn made payment to individual person on different dates and all these

payments are made in cash less than Rs.20,000/– individually to the labourers

in the single day. But the Assessing Officer has not accepted the explanation

of the assessee stating that the assessee has made payment exceeding to

Rs.20,000/– in a single day as prescribed in chart to different individual is

reproduced in the assessment order. The Assessing Officer accordingly

ITA No. 446/NAG/2014

disallowed a sum of Rs.1,19,18,353/–. Aggrieved, the assessee preferred

appeal before Ld.CIT(A).

payment to the labourers which was below prescribed limit as prescribed by

the provisions of section 40A(3) of the Act i.e. less than Rs.20,000/–. Ld. CIT(A

dealt this issue in para 7 as under:–

Aggrieved, now the Revenue is in appeal before us.

circumstances of the case. We find that the assessee has paid wages to

individual workers and vouchers was obtained from representative workers or

the sardars, who is employee of the assessee for accounting purpose in respect

of payments made to individual labourers. It was explained by Ld. Counsel for

the assessee that the payment made to various individual labourers being in

nature of labourer charges was paid below Rs.20,000/–, the provision of

section 40A(3) will not apply. Even the muster register explain the

submissions of the assessee that the payments have been made towards daily

wages and are not in respect of any contract and which are below Rs.20,000/–

ITA No. 446/NAG/2014

as can be evidenced from page 12 to 17 of the assessee’s paper book. In view

of the above, we are of the view that Ld.CIT(A) has rightly deleted the addition

and we confirm the same.

Order pronounced in the open court on 08th March, 2018.

Sd/– Sd/– (G.D.AGRAWAL) (MAHAVIR SINGH) HON’BLE PRESIDENT JUDICIAL MEMBER

Dated: 08th MARCH, 2018 *Amit Kumar* Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A), Nagpur 4. The CIT, Nagpur 5. The DR, Bench, ITAT, Nagpur By Order Assistant Registrar ITAT, Nagpur Bench, Nagpur