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Income Tax Appellate Tribunal, “SMC - C” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN
IN THE INCOME TAX APPELLATE TRIBUNAL “SMC - C” BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT
ITA No.1812/Bang/2019 Assessment year: 2013-14
Shri Santosh M. Bhandari, Vs. The Income Tax Officer, Prop. Ostwal Clothing, Ward 2(1), Ostwal Tower, Jubilee Circle, Navanagar, Dharwad. Hubballi. PAN: AHRPB 0819N APPELLANT RESPONDENT
Appellant by : Ms. Preeti Patel, Advocate Respondent by : Shri Ganesh R. Ghale, Standing Counsel for Dept.
Date of hearing : 11.12.2019 Date of Pronouncement : 20.12.2019 O R D E R This appeal by the assessee is against the order dated 25.03.2019 of the CIT(Appeals), Hubballi relating to assessment year 2013-14.
The registry has sought to raise an objection that the appeal has been filed belatedly by the assessee by two days. The assessee has however filed a clarification stating that the appeal is filed in time which is as follows:-
DATE PARTICULARS 18 .06.20 19 - Tuesday Date of the receipt of the order of the Hon'ble First Appellate Authority. 18.08.2019 - Sunday 60 days to file the appeal before the Hon'ble ITAT. 19.08.20 19 - Monday The appeal was filed before the Hon'ble ITAT.
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“3. As seen from the above table, the last day to file the appeal was on 18.08.2019 i.e., Sunday which was a holiday. Therefore, the appeal was filed the very next day on 19.08.2019 i.e., Monday. In these circumstances we request-the Hon'ble ITAT to condone the delay, if any, in filing the appeal.” The appeal is therefore held to be filed within time.
Though the assessee has raised several grounds of appeal, at the time of hearing, the ld. counsel for the assessee prayed for adjudication of ground Nos. 2 & 3 in the grounds of appeal which in relation to disallowance of 3,47,717 made by the AO by invoking the provisions of section 40A(3) of the Income Tax Act, 1961 [the Act].
The assessee is an individual carrying on business in retail cloth under the name, Ostwal Clothing. In the course of assessment proceedings for the AY 2013-14, the AO noticed that the assessee had made cash payments to certain parties and those cash payments were claimed as expenditure in the Profit & Loss account. The details of cash payments made by the assessee were as follows:-
Name of party Date of Inv.No Amount Sl. payment No Vimal Plastics 01 31.03.2013 2702 211363 02 Radhey Shyam Hosiery 31.03.2013 1479,2704 90454 A2A Clothing Co Pvt Ltd 03 889,2707 31.03.2013 45900 TOTAL 347717 5. The AO called upon the assessee to explain as to why the aforesaid payments which were made in violation of section 40A(3) be disallowed and added to the income of assessee. The assessee explained that the transactions were genuine and that the payments were made on the last date of the month, which happened to be a Sunday. Since the payments were made owing to business exigency, the same should not be disallowed
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u/s. 40A(3) of the Act. This explanation was rejected by the AO as well as CIT(Appeals). On this aspect, the CIT(Appeals) observed as follows:-
“4.1 In the submissions, the assessee stated that payment of Rs.3,47,717/- made in cash was on Sunday when banks were closed on account of holiday. The assessee however failed to submit reason as to why payment had to be made on Sunday, and as to why cheque payment could not be made even if it was a holiday. Thus, the disallowance made by the AO U/s. 40A(3) of the I.T. Act, 1961, is upheld.” 6. Aggrieved by the order of CIT(Appeals), the assessee is in appeal before the Tribunal. I have heard the submissions of the ld. counsel for the assessee. The ld. counsel for the assessee reiterated the submissions made before the revenue authorities and further placed reliance on a decision of Hon’ble Kerala High Court in ITA No.83/2010 in the case of M.K. Agrotech P. Ltd. v. Addl.CIT dated 29.11.2018. In the aforesaid case, the Hon’ble Karnataka High Court was seized of a case, where payments were made by DDs. The DDs were not crossed and therefore was not in accordance with the mandate of section 40A(3) of the Act. The Hon’ble High Court took the view that the explanation of assessee that DDs were not crossed because the suppliers wanted quick realisation was an acceptable explanation and there is a valid justification for not invoking the provisions of section 40A(3) of the Act. In my view the aforesaid decision of the Hon’ble Karnataka High Court will not support the plea of assessee in the present case. The assessee in the present case except making a statement that cash payments were made on the last day of the month and cash payments were made keeping in view the business exigencies is not supported by any evidence as to whether the last day of the month is the last day for payment and the assessee would suffer any other consequences if the payment is not made beyond the last date of the month. In the given circumstances, I am of the view that the assessee has not made out any valid justification for not making the payments of sums of
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above Rs.20,000 in the manner required by the provisions of section 40A(3) of the Act. I therefore do not find any grounds to interfere with the order of CIT(Appeals). Consequently, the relevant grounds of appeal of the assessee are dismissed.
In the result, the appeal of the assessee is dismissed.
Pronounced in the open court on this 20th day of December, 2019.
Sd/- ( N V VASUDEVAN ) VICE PRESIDENT Bangalore, Dated, the 20th December, 2019.
/Desai S Murthy /
Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file
By order
Assistant Registrar ITAT, Bangalore.