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Income Tax Appellate Tribunal, “SMC-B” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA
O R D E R Per Shri A.K. Garodia, Accountant Member Thisappeal is filed by the revenue which is directed against the order of ld. CIT (A), Gulbarga dated29.12.2017 for Assessment Year 2014-15.
The grounds raised
by the revenue are as under. “1. The order of the learned Commissioner of Income-tax (Appeals) is opposed to law and facts of the case.
2. In the facts and circumstances of the case, the ld. CIT(A), has erred in allowing assesse's appeal while it is undisputed fact that the assessee has issued bearer cheques to the various persons on account of Transportation charges in excess of Rs. 20,000 which clearly attracts the provision of Sec. 40A(3).
3. In the facts and circumstances of the case, the Ld. CIT(A) had observed that cheques are issued to parties appeared in ledger account of Transport charges, who in turn paid to Transporter/ lorry owners, whereas the ledger extract is clear indication of payments made to parties, 44 in number, where amount in each case exceeding Rs. 20,000.
4. The LD. CIT (A) has erred in not setting-aside the matter to the file of AO, as per Rule 46A, where alternatively, in facts and circumstances of the case, the observation of the CIT (A)" that a lump sum amount that was paid to an individual in turn to distribute to other truck owners in the group, amounted to accepting the additional information which was not before the AO.
Any other facts and grounds which may arise during the case.”
At the outset, regarding ground no. 4 raised by the revenue in respect of alleged violation of Rule 46A of IT Rules, 1962, the bench asked the ld. DR of revenue to show as to which new evidence was filed by the assessee before the CIT(A) in violation of Rule 46A. The ld. DR of revenue drawn my attention to Para no. 5 of the order of CIT(A) and pointed out that it is noted by CIT(A) in this Para that the assessee had detailed the list of trucks and details of a lump sum amount that was paid to an individual in turn to distribute to other truck owners in the group and these details were not available before the AO and it was filed before the CIT(A) for the first time and therefore, there is violation of Rule 46A of IT Rules, 1962. In reply, ld. AR of assessee drawn my attention to page 5 of the assessment order where the AO has noted that AR of assessee has filed reply vide letter dated 16.12.2016 and stated that the payment is made directly to the lorry owner or the same is made to the lorry owners by issuing cheques to any one of them or to one of the assessee’s staff for payment to individual lorry owners and he has enclosed the list of transport charges paid in the annexure. He submitted that all these details were furnished before the AO also and no new document was filed before the CIT(A) in violation of Rule 46A.
I have considered the rival submissions and I find force in the submissions of ld. AR of assessee and I find that ld. DR of revenue could not satisfy about any violation of Rule 46A by the assessee and hence, ground no. 4 of revenue’s appeal is rejected.
5. Regarding the merit of the case being allowability of deduction disallowed u/s. 40A(3) of IT Act, ld. DR of revenue submitted that the said details on the basis
of which the CIT(A) has decided the issue in favour of the assessee are available on various pages of paper book and in particular, my attention was drawn to pages 2 to 10 of paper book and it was pointed out that as per entry in page no. 2 of paper book Rs. 1,05,700/- was paid by cheque bearing no. 519565 to A. Nagaraj on 21.02.2014 and as per page no. 10 of the paper book, the said payment was made by A. Nagaraj to the owners of 11 vehicles of which the number of vehicle and the amount paid to each vehicle owner is mentioned. He submitted this is not coming out from this detail as to whether the owners of these 11 vehicles are one or more. He submitted that if the owner of these vehicles is one then it has to be accepted that the entire amount of Rs. 1,05,700/- is paid to one person on one day in excess of the limit prescribed in section 40A(3) and the disallowance made by the AO is justified. He submitted that under these facts, the order of CIT (A) should be reversed or the matter may be restored back to the file of CIT (A) for fresh decision after examining this aspect of the matter with a categorical finding on this aspect. The ld. AR of assessee submitted that the matter may be restored back to the file of CIT(A) for fresh decision after examining this aspect of the matter because the relevant details of this aspect are not readily available.
I have considered the rival submissions. I find force in the submission of ld. DR of revenue that the matter should go back to the file of CIT(A) for fresh decision after examining this aspect of the matter as to who are the owners of various vehicles of which the numbers are mentioned at page no. 10 to 59 of the paper book and this has to be seen as to whether the payment to one vehicle owner on one day is exceeding the limit prescribed in section 40A(3) of IT Act. If it is found that such payment to one vehicle owner is in excess of such limit prescribed in section 40A(3), then the disallowance u/s. 40A(3) has to be made as per law but if the payment to a vehicle owner on one day is less than the said prescribed amount then no disallowance is called for u/s. 40A(3). The CIT(A) should decide the issue afresh as per above discussion by way of a speaking and reasoned order after providing adequate opportunity of being heard to both sides.
In the result, the appeal filed by the revenue is partly allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.