GIRIRAJPRASAD R. KHANDELWAL,NAVI MUMBAI vs. ITO 32(1)(5), MUMBAI

Assessee by .. Shri. Vimal Punmiya, AR Revenue by .. Shri. Pradeep Kumar Singh, DR Date of hearing .. 17-05-2017 Date of pronouncement .. 24-05-2017 O R D E R PER MAHAVIR SINGH, JM:

This appeal by the assessee is arising out of the order of CIT(A)-44, Mumbai, in appeal No. CIT(A)-44/ITO 32(1)(5)/ITA-199/15-16 dated 14-12- 2016. The Assessment was framed by ITO Ward-32(1)(5), Mumbai for the A.Y. 2012-13 u/s 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).

1. On the facts and circumstances of the case and law, the ld. CIT(A) erred in confirming the action of Rs.65,53,250/- made by the ld. Assessing Officer in view of section 40A(3) of the act and erred in conforming that are not covered by any of the exceptions provided under Rule 6DD of the Income Tax Rules.

Girirajprasad R. Khandelwal A.Y:12-13 2. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the interest charged under section 234A/234B/234C of the IT Act, 1961 by the ld. Assessing Officer.

3. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the penalty initiated under section 271(1)(c) of the Income Tax Act, 1961 by the Ld. Assessing Officer.”

Girirajprasad R. Khandelwal A.Y:12-13 incidental expenses on fuel etc. should be normally borne by the vehicle owner and not by the person who has taken the vehicle on him. Since it would be a normal practice that a business man, would hire vehicle from a particular transporter for a longer period it logically follows that the appellant would have made payment to the person from wham vehicles are hired through banking channels. On the other hand, what we see in this case is that out of the total lorry hire charges amount of Rs 6,43,56,073/- the amount of payment made in cash during the year was Rs 5,31,14,207/-. In this situation, the AO was duty bound to examine whether there is any violation of provision of section 40A(3) of the IT Act 1961. It is seen from record that AC examined the details submitted by the appellant and calculated the amount of disallowance rather than disallowing the entire payment made in cash. Thus the AO had a strong case for disallowance u/s 40A(3) by analyzing the details submitted by the appellant. As far as exception to Rule 6DD is concerned, the AO has given a clear finding that the violation of provision of section 40A(3) is not covered by any of the exceptions provided u/r 6DD of the IT Rules 1962. During the course of appeal proceedings, the appellant has given a chart showing payment made on public holidays. However, from a perusal of this chart it is seen that all the cash payments shown in this chart are below Rs 35,000/- and being so they have already been considered by the AO as not falling under the provision of sec. 40A(3). So it is not correct to say that the AO did not consider the exception provided under rule 6DD. After considering the totality of facts and on the basis of above discussion, the grounds of appeal no. (a) is dismissed and the addition of Rs 65,53,250/- is confirmed.”

We have heard the rival contentions and gone the facts and circumstances 4. of the case. Before us, the learned Counsel for the assessee made argument that a Page 3 of 5

Girirajprasad R. Khandelwal A.Y:12-13 plea was taken before the AO as well as before CIT(A) that the assessee has made payments per day per vehicle less than Rs. 35,000/- and these expense have to be made in cash as these use to be paid to the drivers of the vehicle as advance payment for expense en-route. He stated that the assessee before AO as well as before CIT(A) and now before Tribunal has filed complete statement of expenses in respect to transport charges for the period of 01-04-2011 to 31-03- 2012, which is enclosed at assessee’s paper book from 26 to 42. The learned Counsel for the assessee argued that the confusion arose in the mind of the AO on the basis of statement showing bill amount and mode of payment submitted on 27-03-2015. It was claimed by the assessee’s counsel that the said statement was not showing the date wise payment made in the cash but a total payment made against the bill. Hence, he concluded that there is a violation of provisions of section 40A(3) of the Act. In view of these facts, the learned Counsel for the assessee requested that the matter may be remitted back to the file of the AO, so that the assessee can proved that payment on each of the day for each of the truck is less than Rs. 35,000/-. On query from the Bench the learned Sr. DR fairly agreed to the proposition. Hence, in the interest of Justice, we remit the issue back to the file of the AO to consider the claim of the assessee and then decide as per law. This issue of assessee’s appeal is allowed for statistical purposes.