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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI N.S SAINI & KULDIP SINGH
IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK
BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND KULDIP SINGH JUDICIAL MEMBER
ITA No. 86/CTK/2015 Assessment Year : 2010-2011
Vs. ITO, Ward-1, Jharsuguda Sanjay Kumar Nanda, M/s. Matarani Transport, Mission Chowk, Sundargarh PAN/GIR No. ACVPN 1075 D (Appellant) .. ( Respondent)
Assessee by : Shri M.Udayapuria/B.Agarwal, AR Revenue by : Shri D.K.Pradhan, DR
Date of Hearing : 25/04/ 2017 Date of Pronouncement : 18 /05/ 2017
O R D E R Per N.S.Saini, AM
This is an appeal filed by the assessee against the order of CIT(A)-
Cuttack, dated 28.11.2014 for the assessment year 2010-2011.
In Ground No.1 of the appeal, the grievance of the assessee is that
the CIT(A) erred in confirming the action of the Assessing Officer
disallowing Rs.11,28,518/-, Rs.14,65,333/- and Rs.14,08,153/- alleging
violation of section 40A(3) of the Act for payments made to truck
owners within limits of Rs.20,000/-.
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The brief facts of the case are that the Assessing Officer, on
verification of books of account, observed that the assessee had paid
transportation payment of Rs.11,28,518/- to M/s. Gayatri Transport,
Rs.14,65,333/- to Sri Bhawani Prasad Majhi and Rs.14,08,153/- to sub-
contractor M/s. YKGN Transport violating the provisions of section 40(3)
of the Act. The assessee was asked to explain why the same will not be
disallowed. In reply, it was submitted by the assessee that the assessee
is in the business of transportation of coal from Mahanadi Coalfields Ltd.,
to different plants of Jharsuguda, Sundargarh. The modus operandi of
this business is that lot of small truck owners and transporters are
working under big transporter. These small transporters used to
transport material on behalf of big transporter and submit bills to them
giving truck wise details. The big transporter after getting payment from
party directly pay to truck owners and debit the account of these small
transporter. The Assessing Officer did not accept the explanation of the
assessee and disallowed deduction of Rs.11,28,518/-, Rs.14,65,333/-
and Rs.14,08,153/- alleging violation of section 40A(3) of the Act for
payments made to truck owners more than the limits of Rs..20,000/-.
On appeal, the CIT(A) confirmed the action of the Assessing
Officer.
Before us, ld A.R. of the assessee reiterated the submissions made
before the lower authorities and relied on the decision of Hon’ble Gujarat
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High Court in the case of Anupama Teleservices vs ITO (2014) 268 CTR
(Guj) 121, wherein, it has been held that the assessee was compelled
to make cash payment on account of peculiar situation on insistence
upon by the principal and genuineness and identity of the payee not
being in dispute, the disallowance u/s.40A(3) of the Act was not
sustainable. He also relied on the decision of Cuttack Bench of this
Tribunal in the case of Veer Ghese Joy Gee vs ITO in ITA
No.28/CTK/2014 for assessment year 2009-2010 order dated
16.11.2016, wherein, the Tribunal has deleted the disallowance made
u/s.40A(3) of the Act on similar facts and circumstances.
Ld D.R. relied on the orders of the lower authorities.
We have heard the rival contentions, perused the orders of lower
authorities and materials available on record. The assessee was
engaged in the business of transporting coal from Mahanadi Coalfields
Ltd., to different plants of Jharsuguda, Sundargarh. The modus operandi
of this business was that lot of small truck owners and transporters were
working under big transporter and under instruction of big transporter,
the small transporters used to transport the materials and submit bills
to them giving truck wise details. The contention of the ld A.R. of the
assessee is that the trucks owners insisted cash payment during
transportation. The Hon’ble Gujarat High Court in the case of Anupama
Teleservices vs ITO 2014) 268 CTR (Guj) 121, has held that when the
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assessee was compelled to make cash payment on account of peculiar
situation on insistence upon by the principal and genuineness and
identity of the payee not being in dispute, the disallowance u/s.40A(3)
of the Act was not sustainable. The contention of the A.R. of the
assessee is that all the payments made are accounted for by the
assessee in its books of account. We find that the genuineness of the
payment made or the expenditure incurred by the assessee by making
such payment is not in dispute or debate. Therefore, the decision of
Hon’ble Gujrat High Court in the case of Anupama Teleservices(supra)
is squarely applicable to the facts of the case. Therefore, the ld CIT(A)
was not justified in sustaining the addition of Rs.Rs.11,28,518/-,
Rs.14,65,333/- and Rs.14,08,153/- being payments were made to
different truck-owners u/s.40A(3) of the Act. We, therefore, set aside
the orders of lower authorities and delete the disallowance of
Rs.Rs.11,28,518/-, Rs.14,65,333/- and Rs.14,08,153/- u/s.40A(3) and
allow the grounds of appeal of the assessee.
Ground No.2 is directed against the order of the CIT(A) in
confirming the part disallowance of depreciation of Rs.1,09,270/-
alleging violation of section 40A(3) of the Act.
From a bare perusal of the order of the CIT(A), we find that this
ground does not arise out of the order of the CIT(A) and, therefore, this
ground of appeal of the assessee is dismissed.
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In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on 18 /05/2017 in the presence of parties.
(Kuldip Singh) (N.S Saini) JUDICIAL MEMBER ACCOUNTANT MEMBER Cuttack; Dated 18 /05/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Sanjay Kumar Nanda, M/s. Matarani Transport, Mission Chowk, Sundargarh 2. The Respondent. ITO, Ward-1, Jharsuguda 3. The CIT(A) Cuttack 4. Pr.CIT, Sambalpur 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//
SR.PRIVATE SECRETARY ITAT, Cuttack