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Shivshakti Transport Sangh Versus Income Tax Officer, Ward– 1, PANVEL.

2016 (7) TMI 952 - ITAT MUMBAI

Additions made u/s 40A(3) read with Rule 6DD - cash payment for expenditures - bifurcation of payment - Held that:- As the assessee-firm has taken a plea and contended that each payment in a day to the payee’s is less than ₹ 20000/- and the case is covered under exception as provided u/r 6DD of Income Tax Rules, 1962 as the individual payment in a day is to be reckoned separately for considering exception u/r 6DD of Income Tax Rules, 1962 and not aggregate payments in a day which is suppor .....

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e case, we are of the considered view that the matter needs to be set-aside and restored back to the file of the A.O. for fresh adjudication on merits based upon the evidences and explanations filed by the assessee-firm to substantiate and corroborate its pleas which need examination and verification by the authorities below. Accordingly we set aside this matter to the file of the A.O. and direct the A.O. to scrutinize the evidences and explanations filed by the assessee firm and evaluate the at .....

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R, Accountant Member This appeal, filed by the assessee-firm, being ITA No. 7515/Mum/2011, is directed against the order dated 15-06-2011 passed by learned Commissioner of Income Tax (Appeals)- 1, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2005-06, the appellate proceedings before the learned CIT(A) arising from the assessment order dated 31-12-2007 passed by the learned Assessing Officer (hereinafter called the AO ) u/s 143(3) of the Income Tax Act,1961 (Hereinafter called .....

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t of total truck charges of ₹ 15418422/- the cash payments on Sunday are ₹ 3291218/- which comes to 21 % only of total truck charges payments and payments made on Sundays very well proved with name & address in receipts & are accounted and also paid TDS & filed TDS return to Department & Accounts are duly audited u/s. 44 AB. The Learned A.O. failed to appreciate the fact that even though consolidated payment to various transporters is reflected in our books of account .....

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he fact that the expenses are proved genuine and looking to the poor and agricultural and illiterate back grounds of the partners some payments that too 1/5th of total payments are in cash to small truck operators under unavoidable circumstances on Sundays. 3) Your Appellant request to consider facts that expenses are incurred in ordinary course of business duly accounted with payee's name & address in receipts & proved genuine and made in cash under unavoidable circumstances on Sund .....

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476/- 2 Shri Prashant Shinde ₹ 7,69,183/- 3 Shri Abdul Gharatkar ₹ 3,03,627/- 4 Shri Aman Ghana ₹ 7,14,095/- 5 Shri Dayanhi Khamkar ₹ 7,19,374/- 6 Shri Farooq Arai ₹ 7,38,038/- Total ₹ 41,07,793/- The assessee-firm was asked by the AO to explain the reason for payment made in cash and why disallowance of 20% of such expenses amounting to ₹ 8,21,559/- should not be made u/s 40A(3) of the Act. In reply, the assessee-firm submitted that out of ₹ 41,07 .....

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he A.O. observed that the assessee-firm has not produced any supporting documents to the cash book to show that the cash payments were actually disbursed on Sunday such as bills raised by the truck owners or receipt of truck owners. The assessee-firm claimed that the drivers and cleaners insist advance payments on Sunday , since Sunday being the market day. The A.O. observed that the assessee-firm makes payment to the truck owners and subsequently the lorry owners make the payment to the drivers .....

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ances of the same were not proved by the assessee-firm nor payments made on Sunday are proved . The A.O. accordingly disallowed a sum of ₹ 8,21,559/- being 20% of the expenses incurred in cash exceeding ₹ 20,000/- u/s 40A(3) of the Act vide assessment order dated 31-12-2007 passed u/s 143(3) of the Act. 4. Aggrieved by the assessment orders dated 31-12-2007 passed u/s. 143(3) of the Act by the A.O., the assessee-firm has filed its first appeal before the learned CIT(A). 5. Before the .....

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ances within exceptions provided under Rule 6DD of Income Tax Rules,1962. The assessee-firm submitted that Sunday being the market day, the truck drivers and cleaners insisted cash payments from the truck owners who in turn demand from the assessee-firm and to maintain truck owners to operate regularly for the assessee-firm, cash payments were made to accommodate truck owners in such emergencies and TDS was deducted and paid to Government account on time . The assessee-firm submitted that since .....

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CIT v. Triveniprasad Pannalal (1997) 228 ITR 680 (M.P) 6. CIT v. Ashish Coal Coke Traders (1987) 163 ITR 174 (MP) 7. Navjivan Synthetics v. ACIT (2002) 168 taxation 5 (Ahd-Trib) 8. Western Indian Bakers v. DCIT (2003) 87 ITD 607 (Mum-Trib) 9. Shree Mahaveer Corporation v. ITO (2002) 258 ITR (AT) 55 (Bang Trib) 10. CIT v. P. Pravin & Co. (2005) 6(1) ITCL 21 (Guj HC), (2005) 274 ITR 534 (Guj). 11. CIT v. Raja Pal Automobiles (2010) 320 ITR 185. The learned CIT(A) considered the submissions of .....

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ith Section 143(2) of the Act, the assessee-firm could not furnish any details to substantiate the claim that the payments were made on Sundays. The learned CIT(A) observed that there were numerous instances of cash payments to same parties. Thus, the payments have been made deliberately to attract exception provided under Rule 6DD of the Income Tax Rules, 1962 and in the light of the above finding, the learned CIT(A) agree with the finding that disallowance @ 20% by invoking the provisions of s .....

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40A(3) of the Act by the A.O. as the cash payments of ₹ 41,07,793/- were made to various transporters, which included payment of ₹ 32,91,218/- on Sunday. The learned Counsel submitted that out of total payment of ₹ 1,54,18,422/- for transportation charges , the assessee-firm paid ₹ 41,07,793/- on cash basis towards transportation charges. The learned counsel submitted that due TDS was deducted by the assessee-firm and paid into the Government account in time. Confirmatio .....

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so decision of the Delhi Bench of the Tribunal in the case of DCIT v. M/s Continental Carriers of India in ITA No. 3248 & 3249/Del/2010 for assessment years 2004-05 & 2005-06 dated 19th August, 2011. The ld. Counsel submitted that genuineness of the transaction is not doubted and requested that the disallowance u/s 40A(3) of the Act should not be made and appeal be allowed. 8. The ld. D.R. submitted that the assessee-firm has not submitted any supporting documents to prove the circumstan .....

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in cash of ₹ 41,07,793/- . The assessee-firm claimed that the payments have been made to the truck drivers and cleaners for and on behalf of the truck owners for reimbursement of petrol/diesel charges etc. as they insisted for cash payments and under these circumstances the assessee-firm made cash payments on Sundays of ₹ 32,91,218 out of total cash transportation charges of ₹ 41,07,793/-, because Sunday is the market day. We have observed that the assessee-firm was not able t .....

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ove the case of the assessee-firm to take it out of rigours and clutches of provisions of Section 40A(3) of the Act and to fall under exceptions provided u/r 6DD of Income Tax Rules,1962. It is also observed that with respect to these six parties as per confirmation letters filed, no payments to these six parties have been made during the entire previous year by cheque/DD and entire payments were made to these six parties in cash except only two payment of ₹ 55166/- to K T more on 21-03-20 .....

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transportation charges paid is shown to be paid in the month of March 2005 for the entire year and it could not be claimed that the tax deducted at source was paid in time within the time limit provided under Chapter XVIIB of the Act, More-over, proof of filing of TDS returns with the Revenue whereby there is complete disclosures with PAN etc of payee s has not been brought on record. The assessee-firm has taken a plea and contended that each payment in a day to the payee s is less than ₹ .....

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