TMI Blog2016 (8) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the aforesaid facts, we are of the view that the issue needs to be reexamined at the end of ld.CIT(A). We, therefore, restore the issue back to the file of ld.CIT(A) to decide the issue afresh - Decided in favour of assessee for statistical purposes. Disallowance u/s.40(a)(ia) - non deduction of tds on payment of labour expenses, crane hire charges, interest payment and audit fee - Held that:- here is no finding of the lower authorities on the issue as to whether the payments made by the assessee to the payees have been being considered by them as their income. In view of the aforesaid facts, we are of the view that the issue needs to be restored back to the file of ld.CIT(A) to decide the issue afresh in the light of our aforesaid discussion, the decision of the Coordinate Bench in the case of Rajeev Agarwal (2014 (6) TMI 79 - ITAT AGRA ) and in accordance with law. - Decided in favour of assessee for statistical purposes. - I.T.A. No. 2083/Ahd/2011 - - - Dated:- 13-6-2016 - Shri Anil Chaturvedi, Accountant Member And Shri S. S. Godara, Judicial Member Appellant by : Shri S.N. Divatia, AR Respondent by : Shri Jagdish, CIT-DR ORDER Per Shri Anil C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions of the assessee were not found acceptable to the AO. He thereafter proceeded to make disallowance aggregating to ₹ 15,97,999/- being the payments in cash exceeding ₹ 20,000/- (the details of which are listed on page No.11 of the assessment order). Aggrieved by the order of the AO, assessee carried the matter to CIT(A), who confirmed the disallowance made by the AO by holding as under:- 3. The first ground of appeal is on different disallowances u/s.40A(3). The facts and submissions of the assessee on different type of payments are considered and decided separately as follows: 3.1. Cash payment to Umiya Trailor Transport ₹ 4,60,300/-. Payments have been made in cash on different days to the party each above ₹ 20,000/- and totaling ₹ 4,60,300/- which has been disallowed by the AO. The assessee s submissions can be summarized as follows:- we have paid Umiya Trailer transport by way of account payee cheque but in some case there is need of driver to take money for fuel or any other reason at site of transportation, where neither Umiya trailer Transport nor our assessee maintaining bank accounts, our employee or our agent has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided in Rule 6DD. The assessee has tried to say that the payment could not be made by crossed bank cheque or draft due to exceptional or unavoidable circumstances. The assessee and the AR have failed to appreciate that the residuary clause as was available under the erstwhile Rule 6DD (j) is no longer available. The decisions cited by the AR were under that clause. Now the assessee has to claim and prove that circumstances in one of the present clauses as applicable to the assessment year under question were existing. The circumstances have not even been claimed. In these circumstances the payments made in cash are covered u/s. 40A(3) and are therefore not allowable. The disallowance made by the A.O. is confirmed subject to verification of amount as directed above. 3.3 Cash payment for Foreign Travel expenses of ₹ 5,97,538/- The assessee's submissions can be summarized as follows: The Learned DCIT has added of ₹ 597538/- for foreign travel exps. paid in cash for ticket charges u/s,40A (3). In respect to it we say that we have paid cash to travel corporation of India for ticket charges in various dates. In normal course Air ticket is issued o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o various labour at site for Grain repairing. We are giving cash to our employee for various site work as a petty cash and he is giving us Vouchers for expenses at site and we are cleared petty cash given to him on particular date. We are account repair maintenance charges on particular date. We have not paid any exps. Above 20000/- we are provide to you all the vouchers of repair maintenance charges given by repairer. So, we pray to you honour delete the addition made u/s 40A (3) for cash payment for repair maintenance. I have examined the contentions and the vouchers produced. The story is clearly an afterthought and not believable. For a moment let as assume that Harpreet Singh etc., are employees of the assessee in different states and they got the work done through various people. But, it is seen that all the so called sub-vouchers are signed by same cashier as the payment giver. How can the same cashier be in Maharashtra, Andhra Pradesh, Rajashtan etc. at the same time? Further, all the sub-vouchers prepared for different states are in the same handwriting. How can the same person make vouchers in different states? Further, curiously the main voucher and claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions made before the AO and ld.CIT(A) and further submitted that each of the cash payment did not exceed ₹ 20,000/- and, therefore, no disallowance could have been made u/s.40A(3) of the Act. He further submitted that amendment to section 40A(3), whereby the stipulation of aggregation of payment made to a person in a day otherwise by than A/c. Payee Cheque or A/c. Payee Draft in excess of ₹ 20,000/- is liable for disallowance is not applicable to the year under consideration because the amendment to section has been made w.e.f. 01/04/2009 and, therefore, not applicable to the year under consideration. He further submitted that while upholding the disallowance u/s.40A(3), there is no finding of ld.CIT(A) as to whether each payment in a day made by the assessee exceeded ₹ 20,000/-. He further submitted that provisions of section 40A(3) was intended with the objective of avoiding tax evasion and when the payments are genuine and are made out of income from disclosed sources, no disallowance u/s.40A(3) can be made and the aforesaid proposition, he placed reliance on the judgemnt of Hon ble Gujrat High Court in the case of Anupam Tele Services vs. ITO re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed for statistical purposes. 6. Ground No.2 is with respect to disallowance u/s.40(a)(ia) of the Act. 6.1. On perusing the ledger account of parties, AO noticed that the assessee made payment of labour expenses, crane hire charges, interest payment and audit fees, the expenses aggregated to ₹ 25,58,026/-, but on expenses the assessee had not deducted TDS (the details of expenses are listed at page Nos.12 13 of the assessment order). AO was therefore of the view that the expenses was required to be disallowed u/s.40(a)(ia) of the Act. He accordingly disallowed the expenses of ₹ 25,58,026/-. Aggrieved by the order of AO, assessee carried the matter before the ld.CIT(A), who upheld the disallowance made by the AO by holding as under:- 4. The second ground is against disallowance of various expenses of ₹ 25,58,026/- u/s. 40(a)(ia) as TDS was not deducted. The submissions of the assessee are summed up as follows: (a) The Learned DCIT has disallowed various expenses made of ₹ 25,58,026/-u/s. 40(a)(ia) as TDS was not deducted. We are ready to deduct the TDS in the current year and there is no mens rea, and therefore the disallowance be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already been considered as income by the respective payees and, therefore, no disallowance u/s.40(a)(ia) could be made in view of second proviso to section 40(ia)(a) of the Act which is held to be retrospective in nature as held by the Co-ordinate Bench of Tribunal in the case of Rajeev Kumar Agarwal(supra). The relevant observations of the Coordinate Bench at para-4 are as under:- The unambiguous underlying principle seems to be that in the situations in which the assessee's tax withholding lapse have not resulted in any loss to the exchequer, and this fact can be reasonably demonstrated, the assessee cannot be treated as an assessee in default. The net effect of these amendments is that the disallowance under section 40(a)(ia) shall not be attracted in the situations in which even if the assessee has not deducted tax at source from the related payments for expenditure but the recipient of the monies has taken into account these receipts in computation of his income, paid due taxes, if any, on the income so computed and has filed his income tax return under section 139(1). After considering various decision cited therein, the Coordinate Bench of Tribunal further he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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