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TMI Blog2016 (6) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... he payments are made by the assessee to the farmers through them. The Assessing Officer has not stated anywhere in the report that the assessee has purchased agricultural produce from these persons. The Assessing Officer has further stated that the assessee has paid commission to the above mentioned four persons. The Commissioner of Income Tax (Appeals) after considering the observations of the Assessing Officer deleted the disallowance u/s. 40(A)(3) in respect of cash payments to the tune of ₹ 61,38,831/-. After perusing the documents on record, we are of the considered view that the Commissioner of Income Tax (Appeals) was justified in deleting the disallowance u/s. 40(A)(3) of the Act. - Decided against revenue - ITA No. 829/PN/2012, ITA No. 863/PN/2012 - - - Dated:- 11-3-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Smt. Deepa Khare For The Revenue : Shri Subhash K.R. ORDER PER VIKAS AWASTHY, JM : These cross appeals have been filed by the assessee and the Revenue impugning the order passed by the Commissioner of Income Tax (Appeals), Aurangabad dated 14-02-2012 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2008-09, assessment for the earlier years have been reopened. The ld. Counsel for the assessee submitted that the assessee had claimed deduction u/s. 80IB(11A) as the assessee is engaged in the integrated business of handling, storage and transportation of food grains. The assessee has created storage facilities for food grains in accordance with the norms prescribed by the NABARD. In support of her submissions, the ld. Counsel placed on record a copy of the report by Joint Monitoring Committee dated 20-05-2005 under Rural Godown Scheme. One of the committee members is official of NABARD. The object of the committee is to examine the conditions of warehousing facilities. The ld. Counsel submitted that the Assessing Officer has disallowed the claim of deduction u/s. 80IB(11A) on three counts, viz : i. There are no labourers on payroll of the assessee, ii. The assessee is not having transport facility of its own, iii. Thus, the assessee is not engaged in integrated activity of handling, storage and transportation of food grains. 4.1 The ld. Counsel for the assessee submitted that a perusal of the provisions of section 80IB(11A) would show that to be eligible t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d form was obtained from the Chartered Accountant on 20-08-2008. However, the same could not be filed along with the return of income. The assessee thereafter offered to file Audit Report before the authorities below but the request of assessee was not considered. The ld. Counsel filed an application for placing on record Audit report as additional evidence. The ld. Counsel prayed for accepting the Audit report and allowing the appeal of the assessee on merits. 6. On the other hand Shri Subhash K.R. representing the Department vehemently supported the findings of Commissioner of Income Tax (Appeals) in rejecting the claim of assessee u/s. 80IB(11A). The ld. DR submitted that the assessee is neither owning infrastructure facilities nor it is engaged in the integrated business of handling, storage and transportation of food grains. Further, the assessee had not filed Audit report in the prescribed form which is necessary for claiming deduction u/s. 80IB(11A) of the Act. No sufficient reason has been given for not placing the Audit report either during assessment proceedings or during the first appellate proceedings. In the absence of Audit report the claim of the assessee cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... combined manner. However, the section does not put any pre-condition that for carrying out the integrated activities of handling, storage and transportation of food grains the assessee should own the infrastructure facilities or should have manpower on its rolls for carrying out such business activities. If the undertaking is carrying out these integrated activities by employing hired labourers or by taking warehousing facilities on rent and hiring transportation facilities, in our considered opinion the undertaking is eligible to claim deduction u/s. 80IB(11A). 9. The Hyderabad Bench of the Tribunal in the case of A.P. State Warehousing Corporation Vs. Deputy Commissioner of Income Tax (supra) also supports our view. The Co-ordinate Bench observed that the godowns where this business is to be carried on need not be owned by the assessee. The Tribunal further observed that merely because the assessee has engaged outsiders for transportation does not mean that the assessee is not engaged in the integrated business of handling, storage and food grains. 10. In the present case it is an undisputed fact that the assessee is neither having labour on its payrolls nor the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n noticed that the appellant has claimed transportation expenses on adhoc basis at ₹ 10,000/- per month that too on the basis of internal vouchers. Therefore, I am of the considered view that the appellant has not proved beyond doubt that he has provided transportation facility to farmers alongwith storage facility. In addition to above the Commissioner of Income Tax (Appeals) has also noted that the assessee has not filed Audit report in the prescribed from 10CCB for claiming deduction. 11. As has been observed by us in the preceding paragraphs the deduction u/s. 80IB(11A) can be claimed only if the assessee has been able to show that it is engaged in integrated activities of handling, transportation and storage of food grains. Owning of transportation facilities, warehousing facilities and manpower on payroll is not sinequa- non for claiming the deduction. What is essential is that all the three activities of handling, storage and transportation should be sewn together in a manner that they become a single structured process. In the present case the assessee has not been able to show the integration of the three activities for claiming deduction. With regard to man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting the claim of the assessee was non-filing of the Audit report. Now, before the Tribunal the assessee has filed an application for admission of additional evidence i.e. the Audit report. The assessee has placed on record Audit report in form 10CCB dated 20-08-2008 at pages 14 to 18 of the paper book. In the application for admission of additional evidence the reason for non-filing of Audit report before the Assessing Officer, as well as, Commissioner of Income Tax (Appeals) has been mentioned as inadvertent mistake. No other reason has been given for non-filing of the Audit report. 13. The Chandigarh Bench of the Tribunal in the case of Lakshmi Energy Food Ltd. Vs. Assistant Commissioner of Income Tax reported as 63 SOT 70 (Chandigarh) (URO) accepted the Audit report as additional evidence since the assessee was able to show reasonable cause for not producing the same before the Assessing Officer or Commissioner of Income Tax (Appeals) as per Rule 46A(b) of the Income Tax Rules, 1962. Additional evidence can be admitted if the assessee can show sufficient cause for not producing the same before the authorities below. In the said case the assessee could not file Audit repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and make direct payment to the farmers. In return the aforesaid persons charge their commission for facilitating the sale and purchase. The aforesaid persons do not purchase the produce from farmers for further sale to the consumers. 20. Both sides heard. During the First Appellate proceedings the assessee made submissions in respect of disallowance of cash payments u/s. 40(A)(3). The Commissioner of Income Tax (Appeals) forwarded the same to Assessing Officer for his report. In the report the Assessing Officer furnished his comments in respect of four persons i.e. Shri Prashant Jakite, Shri Sonaji Trimbakrao Bedke, Shri Sheikh Rashid Shaikh Chand and Shri Siddheshwar Kondiba Sontakke. The Assessing Officer has categorically stated that the payments are made by the assessee to the farmers through them. The Assessing Officer has not stated anywhere in the report that the assessee has purchased agricultural produce from these persons. The Assessing Officer has further stated that the assessee has paid commission to the above mentioned four persons. The Commissioner of Income Tax (Appeals) after considering the observations of the Assessing Officer deleted the disallowance u/s. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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