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TMI Blog2018 (2) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... of evidences filed Disallowance made u/s 40A(3) - payments in cash aggregate of payments exceeding the statutory limit of ₹ 20,000/- - Held that:- CIT(A) has verified the said payments in details found to be made through account payee cheques. The Ld. AR before us referred to page nos. 416 to 453 which are in the ledger accounts of the various entities as reflected in AO’s order under the different head i.e. service charge, drawing and drafting, machinery hire charges, material testing charges, soil exploration charges, transport charges and business promotion charges. Therefore, in our opinion the order of CIT(A) justified in holding the payments were made through account payee cheques and all other payments were made in cash are below the prescribed monetary limit u/s 40A(3) of the Act Addition made on account of unexplained cash credit - Held that:- Cash was deposited out of existing cash as per cash book. Regarding the account of the statement of the Kalikapur Branch which reflects opening balance in savings bank twice on 20.10.2008 at serial nos. 2 and 9. It is also observed at page no. 409, some of the payments were cancelled and transferred to SB account. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Hon ble High Court of Delhi in the case of Chem Investment Ltd. which was overruled the decision of the Hon ble Special Bench relied on by the AO and deleted the said addition. The relevant portion of which is reproduced herein below: 4 . 2 . I have examined and considered the written submission of the appellant as well as assessment order . It is seen that there was neither any new Investrnent nor any part of expenditure was incurred in relation to exempt income during the concern Assessment Year . All the investments are brought forward balance from earlier year's account and made out of the appellant assessed total income . Moreover, the assessment was made originally for earlier years and also subsequent year by the then Assessing Officer accepting the claim of the appellant . With reference to the Special Bench decision of the ITAT, Delhi in Cheminvest Ltd . VS . ITO [ which judgement was overruled by the Hon'ble Delhi High Court by its consolidated judgement delivered on 18 . 11 . 2011 in Maxopp Investment Ltd . Vs . CIT ( ITA 687 / 2009 ) including the appeal of the said Cheminvest Ltd . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS was deducted except same payment which the assessee paid directly . ( iv ) To avoid local disturbances and nuisance the assessee paid service charges to various parties . ( v ) Regarding drawing and drafting payment was made from time to time . ( vi ) TDS were deducted on low charges to Haldia Nirman Project Pvt . Ltd . and no TDS was deducted on same payments which were below taxable limit . ( vii ) Regarding Callibration Charges amounts were paid towards upgradation . ( viii ) Regarding transport charges were contended that the transport were arranged legally and paid directly through vouchers by the site supervisors . ( ix ) Regarding business promotion expenses the assessee stated that it was incurred exclusively for business purposes under incentives and incidental expenses by way of rewards to various high profile persons for development of its business . 9. The AO on verification and examination of the submission of the assessee observed that the assessee did not furnish any evidence whatsoever in support of its claim and accordingly disallowed an amount of ₹ 3,64,349/- and &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45 /- is added to the total income being short deduction of TOS . An amount of Rs . 1,15,36,280 /- is added to the total income of the assessee as the assessee has not deducted any TDS on these amount . 6 . 7 In view of the above, the total addition of Rs . 1,22,89,774 /- is added to the total income of the assessee . 10. Aggrieved, the assessee challenged the same before the CIT(A). The CIT(A) by examining the documents and bill produced before him in first appellate proceedings deleted the addition observing as under: 5 . 1 . The A . O . has added a slim of Rs, 1,22,89,774 /- to the total income of the appellant by making disallowance under section 40 ( a )( ia ) of the Act referring to his discussion at para - 6 . 6 of the said assessment order, it appears that the total addition of Rs . 1,22,89,774 /- consist of Rs . 3,64,349 /- and Rs . 3,89,145 /- for short deduction of TDS and Rs . 1,15,36,280 /- for non - deduction of any TDS . Discussion as to the disallowance of said sum of Rs . 3,64,349 /- and Rs . 3,80585 /- was made in Para - 6 . 2 of the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the assessment order includes the name and amount M / s Bhunia Construction and M / s Sepai Baidya discussed above . Various others name and amount mentioned in the said Table includes the amount of supply and / or the reimbursement of expenses made by the appellant, on which there is no scope or provision for deduction of TDS . There are various other names in which cases aggregate amount of bill for the work done by each of them ( excluding the cost of material and reimbursement of expenses ) are less than the statutory amount on which there was no requirement of any TDS as per the provisions of the I . T . Act . 5 . 4 . In Para 6 . 5 of the assessment order the A . D . has specifically mentioned the name of Reliable Construction and D . B Enterprises - in respect of which the appellant in the course of assessment proceeding specifically submitted that payment were made to them for supply of stone dust and other materials used for the infrastructure development of Eastern Railway Site at Kuntighat . From the bills of the said parties submitted by the applicant it will . appear that such bills were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e details were submitted before the AO in spite of which AO made the addition arbitrarily without examining the said details. The AR in support of his contentions filed paper book containing in respect of impugned amount involving ground nos. 2 and 3 referred to page nos. 151 to 403 and argued having the said material evidences before the Ld. AO the additions were made and the CIT(A) by examining the same deleted the said addition and Ld. AR referred to page no. 151 and argued that all the payments were made towards reimbursement of expenses for stone dust lifting, for dressing and levelling etc. therefore, the addition made u/s 40a(ia) is not maintainable. The AR also placed reliance on the decision of the Hon ble High Court of Gujarat in the case of Consumer Marketing (India) Pvt. Ltd. reported in (2015) 64 taxmann.com 16 (Gujarat) for the proposition no TDS is maintainable on reimbursement of expenses. 13. Heard the rival submission and perused the material available on record. It is observed from the assessment order it is clearly mentioned by the AO that the assessee did not furnish any evidence in support of his claim on expenditure. But however, it is seen from para no. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails were filed before the AO as well as CIT(A). The CIT(A) considering the same deleted the said amount by observing that the amounts shown by the AO are mostly through account payee cheques. The AR referred to page no 416 which is ledger account of Viva Chowdhury and argued the service charges mentioned therein clearly shows the cash payments were below the statutory limit. The AR argued that all the payments which were made in cash were below ₹ 20,000/- and the addition made u/s 40A(3) is not maintainable. 17. Heard the rival submissions and perused the material available on record. It is observed that there is no evidence filed before the AO but however it is seen the CIT(A) has examined the same payments as reflected in page nos. 12,13 and 14 and AO found that all payments were made through account payee cheques. In our opinion, the CIT(A) has verified the said payments in details found to be made through account payee cheques. The Ld. AR before us referred to page nos. 416 to 453 which are in the ledger accounts of the various entities as reflected in AO s order under the different head i.e. service charge, drawing and drafting, machinery hire charges, material test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submits that they were not cash deposits and filed evidences showing transfer from one account to other account and there was duplication of amounts. The AR supported the order of CIT(A) and prayed to dismiss the grounds raised by the Revenue in this regard. 21. Heard the rival submissions and perused the material available on record. It is observed from the page no. 408 of the paper book of the cash was deposited out of existing cash as per cash book. Regarding the account of the statement of the Kalikapur Branch which reflects opening balance in savings bank twice on 20.10.2008 at serial nos. 2 and 9. It is also observed at page no. 409, some of the payments were cancelled and transferred to SB account. Therefore, as rightly observed by the CIT(A) that there were cancellation of some amounts, duplication of amounts and also transferred from one existing account to another account belonging to the assessee. Therefore, we find no infirmity in the order of CIT(A). The addition made u/s 68 of the Act is deleted. Therefore the ground no. 5 raised by the Revenue is dismissed. 22. In the result, the appeal of the Revenue is partly allowed. Order pronounced in the open Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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