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TMI Blog2019 (1) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... of making cash payments on a regular basis is also proved by the assessee in the instant case. CIT-A had rightly deleted the disallowance of expenditure on account of genuineness and also u/s 40A(3) of the Act, which in our considered opinion, does not call for any interference - decided against revenue - I.T.A No. 1439/Kol/2015 - - - Dated:- 16-11-2018 - Shri S.S.Godara, JM And Shri M.Balaganesh, AM For the Appellant : Shri Saurabh Kumar, Addl. CIT Sr. DR For the Respondent : Shri Mahadev Ghosh, Advocate ORDER PER M.BALAGANESH, AM 1. This appeal by the Revenue arises out of the order of the Learned Commissioner of Income Tax(Appeals)-7, Kolkata [in short the ld CIT(A)] in Appeal No.537/CIT(A)- 7/Cir-27/14-15 dated 16.09.2015 against the order passed by ACIT, Circle- Haldia, [ in short the ld AO] under section 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 12.03.2014 for the Assessment Year 2011-12. 2. The only issue to be decided in this appeal is as to whether the ld CITA was justified in deleting the disallowance of payments made to sub-contractors both on genuineness and u/s 40A(3) of the Act in the facts and circumstances of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecialized job. Collection of Dry Fly ash from Sillo s is continues process in a day 24 hours, throughout the year. He stated that the nature of work of the appellant is emergency basis for the purpose of pollution control from the ash of thermal project. As per the direction of the pollution control board and also Hon ble Calcutta High Court, the appellant required to attend the work promptly and any delay was taken by the WBPDCL/ KTPS seriously in view of constant monitoring by pollution control authorities. The assessee also furnished the copy of work order from The West Bengal Power Development Corporation Limited, copy of The Gazette of India for control the pollution from the thermal project. The terms conditions of the work order and clauses for safety measure and for the benefit of the worker who engaged in the field to excavation of ash. As per the terms from thermal project of KTPC 3000 CuM per day or more As per the terms from thermal project of KTPC 3000 CuM per day or more. As per the terms from thermal project of DPL 3000 CuM per day or more. As per the terms of Purba Medinipur Zilla Parishad 3500 CuM per day or more required to evacuated. The assessee s AR fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors. The Assessing Officer's comments are totally irrelevant, far from the facts and the transactions with the sub-contractors were fully established as genuine and allowable. 5. The ld CITA deleted the disallowance by observing as under:- 5.4. I have carefully considered the submissions made by the assessee and gone through the assessment order and the material placed before me. As per the assessment order the assessing officer collected the information u/s 133(6) from the subcontractors. From the information furnished by the sub-contractors and the assessee the Assessing officer has analysed and wrongly concluded that the transaction with sub-contractors were not substantiated, instead of making any further verifications. He has not even asked or confronted either with the assessee or the subcontractor after the receipt of information. No further enquiry was made. He did not even put before the assessee about his suspicion for clarifications. The assessee has completed the work of evacuation and received the payment which was offered to tax. Therefore there is no doubt regarding the genuineness of the assessee . The assessee has to complete the work on his own or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctors have furnished the required information to prove the genuineness of the transaction. In spite of producing the books of accounts the AO did not find any defects also. I have gone through the information collected from the sub-contractors u/s 133(6) and the ledger extracts I do not find any reason to suspect the transaction. Therefore, there is no case for making any disallowance holding the transactions as not genuine. Therefore the addition made on this ground cannot be sustained. 5.6. Secondly the Assessing officer has also invoked the provisions of section 40A(3) of the Income Tax Act, 1961 for disallowing the payments made to the sub-contractors. In the assessment order the Assessing Officer stated that neither the assessee nor his party been able to establish that the payments were made on various dates and in each case the payment did not exceed ₹ 20,000/-. The assessee during the appeal submitted that the assessee had never paid in a day more than ₹ 20,000/- to its sub-contractors in violation of the provisions of Sec 40A(3) of the Income-tax Act, 1961. The assessee produced the cash book and ledger before the Assessing Officer and the same have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue on the action of the ld CITA accepting the genuineness of expenditure requires to be dismissed. 7.1. We find that the ld CITA had categorically observed that from perusal of the cash book of the three sub-contractors and the assessee and found that the assessee had not made cash payments exceeding ₹ 20,000/- on a single day . Hence there is no violation of provisions of section 40A(3) of the Act. Admittedly, the ledger accounts of sub-contractors were obtained by the ld AO directly from the sub-contractors u/s 133(6) of the Act, wherein these facts were found. These details were obtained admittedly by the ld AO behind the back of the assessee and nothing adverse was found thereon. Moreover, we find that the ld AR rightly drew our attention to the relevant page of the paper book containing work orders wherein the sub-contractors had mandated payments to be made to them in cash every day to meet their day to day expenses for daily labour and lorry hire for smooth execution of the work. Hence business expediency of making cash payments on a regular basis is also proved by the assessee in the instant case. Hence we hold that the ld CITA had rightly deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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