TaxTMI 
TaxTMI 
2016 (1) TMI 898
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts of the case are that the Assessing Officer passed an assessment order dated 24.12.2009 for Asst. Year 2007-08. The Commissioner of Income Tax exercised powers under section 263 and passed order under section 263 vide order dated 21.03.2012, which the assessee challenged before the Hon'ble ITAT, Amritsar Bench. The Hon'ble ITAT Amritsar Bench set aside the order of Commissioner of Income Tax vide its order 31.10.2013 with the directions that assessee be provided sufficient opportunity of being heard and therefore, after affording the assessee adequate opportunity, the Commissioner of Income Tax again passed order under section 263 with the same directions which were in original order under section 263 dated 21.03.2012. The show cause notice issued by the Commissioner for initiating proceedings under section 263 is reproduced as below. "2. On going through the proposal and the accompanying records, it is observed that during the year under consideration, expenditure of Rs. 1,65,23,105/- has been debited under the head fuel account. During the course of the assessment proceedings the ledger account of fuel consumption has been called for by the Assessing Officer ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rs. 20,000/- Cash Rs. 20,000/- Cash Rs. 20,000/- 3.4 The provisions of section 40A(3) of the I.T. Act, 1961, clearly provide that wherever the assessee incurs an expenditure, in excess of Rs. 20,000/-, in respect of any payment/aggregate of payments to any person otherwise than by an account payee cheque/draft, no deduction is allowable in respect of such expenditure. It appears that the provisions of section 40A(3) of the I.T.Act,1961, were clearly applicable but the Assessing Officer has failed to invoke the said provisions and bring to tax the amount of Rs. 45,45,731/-. 3.5. Further, it has also been stated that during the course of the assessment proceedings for the Assessment Year 2008-09, the Assessing Officer called information u/s 133(6) of the Act, 1961, from RTO Srinagar, Baramulla & Jammu and found that in some of the cases, the hiring charges were paid to bogus parties/vehicles. However, the perusal of the assessment records for the Assessment Year 2007-08 reveals that the Assessing Officer while completing the assessment proceedings has failed to make any such enquiry although similar hiring charges....
X X X X Extracts X X X X
X X X X Extracts X X X X
....circumstances effecting the income and profit positions of the assessee and has observed in his order dated 24.12.2009 that the income shown for the year as progressive approach and a view that whatsoever has been done by an assessing officer in the assessment year 2008-2009 should have been done in the case of assessment year 2007-08 as well is cognized under law because the differentiation of view does not make an assessment order erroneous & prejudicial to the interests of the revenue and these views are also supported by decisions held by the Hon'ble Supreme Court in the case of CIT vs. Greenworld Corporation [2009] 181 Taxman 111/314 ITR 81 (SC), Malabar Industrial Co. Ltd. vs. CIT 243 ITR 83 (SC). Jai Kumar Kankaria Vs. CIT 251 ITR 707 hence the proceedings under section 263 of the Income Tax Act 1961 may kindly be dropped. 2. That the payments made to M/s. Shalimar Transporters for purchase of fuel have been made in para below Rs. 20,000/- on different times in a day. The word 'sum' in section 40A(3) is used only to indicate an amount of money and does not refer to the totality of the expenditure. It is only w.e.f. 1.4.2009 when the amendment was made in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cash cheques caused hardship to them. Hence the order under section 143(3) read with section 115WE(3) dated 24.12.2009 is neither erroneous nor prejudicial to the interest of revenue & therefore the proceedings under section 263 of the Income Tax Act 1961 may kindly be dropped. 4. That while passing Assessment Order u/s 143(3) dated 24.12.2009 the assessing officer has applied the law under section. 40A(3) of the Income Tax Act 1961 as laid down by the Hon'ble Courts in the case of including CIT vs. Aloo Supply Co. [1990] 121 ITR 680(Ori.). M.R.Soap (P.) Ltd. vs. IAC[1988] 32 TTJ (Delhi) 505 ITR CIT vs. Triveniprasad Pannalal [1997] 94 Taxman 381 (MP)/CIT vs. Kothari Sanitation & Tiles (P.) Ltd.[2006] 282 ITR 117 (Mad.) which clarify that till the amendments made in the Income Tax Act 1961 by the Finance Act, 2008 the settled position of is: Limit applies to payment to a party at one time. The statutory limit of Rs. 20,000 applied to payment made to party in the course of the day as recorded in the cash book which in the instant case is the position of the Assessee with regards to applicability of the provisions of sec. 40A(3) of the Income Tax Act 1961. Hence....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of less than Rs. 20,000/-. The learned AR submitted that before Asst. Year 2009-10, it was a settled law that each payment was to be considered for the purposes of violation of provisions of section 40A(3) and not the aggregate of payments in a day was to be considered. In this respect, he invited our attention to a Circular No.1/2009 dated 27th March, 2009and invited our attention to Para 13.2 to 13.4. The leaner AR submitted that from Asst. Year 2009-10 the aggregate of payments in a single day is to be considered for the purposes of violation of provisions of section 40A(3). The learned AR submitted that circular itself, says that Courts had approved such splitting thereby applying the limit to each transaction. In view of the above, it was submitted that the making of multiple payments in a single day was allowed in the Asst. Year under question. The learned AR, further submitted that the Assessing Officer had duly carried necessary investigation for verifying violation of section 40A(3) and in this respect he invited our attention to a questioner dated 07.12.2009 placed at paper book page 34 to 36. Our specific attention was invited to question10, wherein, the Assessing Office....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on in Assessment Order does not make an order erroneous. The learned AR further submitted that audit report issued under section 44AB also did not point out any payment exceeding Rs. 20,000/- and the audit report also strengthens the fact that no payment exceeding Rs. 20,000/- was made. 5. As regards the other allegation of Commissioner regarding non verification of lorry hiring charges in view of his investigation in Asst. Year 2008-09, the learned AR submitted that each year is a different year and principle of res judicata is not applicable to the Income Tax proceedings and differentiation of views of Assessing Officer in two years does not make an assessment order erroneous and prejudicial to the interest of revenue. He further, argued that the Commissioner cannot examine the records of another year to form an opinion in another year. 6. The learned DR on the other hand, submitted that assessee had splinted the payments into transactions of less then 20,000/- as in fact he had made payments in lump sum as it is not possible that in a single day the assessee would have made payment to same party 10 times in a day. He argued that human probability does not warrant such type....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the aggregate of payments made to a single party otherwise than by an account payee cheque exceeds Rs. 20,000/- in a day. Vide para 13.4, the Circular states that the amendment will be applicable w.e.f. 1st April, 2009, therefore, this amendment will not be applicable for the year under consideration as the assessment year involved in 2007-08. The Circular vide para 13.2 itself states that assessee tend to circumvent the provisions of section 40A(3) by splitting a particular high value payment to one person into several cash payments, each below Rs. 20,000/-. The relevant provision of the said Circular as contained in para 13.2 to 13.4 are reproduced below: "13.2 Sub-section (3) of section 40A is an anti tax-evasion measure. By requiring payments to be made by an account payee instrument, it is possible to verify the genuineness of the transaction. Thereby the risk of evasion is substantially mitigated. Field formations have reported that assessees tend to circumvent the provisions of sub-section(3) of section 40A by splitting a particular high value payment to one person into several payments, each below Rs. 20,000/- This splitting is also resorted to for payments made in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d not make an elaborate discussion in this regard. In the present case, the Assessing office raised an enquiry and assessee filed detailed reply and thereafter, Assessing Officer accepted the explanation and did not make any addition on that account. The order of Assessing Officer cannot be said to be erroneous as he has taken a plausible view, keeping in view of the facts and circumstances of the case. 7.2 As regards the other issue that Assessing Officer did not examine the amount of lorry charges in a particular manner as he did in the subsequent year, we find that each year is a separate year and principle of res- judicata does not apply to Income Tax proceedings. The view taken by one Assessing Officer in one year, if it differs from the view taken by Assessing Officer in succeeding year on the same issue cannot be said to be erroneous provided the view taken by Assessing Officer is a plausible view. The Assessing Officer did carry out necessary examination to arrive at the genuineness of payments and assessee also filed confirmations by parties to whom payments were made. The fact that the assessee had filed confirmations of payees becomes apparent from the reply filed by ....