TaxTMI 
TaxTMI 
2017 (8) TMI 1377
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....of appeals: Grounds raised by assessee in ITA No.1593/Kol/2014 (AY:2011-12) : 1. That on the facts and in the circumstances of the case the action of the Ld CIT(A) in confirming the addition made by the Assessing Officer of Rs. 603150/ u/ s 40A(3) of the IT Act is contrary to the material evidences on record and the addition made is bad in law. 2. That on the facts and in the circumstances of the case the action of the Ld ClT(A) in confirming the addition of Rs. 603150/u/ s 40A(3) of the IT Act even where payments were made and there was no applicability of Section 40A(3), the addition confirmed by the Ld CIT(A) is bad in law. 3. That the action of the Ld ClT(A) in confirming the addition of Rs. 603150/u/ s 40A(3) made by the Assessing Officer is arbitrary excessive and illegal. 4. That the above grounds of appeal shall be argued in detail at the time of hearing and the appellant craves leave to submit, add, alter, modify, amend any grounds of appeal or submit any additional grounds of appeal at or before the time of hearing. 4. Although, in this appeal, the assessee has raised a multiple grounds of appeal, but at the time of hearing, the main grievance of the assessee ha....
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....paid Rs. 6,03,150/- to Shivam Enterprises on the instruction of its creditor M/s Charco Electronics Pvt. Ltd. i.e. the assessee instead of paying to M/s Charco Electronics Pvt. Ltd., creditor of the assessee, as per the instructions of the creditor, he paid to M/s Shivam Enterprises Rs. 6,05,150/- through account payee cheque. In other words, to simplify the issue under consideration the assessee purchased goods from M/s Charco Electronics Pvt. Ltd. of worth Rs. 6,03,150/- and therefore, he supposed to pay M/s Charco Electronics Pvt. Ltd, but the creditor of M/s Charco Electronics Pvt. Ltd. has instructed the assessee not to pay him but the payment is to be made directly to M/s Shivam Enterprises. Therefore, it is a payment through account payee cheque and there is no violation of provisions of Section 40A(3) of the Act. Besides, the assessee relied on the following judgments :- i) Anupam Tele Services, (2014) 43 taxmann.com 199 (Guj HC) " Section 40A(3) does not eliminate considerations of business expediencies, thus where assessee was compelled to make cash payments, disallowance made by invoking Section 40A(3) was not justified." ii) CIT Vs. Muthoot Bankers (2000) 11....
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....n to ESI & Rs. 63,299/on account of employees' Contribution to EPF for payment after due dates specified by the respective Act. vi) That Ld CIT(A) has erred in accepting the decision of case laws cited by the assessee ignoring the two case laws cited by the A.O. ( i.e. Bengal Chemical & Gujarat State Road Transport corpn. (supra) alongwith the elaborate discussion made by the A.O. in the assessment order regarding applicability of sec 2(24) (x) read with 36(1)(va) of I.T. Act instead of section 43B of IT. Act. 5.1 Grounds No. i) to iv) raised by the Revenue relate to one issue, that is, transfer the amount of Rs. 70,00,000/- for sundry creditor to loan creditor with the motive to hoodwink the revenue. 5.2 The brief facts qua the issue are that the assessee filed its return of income for the assessment year 2011-12, on 30.09.2011 declaring a total income of Rs. 13,13,180/-. The assessee's case was selected for scrutiny u/s.143(2) of the Act and the AO completed the assessment by making various additions. The AO during the assessment proceedings, noted that sundry creditors, as on 1st April, 2010 and 31.03.2011 in comparison with loan confirmations furnished by the assessee, ....
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.... creditor. It cannot be said that any payment has been made. M/s Rollataniers Niryat Pvt. Ltd. was shown as a creditor in the assessee's books of account but the assessee has changed the nomenclature and made it unsecured loan from same party, M/s Rollataniers Niryat Pvt. Ltd. The liability remained same, only nomenclature has been changed and this fact has not been disputed by the AO that the liability of Rs. 70,00,000/- will exceed and only the assessee has converted the trade liability of Rs. 70,00,000/-, to unsecured loan from the said party. The Ld. CIT(A) also observed that in this transaction no any third party is involved and no liability discharged by the assessee, the provision of Section 40A(3) is not attracted. Therefore, the ld CIT(A) held that the AO's action cannot be sustained. The ld CIT(A) also relied on the Third Member Judgment in the case of DCIT Vs. Bharatiya Hotels Limited, ITA No.941/Kol2011, A.Y.2007-08, which clearly explains that section 40A (3) of the Act uses the expression "in sum" which indicates that it is only when payment is made in monetary terms/cash. In the assessee`s case under consideration, the payment has not been made only nomenclature has ....
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....ks of accounts of the assessee and the payment has not been made by the assessee. The AO also did not dispute the fact that the liability of Rs. 70,00,000/-, did not exist in the books of the assessee. Just because that the trade creditor has been renamed by the assessee, as unsecured loan does not mean that the assessee has paid any liability or has done any illegal activity to conceal the particulars of income. Therefore, considering the factual position, we are of the view that there is no any infirmity in the order passed by ld. CIT(A). Therefore, we confirm the order passed by the ld.CIT(A). 5.7 In the result, appeal filed by the Revenue in grounds Nos.1 to 4 ( In ITA No. 1802/kol/2014) are, dismissed. 6. Ground Nos. v) and vi) raised by the Revenue relate to payment of ESI Rs. 2813/- and payment of EPF Rs. 63,299/- after due date and in violation of provisions of section 36(1) (va) of the I.T.Act. 6.1 The brief facts qua the issue are that during the assessment proceedings, the AO observed that the assessee delayed in making the payment of employees contribution to EPF and ESI amounting to Rs. 63,299/- and Rs. 2,813/- respectively. The AO found that the assessee had paid t....