Shri Annadkumar Rawatam Joshi, Surat v. The Income tax Officer,Ward-2(2),, Surat

ITA 1833/AHD/2011 | 2008-2009
Pronouncement Date: 18-11-2011 | Result: Allowed

Appeal Details

RSA Number 183320514 RSA 2011
Assessee PAN SELPJ2447K
Bench Ahmedabad
Appeal Number ITA 1833/AHD/2011
Duration Of Justice 3 month(s) 29 day(s)
Appellant Shri Annadkumar Rawatam Joshi, Surat
Respondent The Income tax Officer,Ward-2(2),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 18-11-2011
Date Of Final Hearing 03-11-2011
Next Hearing Date 03-11-2011
Assessment Year 2008-2009
Appeal Filed On 20-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD BEFORE SHRI G. C. GUPTA HONBLE VICE PRESIDENT AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO. 1833/ AHD/2011 (ASSESSMENT YEAR 2008-09) SHRI ANANDKUMAR RAWATRAM JOSHI 407 MANOJ MARKET RING ROAD SURAT VS. ITO WARD 2(2) SURAT PAN/GIR NO. : ASELPJ2447K (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI R. B. SHAH AR RESPONDENT BY: SHRI KARTARSINGH CIT DR DATE OF HEARING: 03.11.2011 DATE OF PRONOUNCEMENT: 18.11.2011 O R D E R PER SHRI A. K. GARODIA AM:- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) II SURAT DATED 29.06.2011 FOR THE ASSESSMEN T YEAR 2008-09. 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A S WELL AS LAW ON THE SUBJECT THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING OF R S. 58 29 8307- U/S 40A(3)(A) OF THE I.T. ACT 1961 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LEARNED CIT (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING DISALLOWI NG OF RS. 2 68 66 115 U/S 40A(3)(B) OF THE IT. ACT 1961 3. IT IS THEREFORE PRAYED THAT ABOVE ADDITIONS / DISALLOWANCES MADE BY ASSESSING OFFICER AND CONFIRMED BY CIT (APP EALS) MAY PLEASE BE DELETED. 4. APPELLANT CRAVES LEAVE TO ADD ALTER OR DELET E ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE AP PEAL. I.T.A.NO.1833 /AHD/2011 2 2. THE BRIEF FACTS TILL THE ASSESSMENT STAGE ARE NO TED BY LD. CIT(A) IN PARA 2.1 TO 2.2 OF HIS ORDER WHICH ARE REPRODUCED B ELOW: 2.1. THE FACTS RELATING TO THE ABOVE ADDITIONS AR E THAT THE APPELLANT IS ENGAGED IN THE EXPORT OF SAREES AND DU PATTAS BY PURCHASING READY GOODS AND SECOND JOB LOT SAREES FR OM LOCAL MARKET. THE TOTAL EXPORT SALES SHOWN BY THE APPELLA NT DURING THE YEAR IS RS. 98 40 719/-. THE ASSESSING OFFICER VID E NOTICE U/S 142(1) OF THE ACT DTD.14 6.2010 ASKED THE APPELLA NT TO FURNISH DETAILS INCLUDING NAME AND ADDRESSES OF THE CREDITO RS AS WELL AS PARTIES FROM WHOM PURCHASES HAD BEEN SHOWN. IN RESP ONSE TO THE SAME THE APPELLANT TOOK ADJOURNMENT FOR 26 6.2010. THEREAFTER ANOTHER NOTICE WAS ISSUED ON 29.6.2010 BY THE ASSES SING OFFICER AGAINST WHICH ANOTHER ADJOURNMENT WAS TAKEN BY THE APPELLANT. SINCE NO DETAILS WERE SUBMITTED THE ASSESSING OFFI CER ISSUED FURTHER NOTICES DTD.27.7.2010 AND 10.8.2010. THE AU THORIZED REPRESENTATIVE OF THE APPELLANT APPEARED ON 06.9.20 10 AND REQUESTED FOR FURTHER ADJOURNMENT ON THE GROUND THA T THE DETAILS WERE UNDER PREPARATION. THE CASE WAS THEREFORE AD JOURNED TO 15.9.2010. HOWEVER NOBODY ATTENDED ON THE SAID DAT E SUBSEQUENTLY ON 18.10.2010 THE AUTHORIZED REPRESE NTATIVE OF THE APPELLANT APPEARED AND SOUGHT ANOTHER ADJOURNMENT O N THE GROUND THAT THE APPELLANT WAS OUT OF STATION. THE ASSESSIN G OFFICER VIDE ORDER SHEET ENTRY DTD.18.10.2010 ADJOURNED THE CASE FOR HEARING ON 25.10.2010 AND ON 03.11.2010 THE AUTHORIZED REPRE SENTATIVE OF THE APPELLANT APPEARED AND SUBMITTED PART DETAILS. HE THEREFORE WAS ASKED BY THE ASSESSING OFFICER TO FURNISH COMPLETE DETAILS. AS DISCUSSED IN THE ASSESSMENT ORDER ON 01.12.2010 T HE AUTHORIZED REPRESENTATIVE OF THE APPELLANT APPEARED BUT FILED NOTHING. THE ASSESSING OFFICER THEREFORE PROVIDED ANOTHER OPPO RTUNITY TO THE APPELLANT TO FURNISH COMPLETE DETAILS BY ADJOURNING THE CASE TO 06.12.2010. THE AUTHORIZED REPRESENTATIVE APPEARED ON 07.12.2010 BUT DID NOT FURNISH ANY DETAIL. IN PARA 6 OF THE AS SESSMENT ORDER THE ASSESSING OFFICER HAS RECORDED THAT SINCE PROPER DE TAILS WEE NOT FURNISHED BY THE APPELLANT HE STARTED ENQUIRY WITH THE BANK OF THE APPELLANT VIZ. HDFC BANK ANNAPURNA MARKET RING R OAD SURAT AND ALSO CALLED FOR PHOTOCOPIES OF BOTH SIDES OF TH E CHEQUES ISSUED BY THE APPELLANT IN RESPECT OF EACH PARTY CREDITO RS AS WELL AS SUPPLIERS DURING THE YEAR. ON RECEIPT OF THE ABOVE INFORMATION FROM THE BANK THE ASSESSING OFFICER OBSERVED THAT THE A PPELLANT HAS MADE PAYMENT TO THE SUPPLIERS/ CREDITORS BY 'NON-AC COUNT PAYEE CHEQUES' WHICH WAS IN VIOLATION OF PROVISIONS OF S ECTION 40A(3) OF THE I.T.ACT. HE THEREFORE VIDE ORDER SHEET ENTRY DTD. 17.10.2010 I.T.A.NO.1833 /AHD/2011 3 INFORMED THE APPELLANT ABOUT THE RESULTS OF THE ABO VE ENQUIRY AND ADJOURNED THE CASE TO 24.12.2010 FOR FILING OF EXPL ANATION AS WELL AS DETAILS. HOWEVER NOBODY APPEARED ON THE SAID DA TE NOR ANY DETAILS WERE FILED. IN PARA 8 OF THE ORDER THE ASS ESSING OFFICER HAS AS AN EXAMPLE RECORDED DETAILS OF CERTAIN PAYMENTS MADE ABOVE F 20 000/-OTHERWISE THAN BY A/C. PAYEE CHEQUES. THE S AME BEING THREE CHEQUES OF RS. 1 00 000/- RS. 50 000/- AND R S. 1 00 000/- ISSUED IN FAVOUR OF EKTA EXPORTS ON 17.5.2007 28.5 .2007 AND 15.5.2007 RESPECTIVELY. SIMILARLY CHEQUES OF RS. 1 00 000/- RS. 50 000/- AND RS. 4 10 0007- WERE ISSUED IN FAVOUR O F MANISHA SILK MILLS BANSHIDHAR FASHION AND BALAJI TEXTILES ON 09 .4.2007 26.6.2007 AND 17.7.2007 RESPECTIVELY. ALL THESE CHE QUES WERE NON- ACCOUNT PAYEE CHEQUES. IN PARA 8.1 OF THE ORDER TH E ASSESSING OFFICER HAS GIVEN THE DETAILS OF PURCHASES MADE BY THE APPELLANT OF RS. 86 64 830/- FROM M/S BANSIDHAR FABRICS EKTA EX PORT HANUMAN TEX RAJ SHREE SILK MILLS SALASAR BALAJI SHANTILAL TEXTILES SHREE NATHJI SILK SHREE BALAJI TEXTILE MANISHA SILK MILLS SHREE KRISHNA TEXTILES AND AGAINST THAT P AYMENT OF RS. 58 29 830/- HAS BEEN MADE DURING THE YEAR OTHERWISE THAN BY A/C. PAYEE CHEQUES. IN PARA 8.2 OF THE ORDER THE ASSESS ING OFFICER HAS REPRODUCED SECTION 40A(3) OF THE ACT AND IN PARA 8 .3 OF THE ORDER HIS ANALYSIS OF THE ABOVE SECTION AS WELL AS LEGAL POSITION AND HAS ALSO HELD THEREIN THAT SINCE THE APPELLANT HAS NOT SUBMITTED BASIC INFORMATION OF SUPPLIERS/CREDITORS IT WAS NOT POSS IBLE TO VERIFY AS TO WHETHER THERE HAS BEEN ANY BUSINESS EXPEDIENCY O R EXCEPTIONAL AND UNAVOIDABLE CIRCUMSTANCES WHICH NECESSITATED S UCH PAYMENTS OTHERWISE THAN BY A/C. PAYEE CHEQUES AND THEREFORE IT WAS A FIT CASE FOR INVOKING PROVISIONS OF SECTION 40A(3)(A) O F THE ACT AND DISALLOWED THE ENTIRE AMOUNT OF RS. 58 29 830/- UND ER THE ABOVE SECTION. 2.2. IN PARA 8 OF THE ASSESSMENT ORDER THE ASSESS ING OFFICER HAS GIVEN THE DETAILS OF PAYMENT MADE TO 'CREDITORS FOR GOODS' OUTSTANDING AS ON 01.4.2007 OTHERWISE THAN BY A/C. PAYEE CHEQUES. THE TOTAL OF SUCH AMOUNT IS RS. 33 99 000/-. IN PAR A 9.1 OF THE ORDER THE ASSESSING OFFICER HAS GIVEN THE DETAILS OF PARTIES WHICH HAVE BEEN SHOWN AS CREDITORS FOR GOODS AS ON 01.4.2 007 AND TO WHOM PAYMENTS HAVE BEEN MADE DURING THE YEAR OTHERW ISE THAN BY A/C. PAYEE CHEQUES/DRAFTS. AS PER THE DETAILS GIVEN THEREIN THE OPENING CREDIT BALANCE IN THE A/C. OF 14 CREDITORS FOR GOODS AS ON 01.4.2007 WAS RS. 3 05 50 775/- AGAINST WHICH THE APPELLANT HAS MADE PAYMENT OF RS. 2 68 66 115/-. IN PARA 9.2 OF T HE ORDER THE ASSESSING OFFICER HAS DISCUSSED PROVISIONS OF SECTI ON 40A(3)(B) OF I.T.A.NO.1833 /AHD/2011 4 THE ACT AND IN 9.3 OF THE ORDER HELD THAT SINCE THE APPELLANT HAS FILED NOTHING TO PROVE THAT THERE WAS EXCEPTIONAL A ND UNAVOIDABLE CIRCUMSTANCES WHICH COMPELLED HIM TO MAKE PAYMENT OTHERWISE THAN BY A/C. PAYEE CHEQUES TO ALL THE ABOVE 14 CRED ITORS DURING THE YEAR IT IS A FIT CASE FOR INVOKING PROVISIONS OF S ECTION 40A(3)(B) OF THE ACT AND MADE ADDITION OF RS.2 68 66 115/- TO T HE INCOME OF THE APPELLANT UNDER THE ABOVE SECTION. 3. BEFORE LD. CIT(A) THIS CONTENTION WAS RAISED BY THE ASSESSEE FOR THE FIRST TIME THAT THE ASSESSEE HAS MADE EXPORT SA LES OF DUPATTAS AND SAREES AFTER PURCHASING THE SAME FORM MARKET THROUG H AGENT AND THE ASSESSEE IS REQUIRED TO MAKE PAYMENTS FOR PURCHASES AS PER THE DIRECTIONS OF THE AGENT AND THE ASSESSEE HAS DONE THE SAME. I T WAS ALSO SUBMITTED THAT IN THE PRESENT CASE THE AGENT OF THE ASSESSEE DEMANDED PAYMENTS THROUGH CROSSED CHEQUES AS HE WAS REQUIRED TO MAKE CASH PAYMENTS TO THE SUPPLIERS. THE NAME OF THE AGENT WAS GIVEN AS SHRI MANOJ KUMAR SHARMA AND IT WAS SUBMITTED THAT THE PAYMENTS HAVE BEEN MADE THROUGH CROSSED CHEQUES AS THE AGENT WAS REQUIRED TO MAKE C ASH PAYMENTS TO THE SUPPLIERS AND THE PAYMENT TO OUTSTANDING CREDITORS WAS ALSO MADE AS PER THE DIRECTIONS OF THE AGENT BECAUSE THE AGENT WAS D EALING WITH THE SUPPLIERS. THE ASSESSEE ALSO FURNISHED CONFIRMATIO N LETTER OF THE AGENT ALONG WITH HIS PAN AND IT WAS SUBMITTED THAT UNDER THESE FACTS RULE 6DD(K) IS APPLICABLE AND HENCE NO DISALLOWANCE IS CALLED FOR U/S 40A(3) OF THE ACT. LD. CIT(A) WAS NOT SATISFIED AND HE CO NFIRMED THE ASSESSMENT ORDER AND NOW THE ASSESSEE IS IN FURTHE R APPEAL BEFORE US. 4. IT WAS SUBMITTED BY THE LD. A.R. THAT SO FAR THE APPLICABILITY OF RULE 6DD(K) IS CONCERNED THE MATTER MAY BE RESTORE D BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION BECAUSE THIS ASPECT W AS NEVER RAISED BEFORE HIM. ONE MORE CONTENTION WAS RAISED BY HIM BEFORE US THAT TILL ASSESSMENT YEAR 2007-08 THE PROVISIONS OF SECTION 40 A(3) WERE DIFFERENT AND AS PER THE SAME IN CASE OF PAYMENT IN SUBSEQUENT I.T.A.NO.1833 /AHD/2011 5 YEAR IN RESPECT OF ANY LIABILITY INCURRED BY THE AS SESSEE FOR ANY EXPENDITURE IF THE PAYMENT IS MADE IN A SUM EXCEED ING RS.20 000/- OTHERWISE THAN BY A CROSSED CHEQUE DRAWN ON A BANK OR BY A CROSSED BANK DRAFT AND THE ALLOWANCE ORIGINALLY MADE SHALL BE DE EMED AS HAVING WRONGLY MADE AND THE A.O. MAY RECOMPUTE THE TOTAL I NCOME OF THE ASSESSEE FOR THE PREVIOUS YEAR IN WHICH SUCH LIABIL ITY WAS INCURRED AND MAKE THE NECESSARY AMENDMENT AND THE PROVISIONS OF SECTION 154 SHALL BE APPLICABLE AND THE LIMITATION OF 4 YEARS SHALL B E RECKONED FROM THE END OF THE ASSESSMENT YEAR OF THE PREVIOUS YEAR IN WHIC H THE PAYMENT WAS SO MADE. IT WAS HIS SUBMISSION THAT BECAUSE OF THESE FACTS AND LEGAL POSITION APPLICABLE UP TO ASSESSMENT YEAR 2007-08 FOR THE PAYMENTS MADE BY THE ASSESSEE IN THE PRESENT YEAR IN RELATIO N TO OUTSTANDING AMOUNT NO DISALLOWANCE IS CALLED FOR IN THE PRESEN T YEAR AND EVEN IF ANY DISALLOWANCE IS TO BE MADE IT HAS TO BE MADE IN TH E YEAR IN WHICH SUCH LIABILITY WAS INCURRED. IT WAS HIS SUBMISSION THAT FOR THIS PURPOSE ALSO THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION. 5. AS AGAINST THIS THE LD. D.R. OF THE REVENUE SUP PORTED THE ORDERS OF AUTHORITIES BELOW. HE ALSO DRAWN OUR ATTENTION TO PAGE 12 OF THE ORDER OF LD. CIT(A) AND SUBMITTED THAT A CLEAR FINDING IS GI VEN BY LD. CIT(A) THAT ALL THE PAYMENTS WERE MADE IN THE CITY OF SURAT WHI CH HAS GOOD BANKING NETWORK AND THEREFORE THERE IS NO JUSTIFICATION O F RESTORING THE MATTER BACK TO THE FILE OF THE A.O. FOR A FRESH DECISION A ND THE ORDER OF LD. CIT(A) SHOULD BE CONFIRMED. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT CONFIRMATION OF SHRI MANOJ KUMAR SHARMA IS AVA ILABLE ON PAGE 6 OF THE PAPER BOOK AS PER WHICH IT IS STATED BY HIM T HAT THE ASSESSEE HAD PURCHASED DUPATTAS AND SAREES THROUGH HIM AND FOR T HE SAME HE HAD I.T.A.NO.1833 /AHD/2011 6 OBTAINED CROSSED CHEQUES FROM THE ASSESSEE TO MAKE CASH PAYMENTS TO VARIOUS SUPPLIERS AFTER DISCOUNTING THE CROSSED CHE QUES RECEIVED FROM THE ASSESSEE. ADMITTEDLY THIS CONTENTION WAS RAISED F OR THE FIRST TIME BEFORE LD. CIT(A) AND THIS ASPECT WAS NEVER RAISED BEFORE THE A.O. HOWEVER THIS ARGUMENT OF THE ASSESSEE WAS REJECTED BY THE L D. CIT(A) BY SATING IN PARA 5.4 OF HIS ORDER THAT THIS ARGUMENT OF THE ASS ESSEE IS NOT RELEVANT AS THE ASSESSEE HAS NOT FURNISHED NAY EVIDENCE FOR THE SAME. HE HAS ALSO STATED THAT SINCE THE CHEQUES WERE ISSUED IN THE NA ME OF THE SUPPLIERS IT IS PROVED THAT THERE WAS NO AGENT. WE ARE NOT SATISFI ED ON THIS ASPECT THAT MERELY BECAUSE THE CHEQUES WERE ISSUED IN THE NAME OF THE SUPPLIES NON- EXISTENCE OF AGENT IS PROVED. REGARDING FURNISHING OF EVIDENCE ALSO WE FEEL THAT IN THE INTEREST OF JUSTICE ONE MORE OPPO RTUNITY SHOULD BE PROVIDED TO THE ASSESSEE TO BRING THE REQUIRED EVID ENCE ON RECORD AND HENCE WE SET ASIDE THE ORDER OF LD. CIT(A) ON BOTH THE ISSUES I.E. REGARDING DISALLOWANCE UNDER SECTION 40A(3) FOR THE EXPENSES INCURRED DURING THE PRESENT YEAR AND ALSO OF THE EXPENSE INC URRED DURING EARLIER YEAR OR YEARS TO THE FILE OF THE A.O. FOR A FRESH D ECISION. THE ASSESSEE HAS TO BRING THE REQUIRED EVIDENCE ON RECORD IN SUPPORT OF THIS CONTENTION THAT THERE WAS AN AGENT AND THE PAYMENTS WERE MADE BY TH E ASSESSEE AS PER THE DIRECTIONS OF THE AGENT AND HENCE RULE 6DD(K) IS A PPLICABLE. AFTER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE THE A.O. SHALL PASS NECESSARY ORDER AS PER LAW ON THIS ASPECT. 7. NOW THERE IS ONE MORE ASPECT REGARDING THE DISA LLOWANCE MADE BY THE A.O. IN RESPECT OF THE PAYMENTS MADE BY THE ASS ESSEE IN THE PRESENT YEAR IN CONNECTION WITH OPENING BALANCE OF CREDITOR S FOR EXPENSES. IN THIS REGARD WE FIND THAT THERE IS AMENDMENT IN THE PROV ISIONS OF SECTION 40A(3) FROM THE PRESENT ASSESSMENT YEAR AND THE APP LICABLE PROVISIONS OF SECTION 40A(3) UP TO ASSESSMENT YEAR 2007-08 ARE AS UNDER: I.T.A.NO.1833 /AHD/2011 7 SECTION 40A(3) OF THE INCOME TAX ACT 1961 AS IN FO RCE IN ASSESSMENT YEAR 2007-08: WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPE CT OF WHICH PAYMENT IS MADE AFTER SUCH DATE (NOT BEING LATER T HAN 31ST DAY OF MARCH 1969) AS MAY BE SPECIFIED IN THIS BEHALF BY THE CENTRAL GOVERNMENT BY NOTIFICATION IN THE OFFICIAL GAZETTE IN A SUM EXCEEDING TWENTY THOUSAND RUPEES OTHERWISE THAN BY A A/C PAYEE CHEQUE DRAWN ON A BANK OR BY A A/C PAYEE BANK DRAFT [TWENTY PER CENT OF SUCH EXPENDITURE SHALL NOT BE ALLOWED AS A DEDUCTION]: PROVIDED THAT WHERE AN ALLOWANCE HAS BEEN MADE IN T HE ASSESSMENT FOR ANY YEAR NOT BEING AN ASSESSMENT YEAR COMMENCIN G PRIOR TO THE 1ST DAY OF APRIL 1969 IN RESPECT OF ANY LIABILITY INCURRED BY THE ASSESSEE FOR ANY EXPENDITURE AND SUBSEQUENTLY DURIN G ANY PREVIOUS YEAR THE ASSESSEE MAKES ANY PAYMENT IN RESPECT THER EOF IN A SUM EXCEEDING TWENTY THOUSAND RUPEES OTHERWISE THAN BY AN A/C PAYEE CHEQUE DRAWN ON A BANK OR A/C PAYEE BANK DRAFT THE ALLOWANCE ORIGINALLY MADE SHALL BE DEEMED TO HAVE BEEN WRONGL Y MADE AND THE ASSESSING OFFICER MAY RECOMPUTE THE TOTAL INCOM E OF THE ASSESSEE FOR THE PREVIOUS YEAR IN WHICH SUCH LIABIL ITY WAS INCURRED AND MAKE THE NECESSARY AMENDMENT AND THE PROVISION S OF SECTION 154 SHALL SO FAR AS MAY BE APPLY THERETO THE PER IOD OF FOUR YEARS SPECIFIED IN SUBSECTION (7) OF THAT SECTION BEING R ECKONED FROM THE END OF THE ASSESSMENT YEAR NEXT FOLLOWING THE PREVI OUS YEAR IN WHICH THE PAYMENT WAS SO MADE : PROVIDED FURTHER THAT NO DISALLOWANCE UNDER THIS SU B-SECTION SHALL BE MADE WHERE ANY PAYMENT IN A SUM EXCEEDING TWENTY THOUSAND RUPEES IS MADE OTHERWISE THAN BY A CROSSED CHEQUE D RAWN ON A BANK OR BY A CROSSED BANK DRAFT IN SUCH CASES AND UNDER SUCH CIRCUMSTANCES AS MAY BE PRESCRIBED HAVING REGARD T O THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE CONSIDE RATIONS OF BUSINESS EXPEDIENCY AND OTHER RELEVANT FACTORS. 8. FROM THE CURRENT YEAR SUB-SECTION (3A) HAS BEEN INSERTED IN SECTION 40A AS PER WHICH IF AN ALLOWANCE HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR AND THE ASSESSEE MAKES PAYM ENT IN RESPECT THEREOF OTHERWISE BY A/C PAYEE CHEQUE DRAWN ON A BA NK OR A/C PAYEE BANK DRAFT THE PAYMENT SO MADE SHALL BE CHARGEABLE TO I NCOME TAX AS INCOME I.T.A.NO.1833 /AHD/2011 8 OF THE SUBSEQUENT YEAR IN WHICH SUCH PAYMENT WAS MA DE. NOW THE QUESTION IS AS TO WHETHER THESE AMENDED PROVISIONS ARE APPLICABLE IN RESPECT OF THE LIABILITY INCURRED IN AND AFTER THE ASSESSMENT YEAR 2008-09 OR EVEN FOR LIABILITY INCURRED UP TO ASSESSMENT YEA R 2007-08. IN OUR CONSIDERED OPINION THE AMENDED PROVISIONS ARE APPL ICABLE IN RESPECT OF THOSE EXPENDITURE FOR WHICH LIABILITY HAS BEEN INC URRED IN ASSESSMENT YEAR 2008-09 OR IN ANY SUBSEQUENT YEAR BUT IT CANNO T BE MADE APPLICABLE TO THE LIABILITY INCURRED UP TO THE ASSESSMENT YEAR 2007-08. IF THE LIABILITY IS INCURRED UP TO 2007-08 BUT THE PAYMENT MADE IS I N A SUBSEQUENT YEAR I.E. IN ASSESSMENT YEAR 2008-09 OR ANY SUBSEQUENT Y EAR THE PROVISIONS OF SECTION 40A(3) AS APPLICABLE IN THAT YEAR IN WHICH LIABILITY WAS INCURRED SHOULD BE APPLIED AS PER WHICH IF THE ASSESSEE DO ES NOT MAKE PAYMENT FOR SUCH A LIABILITY IN A SUM EXCEEDING RS.20 000/- BY AN A/C PAYEE CHEQUE DRAWN ON A BANK OR BY AN A/C PAYEE BANK DRAF T THE ALLOWANCES ORIGINALLY MADE SHALL BE DEEMED HAVING WRONGLY BEEN MADE AND THE ASSESSMENT ORDER OF THAT YEAR IN WHICH LIABILITY WA S INCURRED SHOULD BE RECTIFIED AS PER THE PROVISIONS OF SECTION 154 AND FOR THE PURPOSE OF RECKONING THE LIMITATION PERIOD OF FOUR YEARS IT S HALL BE RECKONED FROM THE END OF THE ASSESSMENT YEAR FOLLOWING THE PREVIO US YEAR IN WHICH THE PAYMENT WAS SO MADE. HENCE REGARDING THE DISALLOW ANCE MADE BY THE A.O. OF RS.2 68 66 115/- BEING PAYMENT OUT OF OPENI NG BALANCE EVEN IF IT IS FOUND THAT RULE 6DD(K) IS NOT APPLICABLE THEN AL SO NO DISALLOWANCE OR ADDITION IS CALLED FOR IN THE PRESENT YEAR IN RESPE CT OF THESE PAYMENTS AND THE SAME HAS TO BE DEALT WITH IN THE ASSESSMENT YEA R IN WHICH THE LIABILITY WAS INCURRED AS PER THE PROVISIONS OF SECTION 40A(3 ) APPLICABLE UP TO THE ASSESSMENT YEAR 2007-08. THE A.O. SHALL FIRST DECI DE THE APPLICABILITY OF RULE 6DD(K) WITH REGARD TO THESE PAYMENTS ALSO AND IF IT IS FOUND THAT RULE 6DD(K) IS APPLICABLE THEN OBVIOUSLY NO ADDIT ION IS CALLED FOR IN ANY OF THE YEAR BUT IF IT IS FOUND THAT RULE 6DD(K) IS NOT APPLICABLE THEN ALSO I.T.A.NO.1833 /AHD/2011 9 NO DISALLOWANCE IS CALLED FOR IN THE PRESENT YEAR I N RESPECT OF THIS PAYMENT OF RS.2 68 66 115/- IN THE PRESENT YEAR OUT OF OPEN ING BALANCE AND THE ADDITION IN THIS REGARD SHALL BE MADE IN THAT YEAR IN WHICH THE LIABILITY WAS INCURRED BY APPLYING THE PROVISIONS OF SECTION 40A( 3) WHICH WAS APPLICABLE TILL THE ASSESSMENT YEAR 2007-08. THE A .O. SHOULD PASS NECESSARY ORDER AS PER LAW AS PER ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 9. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 10. ORDER PRONOUNCED ON THE DATE MENTIONED HEREINAB OVE. SD./- SD./- (G. C. GUPTA) (A. K. GARODIA) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD; SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD BY ORDER 6. THE GUARD FILE AR ITAT AHMEDABAD 1. DATE OF DICTATION 8/11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 9/11.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 16/11 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 18/11 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 18/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18/11/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..