Chemtech Processors, Tiruppur vs Assessee

This appeal of the assessee is directed against the order of

the Commissioner of Income Tax (Appeals)-II, Coimbatore, dated

30.06.2014 and pertains to assessment year 2010-11. 2 I.T.A. No.2216/Mds/14

2. Sh. T. Banusekar, the Ld. representative for the assessee,

submitted that the Assessing Officer disallowed the payment made

by the assessee under Section 40A(3) of the Income-tax Act, 1961

(in short 'the Act') on the ground that the same was paid to settle the

liability of the previous year which was due to purchase of wind

energy, pre-export garments and cloths from M/s Reliance Dyeing

Works. Filing additional material before this Tribunal, the Ld.

representative submitted that on the basis of the statement

recorded under Section 131 of the Act, the Assessing Officer came

to a conclusion that the payment made by the assessee was to be

disallowed. However, the material available on record suggests that

the payment was made towards current account. The material

available on record clearly indicates that the payment was made

towards running a current account. Therefore, the provisions of

Section 40A(3) of the Act is not applicable. The Ld. representative

further clarified that the payment made by the assessee did not

relate to any expenditure at all. The Ld. representative further

submitted that the Assessing Officer made disallowance only on the

basis of the statement recorded from one Shri S.P. Saravanan on

08.03.2010 under Section 131 of the Act. In view of the material

available on record, according to the Ld. representative, there

cannot be any disallowance.

3 I.T.A. No.2216/Mds/14

3. On the contrary, Shri N. Madhavan, the Ld. Departmental

Representative, submitted that the assessee has now filed

additional material before this Tribunal for admission under Rule 29

of the Appellate Tribunal Rules, 1963. According to the Ld. D.R.,

these documents were not available before the lower authorities.

Therefore, if the Tribunal intends to take the additional material on

record, an opportunity may be given to the Assessing Officer to

examine the same. The Ld. D.R. further pointed out that the

Managing Partner of the assessee, during examination on

08.03.2010, admitted that the payments were made towards liability

of the previous year for purchasing of wind energy, garments, etc.

Therefore, it is an expenditure, hence, the Assessing Officer has

rightly disallowed the claim of the assessee.

4. We have considered the rival submissions on either side and

perused the relevant material on record. The Assessing Officer

disallowed the claim of the assessee towards cash payments

exceeding `20,000/- on the ground that the same was relatable to

expenditure for purchasing of wind energy, garments, etc. Now the

assessee claims that it was not an expenditure and the payments

were made towards running a current account. The assessee has

filed additional material before this Tribunal to establish that what 4 I.T.A. No.2216/Mds/14

was paid by it is only a current account transaction and not any

expenditure. As rightly submitted by the Ld. D.R., these materials

were not available before the lower authorities. Therefore, the

Assessing Officer had no occasion to consider these materials.

This Tribunal being a fact finding authority, the facts are to be

brought on record so as to enable the appellate forum to appreciate

the grievance of the assessee while examining the question of law.

Therefore, this Tribunal is of the considered opinion that the

additional material filed by the assessee needs to be examined by

the Assessing Officer to find out whether the payment made by the

assessee was relating to the liability of the previous year or it is only

a transaction in the nature of current account. Accordingly, the

orders of the lower authorities are set aside. The entire issue of

disallowance under Section 40A(3) of the Act is remitted back to the

file of the Assessing Officer. The Assessing Officer shall re-

examine the issue afresh in the light of the additional material filed

before this Tribunal and thereafter decide the issue after giving

reasonable opportunity to the assessee.

5. In the result, the appeal of the assessee is allowed for

statistical purposes.

5 I.T.A. No.2216/Mds/14

Order pronounced on 26th June, 2015 at Chennai.

sd/- sd/- (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) (A. Mohan Alankamony) (N.R.S. Ganesan) लेखा सद य/Accountant Member या यक सद य/Judicial Member

चे नई/Chennai, th 5दनांक/Dated, the 26 June, 2015.

Kri.

आदे श क/ - त6ल7प अ8े7षत/Copy to: 1. अपीलाथ,/Appellant 2. -.यथ,/Respondent

3. आयकर आयु9त (अपील)/CIT(A)-II, Coimbatore

4. आयकर आयु9त/CIT-III, Coimbatore

5. 7वभागीय - त न ध/DR

6. गाड( फाईल/GF.