Chandroprrocess v. The Deputy Commissioner Of Income Tax,Office Of The Deputy Commissioner Of Income Tax,Circle-Ii, Tirupur

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 05.02.2020CORAMTHE HONOURABLE Dr. JUSTICE ANITA SUMANTHW.P.No.2668 of 2020 andWMP.Nos.3094 & 3108 of 2020 ChandroPrrocess,Represented by its Partner,E.A.Arumugam,No.151/2, Pachankattupalayam,Arulpuram, Veerapandi Post,Tirupur - 641 605. .. Petitioner Vs. The Deputy Commissioner of Income Tax,Office of the Deputy Commissioner of Income Tax,Circle-II, Tirupur. .. Respondent Prayer:- Writ Petition filed under Article 226 of theConstitution of India, praying for the issuance of a Writ ofCertiorari, calling for the records on the files of therespondent in ITBA/AST/S/143(3)/2019-20/1023417682(1) dated30.12.2019 and quash the same. For Petitioner : Mr.R.SenniappanFor Respondent : Mr.A.P.Srinivas, Senior Standing Counsel ORDER The petitioner has challenged an order of assessment dated30.12.2019 for Assessment Year (AY) 2017-18 passed in terms ofthe provisions of the Income Tax Act, 1961 (in short 'Act'). 2. Two disallowances have been effected, the first in termsof Section 40A(3) of the Act that deals with 100% disallowanceof expenditure in cash, in excess of a permitted limit. It wasthe case of the petitioner that the cash payments related topurchase of fire wood and that the same are covered by theprovisions of Rule 6 DD of the Income Tax Rules, 1962 whichcarve out certain expenditures to the rigour of Section 40A(3)where the cash payments relate to specified categories. One ofthe exceptions relate to purchases of agricultural or forestproduce or produce of Animal Husbandry or diary poultry farmingor fish and fish products or the products of horticulture orapiculture, where the payments had been made to the cultivator, 1/4 https://hcservices.ecourts.gov.in/hcservices/ 3. Reliance upon Rule 6DD was rejected by the AssessingOfficer quoting the procedure followed for purchase of fire woodthrough open bidding system. The Officer states that no farmersells fire wood directly in the open market and hence theprotection under Rule 6DD would not be available to thepetitioner. 4. In addition, certain credits appearing in the bankaccounts of the petitioner were proposed to be disallowed underSection 68 of the Act. The petitioner explained the same asbeing loans advanced by twelve creditors for medical treatmentof Sadasivam V A, stated to be a partner in the petitioner firm.This explanation was also disbelieved on the ground that thepetitioner had not established identity of the creditors, theircapacity to advance money or the genuineness of the transaction. 5. Both the issues dealt with above require an examinationof facts and hence this is not an appropriate case forinterference under Article 226 of the Constitution of India. 6. Learned counsel states that adequate opportunity was notgranted to the petitioner prior to completion of assessment. Myattention is drawn to the medical records of VA Sadasivam toestablish the need for emergency treatment and expensesincurred when the partner had met with a serious accident. 7. The petitioner is relegated to statutory appellateremedy. The order of assessment may be challenged by way offirst appeal before the Commissioner of Income Tax (Appeals)within a period of three weeks from today. If the appeal isfiled within the period as aforesaid, the same shall be taken onfile by the office of the Commissioner (Appeals) and disposed onmerits and in accordance with law, without reference tolimitation. 6. Learned counsel states that adequate opportunity was notgranted to the petitioner prior to completion of assessment. Myattention is drawn to the medical records of VA Sadasivam toestablish the need for emergency treatment and expensesincurred when the partner had met with a serious accident. 7. The petitioner is relegated to statutory appellateremedy. The order of assessment may be challenged by way offirst appeal before the Commissioner of Income Tax (Appeals)within a period of three weeks from today. If the appeal isfiled within the period as aforesaid, the same shall be taken onfile by the office of the Commissioner (Appeals) and disposed onmerits and in accordance with law, without reference tolimitation. 8. Since the powers of the Commissioner (Appeals) are co-terminus with that of the Assessing Officer, a proper enquiry beconducted as to the veracity or otherwise of the explanationstendered by the petitioner both in response to the proposalunder Section 68 of the Act as well as the applicability of Rule6DD to the disallowance under Section 40A(3). Let an order ofassessment be passed de novo within a period of three monthsfrom date of institution of appeal, after hearing thepetitioner. Recovery of the disputed demand shall not beinsisted upon till disposal of appeal. In the event the appealis not instituted within the time frame as aforesaid, the order 2/4 of assessment now impugned shall be revived and standundisturbed. 9. This writ petition is dismissed granting liberty asaforesaid. No costs. Consequently, connected miscellaneouspetitions are closed. Sd/- Asst.Registrar (CS VI) /true copy/Sub Asst. Registrarvs/slToThe Deputy Commissioner of Income Tax,Office of the Deputy Commissioner of Income Tax,Circle-II, Tirupur.+1 cc to Mr.R.Senniappan Advocate sr9356+1 cc to Mr.A.P.Srinivas Advocate sr9385W.P.No.2668 of 2020 andWMP.Nos.3094 & 3108 of 2020aa24/02/2020 3/4