Ita/315/2010 Of The Commissioner Of Income Tax,Tvm v. Sri.s.rahmathulla

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR &THE HON'BLE MR. JUSTICE BABU MATHEW P.JOSEPH TUESDAY, THE 6TH DAY OF MARCH 2012/16TH PHALGUNA 1933ITA.No. 315 of 2010 ( ) -----------------------ITA.479/2009 of I.T.A.TRIBUNAL,COCHIN BENCHAPPELLANT(S)/APPELLANT/APPELLANT:-------------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI. P.K.R.MENON, SENIOR STANDING COUNSEL BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAXRESPONDENT(S)/RSPONDENT:------------------------ SRI. S.RAGHUMATHULLA, M/S. CEE AND CEE FOREX SHOP NO.17, HOORA CHAMBERS PAZHAVANGADI, THIRUVANANTHAPURAM-695023. BY ADV. SRI.K.SRIKUMAR BY ADV. SRI.K.MANOJ CHANDRAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 06-03-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX. ANNEXURE 'A': TRUE COPY OF THE ORDER U/S.143(3)OF THE ASSESSING OFFICERDATED 31.12.2008. ANNEXURE 'B' : TRUE COPY OF THE ORDER OF THE COMMISSIONER OF INCOMETAX (APPEALS) DATED 16.6.2009. ANNEXURE 'C' : TRUE COPY OF THE ORDER OF THE APPELLATE TRIBUNAL DATED 20.4.2010. // TRUE COPY // P.S. TO JUDGE. C.N. RAMACHANDRAN NAIR& BABU MATHEW P. JOSEPH, JJ. ------------------------------------------------------------I.T. Appeal No. 315 of 2010-------------------------------------------------------------Dated this the 6[th] day of March, 2012 JUDGMENT Ramachandran Nair, J. Heard Senior Counsel Sri. P.K.R. Menon appearing forappellant and Adv. Sri. K.Sreekumar appearing for respondent.The question raised in the Appeal is whether Tribunal is justifiedin cancelling disallowance made under Section 40A(3) of theIncome Tax Act for payments made in excess Rs.20,000/- in cash.The disallowance made is at 20% of cash payments in excess ofRs.20,000/-. The Tribunal took the view that respondents wasengaged in purchase and sale of SIM cards, Recharge coupons,BSNL cards etc., which are used in mobile communications. TheTribunal was of the view that these are purchase and sale ofgoods and so much so Section 40A(3) is not attracted. Afterhearing both sides, we are not able to uphold the Tribunal's I.T.Appeal No.315/2010] finding because the transactions are not pure sale of goods asheld by the Tribunal. On the other hand, it is by way of serviceand so much so, Section 40A(3) is attracted for the transaction. 2. The counsel for the respondent alternatively raised thecontention that all the parties from whom respondent purchasedSIM Cards, Recharge coupons etc. purchased articles from BSNLand for the entire supplies BSNL has collected TDS and issuedForm 16A to the distributors from whom respondent purchasedthe articles. Based on these documents, the contention raised byrespondent is that the department's apprehension of evasion oftax in cash transactions does not apply in this case. The Seniorcounsel appearing for the revenue submitted that the TDSrecovery on the supplies as such does not grant any immunity tothe respondent from the operation of Section 40A(3). 3. After hearing both the sides, what we feel is that thealternative contention raised by the respondent calls for detailedconsideration by the Tribunal. Since the High Court is only hearingthe appeal against orders of the Tribunal on merit, it would notbe proper for us to decide this issue for the first time raisedbefore us. We therefore feel an opportunity should be granted tothe respondent to raise this contention before the Tribunal based I.T.Appeal No.315/2010] on documents, Form 16A and other documents produced before us which may be produced by the appellant before the Tribunal. 3. After hearing both the sides, what we feel is that thealternative contention raised by the respondent calls for detailedconsideration by the Tribunal. Since the High Court is only hearingthe appeal against orders of the Tribunal on merit, it would notbe proper for us to decide this issue for the first time raisedbefore us. We therefore feel an opportunity should be granted tothe respondent to raise this contention before the Tribunal based I.T.Appeal No.315/2010] on documents, Form 16A and other documents produced before us which may be produced by the appellant before the Tribunal. I.T.A is allowed vacating the Tribunal's order and byremanding the matter for decision of the appeal afresh onalternative grounds raised above, based on documents producedand after hearing the respondent. The Tribunal is directed todispose of the appeal afresh after giving opportunity to bothsides. Since we are restoring the Appeal to the Tribunal, norecovery should be made until disposal of the Appeal by theTribunal. Sd/- C.N. RAMACHANDRAN NAIR, JUDGE Sd/- BABU MATHEW P. JOSEPH, JUDGE. krs.