MRS ROADWAYS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This appeal is filed by the assessee against the order passed by the Income-tax Appellate Tribunal, Cochin Bench in I.T.A. No. 74/Coch/2013 with reference to the assessment year 2009-10. The facts in this case would disclose that the assessee being a partnership firm, undertakes transporting contract for transportation of goods for various organisations. During the assessment year, the assessee has spent Rs. 4.77 crores towards lorry hire charges of which the assessee had paid a sum of Rs. 1,06,69,600 in cash, contrary to the provisions of section 40A(3) of the Income-tax Act. The Assessing Officer disallowed the said amount. The assessee preferred an appeal before the Commissioner of Income-tax (Appeals), which stood dismissed against which the appeal was preferred before the Tribunal, which also came to be dismissed.

(2.) The main contention urged by the appellant is that the assessee was maintaining accounts properly. It does not own sufficient number of lorries for undertaking the transportation contract and, therefore, it usually hires lorries from the market and the freight amount is determined through negotiations with lorry drivers and the payment is made to the concerned lorry drivers in cash. According to them, this was being done out of the business expediency and on account of the special nature of business they have undertaken.

(3.) The Tribunal, on an elaborate consideration of the matter, found that the explanation offered by the assessee was not satisfactory as the assessee has failed to show that the payments made by it in violation of the provisions of section 40A(3) of the Act is covered by any of the exceptions provided under rule 6DD of the Income-tax Rules.