MILK SPECIALITIES LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This order shall dispose of two appeal Nos. ITA 374 of 2011 and 366 of 2011 which have been filed by the assessee under section 260A of the Income Tax Act, 1961 (for brevity the Act) claiming that following substantial questions of law would arise from the order of the Tribunal dated 22-10-2010 in respect of the assessment year 2005-06 and 12-10-2010 in respect of the assessment year 2006-07 while deciding ITA No. 755/Chd./2009 and 789/Chd./2009 respectively.

(2.) The Assessing Officer further found that cash payments were made in violation of the provisions of Section 40A(3) of the Act both in respect of amount exceeding Rs. 20,000/- paid in cash as well as in relation to payments exceeding Rs. 20,000/- made in cash as shown in the books of accounts by breaking it into smaller amounts each below Rs. 20,000/-. In the order of the Assessing Officer a sample of various such payments have been given e.g. on 6.4.2004 a sum of Rs. 19,000/- is shown to have been made to one party and the total payment of Rs. 3,50,000/- made on 6.4.2004 vide 19 vouchers has also been highlighted because 18 vouchers are for a sum of Rs. 19,000/- and one voucher is for a sum of Rs. 8,000/-. Various other irregularities were noticed resulting in conclusion that exception as per Rule 6DD (f)(ii) was not available in respect of any cash payment for various reasons recorded in para 5 of the order of the Tribunal.

(3.) The CIT(A) upheld the additions on all counts. When the assessee filed an appeal and on the first question of law, the Tribunal held that once the assessee-appellant was held to be in default of non deduction of tax at source, the provisions of Section 40a(ia) of the Act were attracted. In the absence of deduction of tax and deposit of the same thereafter a sum of Rs. 33,97,674/- was not allowable as expenditure in view of the aforesaid provisions. The Tribunal then proceeded to uphold the order of the Assessing Officer as well as that of the CIT(A).