ITO, WARD-2(1), BEGUSARAI vs. SHRI PREM CHAND KESHRI, LAKHISARAI

आयकर अपीलीय अधिकरण पटना पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH AT KOLKATA [वर्चुअल कोटु] [Virtual Court] श्री संजय गगु, न्याधयक सदस्य एवं श्री राजेश कचमार, लेखा सदस्य के समक्ष Before SRI SANJAY GARG, JUDICIAL MEMBER & SRI RAJESH KUMAR, ACCOUNTANT MEMBER I.T.A. No.: 99/PAT/2020 Assessment Year: 2015-16 ITO, Ward-2(1), Begusarai….………………………………Appellant Vs. Shri Prem Chand Keshri.......................................Respondent [PAN: BYNPK 7545 L] Appearances by: Sh. Rupesh Agrawal, Sr. D/R, appeared on behalf of the Revenue. Sh. D.V. Pathy, Adv., appeared on behalf of the Assessee. Date of concluding the hearing : November 22nd, 2022 Date of pronouncing the order : July 13th, 2023 ORDER Per Rajesh Kumar, Accountant Member: The only issue raised by the Revenue is against the deletion the addition of Rs. 2,22,05,895/- by Commissioner of Income Tax (Appeals), Bhagalpur [in short Ld. 'CIT(A)'] as made by the

I.T.A. No.: 99/PAT/2020 Assessment Year: 2015-16 Shri Prem Chand Keshri. Assessing Officer (in short ld. 'AO') on account of cash payments in violation of provisions of Section 40A(3) of the Act. 2. Facts in brief are that during the course of assessment proceedings Ld. AO observed that the assessee has made purchases amounting to Rs. 2,22,05,895/- which were mostly on cash basis. Accordingly, Ld. AO called upon the assessee to show cause as to why the said payments were not made by adhering to provisions of Section 40A(3) of the Act. The assessee submitted before Ld. AO that his place of business is located in a small town and most of the times the assessee, under compelling circumstances, has to make purchase in cash. However, plea of the assessee did not find favour with Ld. AO and he added a sum of Rs. 2,22,05,895/- u/s 40A(3) of the Act. 3. In the appellate proceedings Ld. CIT(A) allowed the appeal of the assessee by observing and holding as under: “I have gone through the assessment order as well as submission of the A.R. filed which clearly speaks that only three payments were made by the appellant during the period from 01.04.2014 to 31.03.2015 in excess of Rs. 20,000/-, which is the violation of Section 40A(3). The details of these transactions are as under: Ledger A/c of Ramchandra Mahajan Sl. No. Date of Payment Amount 1 20.06.2014 50,000/- 27.06.2014 40,000/- Ledger A/c of Maa Vaishno Devi Enterprises Sl. No. Date of Payment Amount 1 15.10.2014 60,000/- From the careful perusal of the assessment order, provisions of Section 40A(3) of the Act and submission made by AR of the assessee which revealed that the assessee has violated the provision in making the payment against the purchase of the goods only to the amount of

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I.T.A. No.: 99/PAT/2020 Assessment Year: 2015-16 Shri Prem Chand Keshri. Rs. 150000/- as detailed above. The AO's action is just on guess and without properly examined the details of payments. It is hereby observed that when the AO has recorded the statement on oath u/s 131 of the Act on 25.11.2014 and found that the assessee has make the payment in contravention of u/s 40A(3) of the Act vide question no. 5 & 6 that only Rs.1,50,000/- as detailed above exceeding the prescribed limit. Besides this, the AO failed to point out from the records that payment has made against the provision u/s 40A(3) of the Act particularly when the submission made by the AR on 21.11.2017 and 30.11.2017 detailed that payments were made within the limits specified under the provision of law along with production of books including cash book. Considering the facts and evidence, it appears that the AO has acted arbitrarily while making disallowing the entire payments against purchases with the remarks that almost payments made in cash which not establish that entire amount are in contravention of provision of sec.40A(3) of the Act. Therefore, Rs. 150000/- is being confirmed and the AO is directed to delete the balance amount of Rs.22055895/-. The ground is partly allowed.” 3. After hearing rival contentions and perusing the material on record, we note that Ld. A survey u/s 133 of the Act was conducted on the assessee on 20.11.2014 and it was found that the assessee has made payments in contravention of provisions of Section 40A(3) of the Act. The assessee explained before the appellate authority that all the payments were made otherwise than in cash except only Rs. 1,50,000/- as detailed above was made exceeding the prescribed limit. We note that Ld. CIT(A) has recorded a finding that Ld. AO has acted arbitrarily making the disallowance to this effect that the entire payment against purchases were not made in cash. Ld. CIT(A) noted that the payment to the tune of Rs. 1,50,000/-, the details thereof is given in the appellate order as extracted above, is only warranted to be disallowed and accordingly confirmed the same by deleting the balance amount of Rs. 2,20,55,895/-. Since Ld. CIT(A) has given factual finding of

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I.T.A. No.: 99/PAT/2020 Assessment Year: 2015-16 Shri Prem Chand Keshri. facts, we are inclined to uphold the same by dismissing the appeal of the Revenue as do not find any merit or substance in the appeal of the revenue. 4. In the result, the appeal filed by the Revenue is dismissed. Kolkata, the 13th July, 2023 Sd/- Sd/- [Sanjay Garg] [Rajesh Kumar] Judicial Member Accountant Member Dated: 13.07.2023 Bidhan (P.S.) Copy of the order forwarded to: 1. ITO, Ward-2(1), Begusarai. 2. Shri Prem Chand Keshri, (Prop. M/s. Sri Ram Agency Khawa), Medni Chowki, Suragarha, District-Lakhisari, Bihar-811 106. 3. CIT(A), Bhagalpur. 4. CIT- 5. CIT(D/R), Patna Bench, Patna. //True copy // By order

Assistant Registrar ITAT, Kolkata Benches Kolkata

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