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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: S/SHRI CHANDRA MOHAN GARG & LAXMI PRASAD SAHU
O R D E R Per Bench This is an appeal filed by the assessee against the order of the Pr.
CIT, Cuttack dated 30.3.2018 u/s.263 of the Act for the assessment year 2013-14.
Facts in brief are that the assessee filed its return of income on 29.3.2015 showing a total income of Rs.5,77,520/-. The assessment was completed u/s.143(3) on 22.12.2015 accepting the returned income.
Therefore, by virtue of powers conferred u/s.263(1) of the Act, the Pr. CIT called for assessment records and on verification, found that the assessee
P a g e 1 | 5 6/CTK /2 019 Assessm ent Y ear : 20 13- 14 has made aggregate payments of Rs.1,58,407/- in cash towards tyre and vehicle & machine insurance in single vouchers each exceeding Rs.20,000/- violating the provisions of section 40A(3) of the I.T.Act. Further, the assessee has made aggregate capital expenditure of Rs.9,76,480/- in cash to Srei Equipment and L&T Finance, for purchase of vehicles in single payments exceeding Rs.20,000/- violating the provisions of section 40A(3) of the Act. Therefore, a show cause notice was issued to the assessee to explain as to why order u/s.263 of the Act should not be passed. In reply, the assessee submitted that the amount of Rs.86,054/- are actually not to a single party on the same day and the insurance payment is genuine. The above explanation of the assessee was not acceptable to Pr. CIT on the ground that firstly, in the absence of evidence or materials such as supporting bills, vouchers, details of the parties, payment aggregating to Rs.86,054/- were made in violation of provisions of section 40A(3) of the Act and secondly, in respect of vehicle and machine insurance amounting to Rs.70,353/-, Pr. CIT observed that in view of the first provisions of section to section 40A(3A), the same cannot be allowed. Therefore, Pr. CIT(A) holding the assessment order to be erroneous and prejudicial to the interests of the Revenue and directing the AO to conduct enquiry and thereafter pass order afresh in accordance with law after allowing an opportunity to the assessee on the following points: i) On the issue of payment of Rs.86,054/- in cash towards ‘tyre’ application of section 40A(3) to such payment.
P a g e 2 | 5 6/CTK /2 019 Assessm ent Y ear : 20 13- 14 ii) On the issue of payment of Rs.70,353/- in cash towards ‘vehicle and machine insurance’, application of section 40A(3) of the Act. 3. Hence, the assessee is in appeal before us.
We have heard the rival submissions, perused the orders of lower authorities and materials available on record. The sole disputed issue is with respect to setting aside the assessment order by the Pr. CIT in respect of payments made to parties in violation of provisions of section 40A(3) of the Act. Prima facie, it appears that the Pr. CIT found that the order passed u/s.143(3) of the Act is without making enquiries on this particular disputed issue, which is raised in the revision proceedings. Ld A.R. submitted that the order of the Assessing Officer is not erroneous and prejudicial to the interests of the revenue and demonstrated before us that payment of Rs.86,054/- is actually not to single party on the same day but rather a combination of tyres, tubes and fitting thereof and the insurance payment though made in cash are genuine. On perusal of assessment order u/s.143(3) of the Act, we observe that the Assessing Officer has not discussed the issue in the assessment order or made any enquiry and simply accepted the returned income by the assessee and there is no deliberation. When the circumstances of the case are such so as to provoke an enquiry, it is his duty to make proper enquiry. Failure to make enquiry in such circumstances would make the assessment order erroneous. The Hon’ble Apex Court in the case of Smt. Tara Devi Aggarwal vs. CIT, 88 ITR
P a g e 3 | 5 6/CTK /2 019 Assessm ent Y ear : 20 13- 14 323 (SC), has held that the CIT may consider an order of the AO to be erroneous not only it contains some apparent error of reasoning or of law or of fact on the face of it but also because it is a stereo typed order which simply accepts what the assessee has stated in his return and fails to make enquiries which are called for in the circumstances of the case. The Assessing Officer cannot remain passive in the face of a return which is apparently in order but calls for further inquiry.
In view of above, we are of the opinion that by accepting the returned income without making any enquiry and deliberation on the points raised by the Lr. Pr. CIT, the assessment order is erroneous and prejudicial to the interest of the revenue. Hence, the Pr. CIT is justified in setting the assessment order and directing the AO to make fresh assessment after providing opportunity to the assessee. Accordingly, we uphold the order of the Pr. CIT and dismiss the ground of appeal of the assessee.
In the result, appeal filed by the assessee is dismissed.
Order pronounced on 11 /3/2021.