D.J.DURAIRAJPANDIAN,COIMBATORE vs. ITO,NON-CORPORATE WARD-1(4), COIMBATORE

The only issue in this appeal of the assessee is as regards to revision order passed by the PCIT to verify whether payments claimed as expenditure by the assessee in regard to payments in cash in excess of Rs.20,000/- to a single person M/s. ESK Trading Company amounting to Rs.32,69,582/- and M/s.Baby Stores amounting to Rs.79,322/- are in violation of provisions of section 40A(3) of the Act or not.

We have heard rival contentions and gone through facts and circumstances of the case. Brief facts are that assessment was completed originally u/s.143(3), which was passed vide order dated 17.12.2019. We have noticed from order of the Assessing Officer that the Assessing Officer has not examined issue of cash payments in excess of Rs.20,000/- to a single person for total amount of Rs.33,48,904/- in regard to two parties namely M/s. ESK Trading Company and M/s. Baby Stores. The PCIT in his revision order has recorded certain findings, but without examining actual facts that there is clear violation of provisions of section 40A(3) of the Act.

We agree with argument of learned CIT DR that there is error and prejudice caused to the interest of the revenue, in case there is payment in cash in excess of Rs.20,000/- for the above payments in violation of section 40A(3) of the Act, but everything has to be examined by the Assessing Officer and then only final conclusion can be reached. Here, the PCIT has to form only a prima-facie opinion for considering whether order of the Assessing Officer is erroneous and prejudicial to the interest of the revenue.

At this stage, learned counsel for the assessee also not contested revision order, but he only requested that a proper direction can be given to the Assessing Officer that without being influenced by the findings of the PCIT, he should independently examine the issue of violation of provisions of section 40A(3) of the Act, in regard to payments made in cash in excess of Rs.20,000/-. Hence, we agree with the argument of the learned counsel for the assessee that no doubt, the Assessing Officer will examine independently of what was stated by the PCIT in his order. Hence, we affirm order of the PCIT revising the assessment, but keep the issue open for the Assessing Officer to examine provisions of section 40A(3) of the Act vis-à-vis., cash payments in excess of Rs.20,000/-.

Hence, we dismiss the appeal with the above direction.