ITO,W-1, DEWAS, DEWAS vs. SHRI YASHWANT KARKARE, DEWAS

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ITA 737/IND/2018Status: DisposedITAT Indore29 July 2019AY 2010-115 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, agreeing that the assessee had not made any single payment exceeding Rs. 20,000/- to one person in a day. The revenue failed to provide contrary material.

What were the facts?

The Assessing Officer (AO) reopened the assessment and disallowed expenses of Rs. 5,46,036/- under Section 40A(3) for cash payments. The CIT(A) deleted this addition, finding no violation of the section.

What were the issues?

Whether the disallowance under Section 40A(3) was justified when cash payments were made to individuals below the prescribed limit.

Which sections of the Income-tax Act were involved?

Section 40A(3),Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE “SMC” BENCH, INDORE

Before: SHRI KUL BHARAT

For Appellant: Shri R.P. Maurya, CIT (DR)
For Respondent: Shri Sanjay Agrawal, A.R
Hearing: 27.06.2019Pronounced: 29.07.2019

आदेश / O R D E R

PER KUL BHARAT, J.M: This appeal by the revenue against order of the CIT(A), Ujjain dated 20.6.2018 pertaining to the assessment year 2010-11. The revenue has raised following grounds of appeal:

[ Yashwant Karkare, Dewas] “On the facts and in the circumstances of the case, Ld. CIT(A) erred in:-

1.

1. 1. Whether on the facts and circumstances of the case, the Ld. CIT(A) was justified in deleting the addition of Rs.5,46,036/- made u/s 40A(3) of the I.T. Act. Ignoring the fact that the Assessing Officer has verified the books of accounts during the assessment proceedings and came to the conclusion that the payments made were in contravention of provisions of section 40A(3) of the I.T. Act, 1961.

2. The revenue has raised solitary ground against deleting the addition of Rs.5,46,036/- made by the A.O. by invoking the provisions of section 40A(3) of the Income Tax Act, 1961 (hereinafter called as ‘the Act’). The facts giving rise to the present appeal are that case of the assessee was reopened and the assessment u/s 143(3) r.w.s. 147 of the Act was framed by order dated 29.12.2016. The A.O. has observed that the original order u/s 143(3) of the Act was passed on 13.3.2013 assessing income at Rs.7,81,290/-.

Subsequently, it was noticed by the A.O. that the assessee made a payment of Rs.5,46,036/- in cash on account of incentive, sweet purchase and uniform expenses.

Therefore, it was proposed to reopen the assessment and thereafter after obtaining the requisite approval from the 2

[ Yashwant Karkare, Dewas] Ld. CIT, Ujjain, the assessment was reopened. The A.O. made addition of Rs.5,46,036/- by disallowing the expenses by invoking the provisions of section 40A(3) of the Act. Against this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions deleted the additions.

3.

Ld. D.R. relied upon the assessment order and submitted that the A.O. has rightly disallowed the expenditure and added to the income of the assessee as the payment was more than the prescribed limit.

4.

On the contrary, Ld. Counsel for the assessee reiterated the submissions as made before the Ld. CIT(A) and also relied upon the decision of the Ld. CIT(A). Ld. Counsel submitted that the assessing officer grossly erred in invoking the provisions of section 40A(3) of the Act as there was no violation of provisions of section 40A(3) of the Act. 3

[ Yashwant Karkare, Dewas] 5. I have heard the rival contentions, perused the materials available on records and gone through the orders of the authorities below. The Ld. CIT(A) has given a finding of fact in his order at para No.4.2, which is reproduced as under for the sake of clarity:-

“4.2 Ground No.6:- Through this ground of appeal the appellant has challenged the addition of Rs.5,46,036/- u/s 40A(3) of the I.T. Act on account of cash payment. The A.O. has not verified the vouchers regarding expenses. The appellant has withdrawn the cash from the bank for the payment of various expenses related to business. This payment was withdrawn by the person related to business. After withdrawal the cash payment was made to various persons. The cash payment made to the individual person is below Rs.20,000/-. The appellant furnished the vouchers in support of his claim. The appellant has not made any payment exceeding Rs.20,000/- to one person in a single day. Therefore, the provisions of section 40A(3) are not applicable. Therefore, the addition made by the A.O. amounting to Rs.5,46,036/- is Deleted. Therefore, the appeal on this ground is Allowed.”

6. From the above finding, it is clear that the assessee has not made any payment exceeding Rs.20,000/- to one person in a single day. This finding is not rebutted by the revenue by placing any contrary material on record, therefore, I do not see any reason to interfere in the finding

[ Yashwant Karkare, Dewas] of the Ld. CIT(A). The ground raised by the revenue in this appeal is dismissed.

7.

In the result, the appeal filed by the revenue is dismissed.

Order was pronounced in the open court on 29.07.2019.

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