RAGHAV FASHIONS PVT. LTD.,SURAT vs. THE INCOME TAX OFFICER, WARD-4(1), SURAT

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ITA 1434/AHD/2015Status: DisposedITAT Surat15 July 2019AY 2009-104 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal confirmed 50% of the disallowance made under Section 40A(3) based on a concession from the assessee. The issue of alleged suppression of job work income was set aside to the AO for recalculation based on a profit average of preceding and subsequent years.

What were the facts?

The assessee's appeal challenged the CIT(A)'s confirmation of the AO's actions, including reopening the assessment and making additions for cash payments exceeding Rs. 20,000 and alleged suppression of job work income. The assessee did not press grounds related to reopening and disallowance under Section 40(a)(ia).

What were the issues?

Whether cash payments exceeding Rs. 20,000 were justified and if there was suppression of job work income.

Which sections of the Income-tax Act were involved?

Section 40A(3),Section 40(a)(ia),Section 148

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: SHRI MAHAVIR PRASAD & SHRI O. P. MEENA

For Appellant: Shri Sapnesh Sheth, C.A

PER MAHAVIR PRASAD, JUDICIAL MEMBER

1.

This appeal by the Assessee is directed against the order of the Ld. CIT(A)-II, Surat dated 16.03.2015 pertaining to A.Y. 2009-10 and following grounds have been taken:

ITA No. 1434/Ahd/2015 2 . A.Y. 2009-10 1. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of assessing officer in reopening assessment by issuing notice u/s 148 of the I. T. Act, 1961. 2. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of assessing officer in disallowing Rs. 3,66,553/- u/s 40A(3) of the IT. Act, 1961. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of assessing officer in making addition of Rs. 23,30,708/- as alleged suppression of job work income. 4. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Appeals) has erred in confirming the action of assessing officer in disallowing Rs. 5,68,028/- u/s 40(a)(ia) of the IT. Act, 1961. 5. It is therefore prayed that assessment order may kindly be quashed or in the alternative above disallowances / additions made by assessing officer and confirmed by Commissioner of Income-tax (Appeals) may please be deleted.

2.

Out of four effective ground, assessee has not pressed ground nos. 1 & 4, hence same are dismissed.

3.

Ground No.3 relates to disallowance u/s.40A(3) of the Act. During the course of re-assessment proceedings, it is noticed that the assessee has made cash payment of Rs.3,66,553/- to various parties in excess of Rs.20,000/- in cash. In response to reply, assessee stated that it has purchased diesel to run generator for the vehicles of the company to carry grey cloth or finished cloth. As cheques are generally not accepted at petrol pump. Therefore company had to pay in cash. But lower authorities were not convinced with the contention of the assessee.

ITA No. 1434/Ahd/2015 3 . A.Y. 2009-10 4. At the outset, ld. A.R. fairly conceded that in order to avoid further litigation between the assessee and the revenue, if 50% addition of Rs.3,66,553/- U/s.40A(3) of the Act is made, in that case, assessee will not have any objection. In our considered opinion, that above proposition appears to be fair and genuine to meet the ends of justice. We confirm 50% of the amount of Rs.3,66,553/-. This ground is partly allowed.

5.

Now we come to Ground No. 3 with regard to Rs.23,30,708/- as alleged suppression of job work income. As there was contradiction in the production and Audit Report on the basis of which ld. A.O. made addition of Rs.23,30,708/-. In order to meet the ends of the justice, we set aside this matter to the file of the ld. A.O. who will calculate the net profit and after considering the two assessment years preceding to assessment year 2009-10 and two subsequent assessment years and thereafter will calculate the average of net profit and thereafter will make addition as per law. This ground is set-aside to the Assessing Officer.

6.

In the result, appeal filed by the Assessee is set-aside for statistical purpose.

7.

The order is pronounced by listing the case on the Notice Board under Rule 34(4) of Income Tax Appellate Tribunal Rules, 1963.

Order pronounced in Open Court on 15- 07- 2019 Sd/- Sd/- (O. P. MEENA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad: Dated : 15/07/2019

ITA No. 1434/Ahd/2015 4 . A.Y. 2009-10 Rajesh

Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

/ / TRUE COPY / / Deputy/Asstt.Registrar ITAT,Surat

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