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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
Laveena Shankar Hotchandani ITA No.677/Ind/2016 आयकर अपील�य अ�धकरण, इंदौर �यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER
ITA No.677/Ind/2016 Assessment Year: 2011-12 Smt. Laveena Shankar Income Tax Officer Hotchandani, C/o SV 5(1), Agrawal & Associates, Dadi Indore Dham, 24 Joy Builders Colony, Old Palasia, Indore (Appellant) (Respondent ) PAN No.AAYPH8078D Revenue by Shri P.K. Mitra, Sr.DR Assessee by S/Shri S.N. Agrawal & Pankaj Mogra,CAs Date of Hearing 12.09.2018 Date of Pronouncement .9.2018
O R D E R PER MANISH BORAD, AM.
This appeal filed at the instance of assessee pertaining to A.Y. 2011-12 is directed against the order of Ld. Commissioner of Income Tax(Appeals)-II, Indore, (in short ‘CIT(A)’), vide appeal No. IT-180/14-15/513 order dated 31.03.2016 which is arising out of the order u/s 143(3) of the Income Tax Act 1961(hereinafter called as the ‘Act’) framed on 29.03.2014 by ITO-5(1), Indore.
Laveena Shankar Hotchandani ITA No.677/Ind/2016 2. Briefly stated facts as culled out from the records are that the
assessee is an individual of sole proprietorship concern namely M/s.
Satyam Agencies, Indore. Income of Rs.4,59,640/- disclosed in the
income Tax return filed on 27.09.2012 . Turnover for the year has
been shown at Rs.10.28 crores. Case selected for scrutiny through
Computer Assistance Scrutiny Section (CASS) and notices u/s
143(2) and 142(1) were duly served upon the assessee along with
questionnaire. The Ld. AO while examining the records observed
that the assessee was having regular purchase and sale
transactions from M/s. Sai Impex and during the year cash
payments of Rs.1,00,72,000/- were made. Provisions of Section
40A(3) of the Act were invoked by the Assessing Officer adding the
alleged amount of cash payment to the income of the assessee.
Addition towards low house hold withdrawals Rs.1,50,000/- were
also made and income assessed at Rs.1,06,81,640/-. Accordingly
assessee preferred appeal before Ld.CIT(A) and partly succeeded.
Now the assessee is in appeal before the Tribunal raising
following grounds of appeal;
Laveena Shankar Hotchandani ITA No.677/Ind/2016 “1. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in maintaining disallowance of Rs.1,00,72,000/- by invoking the provision of section 40A(3) of the Act. 1.2. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in maintaining cash payment made in excess of prescribed limit u/s 40A(3) of the even on Sunday and holiday. 1.3 That on the facts and in the circumstances of the case the Ld. CIT(A) erred in not giving any comments on the net profit of the assessee as shown in the case of a whole sale business and after making disallowance u/s 40A(3) of the Act. 2. That on the facts and in the circumstances of the case the Ld. CIT(A) erred in maintaining addition of Rs.1,00,000/- as made on account of low house hold expenses. 3. That on the facts and in the circumstances of the case the amount of interest as charged u/s 234A and 234B of the Act was either wrong or excessive, the same now requires to be deleted in full or reduced substantially”. 4. From perusal of the above grounds, we note that only two issues
needs to be adjudicated (1) Addition of low house hold withdrawals
at Rs.1,00,000/- (2) disallowance u/s 40A(3) of the Act at
Rs.1,00,72,000/-.
Apropos first issue relating to low household withdrawals we have
heard rival contentions and perused the records placed before us.
In the audited capital account no withdrawals were shown by the
assessee for household expenses and it was claimed that the
household withdrawals of her husband was sufficient. Ld.A.O was
Laveena Shankar Hotchandani ITA No.677/Ind/2016 not satisfied with this statement and estimated the addition of
Rs.1,50,000/- for low household withdrawal which was thereafter
scaled down by Ld.CIT(A) to Rs.1,00,000/- thereby giving relief of
Rs.50,000/- to the assessee.
We observe that the assessee has disclosed total income of
Rs.4,59,640/- against total turnover of Rs.10.28 crores (approx) and
no cash has been withdrawn by her towards household expenses.
The contention of the Ld. Counsel that assessee’s husband took care
of total household expenditure cannot justify that the assessee was
not required to make any withdrawal for household expenses. In
this give facts we find no inconsistency in the findings of Ld.CIT(A)
confirming the addition of Rs.1,00,000/-. Assessee’s Ground No.2
stands dismissed.
As regards the issue raised in Ground No.1 relating to invoking of
provisions of section 40A(3) of Rs.1,00,72,000/-, at the outset
Ld.Counsel for assessee submitted that the Ld. Assessing Officer
has not examined the details properly. The assessee is having
alleged cash transactions with Ms/ Sai Impex due to huge debt
credit balances and M/s Sai Impex was persisting the assessee to
make payment in cash only. He also contended that each cash 4
Laveena Shankar Hotchandani ITA No.677/Ind/2016 payment is less than Rs.20,000/- , however he accepted that on
various dates total cash payment has exceeded Rs.20,000/-. He
also contended that on various occasions there was bank holiday
but Ld.A.O disallowed the payment u/s 40A(3) of the Act. Ld.
Counsel for the assessee prayed that he may be provided one more
opportunity to go before Ld.A.O to furnish all details so that he
could decide the issue afresh in the light of facts and various
judgments which favours the assessee.
Ld. Departmental Representative though supported the orders of
both the lower authorities was fair enough to raise no objection if
this particular issue of disallowance u/s 40A(3) of the Act is set
aside to the file of Ld.AO for re-examination.
We have heard rival contention and perused the records placed
before us. This is an undisputed fact that sum of Rs.1,00,72,000/-
has been paid in cash by the assessee to M/s. Sai Impex with
whom the assessee is having regular transaction of purchase and
sale of edible oil. From perusal of the ledger account of Ms/ Sai
Impex from page 28 to 42 of paper book we find that there was an
opening credit balance of Rs.4,80,89,203/-. Regular purchases of
soyabean have been made up till 19.1.2011. There is no transaction 5
Laveena Shankar Hotchandani ITA No.677/Ind/2016 of sale of soyabean up to 19.1.11 thereafter i.e. from 19.1.11
assessee stopped making purchases but only made sale of soyabean
to M/s. Sai Implex. All the payments made during the year are in
cash and each amount is lesss than Rs.20,000/-, however on
various dates the total cash payment has exceeded Rs.20,000/-.
This ledger account of M/s. Sai Impex is not giving a normal picture
of the transactions between the concerns because there is opening
credit balance of Rs.4.81 crores and closing credit balance of
Rs.3.11 crores. Total purchases from M/s. Sai Impex during the
year stood at Rs.5,05,20,558/-. The transactions between the two
concerns are of good magnitude but not a single transaction have
been entered through account payee cheque or bank draft even
when the assessee holds a bank account with Indian Overseas
Bank. Provisions of Section 40A(3) of the Act comes into action if
the payment exceeding Rs.20,000/- in a day is made towards
making any purchase or incurring an expenditure. It seems that
the Ld.A.O has merely added the total cash payment and has made
disallowance u/s 40A(3). Both the parties have agreed for setting
aside this issue to the file of Ld.A.O.
Laveena Shankar Hotchandani ITA No.677/Ind/2016 10. We are of the view that in the given circumstances of the case
the alleged transactions of making cash transactions as well as the
modus operandi of the assessee of entering such transactions of
M/s. Sai Impex of making huge purchase, huge sales and making
the payments only in cash other than the bank holidays needs
extensive verification. Ld.A.O also need to cross verify from Ms/. Sai
Implex as to whether similar transactions of cash have been shown
on the very same date in their books of accounts. We accordingly
set aside this issue of disallowance u/s 40A(3) of the Act to the file
of Ld.AO to make necessary verification along with the application of
the provision of 40A(3) of the Act on all these transactions of cash
payment in the light of various judgments referred and relied by the
Ld. Counsel for the assessee (placed at Page 48 to 89 of the paper
book) during the course of hearing before us. Needless to mention
that proper opportunity of being heard should be provided to the
assessee and also direct the assessee to make due compliances to
the notices of Ld.A.O. Accordingly Ground No.1 relating to
disallowance u/s 40A(3) of the Act raised by the assessee is allowed
for statistical purpose.
Laveena Shankar Hotchandani ITA No.677/Ind/2016 11. In the result the appeal of the assessee is partly
allowed for statistical purposes.
The order pronounced in the open Court on 19.9.2018.
Sd/- Sd/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER �दनांक /Dated : 19th September, 2018 /Dev Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By order Private Secretary/DDO, Indore