SWEETMITA ROYCHOUDHURY,KOLKATA vs. ITO, WARD-4(3), KOLKATA

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ITA 774/KOL/2024Status: DisposedITAT Kolkata21 April 2025AY 2017-18Bench: the Ld. CIT (A) that these purchases were paid in installments, however, the Ld. CIT (A) dismissed the appeal without giving any finding on this issue merely relying on the admission of the counsel of the assessee before the Ld. Assessing Officer. The Ld. Counsel for the assessee submitted that the appeal may be restored to the file of the Ld. AO for denovo adjudication after looking into the evidences which the assessee has filed evidencing the fact that the payments not exceeding ₹20,000/3 pages

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Facts

The assessee appealed against the confirmation of an addition of ₹1,31,71,180/- by the Ld. CIT(A), which was originally made by the Ld. AO for purchases allegedly made in violation of Section 40A(3) of the Act. The assessee contended that the payments were made in installments, not violating Section 40A(3), but the CIT(A) dismissed the appeal based on an admission by the assessee's counsel before the AO.

Held

The Tribunal found that the CIT(A) erred by dismissing the appeal without considering the assessee's evidence of part payments and by solely relying on the counsel's admission. The case was restored to the file of the Ld. AO for de novo adjudication, with directions to examine all evidences the assessee may produce and afford a reasonable opportunity of hearing.

Key Issues

Whether the addition under Section 40A(3) for purchases made was justified given the assessee's claim of part payments, and whether the CIT(A) erred in dismissing the appeal based solely on counsel's admission without considering fresh evidence.

Sections Cited

40A(3)

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Income Tax Appellate Tribunal, “SMC” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM

For Appellant: Shri Amit Agrawal, Adv &, Shri Chirag Thoria, Ars

For Respondent: Shri Madhumita Das, DR

Hearing: 16.04.2025Pronounced: 21.04.2025

This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals)-12, Mumbai (hereinafter referred to as the “Ld. CIT(A)”] dated 13.02.2024 for the AY 2017-18.

The only issue raised by the assessee is against the confirmation of addition of ₹1,31,71,180/- by the ld. CIT (A) as made by the ld. AO on account of purchases made in violation of Section 40A(3) of the Act. The ld. Counsel for the assessee at the outset pointed out that the addition has been made by the ld. AO mainly on the basis of admission by the counsel of the assessee in the show cause notice whereas as a matter of fact all these payments were made in part which were not in violation of Provisions as contained in Section 40A(3) of the Act.

The ld. DR on the other hand stated that these evidences were not produced before the ld. Assessing Officer.

After hearing the rival contentions and perusing the materials available on record, I find that in the interest of justice and fair play the assessee’s appeal needs to be restored to the file of the ld. AO for denovo adjudication after examining the evidences which the assessee may produce in the set aside proceeding, as the assessee cannot be punished for the admission of the Counsel of the assessee. Taking into account all these evidences, I restore this appeal to the file of the ld. AO with a direction to decide the same denovo after affording reasonable opportunity of hearing to the assessee.