AROKEYA ANNAI EXPORTS,PANRUTI vs. ACIT , CUDDALORE

This appeal by the assessee is arising out of the common order of Commissioner of Income Tax (Appeals), Puducherry, in 99 & 100/CIT(A)-PDY/2017-18 vide order dated 28.02.2019. The Assessment was framed by ACIT, Cuddalore Circle, Cuddalore for the assessment years 2010-11, 2011-12 & 2012-13 vide all orders dated 19.12.2017 U/s 143(3) r.w.s. 148 of the Income Tax Act, 1961 (hereinafter ‘the Act’). to 1085/Chny/2019 2 2. The only issue in these 3 appeals of assessee is as regards to the order of the CIT(A) confirming the action of the AO in disallowing expenses i.e., expenses incurred in cash payment in excess of Rs.20,000/- by invoking the provisions of Section 40A(3) of the Act without reasonable cause. For this, the assessee has raised identical worded grounds in all the three appeals, which need not be reproduced.

Brief facts are that the assessee is engaged in the business of cashew kernel trading by way of export to foreign countries and sale within India. The AO during the assessment proceedings asked details with regard to cash payments in excess of Rs.20,000/-, which was made to four different persons [in AY 2010-11] amounting to Rs.12,69,400/-. According to AO, the assessee has made cash payment without reasonable cause as per Rule 6DD. He disallowed the cash payment in excess of Rs.20,000/- made to those four persons amounting to Rs.12,69,400/-. Aggrieved, the assessee preferred an appeal before the CIT(A). The CIT(A) passed ex-parte order and has not considered the reasons given in statement of facts and by common order, he decided the issue vide Para 5.8 as under:- to 1085/Chny/2019 3 “5.8 The appellant itself had accepted that the above payment is above Rs.20,000/- and it is made in a single day. The appellant did not prove that the purchase of cashew kernels is from the producer of cashew kernel. There is no proof submitted by the appellant regarding the claim that purchase is from the actual producer by submitting the necessary proof to substantiate his claim. Though appellant is claiming that the seller is not a trader, but no effort was taken by the appellant to prove the same. Appellant claimed before the A.O that the purchase of Cashew kernels, after the cashew nuts are broken by the seller. The process of breaking the cashew nuts into cashew kernels is the process of manufacturing and the same cannot be considered as purchase from producer as mentioned in Rule 6DD. Appellant has claimed before A.O. that the distance between the residence of the seller and bank is more than 5 KM. but appellant failed to prove the same with facts. Even after show cause notice issued by the A.O., and during appeal proceedings appellant did not prove the claim. For A.Y. 2012-13, though the appellant has raised ground that there was no cash payment, no details were furnished to substantiate the same.”

After hearing both the sides, I noted that the CIT(A) has passed ex-parte order and it seems from the order of CIT(A) that a reasonable opportunity of being heard was not provided as per the grounds of appeal of the assessee. Even otherwise, the CIT(A) has not discussed the merits of case. Hence, I’m of the view that the order of CIT(A) be set aside and matter be remanded back to the file of CIT(A) for fresh adjudication. I order accordingly. Similar are the appeals in all the three years to 1085/Chny/2019 4 and in all the three years, matter is remanded back to the file of the CIT(A).

In the result, all the appeals of the assessee are allowed for statistical purpose.