MR.MOHD RAFIQ,GULBARGA vs. INCOME TAX OFFICER WARD-2, GULBARGA

During the course of hearing, it was submitted by the learned AR of the assessee that ground Nos.1 to 3 are general and as per ground Nos.4 to 10, the only grievance of the assessee is regarding disallowance made by the AO

We have considered the rival submissions and except applicability of second proviso to section 40a(ia), we find no infirmity in the order of CIT(A). Regarding applicability of second proviso to section 40a(ia) which is inserted by Finance Act, 2012 w.e.f. 01.04.0213, we find that this proviso is not applicable in the present case if it is not retrospective because in the present case, Assessment Year involved is 2010-11 but as per the judgment of Hon’ble Allahabad High Court rendered in the case of PCIT vs. Manoj Kumar Singh, 402 ITR 238, it was held that Section 40(a)(ia) proviso was for benefit of Assessee and when provision had been made in fiscal statute for benefit of Assessee, in absence of any express provision or provisions which by necessary implication gave different impression, such provision which was beneficial to Assessee must be read and given effect to retroactively. Hence, we set aside the order of CIT (A) on this issue and restore the matter back to his file for a fresh decision with the direction that if the assessee is able to establish that second proviso to section 40 a (ia) is applicable in the present case by bringing necessary material on record, benefit should be allowed to the assessee of this proviso in the present year also in view of this judgment of Hon’ble Allahabad High Court as noted above because it was held that it is retrospective. We want to make it clear that the assessee should make efforts to obtain necessary documents from the payees immediately after getting this order and furnish the same before CIT (A) when the matter is fixed for hearing by CIT (A). Learned CIT (A) should provide reasonable opportunity of being heard to both sides before deciding this issue.

As per ground 11, the dispute is regarding part upholding of the disallowance made by the AO to the extent of Rs.5,36,233/-.

In the course of hearing, it was submitted by learned AR of the assessee that out of total expenses incurred of Rs.1,60,83,471/- on account of various

We have considered the rival submissions. We find that relevant portion of the remand report is reproduced by CIT(A) on pages 10 and 11 of his order in which it is reported by AO that the assessee has not produced bills and vouchers of these expenses in course of assessment proceedings and therefore, disallowance was made by him to the extent of 8% of such expenses. We have seen that learned CIT(A) has reduced those expense for which payment was made by the assessee by way of cheque and for which the assessee could produce bills and vouchers in remand proceedings. Hence the disallowance confirmed by the CIT(A) is out of those expenses only which are paid in cash and for which no bill or voucher could be produced by the assessee even in the course of remand proceedings. When the payment of such expense is made by way of cash and no supporting is available, inflation of expenses cannot be ruled out. After considering these facts, we find no reason to interfere in the order of CIT(A) on this issue. Accordingly, ground 11 is rejected.

As per ground No.12, the grievance of the assessee is regarding addition of interest under section 244A of Rs.28,970/- for Assessment Year

In the course of hearing, learned AR of the assessee submitted that this issue was decided by learned CIT(A) on page 14 of his order. He submitted that there is no finding of CIT(A) that the refund cheque was actually enchased by the assessee and therefore, the addition made by the AO and confirmed by the CIT(A) is not justified. Learned DR of the Revenue supported the order CIT(A).

We have considered the rival submissions. We find that this is noted by learned CIT(A) on page 14 of his order that the assessee has received a refund by cheque No.473346 dated 18.04.2009 and this refund included interest under section 244A of Rs.28,970/-. The only objection of the assessee before CIT(A) and before us is this that the refund cheque was not encashed by the assessee in the present year but even if this assertion is correct, there is no infirmity in the order CIT(A) on this issue because the assessee is following mercantile system of accountant as noted by the AO on page 1 of the Assessment Order and hence, even if the cheque is not encashed in the present year, interest granted under section 244A is taxable in the present year. Hence, this ground is also rejected.

As per ground 13, the dispute is regarding disallowance of the assessee’s claim for deduction 80C of the IT Act, 1961 to the extent of Rs. 25,000/-. In the course of hearing, it was submitted by learned AR of the assessee that the claim of assessee for deduction under section 80C to the extent of Rs. 25,000/- was rejected on this basis that the assessee has failed to furnish the proof for the same. He submitted that although the assessee is not have a proof but the investment was actually made by the assessee and hence,

We have considered the rival submissions and in the absence of any proof regarding the investment, assessee’s claim cannot be allowed and hence, this ground is also rejected.

In the result, appeal of the assessee is partly allowed for statistical purposes.