SHRI. SHANKAR CHAKRAVARTHY,CHENNAI vs. ACIT NON CORPORATE CIRCLE 7 (1), CHENNAI

The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-7, Chennai in dated 23.03.2018 for the assessment year 2014-15.

Shri Shankar Chakravarthy, the assessee, an individual running a travel agency filed his return for the assessment year 2014- 15. While making the assessment, the AO found that the assessee made cash payments exceeding the threshold limit of Rs.20,000/- under the heads computer stationary, fuel expenses and vehicle maintenance. When the AO sought explanation, the AR explained that though the expenses were booked in single vouchers, however, payments were made to 5 to 6 persons and in this regard produced certain vouchers. The AO found most of them were self made vouchers and hence did not want to accept them. When he gave opportunity to substantiate the claim, the AR produced certain bills which looked as if prepared recently, further AO found that only two persons have given the bills, though the bills were on different dates the sequence of bill number were continuous etc. Therefore, the AO made disallowance U/s.40A(3) of the Act on the assessee’s claim on the above heads and completed the assessment. Aggrieved, the assessee filed an appeal before the CIT(A). The Ld.CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed this appeal.

The case was heard through video conferencing. The Ld.AR based on a chart filed before us submitted that most of the payments were made through cheque. However certain payments disallowed did not exceed the limit, certain payments were made on holidays including banking holidays. The assessee being a contractor for transporting employees of IT companies and other factories for various shifts through own vehicle as well as hired vehicles on contract which were monitored by supervisors. The supervisors are paid cash as advance to meet exigencies, many payments were below the limit, however, the expenses were booked by a consolidated entry, without appreciating the facts and circumstances and the relevant material, the Ld.CIT(A) dismissed the appeal and hence pleaded to allow the appeal. Per contra, the Ld.DR supported the orders of the lower authorities.

We heard the rival submissions and gone through the relevant material. Though, the assessee made similar plea before the Ld.CIT(A) and claimed to have filed voluminous vouchers and other material in support of the claim, it appears that the Ld.CIT(A) neither sought the views of the AO on them nor made any appreciation about them. In the facts and circumstances, we deem it fit to set aside the order of the Ld.CIT(A), remit the issues back to the AO for a fresh examination. The assessee shall place relevant contemporaneous material in support of his claim before the AO and comply with the requirements of the AO in accordance with law. The AO, on due examination and after affording effective opportunity to the assessee, shall pass the order on merits.

In the result, the assessee’s appeal is treated as allowed for statistical purposes.