ASHA PRAMOD SHAH,PUNE vs. INCOME-TAX OFFICER, WARD - 4(5), PUNE

PER D. KARUNAKARA RAO, AM :

This is the appeal filed by Assessee against the order of CIT(A)-5, Pune dated 27-07-2017 for the Assessment Year 2006-07.

“1. The Ld.CIT(A) erred in confirming the addition of Rs.5,72,431/- made by ITO, Ward-4(5) while passing the order. 2. The Ld. AO had wrongly added Rs.5,72,341/- i.e. 20% of total cash expenses of Rs.28,62,154/- on mere presumption that all expenses are made in cash in excess of Rs.20,000/- in contravention of sec.40A(3) though books of accounts were produced before him for verification. 3. The Ld.CIT(A) also ignored the books of accounts & confirmed the above addition of Rs.5,72,431/- inspite of Appellant’s arguing taht the entire cash payments of Rs.28,62,154/- are not at all made in contravention of sec.40A(3) of I.T. Act. 4. The appellant being small trader is unable to bear such wrong hardship & prays for deletion of the said Rs.5,72,431/- to her income. 5. The appellant craves to add, alter or modify any grounds of the appeal.”

ITA No.2264/PUN/2017 2 Mrs. Asha P. Shah

individual and is engaged in the business of supplying sand and stones

for building construction work and also providing transport services.

Assessee also derives income from other sources. During the impugned

assessment year, assessee filed the return of income on 31-10-2006

declaring total income of Rs.2,36,480/-. AO noticed that assessee has

shown receipts from works and Transport amounting to Rs.42,41,980/-

and expenses amounting to Rs.39,12,154/-. AO also noticed that

assessee claimed to have paid Rs.28,62,154/- in cash and

Rs.10,50,000/- through cheques. However, in the absence of

supporting evidences, the AO proceeded to disallow Rs.5,72,431/-

(being 20% of Rs.28,62,154/-) as the same are in contravention to

provisions of section 40A(3) of the Act. At the end of the assessment

proceedings, the AO, considering the GP @25%, determined the income

of the assessee at Rs.15,39,580/-.

before the CIT(A). CIT(A) called for a remand report from the AO. After

considering the submissions, remand report of the AO and the counter

comments of the assessee, the CIT(A) came to the conclusion that GP

rate of the assessee should be considered at 8% of the turnover.

Contents of Para No.4.7 of the order of CIT(A) are relevant. Coming to

the addition of Rs.20% of the cash payments, the CIT(A) sustained the

addition of Rs.5,72,431/-. Eventually, the appeal of the assessee was

partly allowed.

payments made by the CIT(A), the assessee is in appeal before the

Tribunal with the grounds extracted above.

ITA No.2264/PUN/2017 3 Mrs. Asha P. Shah

assessee submitted that the individual cash payments of

Rs.28,62,154/- made by the assessee never exceeded the limit of

Rs.20,000/- specified in the provisions of section 40A(3) of the Act. He

therefore, requested the Bench to remand the issue to the file of AO for

verification of the same and passing a speaking on this issue.

orders of AO/CIT(A).

the CIT(A), I find the AO/CIT(A) have not analysed this aspect of cash

payments if they have exceeded Rs.20,000/- specified under the

provisions of section 40A(3) of the Act. Therefore, in the interest of

administration of justice, I remand the issue to the file of AO for

verification of the same and passing a speaking order on this issue.

Needless to mention, the AO shall give reasonable opportunity of being

heard to the assessee in accordance with the set principles of natural

justice. Accordingly, the grounds raised by the assessee are allowed for

statistical purposes.

purposes.

Order pronounced on this 05th day of October, 2018.

Sd/- (D.KARUNAKARA RAO) लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 05th October, 2018. Satish

ITA No.2264/PUN/2017 4 Mrs. Asha P. Shah

आदेश क� आदेश क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to : आदेश आदेश क� क� �ितिलिप �ितिलिप अ�ेिषत अ�ेिषत

अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. आयकर आयु�(अपील) / The CIT(A)-5, Pune 3. आयकर आयु� / The Pr.CIT-4, Pune 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “SMC” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार

स�यािपत �ित //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune