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Income Tax Appellate Tribunal, SMC BENCH, PUNE
Before: SHRI D. KARUNAKARA RAO, AM
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.
Grounds raised by the Assessee are extracted below :
“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
Briefly stated relevant facts includes that the assessee is an
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/-.
In the First Appellate proceedings, assessee made submissions
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.
Aggrieved with the confirmation of addition of 20% on cash
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
Before me, at the outset, Shri Prakash Billimoria, on behalf of
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.
On the other hand, Ld. DR for the Revenue relied heavily on the
orders of AO/CIT(A).
On hearing both the sides and on perusing the orders of AO and
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.
In the result, appeal of the assessee is allowed for statistical
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