SRI MALAY MONDAL,BURDWAN vs. ITO, WD-2(2), ASANSOL, ASANSOL

The Grievances raised by the assesseeare as follows:

However, in this appeal, the assessee has raiseda multiple grounds of appeal but at the time of hearing, the main grievance of the assessee has been confined to Ground Nos.1, 2, 5 & 6 and other grounds were not pressed.

The brief facts qua the issue are that assessee is an individual and filed its return of income on 10.03.2012. The assessee’s case was selected for scrutiny u/s 143(2) of the Act and Assessing Officer completed theassessment by making various additions / disallowances. One of the disallowances made by the Assessing Officer relates to u/s 40A(3) of the Act as the assessee made payment against purchases an amount exceeding Rs.20,000/- in a day and thereby violating provision of section 40A(3) of the Act. During the assessment proceedings, the Assessing Officer noted that assessee has made payment to Asansol Bottling Plant of an amount of Rs.42,06,080/- against purchase of goods from Asansol Bottling Plant, where the amount of transactions includes the cost of goods and excise. The total transaction in a day where the amount of cost of goods has exceeded Rs.20,000/- in a day and violated the provision of section 40A(3) of the Act Sri Malay Mondal Assessment Year: 2011-12 and, therefore, Assessing Officer made disallowance to the tune of Rs.42,06,080/-.

On appeal by the assessee, the ld. CIT(A) confirmed the addition made by Assessing Officer. Aggrieved by the order of ld CIT(A), the assessee is in appeal before us.

The ld. counsel for the assessee, at the outset itself submitted before us that the said issue is squarely covered by the Hon’ble ITAT, Kolkata in assessee’s own case in for A.Y 2010-11, wherein the Hon’ble Tribunal held as follows:

At the time of hearing it was brought to our notice that similar issue came up for consideration in assessee's own case for A.Y.2008-09 in dated 28.09.2016 and the tribunal was pleased to hold that the disallowance u/s 40A(3) of the Act cannot be sustained. The Tribunal following the decision rendered in another case of Prabir Kr. Mallik vs ITO in ITA No.1603/Kol/2011 order dated 01.06.2016 deleted the disallowance u/s 40A(3) of the Act. In short the tribunal held that the circumstances in which payments were made in cash were exceptional circumstances falling within the ambit of Rule 6DD(b) of the I.T.Rules, 1963 i.e. payment by way of legal tender to Government and Rule 6DD(k) i.e. payment made to an agent of the Government. Respectfully following the decision of the tribunal, we direct that the addition made be deleted.”

Learned Departmental Representative did not have much to say but he nevertheless relied upon the orders of the authorities below.

We have given a careful consideration to the rival submissions and perused the materials available on record. We note that the issue is squarely covered in favour of the assessee by the decision of the Coordinate Bench of ITAT, Kolkata in assessee’s own case, in (supra) and there is no change in facts and law and the Revenue was unable to produce Sri Malay Mondal Assessment Year: 2011-12 any material to controvert the aforesaid findings. Therefore, relying on the judgment of the Coordinate Bench (supra), we delete the addition of Rs.42,06,080/-.

Ground No.2, 5 & 6 are interlinked. Ground No.2 relates undisclosed purchase of Rs.1,24,200/-, Ground No.5 relates to undisclosed bottle purchased of Rs.81,550/- and Ground No.6 pertains to addition of Rs.8,53,867/- as per alleged 26AS. Since, all these grounds are interlinked to each other, therefore, we adjudicate them altogether.

The brief facts qua the issue are that during the assessment proceedings, the Assessing Officer noted that the assessee has undisclosed purchase from IFB to the tune of Rs.1,24,200/-, which has not been explained properly by the assessee, therefore the Assessing Officer made addition on account of undisclosed purchase at Rs.1,24,200/-.

Aggrieved by the stand of the Assessing Officer, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee is not satisfied and is in further appeal before this Tribunal.

The ld. counsel for the assessee has submitted before us that theassessee has debited total purchases to the Profit and Loss account amounting to Rs.48,35,023/-. The total amount mentioned in Form No.26AS Sri Malay Mondal Assessment Year: 2011-12 excluding TCS is at Rs.47,31,926/-. The ld. counsel for the assessee submitted that amount of Rs.1,24,200/- which relates to Ground No.2 is part of Form No.26AS. The ld. counsel also drew our attention that empty bottles purchased by the assessee amounting to Rs.81,550/- is also part of the total purchases shown in the Profit and Loss account. The difference in purchase of C.S, of Rs.8,53,867/- is also part of form No.26AS.

Learned Departmental Representative did not have much to say but he nevertheless relied upon the orders of the authorities below. Sri Malay Mondal Assessment Year: 2011-12 15. Having heard the rival submissions and perused the materials available on record, we note that the total purchases debited in the Profit & Loss account including the purchase of Rs.1,24,200/-, the purchases of empty bottle amounting to Rs.81,550/- and the difference in purchase of C.S, of Rs.8,53,867/-, all are part of amount debited in the profit and loss account under the head purchases which come to Rs.48,35,023/- whereas the amount shown in the Form No.26AS excluding TCS is to the tune of Rs.47,31,926/-. Therefore, the difference of Rs.1,03,095/- (Rs.48,35,023 - Rs.47,31,926) is being added to the income of the assessee, as the ld. counsel for the assessee submitted before us that the assessee is unable to reconcile the said small difference. Therefore, we restrict the addition to the tune of Rs.1,03,095/- difference between the purchases debited in Profit and Lossaccount and the purchases disclosed in Form No.26AS.

The ld. DR for the Revenue has fairly agreed with us for the difference which has to be disallowed to the tune of Rs.1,03,095/-. Therefore, we restrict the disallowance made by the Assessing Officer in Ground No.2, 5 & 6 (in combined, that is altogether) to the tune of Rs.1,03,095/-, as the assessee is not able to reconcile the difference. Hence, ground Nos. 2,5 and 6 are partly allowed andthe AO is directed to make the disallowance to the tune of Rs.1,03,095/- on account of ground Nos.2,5 and 6 raised by the assessee.

In the result, the appeal filed by the assessee is partly allowed.