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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: Shri P.M. Jagtap
This appeal filed by the assessee is directed against the order of ld. Commissioner of Income Tax (Appeals)-11, Kolkata dated 20.10.2016, whereby he confirmed the addition of Rs.1,96,595/- made by the Assessing Officer by way of disallowance of purchases under section 40A(3) of the Income Tax Act, 1961.
The assessee in the present case is an individual, who is engaged in the business of trading of gold ornaments. The return of income for the year under consideration was filed by him on 24.09.2009 declaring total income of Rs.9,98,204/-. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee has made certain payments in cash against purchases exceeding Rs.20,000/-. He, therefore,
Assessment year: 2009-2010 Page 2 of 4 invoked the provisions of section 40A(3) and made a disallowance on account of cash purchases aggregating to Rs.1,96,595/- in the assessment completed under section 143(3) vide an order dated 30.12.2011.
The disallowance made by the Assessing Officer under section 40A(3) was challenged by the assessee in the appeal filed before the ld. CIT(Appeals). During the course of appellate proceedings before the ld. CIT(Appeals), it was submitted by the assessee that the cash purchases in question were made under different bills and none of such bills exceeded Rs.20,000/-. It was also brought to the notice of the ld. CIT(Appeals) by the assessee that even the payments made in cash against the said purchases never exceeded Rs.20,000/- in a single transaction. This stand of the assessee was not found acceptable by the ld. CIT(Appeals). According to him, such stand was not taken by the assessee during the course of assessment proceedings before the Assessing Officer and the same even otherwise was not acceptable on merit keeping in view the Amendment made in section 40A(3) by the Finance Act, 2008 w.e.f. 1st April, 2009, whereby even the aggregate of payments against any expenditure in cash exceeding Rs.20,000/- was covered by section 40A(3). He accordingly confirmed the addition of Rs.1,96,595/- made by the Assessing Officer by way of disallowance under section 40A(3) of the Act. Aggrieved by the order of the ld. CIT(Appeals), the assessee has preferred this appeal before the Tribunal.
I have heard the arguments of both the sides and also perused the relevant material available on record. In support of the assessee’s case on the issue under consideration, the ld. Counsel for the assessee has relied on the decision of Cochin Bench of this Tribunal in the case of Raja & Co. –vs.- CIT [64 SOT 12], wherein it was held that if an assessee makes payment of two different bills with none of them exceeding Rs.20,000/- at the same time in cash, section 40A(3) is not applicable even if the aggregate payment is more than Rs.20,000/-. Explaining further, it was observed by the Tribunal that section 40A(3) is applicable only in respect
Assessment year: 2009-2010 Page 3 of 4 of an expenditure which is in excess of Rs.20,000/- and for applicability of section 40A(3), both the payment and amount of bill should exceed Rs.20,000/-. As claimed by the ld. Counsel for the assessee, neither the amount of bill nor even the payment made against such bills in cash exceeded Rs.20,000/- in a single transaction in the present case and the decision of Cochin Bench of this Tribunal in the case of Raja & Co. (supra) thus is clearly applicable in the facts of the assessee’s case. Even the ld. D.R. has not disputed this position in principle. He, however, has contended that since this claim was not specifically made by the assessee during the course of assessment proceedings before the Assessing Officer, an opportunity may be given to the Assessing Officer to verify the same. I find merit in the contention of the ld. D.R. and since the ld. Counsel for the assessee has also not raised any objection in this regard, I set aside the impugned order of the ld. CIT(Appeals) on this issue and restore the matter to the file of the Assessing Officer for deciding the same afresh in the light of the decision of Cochin Bench of this Tribunal in the case of Raja & Co. (supra) after verifying the relevant facts from record.
In the result, the appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open Court on April 09, 2018.
Sd/- (P.M. Jagtap) Accountant Member Kolkata, the 9th day of April, 2018 Copies to : (1) Shri Bipin Kumar Gupta, Prop. Balaji Alankar, S-194, Golebazar, Kharagpur-721 301, Paschim Medinipur
(2) Deputy Commissioner of Income Tax, Circle-2, Midnapur, Sahoo Bhawan, Zilla Parishad Road, P.O. Midnapore-72, Dist. Paschim Medinipur (3) Commissioner of Income Tax (Appeals)-11, Kolkata,