M/S RAMJI BOARD & PAPER MILL PVT LTD,MUMBAI vs. DCIT CENTRAL CIRCLE 6 (2), MUMBAI

In the instant case, the case of the Assessee was reopened under section 147 of the Act on the basis of survey action conducted in the case of Assessee and post survey proceedings and analyzing the data back up mainly on the ground that the Assessee has made various payments in cash amounting to Rs.3,82,09,507/- which has escaped assessment.

The Assessing Officer ultimately made the disallowance of Rs.7,73,929/- on account of unexplained expenditure under section 69C of the Act being salary paid in cash (difference of Rs.15,68,564/- payment made in cash as per salary sheet minus the amount of Rs.7,94,635/- as recorded in daily data base).

The Ld. Commissioner on the same footing as observed by the Assessing Officer, affirmed the addition against which the Assessee is in appeal before us.

We have heard the parties and perused the material available on record. As per Ms. Dinkle Hariya, Ld. Counsel of the Assessee, the main allegation for reopening of the case under section 147 of the Act was that the Assessee has made payment in cash and not followed the provisions of section 40A(3) of the Act and, therefore, the amount of Rs.3,82,09,507/- is liable to be disallowed under section 40A(3) of the Act. However,

On the contrary Shri. Srinivas, Ld. DR vehemently supported the impugned order by submitting that the impugned

We have given thoughtful consideration to the rival claims of the parties. As claimed by Ld. Counsel for the Assessee, admittedly in the instant case, the reasons were recorded for not following the provisions of section 40A(3) of the Act and consequential disallowance of Rs.3,82,09,507/- under section 40A(3) of the Act. But no such disallowance has been made by the Assessing Officer in the assessment order. However, the Assessing Officer proceeded to make the addition of Rs.7,73,929/- as unexplained expenditure under section 69C of the Act being difference between the amount of Rs.15,68,564/- and Rs.7,94,635/- respectively on account of salary paid in cash and daily database and ledger as submitted by the Assessee which, according to our considered opinion and dictum laid down in the cases i.e. Jet Airways and Ranbaxy Laboratories Ltd. (supra), is not warranted being sans recording the proper satisfaction as mandated for issuance of notice under section 148 of the Act and, therefore, we do not have any hesitation to delete the addition by allowing the appeal of the Assessee. As we have deleted the addition on legal aspect, hence not dwelling into other issues/merit of the case, as adjudication of the same would be futile exercise.

In the result, the appeal filed by the Assessee stands allowed. Order pronounced in the open Court on 24//01/2024.