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Income Tax Appellate Tribunal, KOLKATA ‘B(SMC
Before: Shri S.V. Mehrotra, Vice-(KZ)
Per Shri S.V. Mehrotra, V.P.(KZ): This appeal has been filed by the assessee against the order of ld. Commissioner of Income Tax (Appeals)-6, Kolkata dated 17.03.2016 for the assessment year 2009-10.
2. Shri Miraj D. Shah, Advocate, appeared on behalf of the assessee and Shri Aloke Nag, ld. Addl. CIT, D.R. represented on behalf of the Revenue.
3. Brief facts of the case are that the assessee was, in the relevant assessment year, engaged in the marketing business of medicine. He had filed his return of income declaring total income of Rs.3,57,575/-. The assessment was completed under section 143(3) on the returned income ./2016 Assessment year: 2009-2010 Page 2 of 4 vide order dated 20.05.2011. Subsequently the Assessing Officer passed an order under section 154/143(3) observing that during the period under consideration, the assessee made cash payments (exceeding Rs.20,000/-) on various occasions aggregating to Rs.5,58,826/- as enumerated at page 1 of his order giving details of date of payment, amount paid and voucher no. He accordingly issued notice to the assessee on 15.02.2013 under section 154 but since the assessee did not appear before him, he made an addition of Rs.5,58,826/- disallowing the payments under section 40A(3). The ld. CIT(Appeals) decided the assessee’s appeal ex-parte confirming the disallowance made by the Assessing Officer.
Being aggrieved, the assessee is in appeal before the Tribunal and has taken the following grounds of appeal:-
1. For that in the facts and circumstances of the case the Appellate order passed was in violation of principals of natural justice hence is bad in law and be quashed.
For that in the facts and circumstances of the case the Ld. Commissioner of Income Tax Appeals passed the appellate order without giving proper opportunity of hearing to the assessee.
For that in the facts and circumstances of the case the order u/s 154 of the I.T. Act 1961 was beyond jurisdiction & bad in law and hence the same be quashed.
4. For that in the facts and circumstances of the case the Ld. Commissioner of Income Tax Appeals erred in upholding the disallowance of Rs.5,58,826/- on account of payment of expenses in cash u/s 40A(3) of the I.T. Act 1961. The disallowance is not called for hence the same be reversed.
For that the interest computed u/s. 234A/B/C/D of the I.T. Act 1961 is over charged and wrongly calculated and or is not applicable to the assessee’s case it be directed to re-compute the interest as per law.
5. The ld. counsel for the assessee referred to the original assessment order, wherein at page 2 the Assessing Officer, after considering the assessee’s detailed submissions as regards the deposits made in the Bank ./2016 Assessment year: 2009-2010 Page 3 of 4 account, accepted the same and did not make any disallowance. He further submitted that since it was a case of deposit pertaining to reimbursement of expenses, therefore, the provisions of section 40A(3) were not attracted. In this regard, the ld. counsel for the assessee has relied on the decision of ITAT, Chennai Bench in the case of ITO –vs.- Smt. N. Padma [2008] 25 SOT 35 (Chennai)(URO) in I.T. Appeal No. 682(MAD.) of 2005 dated April 21, 2006, wherein it has been, inter alia, held that under section 40A(3), only an expenditure can be disallowed. He submitted that the reimbursement does not fall in category of expenditure.
The ld. D.R. submitted that the Assessing Officer has given specific voucher no. in the assessment order and, therefore, it pertained to disallowance of expenditure.
I have considered the submissions of both the parties and perused the relevant material available on record. Admittedly before both the lower authorities orders were passed ex-parte and, therefore, the assessee’s plea regarding payments being in the nature of reimbursement has not at all been considered. The ld. counsel has also demonstrated that the impugned amount has not been debited in the Profit & Loss Account so there was no question of section 40A(3) being attracted. All these aspects need to be considered by Assessing Officer and if the assessee’s plea is found to be correct, then no disallowance is called for. Accordingly, the matter is restored back to the file of the Assessing Officer to decide the issue de novo.