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Income Tax Appellate Tribunal, BANGALORE BENCH B, BANGALORE
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IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A No.884/Bang/2014 (Assessment Year : 2009-10) Shri. T. Shivakumar, Prop : Laxmi Ranganatha Transport, 4th Main, 7th Cross, Yellamma Nagar, Davangere .. Appellant PAN : ADEPT1819M v. Commissioner of Income-tax, Davangere .. Respondent Assessee by : Shri. Chandrashekar, Advocate Revenue by : Smt. Neera Malhotra, CIT - DR Heard on : 16.12.2015 Pronounced on : 28.12.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :
This appeal has been filed by the assessee with a delay of 213 days. Assessee has filed an affidavit in which he says that his auditor Shri. B. P. Vijaykumar had advised him that no prejudice was caused due to the order passed by the CIT u/s.263 of the Income-tax Act, 1961 (‘the Act’ in short).
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As per the assessee, only when he approached Shri. Virupanna Ameberkar, CA for filing an appeal against an assessment order dt.24.04.2014, passed by the AO pursuant to the impugned revisionary proceedings, proper advice was received by him. In support of the above, assessee has also filed affidavits of both Shri. B. P. Vijaykumar and Shri. Virupanna Ameberkar.
Ld DR submitted that the assessee was unable to show genuine reasons for the delay and the delay should not be condoned.
I have perused the affidavits and heard the Ld. DR. Shri. B. P. Vijaykumar, ITP, has given an affidavit stating that he had appeared before the CIT in the revisionary proceedings u/s.263 of the Act and had also advised the assessee that there was no necessity to file an appeal against a revisionary order of CIT. In the affidavit filed by Shri. Virupanna Ameberkar, CA, it is stated that assessee had approached him for filing an appeal against the order of assessment passed pursuant to revisionary proceedings u/s.263 of the Act. According to this affidavit Shri Virupanna Ameberkar had advised the assessee to file an appeal against the order u/s.263 of the Act. I find that assessee was earnestly pursuing the proceedings relating to its assessment for A. Y. 2009-10, and the delay was
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caused due to wrong advise received by the assessee from Shri. B. P. Vikay Kumar, ITP. Delay was not attributable to any failure of the assessee. Ld. DR has not stated why the affidavit filed by Shri. B. P. Vijaykumar, should be disbelieved. In the circumstances, I am of the opinion that the delay has to be condoned. The delay is condoned and appeal is admitted.
Grounds taken by the assessee in its appeal is reproduced hereunder :
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Facts apropos are that assessee a contractor had filed his return declaring income of Rs.4,05,830/- for the impugned assessment year. Case of the assessee was selected for scrutiny by the AO. Assessee was required to produce bank pass books and other details. It seems assessee produced only bank pass sheets and details for verification. AO did a test-check of the particulars furnished. As per the AO, vouchers produced by the assessee were all self-made and assessee could not produce bills for transportation charges. AO also verified the bank accounts of the assessee with ING Vysya Bank and State Bank of India and reached a conclusion that interest of Rs.22/- credited in the said account was not included in the return of income filed by the assessee. AO thereafter estimated income of the assessee at 10% of the gross contract receipts. Gross contract receipts for the relevant previous year came to Rs.70,39,181/-,
On 01.07.2013 CIT issued a letter to the assessee proposing a revision u/s.263 of the Act. As per the CIT assessee had made several cash payments in excess of Rs.20,000/- on a single day and Section 40A(3) of the Act stood attracted. CIT noted that there were total payments of Rs.23,09,526/- which attracted section 40A(3) of the Act. Assessee in his reply stated that the persons to whom the bearer cheques were issued were
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all his employees and the withdrawals of the money were for meeting various business expenditure. As per the CIT, this claim of the assessee could not be accepted since the amounts drawn from the bank were by a single person through bearer cheques. He set aside the order of AO and directed the AO to do it afresh after considering the applicability of Section 40A(3) of the Act.
Now before us, Ld. AR strongly assailing the order of lower authority submitted that the AO was having the bank pass sheets with him. It was only due to the inability of the assessee to explain all the deficiencies that AO resorted to an estimation of income. Income was estimated at 10% of the gross receipts. As per the Ld. AR by virtue of judgment of Hon’ble High Court of Andhra Pradesh in the case of Indwell Construction v. CIT [ 232 ITR 776], no further addition could be made in a case where income was estimated. Reliance was also placed on a decision of coordinate bench in the case of Sri. Jayaram Pathak v. ACIT [ITA No.1332/Bang/2011,dt.21.12.2012].
Per contra, Ld. DR submitted that AO had never examined the cash payments made by the assessee. According to him, Section 40A(3) of the Act stood clearly attracted. Non-examination of this aspect rendered the
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order of AO prejudicial to the interests of Revenue, according to the Ld. DR.
I have perused the orders and heard the rival contentions. Paras 3 to 4.2 of the original assessment order dt.07.12.2011 is reproduced hereunder:
It is clear that AO was having with him bank account extracts obtained from ING Vysya Bank, Davangere and State Bank of India, Davangere. AO had even made an addition for interest of Rs.22 credited in ING Vysya Bank Account. Payments which were considered by CIT for
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application of Section 40A(3) of the Act were made out of ING Vysya Bank Account. This has been clearly mentioned by him at para 3 of his order u/s.263 of the Act. Thus when the original assessment order was passed, AO had with him all the details with regard to the bank accounts of the assessee. Considering various defects in the details and explanation furnished by the assessee, AO came to a conclusion that estimating the income of the assessee at 10% of his gross receipts would suffice. Coordinate bench of this Tribunal in the case of Sri. Jayaram Pathak (supra) by relying on judgment of Hon’ble High Court of Andhra Pradesh in the case of Indwell Construction v. CIT [ 232 ITR 776] held that once income of an assessee was estimated on gross sales, resorting to a disallowance u/s.40(a)(ia) of the Act was not warranted. It cannot be said that disallowance u/s.40A(3) of the Act stood was on a different footing. Thus, I am of the opinion that CIT was only substituting his opinion for a lawful view taken by the AO. AO having estimated the income of assessee obviously decided that there can be no further disallowance u/s40A(3) of the Act. I also cannot say that order of AO suffered from any error, much less any error which was prejudicial to the interests of Revenue. I therefore set aside the order of CIT.
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In the result, appeal of the assessee stands allowed.
Order pronounced in the open court on 28th day of December, 2015.
Sd/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER MCN
Copy to: 1. The assessee 2. The Assessing Officer 3. The Commissioner of Income-tax 4. Commissioner of Income-tax(A) 5. DR 6. GF, ITAT, Bangalore By Order Assistant Registrar