VENKATASATYANARAYANA CHOWDARY YALAMANCHILI ,HYDERABAD vs. ACIT CIRCLE-6 (1), HYDERABAD

Assessee is an individual and proprietor of a cinema theatre. He filed his return of income for the assessment year 2018-19 on 5/10/2018 declaring an income of ₹ 2, 76, 580/-. While processing the return under sec�on 143(1) of the Income Tax Act, 1961 (for short “the Act”), CPC Bangalore made disallowance of ₹ 1, 08, 50, 577/-under sec�on 40A(3) of the Act and another sum of ₹ 11, 13, 507/- under sec�on 43B of the act.

Assessee preferred appeal. Based on the audit report learned CIT(A) held that the CPC rightly disallowed under sec�on 40A(3) of the Act. He further held that the disallowance under 43 B of the Act is also consistent with the facts on record. 4. Ld. AR submits that the authori�es have taken only a part of the audit report to be found at column 21 (d) only in part and failed to no�ce the la�er part by the auditors have cer�fied that according to the test checks of the cash book and the cheque, record slips etc., as a reasonable, considering the size of the form, there has been no Revenue payments in cash which are inadmissible under sec�on 40 A (3), 40 A (3A) read with rule 6 DD. He submits that the disclaimer is only a formality and nothing prevented the authori�es from verifying the books of the assessee. In respect of the other disallowance Ld. AR submits that the assessee submi�ed before the learned CIT(A) that the amounts represen�ng the GST was paid before the due date in respect of the months from August, 2007 to December, 2007 but it is only in respect of the payments towards the months of January to March, 2018 that were delayed. 5. Ld. DR placing heavy reliance on the orders of the authori�es below. 6. We have gone through the record in the light of the submissions made on either side. Whether or not there are any Revenue payments in cash, de hors the disclaimer clause is a verifiable fact and merely because the auditors put a disclaimer clause it does not prevent the verifica�on of books to know whether or not there are any cash payments. Merely because there is a disclaimer no addi�on could be made without proper verifica�on of the books. So also, the payments towards GST as pleaded by the assessee before us. We, therefore, find it just and proper to set aside the impugned order and restored the issue to the file of the learned Assessing Officer to cause enquiry on this verifiable facts and to take a plausible view according to law. With this view of the ma�er, we set aside the impugned order and direct the lemon learned Assessing Officer to verify the books and reach a conclusion according to law on this two aspects. Grounds are accordingly treated as allowed for sta�s�cal purpose. 7. In the result, appeal of the assessee is allowed for sta�s�cal purpose. Order pronounced in the open court on this day the 18thJuly, 2024. Sd/- Sd/- (MANJUNATHA G.) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER