M/s. Sunny Enterprise, Surat V. The Income tax Officer,Ward-2(1), Surat

ITA 2433/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89527 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 08-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 26-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SAURABHAI PATEL
• Keywords: Business income
• Section: 40A(3)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.2433/AHD/2011 / ASSTT. YEAR: 2008-09 M/S.SUNNY ENTERPRISE PLOT NO.1/80 HARI NAGAR COLONY UDHNA, SURAT. VS ITO, WARD-2(1) SURAT. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI SAURABHAI PATEL REVENUE BY : SHRI NIMESH YADAV, SR.DR / DATE OF HEARING : 08/06/2015 / DATE OF PRONOUNCEMENT: 12/06/2015 $%/ O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER: THIS AN APPEAL FILED BY THE ASSESSEE AGAINST ORDER OF THE CIT(A)-II, SURAT DATED 6.7.2011 FOR ASSTT.YEAR 2009-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWINGS OF APPEAL . 1. THE EARNING ADDITION OF RS.28,00,000/- BY THE A O IN THE TOTAL INCOME OF ASSESSEE WAS NOT GOOD PRACTICE OF A SSESSMENT JUDGMENT AS A SIMPLE MISTAKE OF ASSESSEE IN BUSINES S. 2. THE EARNING ADDITION OF RS.28,00,000/- IN THE TO TAL INCOME WAS NOT RELATION IN BUSINESS INCOME OF ASSESSEE AS A REAL INCOME. 3. THIS ASSESSMENT DONE BY THE ASSESSING OFFICER A RE NOT REAL PUNISHMENT TO ASSESSEE. 4. THE EARNING ADDITION OF RS.28,00,000/- IN THE TOTAL INCOME OF ASSESSEE IN A. Y.2008-2009 WHICH WAS NOT A REAL INC OME OF ASSESSEE BUT IT IS CLOSURE NOTICE OF BUSINESS OF AS SESSEE AS WELL AS BUSINESS DEATH PUNISHMENT. ITA NO.2433/ AHD/2011 2 5. THE ADDITION DONE BY ASSESSING OFFICER WAS NOT FAIR AND NOT A SINGLE RELATION INCOME OF BUSINESS BUT IT IS BUSINE SS DONE HEAVY PUNISHMENT TO ASSESSEE. 6. AT THE TIME OF ASSESSMENT PROCEEDING OF ASSESSE E THE ASSESSING OFFICER NOT SEEN THE FINANCIAL AND BUSINE SS POSITION OF ASSESSEE. 7. THIS ADDITION IN TOTAL INCOME OF BUSINESS WAS N OT SHOWN REAL INCOME OF ASSESSEE IN THE BUSINESS AND THIS IS ONE WAY ADDITION IN AGAINST OF ASSESSEE'S RIGHT. 8. THE ASSESSING OFFICER GIVING JUDGEMENT AND LEAV ING TAXES ARE VIOLATION OF PRINCIPLE OF JUDGEMENT IN NATURE OF JU STICE. 9. THIS ADDITION OF RS.28,00,000/- IS VERY UNTRUE A ND HIGH AS AGAINST THE MISTAKE DONE BY ASSESSEE. 10. THE ADDITION IN TOTAL INCOME MUST BE DONE AT TH E RATE OF PROFIT NOT THE AMOUNT OF SALES. 11.THE SECTION 40A(3) W.E.F. 01/04/2008 OF I.T. ACT HAS BAN ON THE FUNDAMENTAL RIGHT OF ASSESSEE IN HIS BUSINESS. 3. AT THE TIME OF HEARING, THE AR OF THE ASSESSEE S UBMITTED THAT HE IS NOT PRESSING THE GROUNDS OF THE APPEAL, AND ALSO MADE AN ENDORSEMENT TO THIS EFFECT ON THE GROUNDS OF APPEAL OF THE ASSESSEE FILED ALONG WITH FORM NO.36. HENCE, THESE GROUND O F APPEALS ARE DISMISSED FOR WANT OF PROSECUTION. 4. THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESS EE HAS RAISED ADDITIONAL GROUNDS, WHICH READS AS UNDER: 12. THE LD. AO HAS ERRED IN DISALLOWING THE FULL P URCHASE FOR WHICH THE AMOUNT WAS PAID OTHER THAN BY ACCOUNT PAY EE CHEQUE OR DRAFT. ACCORDING TO THE PROVISIONS OF SECTION 40 A(3) OF THE INCOME TAX ACT AS AMENDED BY FINANCE ACT, 2007, APP LICABLE FOR FY 2007-08 I.E. AY 2008-09, (BARE ACT READS) A. 'WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT IS MADE, AFTER SUCH DATE (NOT BEIN G LATER THAN THE 31ST DAY OF MARCH, 1969) AS MAY BE SPECIFI ED IN ITA NO.2433/ AHD/2011 3 THIS BEHALF BY THE CENTRAL GOVERNMENT BY NOTIFICATI ON IN THE OFFICIAL GAZETTE, IN A SUM EXCEEDING {TWENTY] THOUS AND] RUPEES OTHERWISE THAN BY [AN ACCOUNT PAYEE CHEQUE D RAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT], [TWENTY PER CENT OF SUCH EXPENDITURE AS A DEDUCTION]' B. THUS ONLY 20% OF THE PAYMENT THAT WAS MADE IN CONTRAVENTION TO 40A(3) SHALL BE DISALLOWED AND NOT 100% OR ENTIRE. THE LD. AO SEEMS TO HAVE CONFUSED THE PR OVISIONS APPLICABLE FOR AY 2009-10(100% DISALLOWANCE) WITH A Y 2008-09(20% DISALLOWANCE). 5. THE AR SUBMITTED THAT THE SAME MAY BE ADMITTED F OR HEARING. 6. THE DR DID NOT HAVE ANY OBJECTION TO THE ADMISSI ON OF THE ABOVE ADDITIONAL GROUNDS OF APPEAL. THEREFORE, THE SAME ARE ADMITTED AND THE PARTIES WERE ALLOWED TO MAKE THEIR SUBMISSIONS THER EON. 7. THE ONLY SUBMISSION OF THE AR OF THE ASSESSEE IS THAT THE AO ERRED IN MAKING DISALLOWANCE OF ENTIRE PAYMENT OF R S.28 LAKHS MADE IN CASH TO M/S.KGN TRADERS BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT. HE SUBMITTED THAT THE FINANCE ACT, 20 07 AMENDED THE PROVISIONS OF SECTION 40A(3) BY PROVIDING THAT WHER E THE ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT IS MADE, AFTER SUCH DATE (NOT BEING LATER THAN THE 31 ST DAY OF MARCH, 1969), AS MAY BE SPECIFIED IN THIS BEHALF BY THE CENTRAL GOVERNMENT BY NOTIFICATION IN THE OFFICIAL GAZETTE, IN A SUM EXCEEDING RS.20,000/- OT HERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT, 20% OF SUCH EXPENDITURE SHALL NOT BE ALLOWED AS A D EDUCTION. HE SUBMITTED THAT THIS AMENDMENT IS APPLICABLE TO THE ASSESSEE, AS THE ASSESSMENT YEAR CONCERNED WAS THE ASSESSMENT YEAR 2 008-09. HE SUBMITTED THAT THE AMENDED PROVISION OF SECTION 40A (3) OF THE ACT W.E.F. 1-4-2008 WAS APPLICABLE FOR THE ASSTT.YEAR 2 009-10. THEREFORE, ONLY 20% OF RS.28 LAKHS SHOULD BE DISALLOWED UNDER SECTION 40A(3) OF THE ACT AND NOT THE ENTIRE AMOUNT PAID IN CASH OF R S.28 LAKHS. THE CIT(A) WAS ALSO NOT JUSTIFIED IN CONFIRMING THE ORD ER OF THE AO. ITA NO.2433/ AHD/2011 4 8. WE FIND THAT SECTION 40A(3) WAS AMENDED BY THE F INANCE ACT, 2007 W.E.F. 1.4.2008 AND THE SAID AMENDED PROVISION S READS AS UNDER: '(3)(A) WHERE THE ASSESSEE INCURS ANY EXPENDITURE I N RESPECT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING TWENTY THO USAND RUPEES OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DR AWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, NO DEDUCTION SHAL L BE ALLOWED IN RESPECT OF SUCH EXPENDITURE 9. WE FIND THAT THE AR OF THE ASSESSEE ADMITTED THA T THE LAW AS AMENDED BY THE FINANCE ACT, 2007 W.E.F. 1.4.2008 WI LL BE APPLICABLE FOR THE ASST.YEAR 2008-09, WHICH IS THE YEAR UNDER APPE AL. THE ONLY DISPUTE AS PER THE ASSESSEE IS THAT THE AMENDED PRO VISIONS OF THE FINANCE ACT, 2007 PROVIDES FOR DISALLOWANCE OF 20% OF THE EXPENDITURE, WHEREAS, AS PER THE LOWER AUTHORITIES THE SAME PROV IDES FOR DISALLOWANCE OF 100% OF THE EXPENDITURE. 10. WE FIND FROM A READING OF LAW AS AMENDED BY THE FINANCE ACT, 2007 W.E.F. 1.4.2008 PROVIDES FOR DISALLOWANCE OF E NTIRE EXPENDITURE AND NOT 20% OF THE EXPENDITURE AS CONTENDED BY THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY ERROR IN THE ORDERS OF T HE LOWER AUTHORITIES, AND THEREFORE, THE SAME IS CONFIRMED AND THE ADDITI ONAL GROUND OF THE ASSESSEE IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 12 TH DAY OF JUNE, 2015 AT AHMEDABAD. SD/- SD/- ( RAJPAL YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 12/6/2015