DCIT, Circle-4(2), Ahmedabad V. Malay Jayendrabhai Dalal, Ahmedabad

ITA 324/AHD/2019

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals)-4, Ahmedabad, which had deleted an addition made under section 40A(3) of the Income Tax Act, 1961. The addition pertained to cash payments exceeding Rs. 20,000 made in a day, totaling Rs. 9,11,666. The assessee, Shri Malay Jayendrbhai Dalal, argued that these payments were within the limits set by section 40A(3) and were verified by his Chartered Accountant in the audit report under section 44AB. The CIT(A) accepted the assessee's explanation without a Remand Report from the Assessing Officer, leading to the Revenue's appeal. The Tribunal found this procedure to be a violation of Rule 46A and set aside the matter for further examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114138 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 11-07-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 28-02-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: WAY OF CALLING A REMAND
• Keywords: Set aside
• Section: 148; 40A(3); 143(3); 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judicial Member The DCIT, Circle-4(2), Ahmedabad (Appellant) Vs Shri Malay Jayendrbhai Dalal, A-12, Aamarkadamb Bunglows, Ramdevnagar Cross Road, Satellite, Ahmedabad PAN: AATPD0944K (Respondent) Assessee Represented: Shri Bharat S. Shah, A.R. Revenue Represented: Ms. Saumya Pandey Jain, Sr.D.R. Date of hearing : 12-07-2023 Date of pronouncement : 14-07-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against the appellate order dated 27.12.2018 passed by the Commissioner of Income Tax (Appeals)-4, Ahmedabad arising out of the reassessment order passed under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2011-12. ITA No. 324/Ahd/2019 Assessment Year 2011-12 I.T.A No. 324/Ahd/2019 A.Y. 2011-12 Page No DCIT Vs. Malay Jayendrabhai Dalal 2 2. Originally the above Revenue appeal was dismissed by common order of this Tribunal dated 14-08-2019 on account of Low Tax Effect as per CBDT Circular No. 17/2019 dated 08-08-2019 in a batch of 628 appeals filed by the Revenue. Thereafter Miscellaneous Application No. 363/Ahd/2019 filed by Revenue stating that the case is covered by exclusion clause as per para 10(c) of the CBDT Circular, therefore the Revenue appeal is required to contested on merit before the Tribunal which was also dismissed by the Tribunal. Revenue’s further appeal before the Hon’ble High Court of Gujarat, set aside the matter back to the file of the Tribunal in R/SCA No. 13452/2020 vide judgment dated 08- 07-2022 with a direction to dispose of the appeal on merits, expeditiously. 3. The solitary ground raised by the Revenue before this Tribunal is that the Ld. CIT(A) erred in deleting an amount of Rs. 9,11,666/- disallowed u/s. 40A(3) of the Act being payment made in cash exceeding Rs. 20,000/- by accepting the fresh evidences furnished by the assessee by violating of Rule 46A(3) of the Income Tax Rules, 1962. 3.1. The brief facts of the case is that the assessee is an individual and engaged in services of collection, verification, call centers and other special projects for Vodafone Ltd. For the Assessment Year 2011-12, the assessee was allotted special project by M/s. Vodafone Ltd. to check the coverage of its network and its feasibility for the territory of upcountry region. The assessee filed its Return of Income on 29/09/2011 for the Assessment Year I.T.A No. 324/Ahd/2019 A.Y. 2011-12 Page No DCIT Vs. Malay Jayendrabhai Dalal 3 2011-12 declaring total income of Rs. 63,81,070/-. Regular assessment u/s. 143(3) was made on 21-11-2013, wherein total income was determined at Rs. 65,82,710/-. 3.2. Subsequently, on verification of record, it revealed that the assessee has made several payment in cash exceeding Rs. 20,000/- to a person in a day, which is in violation of provision of section 40A(3) of the Act, amounting to Rs. 9,11,666/- whereas the said expenses have not been disallowed by the assessee in the Statement of Income. Therefore the assessment was reopened by issuing a notice u/s. 148 of the Act. In response, the assessee requested to treat the original Return as the return again the 148 notice. During reassessment proceedings, the Ld. A.O. given opportunities to explain the cash payment exceeding Rs. 20,000/-. The assessee neither attended nor sought any adjournment/furnished any submissions on the show cause notice. Therefore the Assessing Officer disallowed the cash payment exceeding Rs. 20,000/- and added as the total income of the assessee u/s. 40A(3) of the Act. 4. Aggrieved against the same, the assessee filed an appeal before Commissioner of Income Tax (Appeals)-4, Ahmedabad. The assessee submitted before Ld. CIT(A), the total expenses of Rs.9,11,666/- under various heads had been incurred by various persons as Team Leaders, who disburse to various persons who are not only identifiable employees but also such expenses per individual per day is well within the limit of section 40A(3). Therefore the Chartered Accountant while furnishing Audit Report I.T.A No. 324/Ahd/2019 A.Y. 2011-12 Page No DCIT Vs. Malay Jayendrabhai Dalal 4 under 44AB has verified such expenses and not put any contrary note, as the assessee complied with the provision of section 40A(3) of the Act. Thus the assessee submitted Name of the party, date and amount of payment, nature and details of expenditure as per Annexure-A to H. The Ld. CIT(A) simply admitted the above documents and details which were filed for the first time by the assessee and deleted the addition made u/s. 40A(3) of the Act without calling for a Remand Report from the Assessing Officer. 5. Aggrieved against the same, the Revenue is in appeal before us. Ld. Sr. D.R. Ms. Saumya Pandey Jain appearing for the Revenue brought to our notice violation of Rule 46A(3) of the Rules by the Ld. CIT(A) and submitted that without verifying the details of expenses as claimed by the assessee by way of calling for a Remand Report from the Assessing Officer. The Ld. CIT(A) deleted the addition. Therefore requested to set aside the matter to the file of Ld. CIT(A) to call for Remand Report from the Assessing Officer on the new documents filed by the assessee. 6. Per contra, Ld. Counsel Bharat S. Shah appearing for the assessee supported the order passed by the Ld. CIT(A) and submitted that the assessee case is audited u/s. 44AB of the Act and no remarks for disallowance u/s. 40A(3) in the Audit Report not only for the present assessment year even for the previous as well as subsequent assessment years in the case of the assessee. Therefore there is no violation so as to attract provisions of section 40A(3), so the deletion made by the Ld. CIT(A) is well within the I.T.A No. 324/Ahd/2019 A.Y. 2011-12 Page No DCIT Vs. Malay Jayendrabhai Dalal 5 provisions of law and does not require any interference. Therefore the Revenue appeal is liable to be dismissed on merits. 7. We have given our thoughtful consideration and perused the materials available on record. It is seen from the reassessment order in spite of opportunities given to the assessee, the assessee failed to furnish details of expenses incurred in cash exceeding Rs. 20,000/- per day per person. In the absence of the details, the A.O. in the reassessment order as clearly given a table of expenditure exceeding Rs. 20,000/- made by the assessee amounting to Rs. 9,11,666/-. However the assessee failed to furnish any details before the Assessing officer, therefore the Assessing Officer held that the assessee has nothing to say in the matter and thereby disallowed the expenditure u/s. 40A(3) of the Act. 8. During the appellate proceedings, it is seen from the appellate order, the assessee has produced the details of special project obtained from Vodafone network which required temporary manpower who were paid in cash, through the Team Leader. Thus the details furnished and documents produced by the assessee, the Ld. CIT(A) convinced with the explanation, but without calling for Remand Report from the Assessing officer is clear violation of Rule 46A of the Income Tax Rules, 1962 as well as Principles of Natural Justice. Therefore we deem it fit to set aside the matter back to the file of the Ld. CIT(A) with a direction to call for the Remand Report from the Assessing Officer and then pass orders on merits. Needless to say, the assessee should cooperate during the Remand proceedings by furnishing all the details and evidences. With this I.T.A No. 324/Ahd/2019 A.Y. 2011-12 Page No DCIT Vs. Malay Jayendrabhai Dalal 6 observation, the appeal filed by the revenue is hereby allowed for statistical purposes. 9. In the result, the appeal filed by the Revenue is hereby allowed. Order pronounced in the open court on 14-07-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER True Copy JUDICIAL MEMBER Ahmedabad : Dated 14/07/2023 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद