Yogesh Gupta Prop., New Delhi V. ITO, New Delhi

ITA 4916/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61795 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 24-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Assessee Lawyers: P D MITTAL
• Section: 40A(3); 80C; 147; 28

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC: NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 4916/DEL/2011 A.Y. : 2006-07 YOGESH GUPTA, VS. I.T.O., WARD 28(2), PROP. GUPTA SAREE KENDRA, NEW DELHI 4126, JOGIWARA, NAI SARAK, DELHI 110 006 (PAN : AAGPG8937Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. P.D. MITTAL, CA DEPARTMENT BY : DR. B.R.R. KUMAR, SR. D.R. O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXV, NEW DE LHI DATED 22.7.2011 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. AT THE THRESHOLD, I NOTE THAT THERE IS DELAY OF 34 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. FOR THE CONDONATION O F DELAY ASSESSEE HAS FILED CONDONATION PETITION AND AVERRED THAT IT WA S BECAUSE OF ILLNESS OF THE ASSESSEE THAT THE DELAY HAD OCCURRED. IN THIS REGARD, A MEDICAL CERTIFICATE HAS ALSO BEEN GIVEN. UPON CAREFUL CONS IDERATION AND HEARING BOTH THE PARTIES, I AM INCLINED TO CONDON E THE DELAY AND ACCORDINGLY THE SAME IS CONDONED. 3. THE GROUNDS OF APPEAL READ AS UNDER:- I) THAT THE ASSESSING OFFICER AS WELL AS LD. COMMISSIONER OF INCOME TAX (A) HAS FAILED TO 2 APPRECIATE THE FACT THAT THE PROVISION OF SECTION 4 0A(3) OF THE I.T. ACT, ARE NOT APPLICABLE IN ALL CASES WH ERE THE ASSESSMENT IS COMPLETED U/S. 44AF. SECTION 44AF(1) CLEARLY EXCLUDES THE APPLICABILITY OF SECTION 40A(3 ) OF THE I.T. ACT, 1961. II) THAT THE LD. COMMISSIONER OF INCOME TAX (A) IS WR ONG WHILE DISCUSSING THE APPLICABILITY OF SECTION 147 W HILE THE SAID APPLICABILITY WAS NEVER CHALLENGED BY THE ASSESSEE AT ANY POINT OF TIME. III) THAT THE LD. COMMISSIONER OF INCOME TAX (A) IS W RONG WHILE DISCUSSING THE BOOK RESULTS INSPITE OF THE FA CT THAT THE ASSESSEE HAS NEITHER FILED THE RETURN OF I COME BASED ON THE BOOK RESULTS NOR RELIED ON THE SAID BO OKS FOR THE PURPOSE OF ASSESSMENT. IV) THAT THE ASSESSING OFFICER AS WELL AS LD. COMMISSIONER OF INCOME TAX (A) HAS ALSO FAILED TO APPRECIATE THE CASH FLOW CHART IN SUPPORT OF THE CONTENTION OF THE ASSESSEE THAT NO PAYMENT IN CAHS WAS MADE TO M/S SAJJAN KUMAR SUMAN KUMAR TEXTILE CO. P. LTD. IN CONTRAVENETION OF SECTION 40A(3), D ULY SUPPORTED FROM THE ORIGINAL PURCHASE VOUCHERS PRODUCED IN THE COURSE OF ASSESSMENT PROCEEDING AS WELL AS APPELLATE PROCEEDINGS. V) THAT THE EVIDENCE RELIED ON BY THE ASSESSING OFF ICER AND UPHELD BY THE LD. COMMISSIONER OF INCOME TAX (A) FOR HOLDING THE CONTRAVENTION OF SECTION 40A(3) CAN NOT 3 BE CONSIDERED AS THE SAME WAS NO EVIDENCE IN THE EYE OF LAW. VI) THAT THE ENTIRE ASSESSMENT ORDER AS WELL AS APP EAL ORDER IS WRONG, ARBITRARY, ILLEGAL, UNJUST AGAINST T HE FACT AS WELL AS AGAINST THE LAW. 4. IN THIS CASE ASSESSING OFFICER NOTED THAT ASSE SSEE HAS MADE CASH PURCHASE OF ` 8,35,943/-. ASSESSING OFFICER MADE DISALLOWANCE U/S 40A(3) @ 20% OF THE SAID AMOUNT. ACCORDINGLY, ASSESSING OFFICER DISALLOWED ` 1,67,099/-. ASSESSEE SUBMITTED IN THIS REGARD THAT ASSESSEE HAS FILED THE RETURN U/S. 44AF OF ` 1,08,9 80/-. IT WAS SUBMITTED THAT 5% OF THE PROFIT OF ` 26,79,602/- CO MES TO ` 1,33,980 AND THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80C OF ` 25,000/- AND HAS FILED THE RETURN OF INCOME OF ` 1,08,980/-. IT WAS SUBMITTED BY THE ASSESSEE THAT PROVISION SECTION 40A(3) ARE NOT APPL ICABLE AS THE ASSESSEE HAS FILED THE RETURN U/S. 44AF. HOWEVER, THE SUBMISSION OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER AND DISALLOWANCE ALSO CONFIRMED BY THE ASSESSING OFFICER. 5. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 6. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE ME. 4 7. I HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF T HE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. I FIND THAT ASSESSMENT IN THIS CASE HAS BEEN FRAMED U/S. 44AF OF THE I.T. ACT. TH E SAID SECTION STARTS AS UNDER:- 44AF(1) NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN SECTIONS 28 TO 43C, IN THE CASE OF AN ASSESSEE ENGAGED IN RETAIL TRADE IN ANY GOODS OR MERCHANDISE , A SUM EQUAL TO FIVE PERCENT OF THE TOTAL TURNOVER IN THE PREVIOUS YEAR ON ACCOUNT OF SUCH BUSINESS, OR AS THE CASE MAY BE, A SUM HIGHER THAN THE AFORESAID SUM AS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF SUCH BUSINESS CHARGEABLE TO T AX UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSIO N. PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY IN RESPECT OF AN ASSESSEE WHOSE TOTAL TURNOVE R EXCEEDS AN AMOUNT OF FORTY LAKH RUPEES IN THE PREVI OUS YEAR. 8. FROM THE ABOVE, I FIND THAT ACT ITSELF PROVIDES TH AT SECTION 28 TO 43C OF THE ACT ARE NOT APPLICABLE FOR THE ASSESSEE ENGAGED IN RETAIL TRADE. UNDER THE CIRCUMSTANCES, I FIND COGENCY IN THE ASSESSEES 5 SUBMISSION THAT PROVISION OF SECTION 40A(3) APPLIED BY THE REVENUE ON THE ASSESSEE IS AGAINST THE PROVISIONS OF THE ACT. 9. LD. DEPARTMENTAL REPRESENTATIVE FAIRLY AGREED THA T THE PROVISIONS OF THE ACT U/S. 44AF DO NOT PROVIDE DISALLOWANCE U/S. 40A(3). 10. UNDER THE CIRCUMSTANCES, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSE E. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/7/2012. SD/- [SHAMIM YAHYA] ACCOUNTANT MEMBER DATE: 26/7/2012 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES