Gaddipati Hari Babu, Hyd, Hyderabad V. DCIT, (Central) Central Circle-1(3), Hyderabad, Hyderabad

ITA 508/HYD/2015

• Counselvise Citation: 50822514 RSA 2015
• Duration Of Justice: 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS
• Assessee Lawyers: J J VARUN
• Section: 263; 40A(3); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHE B (SMC) : HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER ITA.NO.508/HYD/2015 ASSESSMENT YEAR: 2010-11 MR. GADDIPATI HARI BABU HYDERABAD. PAN : AAPPG 6512 L VS. DCIT, CENTRAL CIRCLE - 1(3) HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. J.J. VARUN FOR REVENUE : MR. V. SRINIVAS DATE OF HEARING : 2 1 .07.2015 DATE OF PRONOUNCEMENT : 24 .07.2015 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. PRINCIPAL CIT (CENTRAL), HYDER ABAD DATED 12.03.2015 PASSED U/S 263 OF THE I.T. ACT, 19 61. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 15.10.2010 DECLARING TOTAL INCOME OF RS.3,85,940. IN THE ASSESSMENT COMPLETED U/S 143(3 ) VIDE ORDER DATED 14.03.2013, THE TOTAL INCOME OF TH E ASSESSEE WAS DETERMINED BY THE A.O. AT RS.8,73,287 AFTER MAKING ADDITION OF RS.2,21,705 ON ACCOUNT OF DISALLOWANCE OF 25% OF THE CREDIT CARD EXPENSES AND FURTHER ADDITION OF RS.2,65,642 ON ACCOUNT OF DISALLOWANCE OF 10% OF THE VEHICLE EXPENSES CLAIMED BY THE ASSESSEE. THE RECORD OF THE SAID ASSESSMENT WAS SUBSEQUENTLY EXAMINED BY THE LD.CIT. ON SUCH 2 ITA NO.508 OF 2015 G HARI BABU HYDERABAD. EXAMINATION, HE OBSERVED FROM THE RELEVANT LEDGER ACCOUNT THAT PETROL EXPENSES OF RS.30,190 AND RS.31 ,513 WERE PAID BY THE ASSESSEE IN CASH ON 19.05.2009 AND 27.08.2009 RESPECTIVELY. ACCORDING TO THE LD. CIT, THE SAID PAYMENTS MADE BY THE ASSESSEE TOWARDS EXPENDIT URE IN CASH EXCEEDING RS.20,000 WERE HIT BY THE PROVISI ONS OF SECTION 40A(3) OF THE ACT AND SINCE THIS ISSUE WAS NOT EXAMINED BY THE A.O., THE ORDER PASSED BY THE A.O. U/S 143(3) WAS ERRONEOUS AND PREJUDICIAL TO THE INTERES TS OF THE REVENUE. A NOTICE U/S 263 THEREFORE, WAS ISSUE D BY THE LD. CIT ON 14.03.2013 IN RESPONSE TO WHICH DETA ILS OF THE PETROL EXPENSES IN QUESTION, WERE FURNISHED BY THE ASSESSEE ALONG WITH RELEVANT BILLS/VOUCHERS TO SHOW THAT ALTHOUGH THE SAID EXPENSES WERE DEBITED IN THE BOOK S OF ACCOUNT ON A SINGLE DAY, THE CORRESPONDING EXPENSES WERE INCURRED ON VARIOUS DATES WHICH DID NOT EXCEED RS.2 0,000 ON ANY SINGLE OCCASION. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THERE WAS NO VIOLATION OF THE PROVISI ONS OF SECTION 40A(3) AND THE ASSESSMENT ORDER PASSED U/S 143(3) WAS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE ON THIS COUNT. 3. THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE LD. CIT FOR THE FOLLOWING R EASONS GIVEN IN PARA 5 OF HIS ORDER: 5. I HAVE GONE THROUGH THE FACTS OF THE CASE. IT I S A FACT THAT THERE WERE INSTANCES OF CASH PAYMENTS EXCEEDING RS.20,000/-, IN VIOLATION OF THE PROVISION OF SEC.40A(3) OF THE I.T. ACT. THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE IN 3 ITA NO.508 OF 2015 G HARI BABU HYDERABAD. DETAIL WHILE COMPLETING THE ASSESSMENT. TO THAT EXTENT, THE ORDER PASSED BY ASSESSING OFFICER U/S.143(3) ON 14.03.2013 IS PREJUDICIAL TO THE INTEREST OF REVENUE. IT HAS BEEN JUDICIALLY HELD THAT AN ASSESSMENT MADE WITHOUT NECESSARY ENQUIRY CAN BE HELD TO BE ERRONEOUS AND CAN BE REVISED U/S.263 OF THE I.T. ACT 1961. REFERENCE IN THIS REGARD CAN BE MADE TO THE DECISION OF SPECIAL BENCH, ITAT, CHENNAI REPORTED IN 313 ITR (AT) 182, CHENNAI SB WHEREIN IT WAS OBSERVED THAT IT IS NOT NECESSARY FOR THE COMMISSIONER OF INCOME- TAX IN REVISION TO MAKE FURTHER ENQUIRIES BEFORE CANCELING THE ASSESSMENT ORDER OF THE AO. THE COMMISSIONER OF INCOME-TAX CAN REGARD THE ORDER AS ERRONEOUS ON THE GROUND THAT IN THE CIRCUMSTANCES OF THE CASE, THE AO. SHOULD HAVE MADE FURTHER ENQUIRIES BEFORE ACCEPTING THE STATEMENTS MADE BY THE ASSESSEE IN HIS RETURN. IT IS INCUMBENT ON THE A.O. TO INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN ENQUIRY PRUDENT. THE WORD ERRONEOUS IN SEC.263 OF INCOME-TAX ACT, 1961 INCLUDES CASES WHERE THERE HAS BEEN FAILURE TO MAKE NECESSARY ENQUIRIES. 4. FOR THE REASONS GIVEN ABOVE, LD. CIT HELD THAT T HE ORDER PASSED U/S 143(3) WITHOUT MAKING NECESSARY INQUIRIES ON THE ISSUE OF DISALLOWANCE U/S 40A(3) W AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE R EVENUE. ACCORDINGLY THE SAID ORDER WAS SET ASIDE BY HIM BY EXERCISING THE POWERS CONFERRED U/S 263 WITH A DIRE CTION TO THE A.O. TO REDO THE SAME AFTER EXAMINING THE IS SUE RELATING TO THE CASH PAYMENTS MADE IN VIOLATION OF SEC 40A(3). AGGRIEVED BY THE ORDER OF THE LD. CIT, ASSE SSEE PREFERRED APPEAL BEFORE THE TRIBUNAL. 4 ITA NO.508 OF 2015 G HARI BABU HYDERABAD. 5. I HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND PERUSED THE MATERIALS ON RECORD. IT IS OBSERVED THA T WHEN THE ERROR ALLEGEDLY COMMITTED BY THE A.O. IN THE OR DER PASSED U/S 143(3) IN NOT EXAMINING THE ISSUE RELATI NG TO DISALLOWANCE U/S 40A(3) IN RESPECT OF CERTAIN PETRO L EXPENSES PAID IN CASH EXCEEDING RS.20,000/- WAS POI NTED OUT BY THE LD. CIT IN THE NOTICE U/S 263, THE DETAI LS OF SUCH EXPENSES WERE FILED BY THE ASSESSEE BEFORE THE LD. CIT TO SHOW THAT THE AMOUNTS DEBITED IN THE CASH BO OK WERE CONSOLIDATED AMOUNT OF PETROL EXPENSES INCURRE D ON DIFFERENT DATES, NONE OF WHICH WAS EXCEEDING RS.20, 000 ON A SINGLE OCCASION. A COPY OF THE SUBMISSIONS MADE B Y THE ASSESSEE IN THIS REGARD VIDE LETTER DATED 26.02.201 5 IS PLACED ON RECORD BEFORE US ALONG WITH RELEVANT BILL S/ VOUCHERS AND PERUSAL OF THE SAME CLEARLY SHOWS THAT THERE WAS NO SINGLE PAYMENT OF PETROL EXPENSES MADE BY TH E ASSESSEE IN CASH WHICH EXCEEDED RS.20,000. THESE DE TAILS AND DOCUMENTS FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT DURING THE COURSE OF PROCEEDINGS U/S 263 WERE SUFFICIENT TO SHOW THAT THERE WAS NO VIOLATION OF T HE PROVISIONS OF SECTION 40A(3) BY THE ASSESSEE IN MAK ING PAYMENT OF RELEVANT PETROL EXPENSES. THE LD. CIT, HOWEVER, COMPLETELY OVERLOOKED THESE RELEVANT DETAI LS AND DOCUMENTS FILED BY THE ASSESSEE AND WITHOUT GIVING ANY ADVERSE FINDINGS THEREON, HE PROCEEDED TO REVISE TH E ASSESSMENT ORDER PASSED U/S 143(3) ON THE GROUND TH AT THIS ISSUE WAS NOT EXAMINED BY THE A.O. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. IN MY OPINION , WHEN IT WAS CLEARLY ESTABLISHED BY THE ASSESSEE BEF ORE THE 5 ITA NO.508 OF 2015 G HARI BABU HYDERABAD. LD. CIT ON THE BASIS OF RELEVANT DETAILS AND DOCUME NTS THAT THERE WAS NO VIOLATION OF THE PROVISIONS OF SE CTION 40A(3), HE WAS NOT JUSTIFIED TO STILL CONSIDER THE ORDER PASSED BY THE A.O. U/S 143(3) AS ERRONEOUS ON THE G ROUND THAT THIS ISSUE WAS NOT EXAMINED BY HIM ESPECIALLY WHEN THE DETAILS AND DOCUMENTS FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT CLEARLY ESTABLISHED THAT THERE W AS NO SUCH EXAMINATION CALLED FOR IN THE FACTS AND CIRCUMSTANCES OF THE CASE AS THE DISALLOWANCES U/S 40A(3) WAS NOT WARRANTED AT ALL. I AM THEREFORE OF THE VIE W THAT THERE WAS NO ERROR IN THE ORDER PASSED BY THE AO U/ S 143(3) AS ALLEGED BY THE CIT AND THERE WAS NO JUSTI FICATION IN THE ACTION OF THE LD. CIT TO REVISE THE SAME BY EXERCISING THE POWERS CONFERRED UPON HIM U/S 263. I N THAT VIEW OF THE MATTER, I SET ASIDE THE IMPUGNED O RDER OF THE LD. CIT PASSED U/S 263 AND RESTORE THAT OF THE A.O. PASSED U/S 143(3). 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24.07.2015. SD/- (P.M. JAGTAP) ACCOUNTANT MEMBER DATED 24 TH JULY, 2015. VINODAN/SPS COPY TO 1. MR. GADDIPATI HARI BABU, HO USE NO.723/A ROAD NO.37, JUBILEE HILLS, HYDERABAD- 500 033 2. THE DCIT, CENTRAL CIRCLE - 1(3) , 3 RD FLOOR, POSNETT BHAVAN, TILAK ROAD, RAMKOTI, HYDERABAD. 3. PRINCIPAL COMMISSIONER OF INCOME TAX,(CENTRAL) HYDERABAD. 4. DY . CIT, CENTRAL CIRCLE - 6 , HYDERABAD . 5. D.R. ITAT B (SMC) BENCH, HYDERABAD. 6. GUARD FILE 6 ITA NO.508 OF 2015 G HARI BABU HYDERABAD.