SMT. LAVEENA SHANKAR HOTCHANDANI, Indore V. THE ITO 5(1), Indore

ITA 677/IND/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0573 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-09-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 20-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: S N AGRAWAL
• Keywords: Opportunity of being heard
• Section: 40A(3); 143(3); 142(1); 234B

Judgement Text

LAVEENA SHANKAR HOTCHANDANI ITA NO.677/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.677/IND/2016 ASSESSMENT YEAR: 2011-12 REVENUE BY S HRI P.K. MITRA, SR.DR ASSESSEE BY S/ SHRI S.N. AGR AWAL & PANKAJ MOGRA, CAS DATE OF HEARING 1 2 .09. 2018 DATE OF PRONOUNCEMENT . 9 .2018 O R D E R PER MANISH BORAD, AM. THIS APPEAL FILED AT THE INSTANCE OF ASSESSEE PERT AINING TO A.Y. 2011-12 IS DIRECTED AGAINST THE ORDER OF LD. COMMIS SIONER OF INCOME TAX(APPEALS)-II, INDORE, (IN SHORT CIT(A)) , VIDE APPEAL NO. IT-180/14-15/513 ORDER DATED 31.03.2016 WHICH IS AR ISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(HER EINAFTER CALLED AS THE ACT) FRAMED ON 29.03.2014 BY ITO-5(1), IN DORE. SMT. LAVE ENA SHANKAR HOTCHANDANI, C/O SV AGRAWAL & ASSOCIATES, DADI DHAM, 24 JOY BUILDERS COLONY, OLD PALASIA, INDORE INCOME TAX OFFICER 5(1), INDORE ( APPELLANT ) (RESPONDENT ) PAN NO. AAYPH8078D LAVEENA SHANKAR HOTCHANDANI ITA NO.677/IND/2016 2 2. BRIEFLY STATED FACTS AS CULLED OUT FROM THE REC ORDS ARE THAT THE ASSESSEE IS AN INDIVIDUAL OF SOLE PROPRIETORSHIP CO NCERN NAMELY M/S. SATYAM AGENCIES, INDORE. INCOME OF RS.4,59,640/- DI SCLOSED IN THE INCOME TAX RETURN FILED ON 27.09.2012 . TURNOVER F OR THE YEAR HAS BEEN SHOWN AT RS.10.28 CRORES. CASE SELECTED FOR S CRUTINY THROUGH COMPUTER ASSISTANCE SCRUTINY SECTION (CASS) AND NOT ICES U/S 143(2) AND 142(1) WERE DULY SERVED UPON THE ASSESSE E ALONG WITH QUESTIONNAIRE. THE LD. AO WHILE EXAMINING THE RECO RDS OBSERVED THAT THE ASSESSEE WAS HAVING REGULAR PURCHASE AND S ALE TRANSACTIONS FROM M/S. SAI IMPEX AND DURING THE YEA R CASH PAYMENTS OF RS.1,00,72,000/- WERE MADE. PROVISION S OF SECTION 40A(3) OF THE ACT WERE INVOKED BY THE ASSESSING OF FICER ADDING THE ALLEGED AMOUNT OF CASH PAYMENT TO THE INCOME OF THE ASSESSEE. ADDITION TOWARDS LOW HOUSE HOLD WITHDRAWALS RS.1,50 ,000/- WERE ALSO MADE AND INCOME ASSESSED AT RS.1,06,81,640/-. ACCORDINGLY ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) AND PART LY SUCCEEDED. 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL RAISING FOLLOWING GROUNDS OF APPEAL; LAVEENA SHANKAR HOTCHANDANI ITA NO.677/IND/2016 3 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) ERRED IN MAINTAINING DISALLOWANCE OF RS.1,00,72,000 /- BY INVOKING THE PROVISION OF SECTION 40A(3) OF THE ACT. 1.2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN MAINTAINING CASH PAYMENT MADE IN EXCESS OF PRESCRIBED LIMIT U/S 40A(3) OF THE EVEN ON SUNDAY AND HOLIDAY. 1.3 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. CIT(A) ERRED IN NOT GIVING ANY COMMENTS ON THE NET PROFIT OF THE ASSESSEE AS SHOWN IN THE CASE OF A WHOLE SALE BUSINESS AND AFTE R MAKING DISALLOWANCE U/S 40A(3) OF THE ACT. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN MAINTAINING ADDITION OF RS.1,00,000/- AS M ADE ON ACCOUNT OF LOW HOUSE HOLD EXPENSES. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE AMOUNT OF INTEREST AS CHARGED U/S 234A AND 234B OF THE ACT WA S EITHER WRONG OR EXCESSIVE, THE SAME NOW REQUIRES TO BE DELETED IN F ULL OR REDUCED SUBSTANTIALLY. 4. FROM PERUSAL OF THE ABOVE GROUNDS, WE NOTE THAT ONLY TWO ISSUES NEEDS TO BE ADJUDICATED (1) ADDITION OF LOW HOUSE H OLD WITHDRAWALS AT RS.1,00,000/- (2) DISALLOWANCE U/S 40A(3) OF THE ACT AT RS.1,00,72,000/-. 5. APROPOS FIRST ISSUE RELATING TO LOW HOUSEHOLD WI THDRAWALS WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLA CED BEFORE US. IN THE AUDITED CAPITAL ACCOUNT NO WITHDRAWALS WERE SHOWN BY THE ASSESSEE FOR HOUSEHOLD EXPENSES AND IT WAS CLAIMED THAT THE HOUSEHOLD WITHDRAWALS OF HER HUSBAND WAS SUFFICIENT . LD.A.O WAS LAVEENA SHANKAR HOTCHANDANI ITA NO.677/IND/2016 4 NOT SATISFIED WITH THIS STATEMENT AND ESTIMATED THE ADDITION OF RS.1,50,000/- FOR LOW HOUSEHOLD WITHDRAWAL WHICH WA S THEREAFTER SCALED DOWN BY LD.CIT(A) TO RS.1,00,000/- THEREBY G IVING RELIEF OF RS.50,000/- TO THE ASSESSEE. 6. WE OBSERVE THAT THE ASSESSEE HAS DISCLOSED TOTA L INCOME OF RS.4,59,640/- AGAINST TOTAL TURNOVER OF RS.10.28 CR ORES (APPROX) AND NO CASH HAS BEEN WITHDRAWN BY HER TOWARDS HOUSEHOLD EXPENSES. THE CONTENTION OF THE LD. COUNSEL THAT ASSESSEES H USBAND TOOK CARE OF TOTAL HOUSEHOLD EXPENDITURE CANNOT JUSTIFY THAT THE ASSESSEE WAS NOT REQUIRED TO MAKE ANY WITHDRAWAL FOR HOUSEHOLD E XPENSES. IN THIS GIVE FACTS WE FIND NO INCONSISTENCY IN THE FIN DINGS OF LD.CIT(A) CONFIRMING THE ADDITION OF RS.1,00,000/-. ASSESSEE S GROUND NO.2 STANDS DISMISSED. 7. AS REGARDS THE ISSUE RAISED IN GROUND NO.1 RELA TING TO INVOKING OF PROVISIONS OF SECTION 40A(3) OF RS.1,00,72,000/-, A T THE OUTSET LD.COUNSEL FOR ASSESSEE SUBMITTED THAT THE LD. ASSE SSING OFFICER HAS NOT EXAMINED THE DETAILS PROPERLY. THE ASSESSE E IS HAVING ALLEGED CASH TRANSACTIONS WITH MS/ SAI IMPEX DUE TO HUGE DEBT CREDIT BALANCES AND M/S SAI IMPEX WAS PERSISTING TH E ASSESSEE TO MAKE PAYMENT IN CASH ONLY. HE ALSO CONTENDED THAT EACH CASH LAVEENA SHANKAR HOTCHANDANI ITA NO.677/IND/2016 5 PAYMENT IS LESS THAN RS.20,000/- , HOWEVER HE ACCEP TED THAT ON VARIOUS DATES TOTAL CASH PAYMENT HAS EXCEEDED RS.20 ,000/-. HE ALSO CONTENDED THAT ON VARIOUS OCCASIONS THERE WAS BANK HOLIDAY BUT LD.A.O DISALLOWED THE PAYMENT U/S 40A(3) OF TH E ACT. LD. COUNSEL FOR THE ASSESSEE PRAYED THAT HE MAY BE PROV IDED ONE MORE OPPORTUNITY TO GO BEFORE LD.A.O TO FURNISH ALL DETA ILS SO THAT HE COULD DECIDE THE ISSUE AFRESH IN THE LIGHT OF FACTS AND VARIOUS JUDGMENTS WHICH FAVOURS THE ASSESSEE. 8. LD. DEPARTMENTAL REPRESENTATIVE THOUGH SUPPORT ED THE ORDERS OF BOTH THE LOWER AUTHORITIES WAS FAIR ENOUGH TO RAISE NO OBJECTION IF THIS PARTICULAR ISSUE OF DISALLOWANCE U/S 40A(3) OF THE ACT IS SET ASIDE TO THE FILE OF LD.AO FOR RE-EXAMINATION. 9. WE HAVE HEARD RIVAL CONTENTION AND PERUSED THE RECORDS PLACED BEFORE US. THIS IS AN UNDISPUTED FACT THAT SUM OF RS.1,00,72,000/- HAS BEEN PAID IN CASH BY THE ASSESSEE TO M/S. SAI I MPEX WITH WHOM THE ASSESSEE IS HAVING REGULAR TRANSACTION OF PURCHASE AND SALE OF EDIBLE OIL. FROM PERUSAL OF THE LEDGER ACC OUNT OF MS/ SAI IMPEX FROM PAGE 28 TO 42 OF PAPER BOOK WE FIND THAT THERE WAS AN OPENING CREDIT BALANCE OF RS.4,80,89,203/-. REGULA R PURCHASES OF SOYABEAN HAVE BEEN MADE UP TILL 19.1.2011. THERE IS NO TRANSACTION LAVEENA SHANKAR HOTCHANDANI ITA NO.677/IND/2016 6 OF SALE OF SOYABEAN UP TO 19.1.11 THEREAFTER I.E. FROM 19.1.11 ASSESSEE STOPPED MAKING PURCHASES BUT ONLY MADE SAL E OF SOYABEAN TO M/S. SAI IMPLEX. ALL THE PAYMENTS MADE DURING THE YEAR ARE IN CASH AND EACH AMOUNT IS LESSS THAN RS.20,000/-, HO WEVER ON VARIOUS DATES THE TOTAL CASH PAYMENT HAS EXCEEDED R S.20,000/-. THIS LEDGER ACCOUNT OF M/S. SAI IMPEX IS NOT GIVING A NORMAL PICTURE OF THE TRANSACTIONS BETWEEN THE CONCERNS BECAUSE TH ERE IS OPENING CREDIT BALANCE OF RS.4.81 CRORES AND CLOSING CREDIT BALANCE OF RS.3.11 CRORES. TOTAL PURCHASES FROM M/S. SAI IMPE X DURING THE YEAR STOOD AT RS.5,05,20,558/-. THE TRANSACTIONS B ETWEEN THE TWO CONCERNS ARE OF GOOD MAGNITUDE BUT NOT A SINGLE TR ANSACTION HAVE BEEN ENTERED THROUGH ACCOUNT PAYEE CHEQUE OR BANK D RAFT EVEN WHEN THE ASSESSEE HOLDS A BANK ACCOUNT WITH INDIAN OVERSEAS BANK. PROVISIONS OF SECTION 40A(3) OF THE ACT COM ES INTO ACTION IF THE PAYMENT EXCEEDING RS.20,000/- IN A DAY IS MADE TOWARDS MAKING ANY PURCHASE OR INCURRING AN EXPENDITURE. IT SEEMS THAT THE LD.A.O HAS MERELY ADDED THE TOTAL CASH PAYMENT AND HAS MADE DISALLOWANCE U/S 40A(3). BOTH THE PARTIES HAVE AGRE ED FOR SETTING ASIDE THIS ISSUE TO THE FILE OF LD.A.O. LAVEENA SHANKAR HOTCHANDANI ITA NO.677/IND/2016 7 10. WE ARE OF THE VIEW THAT IN THE GIVEN CIRCUMSTAN CES OF THE CASE THE ALLEGED TRANSACTIONS OF MAKING CASH TRANSACTION S AS WELL AS THE MODUS OPERANDI OF THE ASSESSEE OF ENTERING SUCH TRA NSACTIONS OF M/S. SAI IMPEX OF MAKING HUGE PURCHASE, HUGE SALES AND MAKING THE PAYMENTS ONLY IN CASH OTHER THAN THE BANK HOLID AYS NEEDS EXTENSIVE VERIFICATION. LD.A.O ALSO NEED TO CROSS VERIFY FROM MS/. SAI IMPLEX AS TO WHETHER SIMILAR TRANSACTIONS OF CASH H AVE BEEN SHOWN ON THE VERY SAME DATE IN THEIR BOOKS OF ACCOUNTS. WE ACCORDINGLY SET ASIDE THIS ISSUE OF DISALLOWANCE U/S 40A(3) OF THE ACT TO THE FILE OF LD.AO TO MAKE NECESSARY VERIFICATION ALONG WITH THE APPLICATION OF THE PROVISION OF 40A(3) OF THE ACT ON ALL THESE TRA NSACTIONS OF CASH PAYMENT IN THE LIGHT OF VARIOUS JUDGMENTS REFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE (PLACED AT PAGE 48 TO 89 OF THE PAPER BOOK) DURING THE COURSE OF HEARING BEFORE US. NEED LESS TO MENTION THAT PROPER OPPORTUNITY OF BEING HEARD SHOULD BE PR OVIDED TO THE ASSESSEE AND ALSO DIRECT THE ASSESSEE TO MAKE DUE C OMPLIANCES TO THE NOTICES OF LD.A.O. ACCORDINGLY GROUND NO.1 RE LATING TO DISALLOWANCE U/S 40A(3) OF THE ACT RAISED BY THE AS SESSEE IS ALLOWED FOR STATISTICAL PURPOSE. LAVEENA SHANKAR HOTCHANDANI ITA NO.677/IND/2016 8 11. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 19.9.201 8. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 19 TH SEPTEMBER, 2018 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE