Iftakhar Danish , Bijnor V. ITO WARD - 3(3), Bijnor

ITA 961/DEL/2020

AI Insights

The case involves Iftakhar Danish, a civil contractor, who appealed against the rectification order passed by the Assessing Officer under Section 154 of the Income Tax Act, 1961, which disallowed cash payments made for the purchase of bricks under Section 40A(3) amounting to Rs. 65,42,800. The rectification was based on an audit objection and was contested by the assessee on grounds that the payments were made on holidays and thus covered under Rule 6DD(j) of the Income Tax Rules, 1962. The ITAT found that the Assessing Officer's action was beyond the narrow scope of Section 154, which is meant for correcting only obvious and patent mistakes.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121588 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-01-2023
• Assessment Year: misc
• Appeal Filed On: 02-03-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 54; 6; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “C” DELHI BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI ANUBHAV SHARMA, JUDICIAL MEMBER I.T.A No.961/DEL/2020 Assessment Year 2012-13 Iftakhar Danish, B-133, Near M.Z. School, Moh. Hazrat Nagar, Noorpur, Bijnor. v. ITO, Ward-3(3), Bijnor. TAN/PAN: AJJPD0512A (Appellant) (Respondent) Assessee by: Shri Vivek Agarwal, CA Department by: Shri Vijay Kumar Kataria, Sr.DR Date of hearing: 05 01 2023 Date of pronouncement: 29 03 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he ca pti oned a ppeal has been file d at t he i ns tance o f the assessee aga inst the o rde r o f t he C ommi ss ione r of In come Ta x (A ppea ls ), Moradaba d, [‘C IT (A) ’ i n short], dat ed 22. 10. 20 19 ar isi ng from th e assess ment order da ted 26. 05.2 016 pa s sed b y the A ssessi ng O fficer (A O ) under Secti on 154 of t he I nco me T ax A ct, 1961 (t he A ct) con cerning A Y 2012-13. 2. A s per the gr ounds o f ap pea l, the assessee has chall enged the rec tific at ion carr ied ou t b y t he A ssessi ng O fficer under Sect ion 154 of t he Act tow a rds disa ll ow ance under Sect ion 40A ( 3) of t he A ct a mounting to Rs. 65, 42,800/ - w hi ch w as i n tu rn endorse d b y the C I T(A) in t he fi rs t appeal and decide d agains t the I.T.As No.961/Del/2020 2 assessee. 3. A gg rieve d, the ass essee pre fe rre d appeal be for e IT A T. 4. Br ie fl y sta te d, t he assess ee is engag ed i n c ivi l c onst ru cti on etc. The a ssesse e file d retu rn of inco me at Rs. 6, 70,0 10/ - deri ved fro m ci vi l cons truc tio n rec eipts of R s. 2, 69, 6 6, 703/-. T he A ssessi ng O ffice r comple te d the regula r assess me nt und er Secti on 143(3) of th e A ct vi de o rder dated 19.01. 2015 on a t ot al income of Rs. 8, 74, 510/ -. The reaf te r, an orde r dated 26.05. 2016 w as pass ed under Sect ion 154 of t he A ct wher ei n a dis al l ow anc e of Rs. 65, 42,800/- wa s made on acc ount of ca sh pa ym ent s made tow ard s purc has e of bric ks alleg ing breac h of Sec tion 40A (3) of the A ct. In de fe nse , the asse ssee c ontended that the cas h pa yments w ere made on Ho li da y / Sun da y a nd is thus cove re d by e xt ant cla use (J ) o f Rule 8D D of t he Inc ome Ta x R ules as well as by consi derati ons of b usi ness e xpediency. 4. It is f urt he r c ont ended tha t t he iss ue of cas h pa yme nt i n cont ravention o f pro visions of Section 40A (3 ) of t he A ct w as under e xa mi nat ion of t he A ssess ing O ffice r an d reason fo r ca sh pa yme nt we re exp la ined vide pa ra graph 3 of re pl y dated 19. 01.2015 submi tted duri ng the assess ment proce ed in gs. The A ssessi ng O fficer had als o exa mi ne d the books, bi lls an d vouche rs pro duc ed b efore him. Al l th e aspects of the c ase w ere e xa mined b y the A ssess ing O ff icer. It is be cause o f s uch e xpla nati ons f urnished in the course of assess ment pro ceed in gs th at w he n the iss ue w as ve ri fied b y th e a udit tea m, an au di t object ion w as r ais ed and base d on the opinion of the audit te a m, th e A ssessi ng O ffic er in voke d the pr ovis ions of Sect ion 154 of t he A ct. I.T.As No.961/Del/2020 3 5. T he assessee fu rther c onte nds th at provisi ons of Sec tio n 1 54 confer a ver y na rrow and li mi t ed pow er t o re ct i fy any mi s take w hich is ap parent fro m record. It i s not open to t he Assessi ng O fficer to go i nto the t rue purport o f the prov is ion of t he A ct i n the recti fica tion pr oc eedi ngs and w hat can be rect ifie d is a n obvious a nd pate nt mis take and not some thi ng which can b e esta bl is he d by a lo ng draw n proc ess of reas oning on po ints where ther e ma y be conceiva bl y two o pinio ns. 6. We agre e. The R ul e 6DD (J) at the re leva nt ti me provided f or inap plicab il it y of Sect ion 4 0A (3) where t he pa yme nts w ere made in cas h on bank H ol ida ys. T he A ssessing O ff ic er has quest ione d the inte ntion of ca sh pa yme nts s how n on Sunda y of ever y mont h and t hus rej ected the expl anat ion. While, the explana ti on of pa yme nts on H olidays app ea rs hi ghl y do ubt ful but howeve r s uch infe re nce ca nnot be taken i n the real m o f obvi ous mis ta ke. Sect ion 154 has n o appli cat io n t o ga uge t he p urported m al a fi des i n explana tio n of fe red by the Asse ssee behi nd such t ransaction. The na rrow jurisd ict io n of Section 154 is th us not avail abl e t o the A ssessi ng O ffi cer to rec t if y suc h so called mis take. 7. We thus se t aside the order of the CIT (A) a nd canc el the rect ifica t io n ca rr ie d out on this poi nt. 8. In the res ul t, the appeal of t he asses see is allow e d. Order pronounced in the open Court on 29/03/2023. Sd/- Sd/- [ANUBHAV SHARMA] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /03/2023