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TMI Blog2014 (7) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... made on successive days are also filed from the ledger extracts - the AO cannot club together payments made on two different dates as one payment so as to bring within the purview of section 40A(3) of the Act - the claim of the assessee is required to be verified which has not been properly done either by the AO or by the CIT (A) – thus, the matter is to be remitted back to the AO for examination – Decided in favour of Assessee. Restriction of deduction u/s 80G of the Act – Held that:- The receipt is in the name of two persons i.e., the assessee and one Sri Kedia - the contention of the assessee is that the cheque for ₹ 1 lakh was entirely paid by the assessee from his bank account - reference to the order passed u/s 80G, a copy of which reveals that the institution to which donation was paid has been registered u/s 80G of the Act - if the assessee as claimed by him, has issued a cheque from his bank account for ₹ 1 lakh, only because the receipt is in the name of the assessee and another person, the claim of deduction u/s 80G cannot be restricted to 50,000/- in place of ₹ 1 lakh – thus, the matter is liable to be remitted back to the AO for verification – Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence ₹ 3,89,921 vii) Addition towards interest payments ₹ 9,00,400 and viii) Addition towards valuation of closing stock ₹ 2,93,495 5. Being aggrieved of the additions made in the assessment order, assessee preferred appeals before the CIT (A). Before the CIT (A), the assessee objecting to each of the additions made filed detailed written submissions. The CIT (A) after considering the submissions of the assessee in respect of the additions made restricted the disallowance to ₹ 10 lakh in respect of the additions made on account of disallowance of expenditure including the addition made on account of low gross profit. 6. The leaned AR submitted before us that the assessee has not only maintained regular books of accounts but all expenditures are supported by genuine vouchers and bills and therefore without finding any defect or discrepancy in the books of accounts or any deficiency in them the Assessing Officer and the CIT (A) were not justified in making additions/ disallowance purely on estimation. It was submitted that the Assessing Officer without rejecting the books of accounts has resorted to estimation of profit. The CIT (A) was also not ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound of the assessee is treated as allowed for statistical purposes. 9. In ground No.5, the assessee has challenged the addition of ₹ 4,35,220 u/s 40A(3) of the Act. 10. Briefly the facts are, during the assessment proceedings, the Assessing Officer while examining the books of accounts noticed that in the profit and loss a/c the assessee has claimed an amount of ₹ 16,29,159/- as fuel expenses. On verifying the vouchers the Assessing Officer noticed that almost all vouchers are self made and payments made in many occasions were in cash exceeding the amount of ₹ 20,000/-. He therefore proposed to disallow the same by invoking section 40A(3) of the Act. The assessee objecting to the proposed disallowance submitted that fuel is purchased from various unregistered dealers, hence it is difficult to get fuel without making payment in cash. Therefore, it is not possible to get the external supporting vouchers for the same. The Assessing Officer however was not convinced with the explanation of the assessee. On verifying the details, the Assessing Officer found cash payments exceeding ₹ 20,000/- on 19 instances totalling to ₹ 4,35,220/-. He therefore dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered dealers towards purchase of firewood which is being used as fuel in assessee s manufacturing activity. Further, it is the contention of the assessee that except payments on the following three instances:- i) 15th May, 2008 ₹ 24,700 ii) 19th October, 2008 ₹ 26,100 iii) 24th Oct. 2008 ₹ 20,600 All other payments made in cash are below ₹ 20,000/-. On a perusal of ledger extract, copies of which are placed at pages 36 to 38 of the paper book, the contention of the learned AR appears to be correct. For instance, it appears that the Assessing Officer has clubbed together payments made on 8th Aril, 2008 and 9th April, 2008 to treat it as single payment of ₹ 20,500 so as to bring it within the purview of section 40A(3). When other instances of clubbing of payments made on successive days are also filed from the ledger extracts. Therefore, in our view the Assessing Officer cannot club together payments made on two different dates as one payment so as to bring within the purview of section 40A(3) of the Act. Therefore, the claim of the assessee in this regard is required to be verified which has not been properly done either by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kh by himself which can be verified from his bank account from which cheque of ₹ 1 lakh was issued. The learned AR also submitted that when the institution to which donation given is registered u/s 80G of the Act and the assessee has actually paid the amount of ₹ 1 lakh, the assessee would be entitled to deduction u/s 80G of the Act of the amount claimed. 18. The learned DR, on the other hand supported the order of the CIT (A). 19. We have heard the parties and perused the materials on record. On a perusal of the donation receipt, a copy of which is at page-39 of the paper book, it appears that the receipt is in the name of two persons i.e., the assessee and one Sri Kedia,. However, the contention of the assessee is that the cheque for ₹ 1 lakh was entirely paid by the assessee from his bank account. Further, reference to the order passed u/s 80G, a copy of which is at page-40 of paper book, reveals that the institution to which donation was paid has been registered u/s 80G of the Act. Therefore, if the assessee as claimed by him, has issued a cheque from his bank account for ₹ 1 lakh, only because the receipt is in the name of the assessee and another ..... X X X X Extracts X X X X X X X X Extracts X X X X
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