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TMI Blog2015 (9) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... , directing the Assessing Officer examine and apply the provisions of 68 and 269SS of I.T. Act. 5. The learned Commissioner of Income Tax erred in directing the Assessing Officer to examine provisions of Sec. 40A(3) and sec 14A of the I.T. Act. 6. Any other ground that may be urged at the time of hearing". 2. The brief facts of the case are that the assessee is a partnership firm engaged in the business of whole sale trader in fast moving consumer goods. The appellant had filed the return of income for the assessment year under consideration on 26-09-2009 declaring total income of Rs. 45,418/-. After processing the said return under the provisions of Section 143(1) of the Act, the case was selected for scrutiny assessment by issuing notice u/s. 143(2) of the Act and finally, the assessment came to be completed u/s. 143(3) vide order dt. 31-05-2011 by the Income Tax Officer, Ward-I, Kothagudem at a total income of Rs. 2,11,207/- after making disallowance of Rs. 1,42,650/- u/s. 40A(3) and Rs. 23,137/- u/s. 40(a)(ia) of the Act. The assessment order was not agitated before the CIT(Appeals). While matter stood thus, the Ld.CIT, Vijayawada issued a show cause notice on 29th October ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2010 opening stock was brought down at Rs. 3,16,882/- and that similar was the case of A.P. WHEAT Account. It is submitted that OST TOOR DAL closing stock was Rs. 2, 16,857/- on 31/03/2007. It was shown in Trading Account and Balance Sheet. For the A.Y. 2008-2009 there were no purchases or sales. Yet the closing stock was valued at enhanced market price of Rs. 3,16,882/- as on 31/03/2008 and shown in the Balance Sheet. The same was shown as opening stock for the A.Y. 2009-2010. As such there is no accounting error or omission on this count. In fact the closing stock was overvalued by about Rs. 1,00,000/- as on 31/03/2008 by the accountant, keeping in view of the market prices. The same occurred in the case of A.P.WHEAT Account. Though there is no increase in valuation. 3. FRIEGHT CHARGES Rs. 7,02,060/-, APPLICABILlTY OF SECTION 40a (ia) :- This expenditure pertains to mainly local dispatches on cyclerikshawa, bullock carts and human drawn carts only, a few expenditure pertain to lorry transports. In any case the expenditure were neither in excess of Rs. 20,000/- at a time nor exceeding Rs. 50,000/- in aggregate. As such the provisions of section 40(a)(ia) do not apply. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference to the provisions of section 40(a)(ia) of the Act. 5.1. Assessee's reply is extracted as under This expenditure pertains to mainly local dispatches on cyclerikshaws, bullock carts and human drawn carts only, a few expenditure pertain to lorry transports. In any case the expenditure were neither in excess of Rs. 20,000/- at a time not exceeding Rs. 50,000/- in aggregate. As such the provisions of section 40(a)(ia) do not apply. 5.2. During the course of hearing, the assessee was asked to furnish the details of this expenditure. In response to that, the assessee has furnished copies of vouchers which do not contain details of the recipients so their genuineness can't be verified. Thus, as per the information available on record, the AD has not verified this claim. The assessee has failed to furnish relevant particulars about the freight charges paid by the assessee. 6. The next issue is extracted as under; Further, it is observed that the unsecured loans with the confirmation letter from Hemanth Sarada, Bindu Sarada and Nikitha Sarada to the assessee firm does not specify whether the loans were given by way of' cash or 'through account payee cheques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 18,80,2000/- from SBH, Kothagudem in aggregate throughout the year to meet the day to day expenses of the business in cash and some payments were made by barer cheques upto permissible limits u/s 40A(3). The assessee does not have any other activity, the incomes of which are exempt. The. assessee has not diverted any amounts to any other activity. The amounts of each withdrawals being very small, this aspect need not be doubted. 7.2. The assessee has withdrawn Rs. 18,80,200/- during the fy relevant to the ay under consideration from SBH, Kothaqudem. But, the AO has not verified the purpose for such huge withdrawals and also the applicability of Sec.14A, if any". Finally concluded that, AO had not conducted the due enquiry or examined the above issues and hence the assessment order passed by the AO was held to be erroneous and prejudicial to the cause of Revenue and therefore, set aside the order. Aggrieved by this order, the appellant-assessee had come up with the present appeal. 5. It was argued by the Ld. AR that the very same issues were examined by the AO during the course of assessment proceedings and he brought to our notice, page No. 9 to 16 of the Paper Book wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TTJ 645]. In this connection, it is apt to extract the observation of the following: i. Hon'ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Ltd., [332 ITR 167] held that: "We have considered the rival submissions of the counsel on the other side and have gone through the records. The first issue that arises for our consideration is about the exercise of power by the CIT under s. 263 of the IT Act. As noted above, the submission of learned counsel for the Revenue was that while passing the assessment order, the AO did not consider this aspect specifically whether the expenditure in question was revenue or capital expenditure. This argument predicates on the assessment order, which apparently does not give any reasons while allowing the entire expenditure as revenue expenditure. However, that by itself would not be indicative of the fact that the AO had not applied his mind on the issue. There are judgments galore laying down the principle that the AO in the assessing order is not required to give detailed reason in respect of each and every item of deduction, etc. Therefore, one has to see from the record as to whether there was application of mind before allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en more elaborately This section does not visualise a case of substitution of the judgment of the CIT for that of the ITO, who passed the order unless the decision is held to be erroneous. Cases may be visualised where the ITO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The CIT, on perusal of the records, may be of the opinion that the estimate made by the officer concerned was on the lower side and left to the CIT he would have estimated the income at a figure higher than the one determined by the ITO. That would not vest the CIT with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi judicial power vested in him in accordance with law and arrived at conclusion and such a conclusion cannot be termed to be erroneous simply because the CIT does not feel satisfied with the conclusion. ...............There must be some prima facie material on record to show that tax which was lawfully exigible has not been imposed or that by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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