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TMI Blog2020 (1) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... creditworthiness of the loan creditors - HELD THAT:- On perusal of the details filed in the paper book by the assessee, we observe that the assessee has furnished the Form No.16, Adhar No. in respect of Pervez Jamal which could prove the identity, genuineness of the transaction. Hence, the addition of ₹ 3,00,000/- is directed to be deleted. As regards to loan creditor of Shri Narayan Sahoo, we find that the assessee has filed only bank statement of the assessee in which cash amount of ₹ 5,00,000/- has been received from Shri Narayan Sahoo. Nothing is placed on record to prove the identity and creditworthiness of the loan creditor Shri Narayan Sahoo. In view of above, we confirm the addition of ₹ 5,00,000/- and partly allow Ground No.2 of appeal. Addition u/s 40(a)(ia) - rent paid for show room AND audit fees paid - HELD THAT:- . As per the amended provision to section 40(a)(ia) by the Finance Act, 2015 w.e.f. 1.4.2015, the disallowance is restricted to 30% as against 100% made by the Assessing Officer. We find that similar issue had come up for consideration in the case of Om Sri Nilamadhab Builders Pvt Ltd [ 2019 (11) TMI 1373 - ITAT CUTTACK ] we direct the AO to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -15 in the matter of assessment under section 143(3) of the Act. 2. In ITA No.169/CTK/2018, the assessee has raised the following grounds: 1. That, the Ld. Commissioner of Income Tax (appeals) is wrong in holding that the appellant had not submitted the confirmations of the sundry creditors whereas all the confirmations were enclosed in the Paper Book filed at the time of appeal hearing and therefore the confirmations of additions of ₹ 21,85,448 is wrong and liable to be deleted. 2. That, the Ld. Commissioner of Income Tax (appeals) is not correct in holding that the appellant failed to prove identity, genuineness and creditworthiness of the loan creditors namely Narayan Sahoo Pervezjamal as all the documents were filed in the Paper Book at the time of hearing and wrong in confirming the additions of ₹ 8,00,000 which is liable to be deleted. 3.That, the Ld. Commissioner of Income Tax (appeals) is wrong in confirming the additions of ₹ 4,28,100 with regard to the rent paid for show room u/s 40(a)(ia) of the Act in view of the fact that the recipients of the rent had disclosed the rental income in their return of income and duly discharged the tax liabilities. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sundry creditors of ₹ 22,07,294/- (₹ 12,08,95,040/- - ₹ 86,87,746/-), the assessee failed to produce the confirmations. Therefore, the AO treated the said amount of ₹ 22,07,294/- as income of the assessee. 5. On appeal, before the ld CIT(A), the assessee could furnish confirmation from three parties pertaining to credit balance aggregating to ₹ 21,846/-. Therefore, the ld CIT(A) restricted the disallowance to ₹ 21,85,448/-. 6. At the time of hearing, ld counsel for the assessee submitted that the assessee has filed ledger account and the confirmations from 13 sundry creditors amounting to ₹ 21,42,479.05 in the paper book at pages 11 to 45 at the time of appeal hearing as under: Sl. No. Name of the sundry creditor Closing balance as on 31.3.2014 1. Hindustan Trading Co. 19,807.00 2. K.S.Agrotech 700.00 3. Madani Nut Bold Centre 1,339.00 4. Mini Engineering 84,408.05 5. Paneswar Agriculture Industries 15,000.00 6. Panju Machinery Store 26,572.00 7. Sarbeswar Jena 18,000.00 8. S.JK.Rahman S.F.Rahman 18,441.00 9. Virat Enterprises 49,743.00 10. Girijanandini Parida 870,000.00 11. Giridhari Senapati 852,000.00 12. Sachidananda Sahoo 110,000.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serve that the addition of ₹ 5,00,000/- in respect of Narayan Sahoo and ₹ 3,00,000/- in respect of Pervezjamal was made and confirmed on the ground that the identity, genuineness of the transaction and creditworthiness of the loan creditors were not established by the assessee. On perusal of the details filed in the paper book by the assessee, we observe that the assessee has furnished the Form No.16, Adhar No. in respect of Pervez Jamal which could prove the identity, genuineness of the transaction. Hence, the addition of ₹ 3,00,000/- is directed to be deleted. As regards to loan creditor of Shri Narayan Sahoo, we find that the assessee has filed only bank statement of the assessee in which cash amount of ₹ 5,00,000/- has been received from Shri Narayan Sahoo. Nothing is placed on record to prove the identity and creditworthiness of the loan creditor Shri Narayan Sahoo. In view of above, we confirm the addition of ₹ 5,00,000/- and partly allow Ground No.2 of appeal. 12. Ground Nos.3 4 of appeal, ld counsel for the assessee submitted that the amendment to Section 40 (a)( ia ) made by Finance Act, 2014 w.e.f. 01.04.2015 provides that 30% of any payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch a situation unless, it is construed as retrospective after observing as under :- 10. Therefore, in the well-known words of Judge Learned Hand, one cannot make a fortress out of the dictionary; and should remember that statutes have some purpose and object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning. In the case of R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 , this Court said that one should apply the rule of reasonable interpretation. A proviso which is inserted to remedy unintended consequences and to make the provision workable, a proviso which supplies an obvious omission in the section and is required to be read into the section to give the section a reasonable interpretation, requires to be treated as retrospective in operation so that a reasonable interpretation can be given to the section as a whole. 11. This view has been accepted by a number of High Courts. In the case of CIT v. Chandulal Venichand [1994] 209 ITR 7/ 73 Taxman 349 , the Gujarat High Court has held that the first proviso to section 43B is retrospective and sales-tax for the last quarter paid before the filing of the return for the assessment year is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce in support of the claim of expenses. Since, the assessee has failed to provide the primary evidence, the AO has made only 10% adhoc disallowance, which is justified considering the nature of expenses incurred by the assessee. 18. On careful consideration of the rival submissions, we observe that the Assessing Officer has not doubted the expenses incurred in connection with staff tiffin, fuel, direct labour and direct expenses. However, since no evidence was filed, he made adhoc disallowance. We find that in this case, the assessment has been completed u/s.143(3) of the Act and the books of account are not rejected. We find that the nature of expenses have not been doubted or disbelieved by the Assessing Officer. We observe that the adhoc disallowance has been made on the basis of suspicion alone and no basis has been given by the AO. Hence, we direct the AO to delete the addition made on adhoc basis. Ground No.5 of appeal is allowed. 19. Apropos Ground No.6 of appeal, we find that since the assessee failed to furnish evidence of the payment of sales tax of ₹ 7,575/- and payment of entry tax of ₹ 15,970/- within the due date of filing of return u/s.139(1) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as income of the assessee. However, the ld CIT(A) confirmed the penalty of balance amount of ₹ 6,18,840/-. 27. We have heard the rival submissions and perused the record of the case. Ld counsel for the assessee submitted that the assessee has accepted the cash loan of ₹ 3,18,840/- from Samsul Rahaman and ₹ 3,00,000/- from Parvez Jamal . Ld counsel submitted that the genuineness of loans received in cash from both the persons is not in doubt and as there was business exigency, the assessee had accepted the cash loans. He submitted that the loan is genuine and there was no intention of tax evasion and violation of provisions of section 269SS of the Act and, accordingly, prayed for deletion of penalty. Ld counsel for the assessee relied on the decision of Cuttack Bench of ITAT in the case of Mamata Patra vs JCIT in ITA No.136/CTK/2017 for assessment year 2015-16 order dated 11.4.2018 and submitted in similar situation, the penalty levied under section 271D has been deleted. 28. Replying to above, ld D.R. submitted that as per section 269SS of the Act, whenever a person takes or accepts a loan of ₹ 20,000/- or more otherwise than by account payee cheque or dra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y authorise the AO to visit the assessee with penalty under section 271D because sections 273B provided that in case assessee demonstrate reasonable cause for violating this provision, then he could be absolved from visiting with penalty. 31. Before we embark upon an inquiry on the facts of the present case, in order to ascertain that whether the assessee has demonstrated reasonable cause for absolving itself from levy of penalty under section 271D , we deem it appropriate to appraise ourselves with proposition laid down in various authoritative pronouncements referred to by the ld. counsel for the assessee in analyzing various fact situation, wherein reasonable cause demonstrated by the assessee were accepted. The ITAT Cuttack Bench in the case of Mamata Patra (supra), in similar situation, has deleted the penalty in respect of cash loan received. Ld A.R. also relied on various judicial pronouncements before us to contend that the present case is covered by the said decisions as follows: i) CIT vs. Saini Medical Store, 276 ITR 79 (P H) ii) Chamundi Granites (P) ltd vs DCIT, 239 ITR 694 (Kar) III) CIT vs Smt Dimpal Yadva, 379 ITR 177(All) iv) CIT vs M Yesoda, 351 ITR 265 (Mad) 32. ..... 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