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TMI Blog2022 (5) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... been raised in respect of each payment by various parties and payment on a single day to a party does not exceed Rs. 20,000/- then there is no reason to disturb the findings of the Ld. CIT(A). We therefore restore the case to the file of Ld. AO with a direction for verification on a limited point whether separate invoices were raised by various parties and separate payments have been made by assessee not exceeding Rs. 20,000/- against such individual invoices as per Chart furnished by the assessee - matter is restored to the file of Ld. AO for carrying out necessary verification as per directions given. Validity of reopening of assessment u/s 147 - reopening based on Audit objection - HELD THAT:- We would like to place reliance on the decision of ITAT Hyderabad in the case of ITO v. Mayuri Construction [ 2021 (8) TMI 790 - ITAT HYDERABAD] wherein the ITAT held that reopening based on Audit objection is valid if cash payments above Rs. 20000 has escaped scrutiny. Moreover, we note that from reasons recorded, Ld. AO has also independently applied his mind to the issue, while initiating re-assessment proceedings. Whether reopening of assessment proceedings can be initiated o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal:- (1) The ld. CIT(A) has erred in law and in the facts in circumstances of the case by deleting the addition of Rs. 19,78,745/- being cash payment in contravention to the provisions of section 40A(3) of the I.T. Act, 1961. (2) If is, therefore, prayed that the order of ld. CIT(A) may be set aside and that of the Assessing Officer be restored. 3. The assessee has raised following grounds in the Cross Objection:- 1. The appeal filed by the Ld. AO should not be admitted on account of low tax effect as the Ld. CIT(A) has decided the appeal only on merit of the case not on any issues as are specified in para 10 of the Circular No. 03 of 2018 dated 11.07.2018. Accordingly, Ld. AO has taken adverse advantage of para 10 of Circular No. 03 of 2018 that should not be allowed. 2. The learned AO has erred both on facts and in law by initiating reassessment proceedings u/s. 147 of the Act, on account of merely audit objection only, which is not permissible in the eyes of Law. Later on Ld. CIT(A) also erred by not giving his findings on the legal issue that reopening of assessment proceedings can be initiated only on Audit objection or not? 3. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as shown in the ledger are in fact paid to various parties below Rs. 20,000/-. However, the assessee's contention has not been found to be correct after verification of the bills. Accordingly, it is held that the amount of Rs. 19,78,745/- claimed under the head printing charges for which payment is made in contravention to section 40A(3) of the Act is not allowable and as such the same is disallowed and added to the total income of the Assessee. The Penalty proceedings are initiated u/s. 271(1)(c) r.w.s 274 of the I.T. Act for concealment of income by furnishing inaccurate particulars of income on this issue. 5. The assessee filed an appeal before the ld. CIT(A), who allowed the assessee's appeal by holding that the ld. A.O. has not pointed out any payment made to any party exceeding Rs. 20,000/-. The ld. CIT(A) observed as under while passing the order:- 5. Before me, the appellant has filed a paper book in which the derails of payments made at Baroda office, Surat office and Ahmedabad office were summarized. No payment to single party in these transactions is above Rs. 20,000/-. These details are certified to be filed before the Assessing Officer. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 to 20, it may be seen from table furnished that assessee has made several payments in excess of Rs. 20,000/-. We are however unclear on whether the figure of payment exceeding Rs. 20,000/- in a single day is in respect of separate invoices by several parties or a consolidated single invoice raised by one party. Now, for instance, in case of Baroda Branch of the assessee, a payment of Rs. 44,220/- was made to M/s. Laxmi Offset on 22/04/2010. The assessee has given a bifurcation that this payment consists of various charges being separately paid to various parties for separate works carried out by them, and aggregate of each payment to a single party does not exceed Rs. 20,000/- in a single day. However, from records, it is unclear whether separate invoices were raised by the respective parties (as given in bifurcation given in 18 to 20 of Paper-Book) or whether payments of entire sum of Rs. 44,220/- was made to a single party M/s. Laxmi Offset on a single day on 22/04/2010 under a consolidated invoice raised by the latter. The assessee has not furnished any supporting vouchers or invoices raised by the various parties against which payments have been made. Similar instances have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear from records, whether separate invoices have been raised by respective parties and separate payments have been made to them, not exceeding Rs. 20,000/- in aggregate, or entire payment of Rs. 40,220/- has been made in aggregate to M/s. Laxmi Offset on consolidated invoice raised by it. The assessee has not furnished any supporting vouchers or invoices raised by the various parties against which payments have been made. Similar payments to various parties have also been observed from the Chart furnished by the assessee at pages 18 to 20 of the paper book containing branch wise details of printing expenses. In the case of ACIT v. Shree Shanmughar Gunny Stores 146 ITR 600 (Mad), it was held that a single payment exceeding the specified amount made to a party would be covered by the sub-section, though it relates to different items of expenditure. The assessee has submitted before Ld. AO that assessee settles account with printer, once or twice a month as per outstanding amount. However, payments have been made to different parties as per their separate invoices raised by them and no payment is in excess of limit specified u/s. 40A(3) of the Act. We are therefore in agreement with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal on ground of low tax effect. This issue is covered by jurisdictional Gujarat High Court, and hence this Cross-objection No. 1 is hereby dismissed. 11. In the result, Cross Objection No. 1 of the assessee is dismissed. 12. Cross Objection No. 2. The learned AO has erred both on facts and in law by initiating re-assessment proceedings u/s. 147 of the Act, on account of merely audit objection only, which is not permissible in the eyes of Law. Later on Ld. CIT(A) also erred by not giving his findings on the legal issue that reopening of assessment proceedings can be initiated only on Audit objection or not. 12.1. We would like to place reliance on the decision of ITAT Hyderabad in the case of ITO v. Mayuri Construction ITA No. 1740/Hyd/2018, wherein the ITAT held that reopening based on Audit objection is valid if cash payments above Rs. 20000 has escaped scrutiny. Moreover, we note that from reasons recorded, Ld. AO has also independently applied his mind to the issue, while initiating re-assessment proceedings. 13. In the result, Cross Objection No. 2 of the assessee is dismissed. 14. Cross Objection No. 3. The learned AO has erred both on facts and in law by initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to reopening of assessment nor has he sought reasons for reopening of assessment. The assessee sought for reasons of reopening of assessment almost after two months thereafter on 15-09-2015 just before the Ld. AO passed the order u/s. 147 of the Act dated 24-09-2015. The Hon'ble Supreme Court in the case of GKN Driveshafts v. ITO 259 ITR 19 (SC) (2002) has laid down a specific procedure to be adopted by the assessee on issuance of notice u/s. 148 of the Act seeking reopening of assessment, which is reproduced below for reference: We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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