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TMI Blog2022 (6) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... mains that keeping in mind that the nature of assessee's business involving 150 transportation vehicles as well as employees operating in different parts of country, the other small payments indeed deserve to be allowed involving peculiar day to day business requirements. We accordingly uphold the impugned addition of Rs. 23,10,630/- to the extent of Rs. 15,69,530/- only. The remaining disallowance component is directed to be deleted. Second component of assessee's permit charges expenditure of Rs. 13,45,280/- disallowed u/s. 40A(3). Learned counsel could hardly refer to any cogent supportive evidence containing all the relevant details. We thus affirmed the impugned disallowance. Next national permit charges of Rs. 16,40,000/- u/s. 40A(3) representing the expenditure incurred for remuneration paid to the directors only. There can be hardly any dispute that such cash payments made on behalf of the company to its directors carry overwhelming genuineness element which itself forms a very strong reason to be allowed in light of Anupam Tele services Vs. Income Tax Officer [ 2014 (2) TMI 30 - GUJARAT HIGH COURT ] We make it clear that there lordships have already considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted does not reflect true state of affairs. Balances for two year are not shown. As per the balance sheet Rs. 45 Lacs has been raised as share capital. As per Form 23AC submitted before the ROC part B-III states that, equity shares of 46 Lacs has been raised during the current financial year. Why such discrepancy is there is best known to the appellant. During the course of assessment proceedings it has been admitted as typographical error. Before the Assessing Officer the appellant could not adduced any evidence in respect of paid capital of Rs. 46,00,000/-. i) Suresh B. Dakle - 18000 Shares - Rs.18,00,000/- ii) Surekha S Dakle - 13500 Shares - Rs.13,50,000/- iii) Vijay S. Dakle - 6750 Shares - Rs.6,75,000/- iv) Geetesh S. Dakle - 6750 Shares - Rs.6,75,000/- The appellant admitted that Share Capital of Rs. 46,00,000/- brought in by the Directors of the appellant Company, there being no contribution actually made by the Shareholders (Directors) as the same is accounted by mere recording the journal entry. Though journal entry in Directors current account share capitals were raised. During the remand proceedings the AO examined the contention of the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of affairs of the Directors. The appellant is silent that, how this journal entry is reflected in accounts of the Director and their returns. Admittedly, no money has been brought in there must be some entry in the liability side of the Directors account which must be artificial. In other words, the appellant is source of funds and investment is in the books of the appellant without any passing of the money. Therefore the appeal effect will also be in two parts one relating to the appellant and another relating to the Directors. Substantive addition/examination of the source of the funding for share capital requires examination in case of Directors. Once this process is complete then only appellant will be absolved from explaining the source of share capital. Accordingly, ground no. 1 of the appeal is dismissed. However, the demand will be protective only, It is for the appellant to demonstrate when actual transactions of money takes placed between appellant and Directors. 3. We have given our thoughtful consideration to rival pleadings against in support of the impugned addition and find no merit in the Revenue's stand. It has come on record that the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under s. 34(1)(a) to wife also ex majorie cautela. It was urged before High Court that ITO having made assessment of husband, s. 34(1)(a) could not apply for issuing notice to wife. The Court held, though ultimately the wife's petition succeeded: In our view this is not tantamount to a change of opinion but a more cautious approach of the ITO by way of protective assessment to avoid the recurrence of technical quashing as in the case of the HUF....... The ITO had to guard against the expiry of limitation in peculiar predicament in which he was placed.... We accordingly hold that the impugned protective addition only deserves to be deleted in above terms. Ordered accordingly. 4. Next comes the assessee's challenge to correctness of section 40A(3) disallowance made in both the lower proceedings involving a sum of Rs. 23,10,000/-. A perusal of assessment findings in Para No. 4.1 suggests that the main figure of Rs. 15,69,530/- involves M/s. M D Ballorgi. Learned counsel sought to clarify that the assessee's transportation fleet is almost of 150 vehicles wherein the normal wear and tear services requires cash payment only. We fail to understand as to how the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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