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TMI Blog2023 (6) TMI 734X X X X Extracts X X X X X X X X Extracts X X X X ..... issed. Additions towards disallowance of cash payment in excess of prescribed limit - AO has disallowed 10% of cash expenses on the ground that the assessee could not furnish necessary books of accounts and other evidence to justify cash payment made in respect of purchase of milk - HELD THAT:- Although the assessee claims to have earned less than 1% net profit, but could not justify said profit with necessary evidence. Since, both the parties failed to prove their case with necessary evidence and reasons, in our considered view to settle dispute between the assessee and the Assessing Officer, a reasonable amount of disallowance needs to be estimated. Assessee is a distributor for milk product and also in this line of business, the percentage of profit is very less, we deem it appropriate to direct the Assessing Officer to disallow 4% of cash expenses. Accordingly, the AO is directed to disallow 4% on total cash expenses in excess of prescribed limit. CIT(A) in directing AO to verify the applicability of provisions of Rules 6DD(e) of the I.T. Rules, 1962, on the ground that the CIT(A) does not have any power to set aside the appeal to the AO - We find that the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the assessee for condonation of delay. From the petition filed by the assessee, we find that there is a reasonable cause in not filing appeals within time allowed under the Act and therefore, considering the explanation of the assessee, the delay in filing of appeals for assessment years 2008-09 2013-14 are condoned. 5. The assessee, has more or less filed common grounds of appeal for all the assessment years. Therefore, for the sake of brevity, grounds of appeal filed for assessment year 2008-09 are reproduced as under: The order dated 31.01.2019 of the Learned CIT(A)- 14, Chennai in ITA No.114/C1T-A-14/ 2016-17 for the Assessment year is contrary to facts, opposed to law and untenable. Lack of Jurisdiction. The Learned Assessing Officer erred in reopening the Assessment after 4 years. 2.1 The Notice u/s 148 lacks jurisdiction as there is no fresh material no fresh material available for reopening the assessment and the notice u/s 148 is unsustainable 2.2 Reassessment cannot be made on the issues not covered beyond the reasons recorded for issuing Notice u/s 148. Disallowance of Cash payment on Estimated basis The Ld CIT (A) erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. In so far as balance amount of Rs. 11,73,56,175/-, rejected explanation of the assessee and estimated 10% on total expenditure and made additions of Rs. 1,17,35,617/-. 7. Being aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the ld. CIT(A), the assessee challenged re-opening of assessment on the ground that the assessment has been re-opened on mere change of opinion and also in violation of provisions of section 147 of the Act, because the assessment has been re-opened after a period of four years from the end of the relevant assessment year and the Assessing Officer failed to make out the case of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The assessee had also challenged additions made towards disallowance of cash payment u/s. 40A(3) of the Act, in light of Rule 6DD(e) of I.T. Rules, 1962 and also estimation of 10% disallowance on cash payment, on the ground that disallowance estimated by the Assessing Officer is higher side and unreasonable. 8. The ld. CIT(A), after considering relevant submissions of the assessee and also taken note of various facts re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment has been reopened u/s. 147 of the Act, as per reasons recorded it clearly shows that there is no disclosure of necessary facts for completion of assessment and thus, the CIT(A) has rightly rejected arguments of the assessee on the legal issue and their order should be upheld. The DR, further submitted that in so far as estimation of disallowance of cash expenses, the ld. CIT(A) after considering relevant submissions and also taken note of various facts scaled down estimation to 5% from 10% and thus, there is no reason to give further relief to the assessee. In so far as revenue appeal, the DR further submitted that the CIT(A) does not have powers to remit the matter for further verification to the Assessing Officer and thus, the order of the CIT(A) in so far as disallowance of cash payment u/s. 40A(3) of the Act should be set aside. 11. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. As regards reopening of assessment u/s. 147 of the Act, we find that the reasons recorded for reopening of assessment clearly establishes failure of the assessee to disclose fully and truly all material facts nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee is a distributor for milk product and also in this line of business, the percentage of profit is very less, we deem it appropriate to direct the Assessing Officer to disallow 4% of cash expenses. Accordingly, the Assessing Officer is directed to disallow 4% on total cash expenses in excess of prescribed limit. 13. Coming back to the revenue appeal. The revenue has challenged the findings of the CIT(A) in directing the Assessing Officer to verify the applicability of provisions of Rules 6DD(e) of the I.T. Rules, 1962, on the ground that the CIT(A) does not have any power to set aside the appeal to the Assessing Officer. The revenue further contended that M/s. Tamilnadu Co:- operative Milk Producers Federation Limited, is a separate legal entity and no longer part of the State Government as per the provisions of Rules 6DD(e) of the I.T. Rules, 1962. We find that the ld. CIT(A) in principal, approved the findings of the Assessing Officer on disallowance of cash expenditure in excess of prescribed limit u/s. 40A(3) of the Act, however set aside the issue for the limited purpose of verification of claim of the assessee in light of provisions of Rules 6DD(b) of the I. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he authorities below. The CIT(A) had dismissed appeal filed by the assessee for assessment years 2010-11 2012-13 on technical ground for not appearing for hearing on the date when appeal was posted for hearing. Although, the CIT(A) dismissed appeal filed by the assessee for want of prosecution, but these appeals have been dismissed on technical grounds without discussing the issues on merits. It is a well settled principal of law by the decisions of various courts and tribunals, that in a case where the appellant is not appearing for the hearing, the appellate authorities should dispose off the appeals on merits on the basis of merits available on record. In this case, the CIT(A) dismissed appeal filed by the assessee on technical ground without discussing the issue on merits. Therefore, we are of the considered view that the appeals needs to go back to the file of the CIT(A) to give reasonable opportunity of hearing to the assessee. Thus, we set aside the orders of the CIT(A) for assessment years 2010-11 to 2012-13 and restore the appeals to the file of the CIT(A) for fresh adjudication after providing reasonable opportunity of hearing to the assessee. 19. In the result, appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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