×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
11-03-2019, V Bird Shipping Agencies, Section 40A(3), Tribunal Mumbai
This appeal, filed by assessee, being ITA No. 5117/Mum/2017, is directed against appellate order dated 27.06.2017 in Appeal No. CIT(A)-3/IT-157/DCIT-1(3)(2)/16-17, passed by learned Commissioner of Income Tax (Appeals)-3, Mumbai (hereinafter called “the CIT(A)”), for assessment year(AY) 2014-15, the appellate proceedings had arisen before learned CIT(A) from the assessment order dated 30.12.2016 passed by learned Assessing Officer (hereinafter called “the AO”) u/s 143(3) of the Income-tax Act, 1961 (hereinafter called “the Act”) for AY 2014-15.
2. The grounds of appeal raised by the Assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called “the tribunal”) read as under:-
“CIT(A) erred in partly allowing of additions done by Ld. AO u/s 40A(3).”
3.The bried facts of the case are that the assessee is engaged in the business of shipping, logistics & freight forwarders. During the course of assessment proceedings conducted by the AO u/s 143(3) read with Section 143(2) of the 1961 Act , it was observed by the AO that the assessee has incurred cash expenditure totalling to Rs. 60,11,502/- as per date wise list submitted by assessee. The assessee was asked by the AO to produce bills/invoices for these cash expenses. The assessee submitted zerox copies of part of self made cash vouchers totalling to Rs. 12,26,757/- . For rest of the cash expenses, the assessee submitted summary of cash vouchers and confirmations vide Annexure-3, which is reproduced hereunder:-
3.2 Thus, the assessee claimed before the AO to have submitted details of cash expenses of Rs. 53,16,826/- out of total cash expenses of Rs. 60,11,502/- . For the balance cash expenses, it was submitted that some files are misplaced and the assessee is trying to collate the details . The letter furnished by the assessee is reproduced here under:-
3.3 The AO disallowed cash expenses to the tune of Rs. 47,93,956/-, out of which cash expenses to the tune of Rs. 37,92,591/- were disallowed being in excess of Rs. 20,000/- infringing Section 40A(3) of the 1961 Act for which only zerox copies of self made vouchers were furnished by the assessee before the AO. The assessee did not produced bills/invoices for the same and as per the AO it infringed Section 40A(3) of the 1961 Act as cash expenses exceeded Rs. 20000/. The assessee also did not produced books of accounts before the AO. The details of disallowance of cash expenses of Rs. 37,92,591/- by the AO vide assessment order dated 30.12.2016 passed u/s 143(3) of the 1961 Act by invoking provisions of Section 40A(3) of the 1961 Act, is reproduced hereunder:-
3.4 There were other reasons for making further disallowances by AO vide assessment order dated 30.12.2016 passed u/s 143(3) of the 1961 Act towards cash expenses but since assessee got relief from Ld. CIT(A) on those account and it is not shown to us by learned DR that the Revenue has filed an appeal against part relief granted by learned CIT(A) , we have not discussed the same in this order.
4. Aggrieved by an assessment framed by the AO vide assessment order dated 30.12.2016 passed u/s 143(3) of the 1961 Act, the assessee filed first appeal before learned CIT(A). The Ld. CIT(A) was pleased to confirm the disallowance of cash expenses to the tune of Rs. 37,92,591/- , vide appellate order dated 27.06.2017 by holding as under:-
“ 6.2 I have carefully considered the rival submissions and facts of the case. The undisputed fact in the case is that the appellant has made cash expenditure amounting to Rs. 60,11,502/-, which require certain norms to be fulfilled as per the provisions of Section 40A(3) and other Sections of the IT Act. The appellant has not produced sufficient evidence and the convincing reasons to incur a cash payment which is not allowable as per the IT Act, to certain extent. In view of the same, payment of Rs. 37,92,591/- in excess of Rs. 20,000/- made in cash in violation of section 40A(3) of the IT Act, need to be disallowed. Therefore, out of the total disallowance of Rs. 47,93,956/- an amount of Rs. 37,92,591/- is confirmed and thus appellant get a relief of Rs. 10,01,365/-. Hence, the Ground no. 1 is partly allowed.”
4.2. Before Ld. CIT(A) , the assessee failed to justify why disallowance u/s. 40A(3) of the 1961 Act be not sustained. The assessee contended that these cash expenses are fractional amount vis-a-vis turnover which was rejected by learned CIT(A). There is a concurrent finding by both the authorities below that the assessee had infringed provisions of Section 40A(3) of the 1961 Act and cash payment exceeding Rs. 20000/- were paid towards expenses in violation of provisions of Section 40A(3) of the 1961 Act.
5. Now, the assessee is aggrieved by sustaining of additions of cash expenses to the tune of Rs. 37,92,591/- exceeding Rs. 20000/- in violation of Section 40A(3) by learned CIT(A) and the assessee has filed an appeal before the tribunal The case of the assessee was fixed for hearing on 19.11.2018, wherein the Ld. Counsel for the assessee filed a letter before the tribunal and made a request for adjournment , which was granted by the Bench to the assessee and the appeal of the assessee was fixed for hearing on 20.11.2018. None appeared on behalf of the assessee on 20.11.2018 when the appeal was called for hearing before the Bench and the appeal was adjourned and fixed by tribunal for hearing on 19.12.2018 . When the appeal was again called for hearing before the Bench on 19.12.2018 , again none appeared on behalf of the assessee before the tribunal and the tribunal was again pleased to adjourn the hearing to 24.01.2019 . When again the appeal was called for hearing before the Bench on 24.01.2019 , none appeared on behalf of the assessee and tribunal was again pleased to grant one more opportunity to the assessee as a last opportunity and the appeal was adjourn for hearing to 11.03.2019. When this appeal was called for hearing on 11.03.2019, again none appeared on behalf of the assessee despite last opportunity granted to the assessee by the