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2022 (5) TMI 1527 - ITAT AHMEDABADReopening of assessment u/s 147 - maintainability of the proceeding initiated u/s 147 - change of opinion - Addition u/s 40A(3) - HELD THAT:- The power of the Ld. AO of reopening of assessment can be exercised only with the availability of “tangible material”. But we repeat that we do not find any tangible material in possession of the Ld. AO which could lead to the reason to believe that payment made by the assessee is in contravention to the provision of Section 40A(3) of the Act and further to come to a conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief culminating into reopening of assessment u/s 147 - The case in hand is nothing but mere change of opinion. Thus, respectfully relying upon the ratio laid down by Kelvinator of India Ltd. [2010 (1) TMI 11 - SUPREME COURT] in the absence of any tangible material the reopening of assessment is found to be not sustainable in law and thus hereby quashed. Disallowance u/s 40A(3) - purchase of livestock made by the assessee in cash from shepherd (farmer) on the count that such payment has been made exceeding Rs. 20,000/- in a day to the person(s) in violation of the provision - absence of confirmation to show that payments are covered under Rule 6DD of the I. T. Rules, 1962 - HELD THAT:- When the word livestock clearly appears in exception clause in Rule 6DDE(ii) regarding of any circular is not required, as of the opinion formed by the Ld. CIT(A). According to the clarification the word ‘produce of animal husbandry’ includes ‘livestock and meat’. Once the business of the assessee of livestock has been confirmed and approved by the Revenue as per the conditions specified in Para 4 of the Circular the appellant is not required to fulfill the conditions specified in the Circular which is applicable to the producer of meat and not in case of trader of livestock and therefore, the case of the assessee has been found squarely covered Rule 6DD and consequently no addition is found to be warranted. Decided against revenue. Disallowance of expenses - AO disallowed 1/5th of the total expenditure which was restricted on estimated basis to Rs. 5 lakhs by the CIT(A) in appeal preferred by the assessee - HELD THAT:- CIT(A) came to a finding that since the Ld. AO has made disallowance pointing out no specific defects in the books of accounts or any document submitted during the assessment proceeding, based on the facts and reasoning, the huge disallowance of 1/5th of the total expenditure as made by the Ld. AO found to be unsustainable. We are also in agreement with the view taken by the Ld. CIT(A) in finding the expenditure reasonable taking into consideration the turnover and the dynamic unorganized trade involved in assessee’s case and therefore, estimated disallowance of Rs. 5 lakhs according to us is just and proper for the reason already reflected in the order passed by Ld. CIT(A) without any ambiguity so as to warrant interference. This ground of appeal preferred by the Revenue is, thus, dismissed.
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