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2022 (5) TMI 507 - AT - Income TaxPayment of expenses in cash - Addition being cash payment in contravention to the provisions of section 40A(3) - CIT(A) in appeal proceedings analyzed the issue in detail and has agreed to assessee's contention that the ld. A.O. has not pointed out any specific payment exceeding Rs. 20,000/- in contravention of section 40A(3) - HELD THAT:- In the case of ACIT v. Shree Shanmughar Gunny Stores [1982 (10) TMI 14 - MADRAS HIGH COURT] 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 assessee who has provided detailed branch-wise breakup of expenses incurred in cash, that if separate invoices have 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 on account of change of opinion or not? - A perusal of original assessment order dated 23/01/2013 does not seem to indicate that the Ld. AO has applied his mind to the issue of disallowance on account of cash payment in excess of Rs. 20,000/- u/s. 40A(3) of the Act. The assessee has placed reliance on questionnaire dated 01-04-2013 issued at the time of original assessment. However, a perusal of the same reveals that the said questionnaire is a general questionnaire and no specific query with regard to details of cash payment in relation to disallowance u/s. 40A(3) of the Act was specifically called for. Moreover, the assessee has not brought on record any submission filed by the assessee before the Ld. AO justifying payments in cash exceeding the specified limit u/s. 40A(3) of the Act. Therefore, from facts it is seen that Ld. AO has not applied his mind to the issue of disallowance u/s. 40A(3) of the Act. Therefore, this is not a case of change in opinion as averred by the assessee. Whether AO has erred both on facts and in law by passing order u/s. 143(3) r.w.s 147 of the Act, without providing reasons recorded to the assessee specifically asked for during the time of re assessment proceedings? - A perusal of assessee's facts reveals that he neither sought reason for re-opening of case on receipt of notice initiating re-assessment proceedings, nor did he object to reopening of reassessment proceedings. The reasons were sought almost two months after reply on merits was filed by the assessee and that too just 10 days before the Ld. AO completed the reassessment proceedings vide order dated 24-09-2015. We therefore, find no merit in Cross Objection No. 4 and the same is hereby dismissed.
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