TMI Blog2014 (2) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... ord in the assessment order regarding denial of explanation towards the payment made to OM Advertising - The mistake was apparent and the AO was supposed to rectify it while rectifying the other mistake pointed out in the application - The AO is directed to allow the same – Decided partly in favour of Assessee. Sustainability of Penalty for concealment u/s 271(1)(c) of the Act - Disallowance u/s 40A(3) of the Act – Held that:- There was mistake apparent in the order of the AO in not accepting the payment made to OM Advertising through an account payee cheque in support of which bank statement was also furnished before the AO - Without verifying this explanation as to whether 5.4.2008 was Saturday or not cannot be arrived at a conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was submitted alongwith the application. Regarding the payment made to Timber merchant it was submitted that when the payment made on 5.4.2008 it was Saturday and bank was also closed at 12.30 pm. The timber merchant was not agreeing to sell timber to the assesee without having cash or demand draft. The only option left with the assessee at that time was to pay by cash or demand draft could not be made due to end of the closure of bank hour that day. Likewise on 7.5.2008 payment of Rs. 22,000/- was made to Shri S.K. Singh, an employee of the assessee, as his wife was hospitalised in nursing home and he was in urgent need of money. He submitted further that on 5.8.2008 payment of Rs. 30,000/- was given to Shri Ghanshyam who has to distrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew that non consideration of the same was mistake apparent from record in the order passed u/s 154 of the Act by the AO. In the case of Mahavir Timber to whom payment of Rs. 25,965/- and Rs. 26,770/- on 5.4.2008 were made the submission of assessee before us remained that payment was mad as bank was closed by 12.30 p.m. as the date was Saturday and the said Timber merchant was insisting for cash payment or payment through draft. We do not find that in the application u/s 154 of the Act made before the AO such explanation was made before the AO or any evidence was filed in support to this explanation. The first appellate authority to this extent has thus rightly approved the action of the AO in this regard. The Ld. CIT(A) was however not jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -. Under these facts and circumstances when the provisions of section 40A (3) must not be read in isolation or exclusion of Rule 6DD as an established position, there was no reason to arrive at a conclusion that the disallowance was due to concealment of particulars of income or furnishing inaccurate was due to concealment of particulars of income or furnishing inaccurate particulars thereof on the part of the assessee to attract penal provisions. He cited several decisions those relied before the Ld. CIT(A) including the decision of Hon'ble Supreme Court in the case of CIT vs. Reliance Petro Products 322 ITR 158 (SC) holding that merely because the assessee had claimed the expenditure, which claim was not accepted or was not acceptable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee regarding the payment made to OM Advertising and Mahaveer Timber explanation of which has not been accepted by the AO. We however mentioned over here that in the above appeal preferred by the assessee against the disallowance made on account of payments to these parties, we have held that there was mistake apparent in the order of the AO in not accepting the payment made to OM Advertising through an account payee cheque in support of which bank statement was also furnished before the AO. The explanation of the assessee regarding payment made to Mahaveer Timber remained that on 5.4.2008 when an amount of Rs. 25,965/- and Rs. 26,770/- were paid it was Saturday and banking hour was restricted till 12.30 p m and the timber merchant w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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