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2015 (7) TMI 777 - ITAT DELHI

2015 (7) TMI 777 - ITAT DELHI - TMI - Legality of notice issued and order passed u/s 154 - AO disallowed cash purchases made at ₹ 33,70,800/- u/s. 40A(3) of the Act which was added to the income of the assessee vide order dated 17.6.2014 passed u/s. 154 - Held that:- We find considerable cogency in the submissions of the assessee’s counsel that assessment order passed under section 143(3) of the Act after considering the relevant material and after appropriate reasoning hence there is no m .....

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Glass Works (2007 (4) TMI 259 - ALLAHABAD HIGH COURT) and T.S. Balaram, ITO, Company Circle-IV, Bombay vs. Volkart Brothers and others [1971 (8) TMI 3 - SUPREME Court] wherein held that “a mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may be conceivably two opinions. A decision on debatable point of law is not a mistake apparent from the record.” - Decided in favour of .....

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bad in law and without jurisdiction. 2. That, in view of the facts and circumstances, the order passed under section 154 of the Act is illegal, bad in law and cannot be justified by any material on record and the CIT(A) has also erred in upholding the same. 3. That CIT(A)/ AO , in view of the facts and circumstances of the case failed to appreciate that the assessment order passed under section 143(3) of the Act after considering the relevant material and after appropriate reasoning hence there .....

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of ₹ 1,47,920/-. 5. The Assessing Officer has, in view of the facts and circumstances of the case, erred on facts and in law, in making addition/disallowance of ₹ 33,70,800/- on account of the violation of the section 40A(3) of the Income Tax Act,1961 and the CIT(A) had also erred in upholding the same. 6. That the CIT(A)/AO failed to appreciate that the amount paid in cash is to run the business in smoothly and it is for business expediency and no disallowances is called for. In an .....

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in ignoring/ not considering the decision of the Jurisdictional High court, even after relying by the assessee that it is squarely applicable to the facts and circumstances of the case. 9. That the Assessing Officer, in view of the facts and circumstances of the case erred on facts and in law in making the ad-hoc addition/ disallowance on estimated basis, which is unjust, arbitrary, unlawful, highly excessive, based on surmises and conjectures and cannot be justified by any material on record. .....

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the principles of natural justice and the same has been passed without affording reasonable and adequate opportunity of being heard. 13. That the interest u/s 234B has been wrongly and illegally charged as the appellant could not have foreseen the disallowances/additions made and could not have included the same in current income for payment of Advance tax. The interest charged under various sections is also wrongly worked out. 14. The appellant craves leave to add, amend, alter and or modify t .....

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, details of which have been reproduced by the AO in the assessment order as under:- (i) Cash Book ₹ 5,90,400/- (ii) Purchase of DAP ₹ 22,35,570/- (iii) Purchase of MOP ₹ 5,44,830/- Total ₹ 33,70,800/- 2.1 Thus as per the amended provisions of section 40A(3) of the Act 100% of such cash purchases at ₹ 33,70,800/- was liable to be added to the income of the assessee. Thus the AO issued notice u/s. 154 of the Act dated 17.1.2013 requiring the assessee to explain as to .....

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goods were purchased were produced for examination and their statements on oath were recorded. The assessee further placed reliance on the decision of Hon ble Allahabad High Court in the case of CIT vs. Banswari Lal Bansidhar 229 ITR 229 (All.). Further, on the point of GP, it was contended by the assessee that the AO at the time of assessment proceedings rejected the account books of the assessee u/s. 145 and increased the GP rate more than what had been shown by the assessee. Thus it was argu .....

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was apparent mistake on the face of record, the AO disallowed cash purchases made at ₹ 33,70,800/- u/s. 40A(3) of the Act which was added to the income of the assessee vide order dated 17.6.2014 passed u/s. 154 of the I.T. Act, 1961. 3. Aggrieved with the aforesaid Order dated 17.6.2013 passed by the AO u/s. 154 of the I.T. Act, assessee appealed before the Ld. CIT(A), who vide impugned order dated 31.3.2014 has dismissed the Appeal of the assessee. 4. Against the aforesaid order dated 31. .....

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in the case of CIT vs. Banwari Lal Bansidhar 229 ITR 299 (All.). To support his contentions, he also filed the copies of the following judgments:- CIT vs. Smt. Santosh Jain 159 Taxman 392 (P&H) - ITO vs. Nardev Kumar Gupta 142 ITD 303 (Jai.) - CIT vs. Gayatri Glass Works 317 ITR 319 (All.) - M/s Mepco Industries Ltd. vs. CIT 319 ITR 208 (SC) - CIT vs. India Cements Ltd. 265 ITR 479 (Mad.) - CIT vs. Sherwani Sugar Syndicate Ltd. 294 ITR 247 (All.) - CIT vs. Lakahni Rubber Udyog Ltd. 312 ITR 1 .....

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ledger account of purchase of DAP and ledger account of purchase of MOP, cash purchases were made in excess of ₹ 20,000/-, details of which have been reproduced by the AO in the assessment order as under:- (i) Cash Book ₹ 5,90,400/- (ii) Purchase of DAP ₹ 22,35,570/- (iii) Purchase of MOP ₹ 5,44,830/- Total ₹ 33,70,800/- 7.1 We further find that as per the AO the amended provisions of section 40A(3) of the Act 100% of such cash purchases at ₹ 33,70,800/- was .....

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eedings all the purchase vouchers were produced before the AO which were verifiable from the books of account. Besides the above, the persons from whom the goods were purchased were produced for examination and their statements on oath were recorded. The assessee further placed reliance on the decision of Hon ble Allahabad High Court in the case of CIT vs. Banswari Lal Bansidhar 229 ITR 229 (All.). Further, on the point of GP, it was contended by the assessee that the AO at the time of assessmen .....

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provisions of section 40A(3) of the Act. The AO also found distinguishable the case law relied upon by the assessee and rejected the same. AO observed that since there was apparent mistake on the face of record, he disallowed cash purchases made at ₹ 33,70,800/- u/s. 40A(3) of the Act which was added to the income of the assessee vide order dated 17.6.2013 passed u/s. 154 of the I.T. Act, 1961 and the same was upheld by the Ld. CIT(A) vide order dated 31.3.2014. 7.2 We find considerable co .....

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vered by the said judgments. We are dealing some of the judgments in the forgoing paragraphs:- 7.3 In the case of CIT vs. Banwari Lal Banshidhar 229 ITR 229 (All), we find that the Hon ble High Court of Allahabad has observed that when the gross profit rate is applied, that would take care of everything and there was no need for the AO to make scrutiny of the amount incurred on the purchases by the assessee. 7.4 In the case of CIT vs. Gayatri Glass Works (2009) 317 ITR 319 (All), we find that th .....

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would virtually amount to review of the order. By dealing this case, the Hon ble High Court while deciding this case, has referred the judgment delivered in the case of CIT vs. Hero Cycles (P) Ltd. etc. (1997) 228 ITR 463 (SC) of the Hon ble Supreme Court of India, wherein the Hon ble Supreme Court of India has held as under:- Rectification under section 154 can only be made when a glaring mistake of fact or law committed by the Officer passing the order becomes apparent from the record. Rectif .....

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