TMI Blog2017 (11) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... AOP is not explained by the AO, while considering the same for violation of Section 40A(3). Moreover, regarding the so called cash payments under the head construction etc., the same were verified by the AO in the earlier scrutiny assessment and disallowed the entire amount of vouchers which were defective. How the same also can be considered for disallowance u/s. 40A(3) is also not explainable. The earlier assessment order of AO indicates that he has considered the facts and made assessment disallowing certain defective vouchers. Thus, the contentions of present AO while reopening assessment is devoid of merit. The basis of reopening is the record only and there is no failure on the part of assessee. Moreover, not only during survey but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 40(A)(3) without appreciating the fact that the site was not purchased by the assessee and that no cash payment made to a single party has exceeded ₹ 20000/ - per day, towards purchase of materials. 4. The learned CIT(A) erred in confirming levy of interest u/s. 234-B in reassessment order though it should not have been as there was no interest in the original order. 5. The learned CIT(A) erred in confirming levy of interest u/s. 234-C in the reassessment order though no such interest is levied in the original order. 6. Any other ground that may be urged at the time of hearing . 3. Briefly stated, assessee, an AOP filed return of income for the AY. 2006-07 on 30-10-2006 admitting total income of ₹ 17,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee contended that the provisions of Section 40A(3) are not attracted and further reopening of assessment u/s. 147 is not as per the provisions of law. The detailed submissions and case law relied were meticulously extracted by the Ld.CIT(A) in his order from page No. 6 to 11, but unfortunately, Ld.CIT(A) did not adjudicate any of the contentions and rejected them summarily by stating as under: 5.2. 1 have gone through the AO's observations and AR s contentions. It is seen from the facts that the AO has disallowed an amount of ₹ 25,19,660/- stating that the assessee has violated the Provisions of Sec. 40A(3) of the, Act by making total cash payments of ₹ 1,25,98,300/- and therefore, 20% of the same is to be disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not used by the AO in the assessment u/s. 143(3) originally. So, the reopening u/s. 147 is as per the facts and law. 8. I have considered the rival contentions and facts placed on record. It is a fact that survey operations were conducted during the financial year itself and the AO came to know that the AOP was doing business from 01-01-2005 and returns were yet to be filed. It is on record that the members purchased the site from their own sources in their individual capacity and formed the AOP to do business. How the payments are to be considered in the hands of the AOP is not explained by the AO, while considering the same for violation of Section 40A(3). Moreover, regarding the so called cash payments under the head construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 5,98,300/- was paid by way of Cash towards bricks, sand, etc., . ( 3) From the above payment made by the assessee, it is clear that the assessee violated provisions of sec. 40A(3) of the Act according to which the disallowance is required to be made towards under assessment of income to the tune of ₹ 25, 19,660/- (20% of the cash payments of ₹ 1,20,00,000 + 5,98,300= 12598300): and be brought to tax. This information was neither furnished in the submissions made by the assessee during the course of assessment proceedings nor brought to the notice of the AO. Further, on verification of the 3CD report enclosed to the ROI, against col. No. 17(h) which is meant for the disallowance under sec. 40A(3), it was mentioned as Ni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income charg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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