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TMI Blog2020 (1) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... besides business income of Rs. 1,70,304/-. The petitioner got his firm's accounts audited with net profit of Rs. 1,61,012/- showing @ 2.00% and gross profit of Rs. 8,67,837/- being 44.33% of the gross receipt. 4. It has been further submitted on behalf of petitioner that he disclosed about the advance given to supplier's account as well as copy of the account of M/s Jalan Synthetics, Varanasi before the assessing authority which clearly demonstrated that on various dates the amount of payment has been deposited by the petitioner in UBI, Varanasi bank on their instructions. It has further been contended that the assessing authority while passing the assessment order for the assessment year 2008- 09, did not raise any objection relating to the aggregate amount of Rs. 3,40,000/- deposited on various dates in the bank account of M/s Jalan Synthetics. 5. The assessment proceedings were completed in exercise of power under Section 143(3) of the Act, 1961 on the income of Rs. 2,80,004/- by order dated 10.11.2010 and giving appeal effect it was revised at Rs. 1,99,804/-. 6. The petitioner received a notice dated 30.03.2013, issued under Section 148 of the Act, 1961, stating therein that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 40A(3) of the Act, 1961. It was within the competence and jurisdiction of the authority to reopen the assessment under Section 148 of the Act, 1961 and therefore up held the order passed by the assessing authority. 11. Assailing the order of the Principal Commissioner, Income Tax, Gorakhpur, the petitioner has urged that the revenue has misinterpreted the provisions of Section 40A(3) of the Act and Rule 6DD of the Rules, 1962 and that the amount of Rs. 3,40,000/-, deposited on various dates in the bank account of M/s Jalan Synthetics, would be covered under Rule 6DD(c)(v) of the Rules, 1962 as the same has been done by use of "electronic clearing system" through the Bank. It is further submitted that there was no new information in possession of respondent no. 2 for invoking reassessment under Section 147 of the Act, 1961, as the documents on the basis of which re-assessment has taken place, were already on record at the time of original assessment and same can not be converted as fresh information in the course of examination by the audit party. 12. Sri Praveen Kumar, learned counsel for the respondents on the other hand has submitted that scope of Section 264 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared that inadmissible expenses under Section 40A(3) of the Act read with Rule 6DD of the Rules, 1962 were nil and the same was also mentioned in the audit report. The assessing authority having no reason to disbelieve the aforesaid declaration made by the assessee, which was subsequently reopened in exercise of powers contained in Section 148 of the Act, 1947. The assessing authority, after giving opportunity of hearing to the assessee has made re-assessment by means of order dated 14.03.2014 and added Rs. 3,40,000/- in the income of the assessee. 18. The application was preferred by the petitioner under Section 264 of the Act, 1961, against re-assessment proceedings and the impugned order passed by the Principal Commissioner, Income Tax also mentions that the assessee has filed application only against the order of assessment. 19. It seems that the issue pertaining to the validity of the order under Section 147 of the Act, 1961 was not raised by the assesseee in his application and his only grievance was with regard to the re-assessment order. In para 22 of the writ petition the petitioner has stated that he is aggrieved by the re-assessment order passed under Section 148/143(3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment from any account in a bank to any other account in that or any other bank; (iv) a bill of exchange made payable only to a bank; (v) the use of electronic clearing system through a bank account; (vi) a credit card; (vii) a debit card. .................." 22. Initially Section 40A(3) of the Act, 1961 which requires payment in respect of expenses which exceed Rs. 2500/- to be made by means of crossed cheque or crossed bank draft, on failure to do so, payment made were disallowed in computation of income. In order to remove hardship to smaller assessees the ceiling limit was increased to Rs. 10,000/- and later on it was increased to Rs. 20,000/- by means of Finance Act, 2017 which was made effective on 01.04.2018. Section 40A(3) of the Act, 1961, has a non obstantive clause which has over riding provision. It operates inspite of any thing to the contrary contained in any other provision of the Act, 1961 relating to computation of income under the head "profits and gains of business or profession", the Legislature as thus made it clear that provisions of Section 40A of the Act, 1961 will apply in place of other contrary provisions of this Act relating to computation of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not lead any evidence to show that he had deposited the amount on the instructions of M/s Jalan Synthetics or due to any business exigency. In absence of such evidence, the assessing authority rightly denied the benefit of exemption to the petitioner. 27. The impugned order dated 19.01.2016, passed by the Principal Commissioner, Income Tax has considered the reply given by the petitioner and has concluded that in respect to the transfer of funds made by the petitioner, benefit of Rule 6DD of the Rules, 1962 is not attracted and therefore computation made by the assessing authority has been up held. 28. The jurisdiction of writ Court in exercise of jurisdiction under Article 226 of the Constitution of India is limited to examining the decision making process and not the decision itself. This position of law has been constantly reiterated by the Hon'ble Apex Court in its various pronouncements. The Apex Court in its recent judgment in the case of Municipal Council, Neemuch v. Mahadeo Real Estate, (2019) 10 SCC 738, has observed as under : "13. In the present case, the learned Judges of the Division Bench have arrived at a finding that such a sanction was, in fact, granted. We w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision-maker is vitiated by irrationality and that too on the principle of "Wednesbury unreasonableness" or unless it is found that there has been a procedural impropriety in the decision-making process, it would not be permissible for the High Court to interfere in the decision-making process. It is also equally well settled that it is not permissible for the Court to examine the validity of the decision but this Court can examine only the correctness of the decision-making process." 29. Applying the above principles to the facts of the present case, it is seen that the reassessment proceedings were initiated on account of the fact that it was discovered that the assessee had misrepresented in his return with regard to the payments made to M/s Jalan Synthetics of Rs. 3,40,000/- in cash which were deposited in their bank account and such a transfer was not admissible in the light of provisions of Section 40A(3) of the Act and Rule 6DD of the Rules, 1962, and therefore, in the reassessment proceedings the said amount was added to the income of the assessee. 30. The reassessment order was assailed by moving an application under Section 264 of the Act, 1961. The assessing auth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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