TMI Blog2020 (8) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 30-7-2020 - Shri Laliet Kumar, Judicial Member And Dr. Mitha Lal Meena, Accountant Member For the Appellant : Shri Ravi Agarwal, Advocate For the Respondent : Shri Waseem Arshad, Sr. DR ORDER PER LALIET KUMAR, J.M.: This is an appeal filed by assessee against the order dated 31.10.2018 passed by ld. Commissioner of Income-tax (Appeals)-I, Agra for the assessment year 2008- 09. The grounds raised by assessee read as under : 1. Because proceedings initiated u/s 148 on the basis of investigation report is illegal and bad in law. The AO has not applied his mind to reopening and relied on the findings of the Investigation Wing which is illegal and bad in law. 2. Because maintenance of disallowance of ₹ 36883.00 in truck repair expenses of ₹ 41060.00 totaling to ₹ 77943.00 are the part of the trading expenses of the truck which is already included in the Trading Account while applying the net rate of profit to the receipts of the assessee. Therefore this amount is double addition and deserves to be deleted. 3. Because disallowance of ₹ 52,12,392 under section 40A(3) of the Income tax Act to the one supplier of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me at ₹ 76,48,190/- as against the total income of ₹ 3,01,170/- declared by the assessee. Following three additions were made by the Assessing Officer : (i) Addition of ₹ 11,58,316/- made after rejecting the books of accounts u/s. 145(3) and enhancing the gross profit at the estimated rate of 5%. (ii) Addition of ₹ 9,76,613/- made by making partial disallowance out of truck running expenses, income tax paid and repair and maintenance expenses. (iii) Addition of ₹ 52,12,392/- out of assessee s purchases u/s. 40A(3). 3. At the outset, the ld. DR had submitted that the department has to file the cross objection in this appeal, as the CIT(A) failed to exercise his powers vested in him u/s. 251(1)(a) of the Act. It was submitted that a letter was written by the Sr. DR on 11.03.2020 and the CIT DR/Sr DR , however prior thereto they were on official training to Kanpur and therefore, no formal communication could take place. During the hearing on last date the Sr. DR had sought time to file the Cross objection along with approval of PCIT on record. Today during the hearing it was submitted that the approval had been granted but the CO is requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted by the Act. In the present case, neither there is any cross objection on record nor any application for condonation of delay had been filled by the revenue. The Revenue should be vigilant in prosecuting its right in right earnest within time provided by the Act. More than 8 months have passed after receipt of appeal and there is no good reason to seek further time to file the cross objection. Accordingly, the request of the ld. DR is rejected in this regard. We are in agreement with AR that such kind of vague grounds seeking direction for exercising the power cannot be considered as ground which can be urged in CO. For that we may rely on the ITAT rules and section 253 and 254 of the Act, which provides that the CO can be filled in support of decision of CIT(A) in case the revenue wants to support the order on some other grounds or logic. Further when the AO had not made the additions in the assessment proceedings and assesse was in appeal on limited grounds before the CIT(A) or before the tribunal, then in our view the Revenue cannot be permitted to raise any ground which is incompatible or contrary to the case of AO. For this purpose we may fruitfully rely upon the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid down by Hon'ble Delhi High Court in the case of R.C. Goyal (supra) and in a few other judgments. Finally, vide ground no. 9, the appellant has relied upon certain other judgments in support of its argument that no disallowance under section 40A(3) can be legally made in a case where gross profit was applied after rejecting its books of account. (b) On a perusal of the facts of the case, it is seen that the supplier of the appellant to whom payments were made by the appellant in contravention of the provisions of section 40A(3), namely, Shri Kishan Singh's address is 127/24, L-Block, Juhi, Kanpur, which is very much part of Kanpur city and has close access to banks. In fact the bearer cheques given by the appellant were encashed from banks by the recipient. Provisions of IT Rule 6DD (g), therefore, do not' come into play. (c) It is also observed that the payments have not been made by the appellant through any employee or agent. Bearer cheques have been given to the supplier and those are encashed by him. It may not be out of place to note that in its written submission before me, the appellant has tried to add incorrect facts to the issue by stating that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs CIT (All) 117 ITR 34. (e) The appellant's reliance on the judgment rendered by Hon'ble Delhi High Court in the case of R.C. Goyal (supra), with due respect to it, is misplaced. That judgment has been given in reference to a peculiar set of facts, which are materially different from the ones in the instant case. Similarly, the appellant's argument that when payments made by it are genuine, no disallowance can be made, with due respect to the judicial precedents cited by it, is not acceptable. (f) In respect of its argument that no disallowance can be made in a case where books of account are rejected, the appellant has relied heavily on the decision rendered by the jurisdictional High Court in the case of Banwarilal Bansidhar (supra). The facts of that case are materially different to the ones of appellant's case. In that case, Hon'ble High Court has held affirming the decision of the tribunal, that no disallowance could be made in view of the provisions of section 40A(3) read with rule 6DD(j) of the Income-tax Rules, 1962, as no deduction was allowed to and claimed by the assesses. When the gross profit rate was applied, that would take care of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) of the Act. It was submitted that the assessee cannot be made to suffer twice once in GP addition and other in addition u/s. 40A(3) of the Act. 9. Per contra, ld. DR had drawn our attention to the order of ld. CIT(A) para 8.4 (supra) and it was submitted that no disallowance was made on account of purchases of the assessee and therefore, the decision of Hon ble Delhi High High Court, relied by assessee, in the case of R.C. Goyal vs. CIT, 213 Taxman 305 and other decisions are not applicable. It was further contended by the ld. DR that the Tribunal having co-terminus powers u/s. 255 of the Act should have decided the issue by invoking the enhancement jurisdiction for making enhancement in addition. 10. In rebuttal, the ld. AR of the assessee submitted that the Tribunal is duty bound to decide the issue on the basis of lis before them and has no power to enhance the addition and for that purpose, the ld. AR relied upon the decisions of Hon ble Madras High Court, Delhi High Court and judgment of Hon ble Supreme Court. He has also referred to the recent decision of Hon ble Supreme Court in the matter of Shiv Raj Gupta vs. CIT. 11. We have heard the rival submissions and h ..... 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