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TMI Blog2022 (5) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has raised following grounds in the Cross Objection:- "1. The appeal filed by the Ld. AO should not be admitted on account of low tax effect as the Ld. CIT(A) has decided the appeal only on merit of the case not on any issues as are specified in para 10 of the Circular No. 03 of 2018 dated 11.07.2018. Accordingly, Ld. AO has taken adverse advantage of para 10 of Circular No. 03 of 2018 that should not be allowed. 2. The learned AO has erred both on facts and in law by initiating reassessment proceedings u/s. 147 of the Act, on account of merely audit objection only, which is not permissible in the eyes of Law. Later on Ld. CIT(A) also erred by not giving his findings on the legal issue that reopening of assessment proceedings can be initiated only on Audit objection or not? 3. The learned AO has erred both on facts and in law by initiating reassessment proceedings u/s. 147 of the Act, on account of change of opinion. Later on, Ld. CIT(A) also erred by not giving his findings on the legal issue that reopening of assessment proceedings can be initiated on account of change of opinion or not? 4. The learned AO has erred both on facts and in law by passing order u/s. 143( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owed and added to the total income of the Assessee. The Penalty proceedings are initiated u/s. 271(1)(c) r.w.s 274 of the I.T. Act for concealment of income by furnishing inaccurate particulars of income on this issue." 5. The assessee filed an appeal before the ld. CIT(A), who allowed the assessee's appeal by holding that the ld. A.O. has not pointed out any payment made to any party exceeding Rs. 20,000/-. The ld. CIT(A) observed as under while passing the order:- "5. Before me, the appellant has filed a paper book in which the derails of payments made at Baroda office, Surat office and Ahmedabad office were summarized. No payment to single party in these transactions is above Rs. 20,000/-. These details are certified to be filed before the Assessing Officer. The appellant has also produced the corresponding vouchers before me, which were test checked. It was also pointed out by the appellant that Ahmedabad office in the case of 'Laxmi Offset', only part payment was made to this party. Therefore, the amount entered in the bill was not matching with the payment. He further reiterated that no payment to single party exceeded Rs. 20,000/-. No such payment has been als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o M/s. Laxmi Offset on 22/04/2010. The assessee has given a bifurcation that this payment consists of various charges being separately paid to various parties for separate works carried out by them, and aggregate of each payment to a single party does not exceed Rs. 20,000/- in a single day. However, from records, it is unclear whether separate invoices were raised by the respective parties (as given in bifurcation given in 18 to 20 of Paper-Book) or whether payments of entire sum of Rs. 44,220/- was made to a single party M/s. Laxmi Offset on a single day on 22/04/2010 under a consolidated invoice raised by the latter. The assessee has not furnished any supporting vouchers or invoices raised by the various parties against which payments have been made. Similar instances have been found in respect of various other payments appearing to M/s. Laxmi Offset on 23/05/2010 (Rs. 42,410/-) and again on 23/07/2010 (Rs. 47,310/-) and also to various other parties like M/s. Arihant Printing Press (Rs. 29,420/-) on 22/09/2010 for its Surat branch. The Counsel for the assessee has also submitted that vouchers were produced before Ld. CIT(A) on test check basis and Ld. CIT(A) also recorded due s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made. Similar payments to various parties have also been observed from the Chart furnished by the assessee at pages 18 to 20 of the paper book containing branch wise details of printing expenses. In the case of ACIT v. Shree Shanmughar Gunny Stores 146 ITR 600 (Mad), it was held that a single payment exceeding the specified amount made to a party would be covered by the sub-section, though it relates to different items of expenditure. The assessee has submitted before Ld. AO that assessee settles account with printer, once or twice a month as per outstanding amount. However, payments have been made to different parties as per their separate invoices raised by them and no payment is in excess of limit specified u/s. 40A(3) of the Act. We are therefore in agreement with the Ld. Counsel for the assessee who has provided detailed branch-wise breakup of expenses incurred in cash, that if separate invoices have been raised in respect of each payment by various parties and payment on a single day to a party does not exceed Rs. 20,000/- then there is no reason to disturb the findings of the Ld. CIT(A). We therefore restore the case to the file of Ld. AO with a direction for verification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the eyes of Law. Later on Ld. CIT(A) also erred by not giving his findings on the legal issue that reopening of assessment proceedings can be initiated only on Audit objection or not. 12.1. We would like to place reliance on the decision of ITAT Hyderabad in the case of ITO v. Mayuri Construction ITA No. 1740/Hyd/2018, wherein the ITAT held that reopening based on Audit objection is valid if cash payments above Rs. 20000 has escaped scrutiny. Moreover, we note that from reasons recorded, Ld. AO has also independently applied his mind to the issue, while initiating re-assessment proceedings. 13. In the result, Cross Objection No. 2 of the assessee is dismissed. 14. Cross Objection No. 3. The learned AO has erred both on facts and in law by initiating re-assessment proceedings u/s. 147 of the Act, on account of change of opinion. Later on, Ld. CIT(A) also erred by not giving his findings on the legal issue that reopening of assessment proceedings can be initiated on account of change of opinion or not? 14.1. A perusal of original assessment order dated 23/01/2013 does not seem to indicate that the Ld. AO has applied his mind to the issue of disallowance on account of cash pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 148 of the Act seeking reopening of assessment, which is reproduced below for reference: We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the Assessing Officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years. 16.2. A perusal of assessee's facts reveals that he neither sought reason for re-opening of case on receipt of notice initiating re-assessment proceedings, nor did he object to reopening of reassessment proceedings. The reasons were sought almost two months after reply on merits was filed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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