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TMI Blog2015 (9) TMI 1764X X X X Extracts X X X X X X X X Extracts X X X X ..... onfirming this addition on the pretext that the appellant paid Rs. 20,000 every day for 14 consecutive days to M/s. Singla Trading Co. even when this was not the case of the AO and the CIT(A) never raised such new issue during appellate proceedings? (ii) That on facts, circumstances and legal position of the case, whether the learned AO was justified in making and the worthy CIT(A) in confirming addition of Rs. 1,00,000 under s. 40A(3) when the appellant never paid any amount in excess of Rs. 20,000 on a single day to M/s. Ess Techno Consultant (P) Ltd. and when payments exceeding Rs. 20,000 are disallowable under s. 40A(3) and not the exact amount of Rs. 20,000? Further, whether the worthy CIT(A) was justified in confirming this addition on the pretext that the appellant paid Rs. 20,000 every day for 5 consecutive days to the party even when this was not the case of the AO and the CIT(A) never raised such new issue during appellate proceedings?" 3. During the course of assessment proceedings, the AO noticed that the assessee has made the payment amounting to Rs. 7,26,574 in cash. As per s. 40A(3) of the Income-tax Act, 1961 (in short 'the Act'), a cash payment exceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artmental Representative relied upon the order of the learned CIT(A). 8. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. We are of the view that the learned CIT(A) has not adjudicated the issue in hand in right perspective. From the list of cash payments made by the assessee as appearing in the order of the AO, we see that there are various payments of amount exactly of Rs. 20,000 totalling Rs. 3,80,000 and the contention of the assessee was that since the language used in s. 40A(3) of the Act is disallowance of the payment in excess of Rs. 20,000, the payment of an amount exactly of Rs. 20,000 does not come under the ambit of s. 40A(3) of the Act. Though the said submission was made before the learned CIT(A), she has not adjudicated the same and tried to make a new case, which was not made by the AO and which was also not confronted to the assessee. In view of this, we restore the issue to the file of the learned CIT(A) to consider the same in the background of the provisions of s. 40A(3) of the Act. 9. The ground No. 3 raised by the assessee reads as under: "3. Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue in hand in right perspective. Therefore, the issue may be sent back to her to readjudicate. 14. The learned Departmental Representative relied upon the orders of the AO and the learned CIT(A). 15. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. On perusal of the order of the learned CIT(A), it is seen that the learned CIT(A) has considered the matter in a very casual manner. The issue was invoking of provisions of s. 40(a)(ia) of the Act, which has nowhere been discussed by her. She has just rejected the submissions of the assessee, however, has herself not given any finding as to the nature of expenses incurred by the assessee and whether the same is exigible to tax deduction at source or not. We, therefore, restore the issue to the file of the learned CIT(A) to adjudicate the same in right perspective. 16. The learned counsel for the assessee preferred not to press ground No. 4(i). In view of this, ground No. 4(i) is dismissed not being pressed. 17. Ground No. 4(ii) of the appeal reads as under: "(ii) That on facts, circumstances and legal position of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent, however, with interest at a prescribed rate. The penalty provisions are provided elsewhere under the law. Therefore, this amount cannot be disallowed under s. 37(1) of the Act. The ground of appeal raised by the assessee is allowed. 23. The ground No. 5 raised by the assessee reads as under: "5. That on facts, circumstances and legal position of the case, whether the learned AO and the worthy CIT(A) were justified in not allowing the claim of set off of Rs. 19,15,005 with sustained additions, when said amount of Rs. 19,15,005 was surrendered at the time of search and further disclosed and taxes paid in the return by the appellant towards miscellaneous discrepancies found or to be found during assessment proceedings. 24. Before the learned CIT(A), the assessee contended that it had surrendered an amount of Rs. 19,15,005 during the course of search under the head 'Miscellaneous discrepancy' apart from other surrenders. It was prayed that the assessee may now be allowed to set off the additions and disallowances made by the AO to be set off under this head of surrender. The learned CIT(A) did not find herself in agreement with the assessee. She was of the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es under the head 'miscellaneous discrepancies'. From the reading of the letter filed by the assessee before the Investigating Officer, it is clear that the surrender has been made under specific heads of income, for example advances to certain persons and also on account of payment to certain persons. However, surrender of Rs. 19,15,005 is made under the head 'miscellaneous discrepancies'. Nowhere during the investigation after the search or also during the assessment proceedings, no fact of any other undisclosed income has come on record. Therefore, it is quite logical to allow the benefit of this surrendered amount to set off the additions and disallowances made by the assessee (sic--AO). Reliance placed by the assessee on the judgment of Hon'ble Delhi High Court in the case of Akme Projects Ltd. (supra) is not out of place. In that case also, it was pointed out by the Court that apart from declaring the discrepancies pointed out, in order to make its offer an honest attempt, offer of some additional amount was made at the time of survey. The Tribunal came to the conclusion that the amount of additions and disallowances made by the AO should be considered to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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