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TMI Blog2025 (5) TMI 1574X X X X Extracts X X X X X X X X Extracts X X X X ..... 015-2016. 2. The solitary issue that is raised is whether the CIT(A) has erred in upholding the addition of Rs. 6,55,605 u/s. 40A(3) of the Act made by the Assessing Officer (hereinafter "the AO") in an order passed u/s. 154 of the Act. 3. Brief facts of the case are as follows: The assessee is an individual. The assessee runs a proprietory concern by the name Rocky Transport and Crane Services. For the assessment year 2015-2016, the return of income was filed u/s. 139(4) of the Act on 04.12.2015 declaring total income of Rs. 49,02,700. The assessment was selected for complete scrutiny and assessment was passed u/s. 143(3) of the Act on 12.12.2017 accepting the returned income declared by the assessee. 4. Thereafter, the AO passed an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an opportunity for a personal hearing, as required by the National Faceless Appeal Scheme 2021 (S.O. 5429 (E), Notification No. 139/2021/F.No 370142/66/2021- TPL), dated December 28, 2021. This was despite the appellant's request in the response dated 12-12-2023, in the CBDT Portal as per acknowledgement no. 550120841121223. 3. The learned Commissioner of Income Tax (Appeals) grossly erred in upholding the addition of Rs. 6,55,650/- made by the Ld. Assessing Authority under section 154 of the Income Tax Act in the absence of a mistake apparent on records in the proceedings under section 143(3) of the Income Tax Act dated 12-12-2017. 4. The learned Commissioner of Income Tax (Appeals) should have understood that the payments for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the matters applicable in this case for the reason there is no mistake apparent on record in respect of Rs. 6,55,650/- paid by the assessee by cash for the purchase of the capital assets and against which the appellant did not claim a deduction in the computation of taxable income. The Ld. Commissioner of Income Tax (Appeals) should have held that the provisions of section 154 invoked by the Ld. Assessing Authority is legally not sustainable. 6. The Hon. Commissioner of Income Tax (Appeals) should have accepted that the provisions of section 40A(3) are applicable only to the extent of disallowance of such expenditure which is otherwise allowable as deduction in the computation of profits and gains from business or profession computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.04.2018, namely, 2nd proviso to sec.43(1) of the Act. 8. The learned Departmental Representative supported the orders of the AO and the CIT(A). 9. We have heard rival submissions and perused the material on record. During the relevant assessment year 2015-2016, the assessee purchased capital assets for an aggregate amount of Rs. 6,55,650. The details of the same are as under:- S. No. Date Name of the person/entity to whom the payment was given Description of the capital asset purchased Whether any expenditure was claimed as a deduction in the P&L Amount (Rs.) 1. 04.04.2014 Lulu Connect Air Conditioner Nil 27,000.00 2. 30.06.2014 Mobile Zone Mobile Phone Nil 20,300.00 3. 11.07.2014 Nippon Motor Corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the existing provisions of the Act, revenue expenditure incurred in cash exceeding certain monetary threshold is not allowable as per sub-section (3) of section 40A of the Act except in specified circumstances as referred to in Rule 6DD of the Income-tax Rules, 1962. However, there is no provision to disallow the capital expenditure incurred in cash. Further, section 35AD of the Act, inter-alia provides for investment linked deduction on the amount capital expenditure incurred, wholly or exclusively for the purposes of business, during the previous year for a specified business except capital expenditure incurred for acquisition of any land or goodwill or financial instrument. In order to discourage cash transactions even for capital e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee cheque drawn on a bank or an account payee bank draft or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], exceeds ten thousand rupees, such expenditure shall be ignored for the purposes of determination of actual cost.]" 13. Before concluding, it is to be mentioned that the CIT(A) in the impugned order at para 5.7 and 5.11 had relied upon various judicial pronouncements in support of his conclusion that sec.40A(3) disallowance is applicable to capital expenditure also. On perusal of the judicial pronouncements relied upon by the CIT(A) in the impugned order, we find the same relates to purchase value of stock-in-trade, which will have to be taken into account while de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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