This appeal at the instance of the assessee is directed against CIT(A)’s order dated 28.06.2019. The relevant assessment year is 2014-2015. The order of the CIT(A) arises out of the order of the Assessing Officer passed u/s 154 of the I.T.Act.
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCHES “SMC-C”, BANGALORE
Before Shri George George K, Judicial Member
ITA No.1862/Bang/2019 : Asst.Year 2014-2015
M/s.Unity Industries No.60, Byraveshwara Industrial Area, Heggana Halli,Vishwaneedam Post Bangalore – 560 091.PAN : AADFU6822F.
The Income Tax Officer Ward 6(2)(3) Bengaluru.
Appellant by : Sri.R.E.Balasubramanyam
Respondent by : Sri.Ganesh R.Ghale,
Standing Counsel for Department
Date of Hearing : 17.11.2020
Date of : Pronouncement : 18.11.2020
O R D E R
This appeal at the instance of the assessee is directed against CIT(A)’s order dated 28.06.2019. The relevant assessment year is 2014-2015. The order of the CIT(A) arisesout of the order of the Assessing Officer passed u/s 154 of the I.T.Act.
2. The grounds raised read as follow:-
The Appellant objects to the impugned order of the Ld CIT (A) on the grounds
1. That the impugned order of the Ld CIT(A) is opposed to facts and law of the case insofar as it is prejudicial to the interest of the Appellant.
2. That the Ld CIT(A) erred in confirming the order of rectification which is invalid and bad in law inasmuch as the rectification is carried out on the basis of a mere change in opinion by the Ld AO in respect of issues that were alreadyscrutinized in the order passed under section 143(3) and the same could not have been a subject matter of rectification under section 154.
3. That without prejudice to Ground no 2, the Appellant also objects to the impugned order for the following reasons that.
a)The Ld CIT(A) and the Ld AO have failed to appreciate the fact that the cash payments are made due to commercial expediency which were beyond the control of the Appellant.
b)The Ld CIT(A) and the Ld AO erred in not following the judicial precedents wherein it is consistently held that the expenses cannot be disallowed under section 40(A)(3) if the genuineness of the expenditure were proved.
The Appellant prays for leave to add, modify, delete or introduce additional Grounds of Appeal at any time before the Appeal is disposed off.
Based on these and such other grounds that may be adduced from time to time, the Appellant requests the Honourable Income Tax Appellate Tribunal to consider the petition in the light of principles of justice and cancel the addition made by the Assessing Officer.”
3. The brief facts of the case are as follow:
The assessee is a partnership firm engaged in the business of manufacturing and fabrication of machine components. The assessment u/s 143(3) was completed vide order dated 30.08.2016. Subsequently, the A.O. issued notice u/s 154 of the I.T.Act for the reason that the assessee had made cash transaction amounting to Rs.1,25,738 during the relevant assessment year in contravention of provisions of section 40A(3) of the I.T.Act. The assessee submitted objections vide letter dated 05.02.2018 to the notice issued u/s 154 of the I.T.Act. It was submitted that the assessee firm commenced its operation in August 2013 and the bank account of the assessee firm was not active. It was stated that the assessee had some business orders in the meanwhile and for purchase of raw material out of commercial expediency had to make cash payments, since the assessee was new in the field. The objections raised by the assessee was rejected and the A.O. passed an order u/s 154 of the I.T.Act (order dated 17.07.2018) by adding a sum of Rs.1,25,738 to the total income by invoking the provisions of section 40A(3) of the I.T.Act.
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