Sunny Enterprise, Surat vs Assessee

अपीलाथ!/ (Appellant) "#यथ!/ (Respondent)

Assessee by : Shri Saurabhai Patel Revenue by : Shri Nimesh Yadav, Sr.DR

सन ु वाई क तार ख/ Dateof Hearing : 08/06/2015 घोषणा क तार ख / Date of Pronouncement: 12/06/2015 आदे श/O R D E R

PER N.S. SAINI, ACCOUNTANT MEMBER: This an appeal filed by

the assessee against order of the CIT(A)-II, Surat dated 6.7.2011 for Asstt.Year 2009-09.

2. The assessee has raised the followings of appeal.

"1. The earning addition of Rs.28,00,000/- by the AO in the total income of assessee was not good practice of assessment judgment as a simple mistake of assessee in business.

2. The earning addition of Rs.28,00,000/- in the total income was not relation in business income of assessee as a real income.

3. This assessment done by the Assessing Officer are not real punishment to assessee.

4. The earning addition of Rs.28,00,000/- in the total income of assessee in A. Y.2008-2009 which was not a real income of assessee but it is closure notice of business of assessee as well as business death punishment.

ITA No.2433/ Ahd/2011 2 5. The addition done by assessing officer was not fair and not a single relation income of Business but it is business done heavy punishment to assessee.

6. At the time of assessment proceeding of assessee the assessing officer not seen the financial and business position of assessee.

7. This addition in total income of business was not shown real income of assessee in the business and this is one way addition in against of assessee's right.

8. The Assessing Officer giving judgement and leaving taxes are violation of principle of judgement in nature of justice.

9. This addition of Rs.28,00,000/- is very untrue and high as against the mistake done by assessee.

10. The addition in total income must be done at the rate of profit not the amount of sales.

11.The section 40A(3) w.e.f. 01/04/2008 of I.T. Act has ban on the fundamental right of assessee in his business."

3. At the time of hearing, the AR of the assessee submitted that he is not pressing the grounds of the appeal, and also made an endorsement to this effect on the grounds of appeal of the assessee filed along with Form No.36. Hence, these ground of appeals are dismissed for want of prosecution.

4. The AR of the assessee submitted that the assessee has raised additional grounds, which reads as under:

"12. The Ld. AO has erred in disallowing the full purchase for which the amount was paid other than by account payee cheque or draft. According to the provisions of section 40A(3) of the Income Tax Act as amended by Finance Act, 2007, applicable for FY 2007-08 i.e. AY 2008-09, (bare act reads)

a. "Where the assessee incurs any expenditure in respect of which payment is made, after such date (not being later than the 31st day of March, 1969) as may be specified in ITA No.2433/ Ahd/2011 3

this behalf by the Central Government by notification in the Official Gazette, in a sum exceeding {twenty] thousand] rupees otherwise than by [an account payee cheque drawn on a bank or account payee bank draft], [twenty per cent of such expenditure as a deduction]"

b. Thus only 20% of the payment that was made in contravention to 40A(3) shall be disallowed and not 100% or entire. The Ld. AO seems to have confused the provisions applicable for AY 2009-10(100% Disallowance) with AY 2008-09(20% Disallowance).

5. The AR submitted that the same may be admitted for hearing.

6. The DR did not have any objection to the admission of the above additional grounds of appeal. Therefore, the same are admitted and the parties were allowed to make their submissions thereon.

7. The only submission of the AR of the assessee is that the AO erred in making disallowance of entire payment of Rs.28 lakhs made in cash to M/s.KGN Traders by invoking the provisions of section 40A(3) of the Act. He submitted that the Finance Act, 2007 amended the provisions of section 40A(3) by providing that where the assessee incurs any expenditure in respect of which payment is made, after such date (not being later than the 31st day of March, 1969), as may be specified in this behalf by the Central Government by Notification in the Official Gazette, in a sum exceeding Rs.20,000/- otherwise than by an account payee cheque drawn on a bank or account payee bank draft, 20% of such expenditure shall not be allowed as a deduction. He submitted that this amendment is applicable to the assessee, as the assessment year concerned was the assessment year 2008-09. He submitted that the amended provision of section 40A(3) of the Act w.e.f. 1-4-2008 was applicable for the Asstt.Year 2009-10. Therefore, only 20% of Rs.28 lakhs should be disallowed under section 40A(3) of the Act and not the entire amount paid in cash of Rs.28 lakhs. The CIT(A) was also not justified in confirming the order of the AO.

ITA No.2433/ Ahd/2011 4 8. We find that section 40A(3) was amended by the Finance Act, 2007 w.e.f. 1.4.2008 and the said amended provisions reads as under:

"(3)(a) Where the assessee incurs any expenditure in respect of which payment is made in a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft, no deduction shall be allowed in respect of such expenditure"

9. We find that the AR of the assessee admitted that the law as amended by the Finance Act, 2007 w.e.f. 1.4.2008 will be applicable for the Asst.Year 2008-09, which is the year under appeal. The only dispute as per the assessee is that the amended provisions of the Finance Act, 2007 provides for disallowance of 20% of the expenditure, whereas, as per the lower authorities the same provides for disallowance of 100% of the expenditure.

10. We find from a reading of law as amended by the Finance Act, 2007 w.e.f. 1.4.2008 provides for disallowance of entire expenditure and not 20% of the expenditure as contended by the assessee. We, therefore, do not find any error in the orders of the lower authorities, and therefore, the same is confirmed and the additional ground of the assessee is dismissed.

11. In the result, the appeal of the assessee is dismissed.

Order pronounced in the Court on Friday the 12th day of June, 2015 at Ahmedabad.

Sd/- Sd/- (RAJPAL YADAV) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 12/6/2015