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2021 (8) TMI 790

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....acts an din law. 2. Whether the Ld. CIT (A) erred in not following the binding decisions of supreme Court that, if a particular issue is brought to the notice of the AO by the Audit party and the AO on his / her application of mind finds that the ground is valid, reopening of assessment cannot be quashed merely because such ground was brought to the notice AO by the audit party as held in the case of CIT vs. PVS Beedies (P) Ltd (1999) 237 ITR 13/103 Taxman 294 (SC). Above decision has been reiterated by the Hon'ble SC in the case of M/s. Larsen & Turbo Ltd vs. State of Jharkhand and other in Civil Appeal No. 5390 of 2007 (SC). 3. The Ld. CIT (A) erred in holding that all the payments of more than Rs. 20,000/- made in cash by the assesse....

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....t year however within the limitation period specified under the Act. During the course of re-assessment proceedings, the Ld. AO once again examined the books of accounts of the assessee and found the observation of the Audit Party to be correct. The Ld. Counsel of the assessee Shri K. Khaja Hussain, Chartered Accountant had appeared on behalf of the assessee however, he could not controvert to the findings of the Ld. AO. Therefore, the Ld. AO disallowed the expenditure incurred amounting to Rs. 21,94,715/- against which cash payment were made exceeding Rs. 20,000/- and added to the income of the assessee. 4. On appeal, the Ld. CIT (A) citing the decision of the case CIT vs. P.J. Chemicals Limited reported in 210 ITR 830 held that the initi....

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....relied on the order of the Ld. CIT (A). 6. I have heard the rival submissions and carefully perused the materials on record. As pointed out by the Ld. DR, I find that the Ld. AO is right in his rem to reopen the assessment based on the Revenue's audit report. The gist of the relevant order of the Hon'ble Apex Court is reproduced herein below for reference. "2. We have considered the matter. It appears that the reopening was done because in the original assessment donations made to a body known as P.V.S. Memorial Charitable Trust was held by the Income Tax Officer to be eligible for deduction under Section 80G. But subsequently it was pointed out by the internal audit party that the recognition which had been granted to the P.V.S. Memoria....

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.... appeal is set aside to this extent. 7. Further, I find the decisions relied by the Ld.CIT(A) Viz., CIT vs. P.J. Chemicals Limited reported in 210 ITR 830 is not on the issue. Moreover on merits, I find the order of the Ld. CIT (A) to be de void of merit because he has not given a categorical finding as to why the provisions of section 40A(3) of the Act would not be attracted in the case of the assessee even though assessee had made cash payments exceeding Rs. 20,000/- aggregating to Rs. 21,94,715/-. In fact he has simply brushed aside the issue by stating that all those payments were made during bank holidays which falls under exceptions mentioned in Rule 6DD of the IT Rules, 1962 without giving a clear cut finding on that regard. Further....