TaxTMI 
TaxTMI 
2025 (8) TMI 1414
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....emises of the assessee during odd hours. And for that purposes, the labour is engaged by the assessee and that they are required at the business premises of the assessee, due to very nature of the business. It is required to be noted and appreciated that bananas are perishable in nature and that they are required to be unloaded and kept safely. They are kept for ripening in the "Ripening Chambers" too. The bananas are generally kept for a week for said purposes and thereafter sales are effected in city, nearby towns and villages. The staff is also deployed for collection of amount mainly from Rehriwala, small shopkeepers, fruit merchants etc. 3. Due to above nature of operation of bananas in the assessee's business premises, invariably there are 15 to 16 labourers/staff in a day. The drivers of the trucks who bring bananas from different States also stay in the business premises of the assessee for 3-4 days with local labourers and staff . 4. In the business premises of bananas, the nature of miscellaneous expenses which are debited are as under : Atta Banana cutter labour blankets cutting gloves LED bulb cable Exp. Calculator sh counting machine ....
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....re us : 1. That the Ld. Commissioner of Income Tax (Appeals)-S, Ludhiana has erred in confirming the addition of Rs. 21,44,420/- on account of alleged cash payment of salary in violation of provisions of section 40A(3) as per para 5.3 of his order. 2. That the Ld. CIT(A) has erred in confirming the addition of Rs. 36,85,400/- on account of alleged unexplained expenditure of the assessee u/s 69C of the Act on the basis of undated document, having no narration at all. 3. That the sustaining of addition by the Ld.CIT(A) and invoking of provisions of section 69 read with section, are against the facts and circumstances of the case. 4. That the appellant craves leave to add or mend the grounds of appeal before the appeal is finally heard or disposed off. 13. With regard to addition of Rs. 21,44,420/- on account of alleged cash payment of salary in violation of provisions of Section 40A(3) of the Act is concerned; the ld. AO in his "Impugned Assessment Order dated 24.12.2022 (supra)" has discussed the issue from pages 52 to 72. The Show Cause Notice has been reproduced by the ld. AO in the impugned assessment order dated 24.12.2022 (supra) from page....
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....Officer as mentioned in the order of Assessing Officer at pages 60 to 69 and the same has also been mentioned by the Assessing Officer at page 70 of his order. f). Our books of accounts have not been rejected u/s 145(3) and same have been accepted by the Assessing Officer and, thus, when as per our books of accounts, there is no payment exceeding Rs. 10,000/- and, thus, no disallowance u/s 40A(3) can be made because section 40A(3) states that where the assessee incurs an expenditure more than Rs. 10,000/-, then the same shall be disallowed. g). Further, when our books of accounts have not been rejected, no such addition can be made on account of disallowance of expenses u/s 40A (3) as per the following judgments:- a) CIT vs. Anil Kumar & Co. in ITA No. 200001 & 200002 vide order dated 25.02.2016 (Karnataka HC) wherein it has been held as under: "The tribunal has rightly held that when the books of account of the assessee had not been rejected and assessment having not been framed under section 144, the Assessing Officer and the Commissioner (Appeals) were in error in resorting to an estimation of income and such exercise undertaken by th....
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....ds duly covered by the Tribunal and it cannot be said that any investment was done beyond the books of accounts." e). Further reliance in this regard is placed on the following judgements of the Hon'ble Apex Court, wherein on exactly similar lines as that in case of the assessee, it has been held that where the cash deposited was out of the books of account & cash book and where such books had not been rejected u/s 145 of the Act, then part addition for cash deposits was not sustainable, namely: Lalchand Bhagat Ambica Ram vs. CIT [1959] 37 ITR 288 (SC) Section 143 of the Income-tax Act, 1961 - Assessment - Addition to income - Assessment year 1946-47 - Assessee carried on extensive business in grain as merchant and commission agent - Assessee maintained its books of account according to mercantile system and there were maintained in its cash books two accounts: one showing cash balances from day to day and other known as "Almirah account" wherein were kept large balances which were not required for day-today working of business - It filed its return showing loss in business -However, ITO noticed that assessee had encashed high denomination notes of va....
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....s findings have remained inconclusive in the sense that the lumpsum payments made in the names of employees in the seized documents can be considered as relevant/acceptable since details are provided for in the regular books of accounts and disal lowances, if any, has to be made as per payments reflected in the regular books of accounts and therefore it cannot be said in law that there is apparent violation of Section 40A(3) as all payments are less than Rs. 10,000/- at one give time. 18. Without prejudice to the aforesaid contention that all payments are less than Rs. 10,000/- and are appearing in books of account regularly maintained in course of trade, it was stated that in the seized documents as found during the course of search, certain payments were reflected in respect of freight but the details were there in the regular books of accounts, where the payments were made less than Rs. 35,000/- per day and in the impugned order (Para 5.2.3 pages 26-27). No disallowance was sustained and therefore, addition of Rs. 21,44,420/- is contrary to the finding given by the ld. CIT(A) in the impugned order in respect of issue of freight. 19. The next contention and submission is on....
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....30/32 basis that we hold that finding of the ld. CIT(A) is incorrect and not proper as entire amount of Rs. 21,44,420/- finds place in the books of account, computation of income statement, cash book, which shows that all payments of salary and wages are below Rs 10,000/- per person in a day and falls outside Section 40A(3) r.w. Rule 6DD of IT Rules, 1962. The Revenue has failed to substantiate the same in as much as there is no whisper that books of account, computation of income statement/cash book account are rejected. The copy of Balance Sheet dated 30.03.2022 has been placed on record of this Tribunal too. We agree with the contention of ld. AR that unless and until books of account not rejected by Revenue, there cannot be any deviation in respect of entries made in the books of account where all payments of salary and wages are less than Rs. 10,000/- per person. Reliance was placed on Karnataka High Court judgement in case of CIT Vs Anil Kumar & Company reported in (2016) 67 taxmann.com 278 (Kar) in support. We have perused the said judgement where in para 11, following is recorded : "11. Insofar as the estimation of gross profit made by the Assessing Officer modifie....
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....ple laid down by the Hon'ble Supreme Court in the case of Sargam Talkies (refer to supra), no addition is called for in the hands of the assessee. In the circumstances, the addition of Rs. 1 lakh as confirmed by the learned Commissioner of Income-tax (Appeals) stands deleted. Reliance was also placed on unreported judgement of Allahabad High Court in case of CIT Vs Pashupati Nath Agro Feed Products Pvt. Ltd. in ITA No.165 of 2010 (Allahabad High Court) wherein following is held in their order dated 04.05.2017 : "On perusal of the impugned judgment and order of the Tribunal dated 27.10.2009 reveals that the assessee has maintained the books of accounts in accordance with the prescribed standard as per Section 145 of 'the Act'. The account books have not been rejected by the assessing officer. In view of the above, the Tribunal formed an opinion where once the account books are expected to be maintained in the prescribed accounting standard, the assessing officer could not have made any additions towards the sale of rice treating it to be outside the books of accounts or towards investing in stock of rice and wheat outside the books of accounts. ....