Case Law Details
Smt. Poonam Mittal Vs ITO (ITAT Amritsar)
We find that the AO had invoked his powers u/s.154 of the Act for disallowing u/s.40A(3) of the Act the assessee’s claim for deduction of bonus of Rs.2,47,380/- that was stated to have been paid in cash, i.e., in excess of the prescribed limit of Rs.20,000/-. In our considered view, as stated by the AR, and rightly so, the disallowance of an amount u/s.40A(3) by no means can be brought within the realm of a mistake which could be held as being in the nature of a mistake which is glaring, patent, apparent and obvious from record, therein rendering the assessment order passed by him u/s.143(3) of the Act amenable for rectification under section 154 of the Act.
As held by the Hon’ble Supreme Court in the case of T.S. Balaram, ITO, Company Circle-IV, Bombay vs. Volkart Brothers and Ors. (1971) 82 ITR 50 (SC), it is only a mistake apparent from the record, i.e., one which is obvious and patent and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions that can be rectified within the meaning of Section 154 of the Act. At this stage, we may herein observe, that though Section 40A(3) contemplates disallowance of certain expenditure which is incurred by an assessee in cash beyond the prescribed limit, however, Rule 6DD of the Income Tax Rules, 1962 carves out a set of exceptions wherein the payments despite having been made in cash beyond the aforesaid prescribed limit are not to be disallowed.
In the backdrop of our aforesaid observations, we are of a strong conviction, that no disallowance u/s.40A(3) of the Act, even in a case where the payments had been made by the assessee in cash beyond the prescribed limit could validly be made by invoking the provisions of Section 154 of the Act.
In our considered view, as the AO had grossly erred in invoking the provisions of Section 154 of the Act for the purpose of disallowing the aforementioned amount u/s. 40A(3) of the Act, therefore, the order therein passed by him cannot be sustained and is accordingly liable to be vacated. We, thus, not being able to persuade ourselves to subscribe to the view taken by the lower authorities set aside the order passed by the CIT(A) and quash the order passed by the AO u/s.154 of the Act.
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