Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 1228 - ITAT KOLKATAAddition u/s 40A(3) on account of payment in cash - genuineness of the transactions - HELD THAT:- Since the genuinity of the payments made to the party is not doubted by the revenue, the provisions of section 40A(3) could not be made applicable to the facts of the instant case - assessee had taken enough precautions from his side to ensure that the payee also don't escape from the ambit of taxation on these receipts by paying cash. This fact is also not disputed by the revenue - consequence, which were to befall on account of non-observation of section 40A(3) must have nexus to the failure of such object. Assessee made bank draft of ₹ 5,00,000/- to pay to M/s Mahima Alekha Coal Traders, but he refused to take bank draft therefore in order to run the business the assessee did not have any option but to make payment in cash. Had the assessee not been paid cash to M/s Mahima Alekha Coal Traders, his business would have been stopped or restricted to that extent. The purpose of section 40A (3) is not to restrict the assessee`s genuine business activity. As genuineness of the transactions and identity of the payee is established. Assessee has proved the pressing circumstances. The assessee acted with bona fide intention, as he made demand draft of the bank to make the payment to payee but later on it was cancelled on the request of the payee therefore, intention of the assessee was to make payment through banking channel only. This is exceptional circumstances where the assessee made payment in cash. It is observed that the assessee had taken enough precautions from his side.Hence, in the facts and circumstances as discussed above, the payment should not be disallowed as held in the case of Girdharilal Soni vs. CIT [1989 (3) TMI 84 - CALCUTTA HIGH COURT] - Decided in favour of assessee. Ad hoc additions - addition of purchases from 13 parties, carriage and wages and Transport charges - Non rejection of books of accounts - HELD THAT:- Here in this case,assessee submitted books of accounts and details during the assessment proceedings, however, the AO has passed order u/s 144/147 of the Act. The AO thus without rejecting the books of account of the assessee has gone for estimation on suspicion and conjectures that the assessee may be inflating its various expenses. While scrutinizing the expenditure if the expenses claimed are not having any nexus to the business of the assessee or if there is deficiency in the vouchers or there is no bills supporting the incurrence of an expenditure, at the most expenses to the extent that are not supported by the vouchers can be held to be non-genuine and can be disallowed by the AO; and item-wise the AO could have disallowed the expenditure rather than going for ad hoc disallowance of percentage basis of the expenses claimed by the assessee which action of the AO is arbitrary in nature and cannot be sustained. Therefore, the various ad hoc additions is to be deleted. - Decided in favour of assessee.
|