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2022 (1) TMI 1051 - CALCUTTA HIGH COURTAddition u/s 40A (3) - expenses incurred by the assessee for the purchase of raw hides and skins by non-account payee cheques - Whether Tribunal was correct in holding that the assessee was entitled to deduction in respect of raw hide purchases made in cash exceeding ₹ 20,000/- u/s 40A(3)? - HELD THAT:- Provisions of Section 40A(3) of the Act read with Rule 6DD of the Rules are intended to regulate business transaction and to prevent the use of unaccounted money - it is always open to the assessee to furnish documents to prove that the payment in the manner prescribed under Section 40A (3) of the Act was not practicable or would have caused genuine difficulty to the payee. In the case on hand, the tribunal has noted the fact and also taken a note of the contemporaneous documents produced by the assessee, namely, the sales tax bills, transport permits and other Government records to prove the genuineness of the transaction. Apart from that, the day-to-day stock register were also maintained which is noted in the tax audit report. Furthermore, the payments were made to the suppliers of the hides and skins and considering the nature of the trade, the [CIT(A)] and the tribunal agreed with stand taken by the assessee. Assessee placed reliance on the decision of this Court in Commissioner of Income Tax, Kolkata-XI –versus- CPL Tannery. [2008 (8) TMI 356 - CALCUTTA HIGH COURT] In the said decision, an identical case arose for consideration and relief was granted to the assessee. Thus, we find that the tribunal was right in affirming the order passed by the [CIT(A)] and dismiss the appeal filed by the Revenue. - Decided against revenue.
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