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2013 (12) TMI 1605 - ITAT VISAKHAPATNAMAddition to be made under section 40A(3)- payments made on Sundays and Holidays - Held that:- In the present case, there is no denying the fact that persons to whom payments were made in cash are villagers and may not be having bank accounts. It is also a fact that payment has to be made to them immediately to secure the lands in question which may require the payments to be made in cash on Holidays and Sundays, otherwise, they would have sold the lands to some other persons. In these circumstances, if the assessee would have insisted for payment by way of cheque or DD or have deferred it, it might have resulted in a loss of business opportunities as the land owners would not have agreed to sale the lands to the assessee. Therefore, the expression ‘required to be made’ understood in this context and keeping the intention of legislature in mind can be construed to mean that payments required to be made for the purpose of the business of the assessee. In these circumstances, payments made on Sundays and Holidays have to be held to be coming within the ambit of Rule 6DD(j), hence provisions of section 40A(3) will not apply to such payments. Therefore, payments made in cash atleast to the extent made on Sundays and Holidays cannot be disallowed u/s.40A(3) of the Act. We, therefore, direct the AO to verify such payments made on Sundays and Holidays and delete the addition of these amounts. So far as addition of the rest of the amount sustained by the CIT(A) we do not find any infirmity in the impugned order to interfere with the same. It is not only a fact that assessee has paid the amount of ₹ 2,32,20,500/- to third parties but such payments have also been made through cheques. The assessee has also furnished back account copies, TDS particulars, PAN of the said parties. Therefore, the entire transactions having been made through proper banking channel is transparent. Only because third parties have withdrawn the amount and paid the same in cash to landlords, assessee cannot be brought within the mischief of section 40A(3) of the Act. Accordingly, we confirm the order of ld CIT(A) on this issue.
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