TMI Blog2011 (11) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... s Section 40A(3) - Held That:- The amended provisions are applicable in respect of those expenditure for which, liability has been incurred in assessment year 2008-09 or in any subsequent year but it cannot be made applicable to the liability incurred up to the assessment year 2007-08. If the liability is incurred up to 2007-08 but the payment made is in a subsequent year i.e. in assessment year 2008-09 or any subsequent year, the provisions of Section 40A(3) as applicable in that year in which liability was incurred should be so applied. The provisions of Section 154 for the purpose of reckoning the limitation period of four years, shall be reckoned from the end of the assessment year following the previous year in which the payment was so made. - Decided in favor of assessee for statistical purposes. - ITA NO. 1833 (AHD.) OF 2011 - - - Dated:- 18-11-2011 - SHRI G.C. GUPTA, AND SHRI A.K. GARODIA, JJ. Represented by: Shri R.B. Shah for the Appellant. Shri Kartarsingh for the Respondent. ORDER Shri A. K. Garodia, Accountant Member - This appeal by the assessee is directed against the order of Ld. CIT(A) II, Surat dated 29.06.2011 for the assessment year 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails. As discussed in the assessment order, on 01.12.2010, the authorized representative of the appellant appeared, but filed nothing. The Assessing Officer, therefore, provided another opportunity to the appellant to furnish complete details by adjourning the case to 06.12.2010. The authorized representative appeared on 07.12.2010, but did not furnish any detail. In para 6 of the assessment order, the Assessing Officer has recorded that since proper details wee not furnished by the appellant, he started enquiry with the bank of the appellant, viz. HDFC Bank, Annapurna Market, Ring Road, Surat, and also called for photocopies of both sides of the cheques issued by the appellant, in respect of each party, creditors as well as suppliers during the year. On receipt of the above information from the bank, the Assessing Officer observed that the appellant has made payment to the suppliers/ creditors by "non-account payee cheques", which was in violation of provisions of section 40A(3) of the I.T.Act. He, therefore, vide order sheet entry dtd. 17.10.2010 informed the appellant about the results of the above enquiry and adjourned the case to 24.12.2010 for filing of explanation as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has made payment of Rs. 2,68,66,115/-. In para 9.2 of the order, the Assessing Officer has discussed provisions of section 40A(3)(b) of the Act, and, in 9.3 of the order, held that since the appellant has filed nothing to prove that there was exceptional and unavoidable circumstances, which compelled him to make payment otherwise than by a/c. payee cheques to all the above 14 creditors during the year, it is a fit case for invoking provisions of section 40A(3)(b) of the Act, and made addition of Rs. 2,68,66,115/- to the income of the appellant under the above section." 3. Before Ld. CIT(A), this contention was raised by the assessee for the first time that the assessee has made export sales of dupattas and sarees after purchasing the same form market through agent and the assessee is required to make payments for purchases as per the directions of the agent and the assessee has done the same. It was also submitted that in the present case, the agent of the assessee demanded payments through crossed cheques as he was required to make cash payments to the suppliers. The name of the agent was given as Shri Manoj Kumar Sharma and it was submitted that the payments have been m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ork and, therefore, there is no justification of restoring the matter back to the file of the A.O. for a fresh decision and the order of ld. CIT(A) should be confirmed. 6. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that confirmation of Shri Manoj Kumar Sharma is available on page 6 of the paper book, as per which, it is stated by him that the assessee had purchased dupattas and sarees through him and for the same, he had obtained crossed cheques from the assessee to make cash payments to various suppliers after discounting the crossed cheques received from the assessee. Admittedly, this contention was raised for the first time before Ld. CIT(A) and this aspect was never raised before the A.O. However, this argument of the assessee was rejected by the Ld. CIT(A) by sating in para 5.4 of his order that this argument of the assessee is not relevant as the assessee has not furnished nay evidence for the same. He has also stated that since the cheques were issued in the name of the suppliers, it is proved that there was no agent. We are not satisfied on this aspect that merely because the cheq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee for the previous year in which such liability was incurred and make the necessary amendment, and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in subsection (7) of that section being reckoned from the end of the assessment year next following the previous year in which the payment was so made : Provided further that no disallowance under this sub-section shall be made where any payment in a sum exceeding twenty thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors." 8. From the current year, sub-section (3A) has been inserted in section 40A, as per which, if an allowance has been made in the assessment for any year and the assessee makes payment in respect thereof otherwise by a/c payee cheque drawn on a bank or a/c payee bank draft, the payment so made shall be chargeable to income tax as income of the subsequent year in which such payment was made. Now, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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