TMI Blog2014 (7) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... ot made any enquiry whether such payments were made at the instance of the parties from whom the assessee-company purchased the goods - there is nothing placed on record that instead of account payee cheques, the assessee-company has made cash payment to the parties from whom the goods were purchased – thus, there is no infirmity in the order of the CIT(A) holding that the AO was not justified in invoking the section 40A(3) of the Act – Decided against Revenue. - I.T.A. No. 461/Ahd/2011 - - - Dated:- 13-6-2014 - Shri N. S. Saini And Shri Kul Bharat,JJ. For the Appellant : Shri K. C. Mathews, Sr. DR For the Respondent : Shri Sunil Talati, AR ORDER Per Shri Kul Bharat, Judicial Member : This appeal by the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer. 3. It is, therefore, prayed that the order of the Ld.CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent. 2. Briefly stated facts are that the case the assessee-company filed its return of income declaring total loss of ₹ 5,70,899/-. The return was processed u/s.143((1) of the Act. Subsequently, the case was re-opened and the assessment u/s.147 r.w.s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 30/04/2009, thereby the Assessing Officer (AO in short) made addition of ₹ 14,81,711/- by invoking the provisions of section 40A(3) of the Act. The AO while framing the assessment observed that on verification o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in invoking the provisions of section 40A(3) of the Act as it is not the case where payment has been made in cash but it is the case where the payments have been made by way of crossed-cheques made on behalf of the assessee by third party. He submitted that third party had confirmed the receipt of payment and making of the payment. Therefore, ld.CIT(A) was justified in deleting the addition. 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The AO reproduced the reply of the assessee in the assessment order and rejected the explanation. In paragraph No.5.2 of his order, the AO observed that on verification of the details submitted by the assesseecompan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed fact emerges from the record and submissions of the parties that the purchases made by the assessee are not in dispute. The AO has not treated such purchases as not genuine, but he had invoked the provisions of section 40A(3) of the Act for making the addition. For the sake of clarity, section 40A(3) of the Act is reproduced below:- Section 40A(3):- Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure. 4.1. From the plain reading of section 40A(3) of the Act, it is evident that where t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Stels 12. 14/02/2005 Shreeram Incorporation 13. 16/02/2005 Shyam Stels 14. 17/02/2005 Shah Steels 15. 04/03/2005 Samarth Corp 16. 11/03/2005 Samarth Corp 17. 30/03/2005 Sai Trade 18. 30/03/2005 Baroda Ind. 4.2. The contention of the assessee is that the provisions of section 40A(3) of the Act not at all applicable. The parties from whom the goods were purchased requested the assessee-company to give payments to their suppliers/their borrowers for early and immed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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