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2012 (9) TMI 324 - ITAT, CHANDIGARHAddition u/s 40A(3) - cash purchases above Rs 20,000 - business of commission agency and trading of vegetables and foods - Held that:- CIT(A) has correctly held that the case of the assessee is not covered either under Rule 6DD(f) or Rule 6DD(k) of Income-tax Rules, 1962. Firstly, Rule 6DD(f) is applicable only in the cases when the payments are made in cash for the purchase of the agricultural produce directly to the cultivators, growers or producers of the agricultural produce, whereas in present case, appellant has made no such payments to the cultivators, growers or producers of the agricultural produce. Secondly, appellant has made final purchases from the Arhatiyas (commission agents / traders) and same cannot be treated as agents of the assessee firm within the meaning of Rule 6DD(k). Circular No. 34 dated 5.3.1970 makes it clear that the payment to Arhatiyas do not fall for exclusion under above sub clause. Thirdly, there is no material on record to show that there was exception or unavoidable circumstances for making payments in cash. Payments to same party were made by cheques and by cash also. Therefore, invoking the provisions of section 40A(3) of the Act was justified. On contention of assessee that authorities below have not doubted the genuineness of the payments made in cash it is held that those genuine and bonafide payments could not be taken out of purview of section 40A(3) after amendment of the Rules by the Finance Act, (1995) which was clarified vide Board's Circular No. 117 dated 14.8.1995 - Decided against assessee
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