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2012 (12) TMI 902 - AT - Income TaxDisallowance u/s 40A(3) - Assessee engaged in the business of jewellery – Cash purchase of jewellery – Exchange of old jewellery with new Jewellery - Rule 6DD - Held that:- The assessee used to account the purchase of old Jewellery/diamond from the customer as cash purchase for control purpose though actual cash outflow is not made, these are only day book entries. Therefore, such transactions could not be considered as violative of Section 40A(3), just for a reason that contra entries appeared in the cash book. In favour of assessee Violation of Rule 46A – Held that:- As the A.O. has nowhere mentioned that assessee had failed to produce any records or books called for. Just because assessee could point out to CIT (Appeals), by producing the same cash book as produced before the A.O., that there were no cash purchases whatsoever effected by it from its customers, will not be a reason to say that there was any violation of Rule 46A. Bogus Purchase – Held that:- In the nature of trade of the assessee, it may not always be possible to get the address of all its customers. Even if customers give their address, there is no means available to the assessee to ensure that such addresses were right. Assessee, in the nature of its trade, cannot insist for an identification process akin to Know Your Customer (KYC) rules applied by banks. Just for the reason that purchases effected from certain parties did not carry full address, in our opinion, a disallowance ought not have been made. In favour of assessee
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