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2015 (4) TMI 792 - AT - Income TaxRevision of assessment order - Applicability of Dis-allowance @ 20% u/s 40A(3) of Income Tax Act, 1961 on transport charges - Held that:- The sole ground for setting aside the assessment order passed u/s 143(3) is that, the assessing officer has not examined the transportation charges which was paid in cash from the angle of disallowance u/s 40A(3). As discussed above, it is evident from the material placed on record that during the course of the assessment order proceedings, the assessing officer has called for the entire details of transportation charges, which included party-wise ledger accounts, bill and vouchers, etc. specifically to examine the nature of cash payment made to the various transporters. From the perusal of such ledger account and bills and vouchers which have been placed before the AO, it is seen that none of the payment made by the assessee at a time has exceeded ₹ 20,000/- in cash. This fact is corroborated by the bills issued by transporters and also the vouchers issued by the assessee. These transportation charges are in the nature of advances paid to the drivers and transporters once the assessee books the trucks for the purpose of the purchases outside Maharashtra. If all these details have been verified and examined by the AO, then it cannot be held that AO has not made any enquiry or verified the evidences. Here in this case, the Ld. CIT has not pointed out that there is any actual violation of section 40A(3) as per the law prevalent in the A.Y. 2007-08. Prior to A.Y. 2009-10, section 40A(3) provided that, where the assessee incurs any expenditure in respect of which payment is made for sum exceeding ₹ 20,000/-, then no deduction shall be allowed. The statute did not envisaged that the aggregate amount of payments made to a person on a day should exceed ₹ 20,000/-. This specific amendment has been brought in the statute w.e.f. 01.04.2009. This proposition that no disallowance u/s 40A(3) should be made if the payment at a time is less than prescribed limit, is fully supported by decision of Hon’ble Allahabad High Court in the case of Ashok Iron and Steel Rolling Mills [2009 (10) TMI 414 - ALLAHABAD HIGH COURT] and decision of Orissa High Court in the case of Aloo Supply Company [1979 (12) TMI 60 - ORISSA High Court]. Thus, the AO has rightly not invoked the provision of section 40A(3) while completing the assessment u/s 143(3). On these facts, it cannot be held that the assessment order passed by the AO is erroneous so far as it is prejudicial to the interest of the revenue. The Ld. CIT has not given any specific finding from the records as to how there is a violation of section 40A(3) with regard to the payments made by the assessee. Thus, we quash the impugned order passed by Ld. CIT u/s 263 and the grounds raised by the assessee is treated as allowed. - Decided in favour of assessee.
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