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2016 (1) TMI 248 - AT - Income TaxDisallowance u/s 40A(3) - purchasing material for old father on cash payments - Held that:- The assessee is an aged person of around 80 years and was doing business of Iron and Steel, his son was also in the same trade; both are assessed to income tax. Except drawing an assumed adverse inference due to the nonattendance of the assessee and his son in remand proceedings, existence and validity of the agreement dated 01-04-2008 has not been disputed or denied by the lower authorities with reference to material available on record and confirmation. Thus on the basis of an inference and without considering the material available on record, relationship between principal and agent has been denied. The reasons for non-attendance have been duly explained by the assessee before ld. AO being ailment of father and son which has also not been disputed. In our considered view the interpretation of the agreement indicates the son was appointed as an agent to perform the work of purchasing material for old father on cash payments. No circumstantial infirmity can be attributed if an aged person who desires to remain in gainful avocation appoints his son as an agent to render necessary help. In our considered view the agreement cannot be ignored on ifs and buts; the same clearly stipulates the relationship between the principal and agent which cannot be ruled out on implication more so when transactions are on day to day basis. The purchases and sales are not in any way doubted and fully held to be genuine by both the authorities below. Thus in view of the facts and circumstances of the case, we hold that the assessee and his son were acting in the relationship of principal and agent and the impugned cash payments are clearly covered under exception carved out by rule 6DD(k). Respectfully following the decision of Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia vs. ITO (2006 (11) TMI 117 - RAJASTHAN HIGH COURT ) we delete the addition confirmed by the ld. CIT(A). - Decided in favour of assessee
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