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2019 (10) TMI 1409 - AT - Income TaxDisallowance u/s 40A(3) - HELD THAT:- We examine the issue in controversy in the light of the CBDT Circular No. 6-P dated 06.07.1968 and Circular No.1/2009 dated 27.03.2009, it is apparently clear that this provision has been incorporated to counter evasion of tax for claim of expenditure shown to have been incurred in cash with a view to frustrate proper investigation by the Department as to the identity of the payee and the reasonableness of the payment. In the instant case, when the identity of the parties who have made the payment have been proved and genuineness of the transaction is also not in dispute, mechanically invoking the provisions contained u/s 40A(3) is not permissible. Moreover, all the payments in question have been duly recorded in the books of account and there is no question of claiming for any expenditure. So, following the decision rendered in Smt. Harshila Chordia [2006 (11) TMI 117 - RAJASTHAN HIGH COURT] and coordinate Bench of the Tribunal in Lord Krishna Dwellers (P) Ltd. [2019 (2) TMI 1053 - ITAT DELHI], we are of the considered view that ld. CIT (A) has erred in disallowing the purchases from M/s. Sumit Enterprises and M/s. Paras Enterprises respectively and as such, the disallowance made is not sustainable, hence ordered to be deleted. - Decided in favour of assessee.
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