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2016 (6) TMI 244 - AT - Income TaxAddition invoking the provisions of section 40A(3) - elaborate submissions were made to prove that the expenses incurred in cash were genuine which were paid to distilleries through the Excise Department for purchase of liquor and there were practical expediency because of which the payments have to be made in cash - Held that:- Each person has licence in his own name to make the sales and purchases as per the terms of these licence agreements. Further, it is quite a known fact that in the business of the liquor, transactions are to be done in cash. All these facts have not been controverted by the Assessing Officer or even by the learned Commissioner of Income-tax (Appeals). This makes out a case that the assessee has business expediency under which it have to make payments in cash. Further, not a single transaction has been questioned at any stage. The learned Commissioner of Income-tax (Appeals) while adjudicating the contention of the assessee with regard to the genuineness himself has held that it is not sufficient for the assessee to establish that the payments were genuine and the parties were identifiable. He was of the view that the assessee is further required to prove that due to exceptional and unavoidable circumstances as provided under the Rules, the payments were made in cash. Therefore, it is not a case of the Department that the payments so made in cash were not genuine. The reasons given by the assessee at every stage have not been disbelieved. Since these reasons are correct, they really make out a case of business expediency. In this view, respectfully following the judgment of the hon'ble Punjab and Haryana High Court in the case of Gurdas Garg (2015 (8) TMI 569 - PUNJAB & HARYANA HIGH COURT ), we hold that the payments cannot be disallowed under section 40A(3) of the Act. - Decided in favour of assessee Addition with regard to ahata income - Held that:- No infirmity in the order of the learned Commissioner of Income-tax (Appeals) as regards ahata income. The Assessing Officer nowhere in his assessment order, nor in the remand report controverted the fact that for running ahata one has to take licence from the excise authority. Neither the Assessing Officer has placed on record any material to show that the assessee has taken this licence or in fact, the assessee is running the ahata. In this view, making addition on account of ahata income on estimate basis that too, comparing the case of the assessee with that of another assessee is not correct. The action of the learned Commissioner of Income-tax (Appeals) in deleting the addition is found to be as per law. - Decided in favour of assessee Addition on account of suppression of sales - Held that:- No infirmity in the order of the learned Commissioner of Income-tax (Appeals) since it is a common fact that in the liquor business, transactions are done through cash. We observe that the Assessing Officer has though proposed to reject the books of account but has not given any finding as to the rejection of the books of account of the assessee. He has not been able to pinpoint any instance of suppression of sales and only on the basis of suspicion, he has made the addition, that too on the estimated basis. These reasons are not enough to make such an addition. In this view, we confirm the order of the learned Commissioner of Income-tax (Appeals) in deleting the addition - Decided in favour of assessee
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