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2016 (12) TMI 1404 - AT - Income TaxAddition u/s 40A - Disallowing the payment for purchase of granites - vendors insisted for cash payment - Held that:- We have carefully gone through the provisions of Rule 6DD of the Income-tax Rules, 1962 which categorically says that payment was made by any person to his agent, who is required to make payment in cash for goods or services on behalf of such person, the provisions of Section 40A(3) of the Act is not applicable. In this case, the assessee claims that M/s Rajham Impex and M/s Shri Bakia Trading Agency acted as agents for procuring granites on behalf of the assessee from quarry owners. Since the vendors insisted for cash payment, the assessee has to necessarily make cash payment to M/s Rajham Impex and M/s Shri Bakia Trading Agency so as to enable them to make payment in cash to the quarry owners. These facts were not in dispute. Therefore, in view of Rule 6DD(k) of Income-tax Rules, 1962, there cannot be any disallowance under Section 40A(3) of the Act. In view of the above discussion, this Tribunal is unable to uphold the orders of the lower authorities, accordingly the same are set aside. The addition made by the Assessing Officer is deleted.- Decided in favour of assessee Penalty levied under Section 271B - delay in filing audit report - Held that:- The object of filing audit report is only to assist the Assessing Officer to determine the correct taxable income. Since the assessee has filed return of income along with the audit report, the purpose of statutory requirement is complied with. The delay in filing the audit report did not hamper the assessment proceeding in any way. Therefore, this Tribunal is of the considered opinion that there is no justification in levying penalty under Section 271B of the Act. Therefore, this Tribunal is unable to uphold the orders of the lower authorities, accordingly, the same are set aside and the penalty levied under Section 271B of the Act is deleted. - Decided in favour of assessee
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