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2019 (5) TMI 531 - AT - Income TaxAddition u/s 40A - cash payments in question exceeded the limit prescribed - AO completed assessment u/s 144 - commercial expediency - HELD THAT:- As examined the cash book and ledger account and cross-checked the same with the narrations of the accountant of the assessee that each payment, on each day to each person was less than ₹ 20,000/- in cash. While doing so, he has not made any adverse comment on the claim of the assessee. A perusal of the copy of the ledger account demonstrates the payments made by cash to each of the parties on any single day has not exceeded ₹ 20,000/-. There were both purchases and sales from each of the parties and it was only the difference that was settled in cash on various dates. This copy of the ledger account and the various evidences, such as voucher copies filed were not disputed by the ld. D/R. The factual claims of the assessee supported by the copy of the ledger account etc. could not be controverted by the ld. D/R. The Assessing Officer has not conducted any third party verification. He has given factually incorrect figures in his remand report. Under these circumstances, we are of the opinion that there is no violation of Section 40A(3). As decided in M/S A DAGA ROYAL ARTS VERSUS ITO, WARD-2 (2) , JAIPUR [2018 (6) TMI 1240 - ITAT JAIPUR] he consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A(3) has been brought on the statute books has been clearly satisfied in the instant case. Therefore, being a case of genuine business transaction, no disallowance is called for by invoking the provisions of section 40A(3) - Decided in favour of assessee.
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