Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2020 (9) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (9) TMI 543 - HC - Income TaxDisallowance u/s 40A - cash payment exceeding fixed limits - as per assessee there was no banking facility and it was a business expediency - whether the assessee is entitled for exemption under Rule 6DD in respect of payments made in cash? - HELD THAT:- Banking facility was available but the bank account could not be operated by the very bank themselves because of an order of attachment passed by the ESI Department. M/s.SLM virtually came to the assessee with the begging bowl and requested to effect payment in cash. The assessee has entered into an agreement for conversion on job work basis. The assessee is required to act as a prudent businessman, so that the job work is completed to his satisfaction with optimum quality. This has led the assessee to effect payments in cash. Argument of the revenue that in order to avoid the attachment of the bank account the assessee has effected payment in cash - What is relevant to be seen insofar as Section 40A(3) is the conduct of the assessee and not the payee. The question would be did the assessee have a reasonable cause to effect payment in cash. If the assessee has a reasonable explanation, then the proviso under Section 3A would stand attracted and the assessee would be entitled to relief. It may be true that merely because the payee is identifiable, it will automatically exonerate the assessee. Payee was identifiable and not a fictitious person would go to show the bonafides of the transaction and this is what is required to be considered from the angle of a commercially expedient and prudent business house. - Decided in favour of assessee.
|