2023 (1) TMI 92 - AT - Income Tax

Addition made u/s 40A(3) - expenditure incurred in cash in excess of the mandatory limit - CIT-A sustained part addition as per Rule 6DD of Income Tax Rules, 1962 - assessee primarily rested his arguments on the transactions being out of business expediency, hence they are out of rigorous of Section 40A(3) - HELD THAT:- So far as the argument that the transactions fall under clause (f) hence would be out of preview of Section 40A(3) is concerned, no evidence is brought on record for supporting such contention. It is incumbent upon the assessee to prove that purchases were made from such person mentioned under Rule 6DD(f). In the absence of any supporting evidence, no relief could be granted.

Therefore, reject this plea of learned counsel. Assessee has placed reliance on the judgment of Attar Singh Gurumukh Singh [1991 (8) TMI 5 - SUPREME COURT] wherein it has been held that the term of Section 40A(3) are not absolute. Consideration of business expediency and other relevant factors are not excluded.

Therefore, looking to the facts where the assessee has made clear averments regarding business expediency and the Revenue has not rebutted the same. We direct the Assessing Officer to delete the impugned disallowance. Decided in favour of assessee.