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2023 (3) TMI 32 - AT - Income TaxAddition u/s 40A(3) - cash payment in excess of prescribed limit - HELD THAT:- Assessee had admitted the fact that it has paid cash to sub-contractors for hiring lorries and such payment has been directly credited to bank account of sub-contractors. The only arguments of the assessee was that payment made to sub-contractors are genuine in nature which are required to be made in cash for business exigency. The assessee has explained the reasons for making cash payment and according to the assessee, the subcontractors were in need of money under urgent circumstances, for which, the assessee has deposited cash into their bank account. We find that although the assessee tries to make out a case of business exigency, but reasons given by the assessee to make cash payment does not come under any exception as provided u/r.6DD of IT Rules. Genuineness or otherwise of payment is not a criteria to exclude cash payment in excess of prescribed limit from the provisions of Sec.40A(3) of the Act. In this case, there is no dispute that the assessee has made cash payments in excess of prescribed limit and further reasons given by the assessee for making cash payment does not come under any exception as provided under u/r.6DD of IT Rules. The assessee had also failed to make out a case of business exigency in making cash payment, because, it was the claim of the assessee that cash has been directly credited into bank accounts of sub-contractors and said bank accounts are maintained in one bank Assessee could have made payment through one of the of the modes provided u/s.40A(3) of the Act. Since, the assessee has paid in cash in excess of prescribed limit, the AO has rightly disallowed cash payment u/s.40A(3) - Decided against assessee.
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