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2023 (5) TMI 623 - ITAT DELHIDisallowance u/s 40A(3) - payments being made in cash and higher than Rs.20,000/- - suppliers did not maintain books of account - AO proposed 10% of totally payment as disallowed on account of unverified payment - HELD THAT:- We find ourselves in agreement with the submission of assessee that disallowance u/s 40A(3) has not been found from the books of accounts of the assessee. Rather the plea is that the suppliers have not maintained proper books of accounts. Hence, it could not be co-related. We note that the disallowance u/s 40A(3) in this case has not been made on the basis of anything found from the assessee’s books. Rather this case has been made out that the suppliers did not maintain books of account and same could not be traced. We also rely upon the ITAT order in assessee’s own case for AY 2007-08 referred above. Suppliers are small type of butchers living in various locations and are illiterate as noted by the Tribunal. Instead of money receipts, assessee was using slip system, which in such areas is not uncommon. The recipients of such type of slips do not preserve such slips and this is not uncommon phenomenon. In our considered opinion, the disallowance made u/s 40A(3) is not reasonable and hence, we set-aside the orders of the authorities below and deleted the addition. Appeal of the assessee stands allowed.
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