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2023 (9) TMI 1076 - ITAT HYDERABADAddition u/s 40A(3) - assessee company made huge cash payments in excess of Rs. 20,000/- in connection with development of housing plots at Bangalore - HELD THAT:- AO is trying to invoke the provisions of section 40A(3) for some site expenses and other expenses, but not on account of any payments made to Shri B.V. Sampath and family members by the assessee. Even in the remand report also, the AO had given vague answer according to which he is presuming that part of the payments might have reached Shri B.V. Sampath. This in our opinion cannot be the basis for addition u/s. 40A(3). For attracting the provisions u/s. 40A(3), there must be some cash payments recorded in the books of accounts. However, in the instant case as mentioned earlier no books of accounts were produced during the course of assessment proceedings for which the assessment was completed u/s. 144 of the I.T. Act and therefore, the AO could not have invoked the provisions of section 40A(3). So far as the statement of the Director is concerned, we find nowhere he has stated that they have paid an amount of Rs. 1.50 crore towards purchase of land. We also agree with the observation of the ld.CIT(A) that in absence of examination of the books of accounts and without finding that such cash payments were made and debited to the profit and loss account, the AO could not have made the disallowance u/s. 40A(3). DR also could not controvert the finding of the ld.CIT(A) that the AO had made the same disallowance of Rs. 1.50 crores u/s. 40A(3) in the subsequent assessment year i.e. AY 2009-10 also. Since, no evidence either oral or documentary has been brought on the record by the AO that in fact the said cash payments were made by the assessee company to Shri B.V. Sampath and family members, therefore, order of the ld.CIT(A) deleting the addition of Rs. 1.50 crores made by the AO u/s. 40A(3) upheld - Decided against revenue.
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