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Issues:
1. Disallowance under section 40A(3) for cash payments exceeding Rs. 10,000. 2. Disallowance of commission under section 40A(2)(b) for lack of evidence of services rendered. Issue 1: Disallowance under section 40A(3) for cash payments exceeding Rs. 10,000: The Revenue appealed against the CIT(A)'s order deleting the addition of Rs. 1,07,196 made by the AO under section 40A(3). The AO disallowed the sum as cash payments exceeding Rs. 10,000 were made to 9 parties. The CIT(A) accepted the assessee's explanation that payments were made in cash due to operational constraints and to truck drivers for freight. The Revenue argued that the payments were to known parties and violated section 40A(3). The authorized representative contended that payments were due to exceptional circumstances as per CBDT Circular No. 220. The ITAT upheld the CIT(A)'s decision regarding payments to truck drivers but directed verification of operational bank account existence for payments made in Delhi. Issue 2: Disallowance of commission under section 40A(2)(b) for lack of evidence of services rendered: The Revenue challenged the deletion of the addition of Rs. 6,85,681 made by the AO under section 40A(2)(b) for commission paid to M/s Saurav Marketing (P) Ltd. The appellant claimed the commission was for services related to Maruti Udyog Ltd. The AO disallowed the payment due to insufficient evidence of services rendered. The CIT(A) reversed the AO's decision. During the appeal, the Departmental Representative presented documents, including correspondence and reports. The authorized representative argued that the payment was for business purposes and supported by various services rendered. The ITAT observed a lack of correspondence between the appellant and the agent for certain periods and directed the matter back to the AO for re-examination after providing the appellant with a reasonable opportunity to support their claim. In conclusion, the ITAT partially allowed the Revenue's appeal for statistical purposes, directing further examination by the AO on both issues.
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