TMI Blog2009 (8) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... ience. 2. The identical effective grounds of appeal taken by the assessee in the instant three appeals are stated as under : ITA 4262/Delhi/07: A.Y. 1992-93 "1. That the ld. CIT(A) has grossly erred on facts and law in sustaining an addition of Rs. 1,97,500 made by the Assessing Officer under the provisions of section 40A(3) of the Income-tax Act, 1961 being payment made to the principal of the appellant in cash. 2. That the ld. CIT(A) failed to appreciate that the circumstances in cash payment to the principal was a business necessity. 3. That the ld. CIT(A) has failed to appreciate that rule 6DD( j ) and the circular of the Board has to be construed liberally and in favour of the subject and not in a technical and narrow se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate that rule 6DD( j ) and the circular of the Board has to be construed liberally and in favour of the subject and not in a technical and narrow sense. 4. That the ld. CIT(A) has erred in confirming the action of ld. Assessing Officer in disallowing Rs. 32,386 as unpaid P.F. collections under section 36(1)( va ) of the Income-tax Act, 1961." 3. At the outset of appellate proceedings before us the ld. AR for the assessee submitted that he did not press the ground No. 4 of the instant appeals relating to the issue of unpaid provident fund collection and the same may be dismissed as withdrawn. 4. In this view of the matter the ground No. 4 of the instant appeals of the assessee is rejected as withdrawn. 5. Briefly stated the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer for violation of provisions of section 40A(3) of the Income-tax Act while observing as under : "The assessee could not demonstrate with cogent evidences that there was business expediency or sufficient cause for such cash payments to various parties in these three assessment years. Though the parties were identifiable and cash payments were genuine, these payments were squarely hit by the provisions of section 40A(3). I have carefully considered the submissions made during the course of appellate proceedings and various case laws relied upon. Considering various facts and lack of cogent evidences, I found that the case laws relied upon are distinguishable on facts as has been held by earlier appellate orders also. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the assessee to the principals in cash violates the provisions of rule 6DD has not been disputed. Now the only point required to be determined by the Tribunal is whether the cases of the assessee fall under any of the exceptions laid down in clause ( j ) of rule 6DD. Further, that the explanation given by the assessee is not substantiated by any cogent evidence. It clearly points out that the explanation given by the assessee, being not genuine and bona fide, is liable to be rejected and the impugned addition made/sustained by the tax authorities below in the assessment years under consideration are required to be upheld. 9. Exceptional circumstances for not making disallowances as provided under sub-section (3) of section 40A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument of the assessee that since the genuineness of the transaction is not in dispute on technical reasons the disallowance should not be made, does not have much force because clause ( j ) provides that even if the assessee is able to prove the exceptional circumstances laid down in clause ( j ) the assessee is still required to prove with evidence to the satisfaction of the Assessing Officer the genuineness of the payment and the identity of the payee. Hence, merely because the genuineness of the transaction is not in dispute it in itself does not absolve the assessee from the disallowance under sub-section (3) of section 40A in case the assessee fails in establishing the exceptional circumstances laid down in clause ( j ) of rule 6DD of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... good business relation in future. Further, the assessee has not explained as to where from it obtained the cash for making the payments in cash and whether it was its own cash or it was an amount borrowed from someone. In case the assessee had obtained the amount as loan in cash for making payment to the principals, then the assessee has again violated provisions of section 269SS by obtaining loan in cash and not by account payee cheques or account payee bank draft. 13. From the facts explained hereinabove, it is evident that in fact the assessee never genuinely intended to make the payments initially by crossed cheques/drafts in compliance with the provisions of sub-section (3) of section 40A read with rule 6DD and simply adopted this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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