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TMI Blog2012 (7) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable even for genuine transactions and further that even if the agriculturists were paid in cash or bearer cheques through the agents of the company, the exceptions provided under Rule 6DD (g) & (k) were not applicable and hence the disallowance to the extent of Rs.1,98,54,348/-. 2) The Hon'ble CIT(A) erred in holding that the sum of Rs.27,19,425/- represented payments made by way of commission to various parties calling for disallowance u/s 40(a)(ia) on the ground that no TDS was deducted and paid on such payments without appreciating that sec. 40a(ia) is applicable only to sums payable and not paid as held in Jaipur Mitharam Nigam Lid and in similar cases. 3) The Hon'ble CIT(A) further erred in not appreciating that the out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions, the assessee was asked to give a list of such payments made by way of bearer cheques. In response to the same, the assessee produced a list of such bearer cheque payments made during the financial year 2005-06 from which AO observed that the assessee has made an aggregate payment of Rs.59,09,625/- in the form of bearer cheques contravening the provisions of sec. 40A(3) and also that the assessee agreed for disallowance of the same u/s 40A(3) of the Act. However, while investigating the bank accounts of the assessee maintained with Canara Bank and MNC Bank, the AO further observed that banking cash transaction tax has been debited to the assessee's accounts on various dates on account of withdrawals made by self cheques and name che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, the provisions of sec. 40A(3) are not attracted. The CIT(A), however was not convinced with the assessee's contention and observed that the payments were made by bearer cheques, so that cheques were encashed in the banks and, therefore, the facility of banks were utilized. Therefore, according to him, the assessee has not proved the necessity of making the payments in cash other than by account payee cheques. As regards assessee's contention that the genuineness of the transaction has not been doubted and, therefore, the provision of sec. 40A(3) cannot be applied to, the learned CIT(A) held that where the genuineness of the transactions was not proved, then the entire amount is not to be allowed and even if the transactions are genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision of sec. 40A(3) of the Income-tax Act. For the applicability of exceptions provided under Rule 6DD of Income-tax Rules, the assessee has to establish the hardship or inconvenience that is caused to the payees if the payments are made by the account payee cheques. One of the pleas of the assessee is that the lands are purchased from the agriculturists who are suspicious of receiving the amounts in cheques and are usually demanding payment in cash before parting with the possession of their lands. It is no doubt that (as observed by the CIT(A) that there is no banking facility in the villages where lands have been purchased. However, we find that the payments are not by cash but are by bearer cheques. As rightly pointed out by the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we do not see any reason to interfere with the order of the CIT(A) and this ground of appeal is rejected. 9. Coming to ground Nos. 2 to 4, brief facts of the case are that the AO made the disallowance of commission payment and interest on vehicle finance u/s 40a(ia) on the ground that the assessee has failed to make deduction of tax at source on these payments. 10. Aggrieved, the assessee preferred an appeal before the CIT(A), who confirmed the order of the AO and the assessee is in second appeal before us. 11. The learned counsel for the assessee submitted that this issue of disallowance u/s 40a(ia) on the ground that no TDS was deducted and paid on such payment is covered by the decision of Special Bench of the Tribunal in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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