TMI Blog2014 (1) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... Payee Bank Draft to the drivers/sub -contractors who are nothing but agent of the assessee - In view of provisions contained in Rules 6DD(1) such payments are permissible - The decision in ITO Versus Rajesh Kr Garg [2011 (8) TMI 632 - ITAT Kolkata] followed - The assessee as well as recipient had shown cash payment less than Rs.20,000 - Then, a single day more once but single entry of payment is not exceeding Rs.20,000 - the assessee has not violated the Section 40A(3) of the IT Act – decided in favour of Assessee. Disallowance u/s 36(1)(vii) of the Act - Addition made on claim of bad debts – Business or trading loss u/s 28(1) of the Act – Held that:- The appellant allowed Shri Rajeshbhai R. Mistry to collect money from the market from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued on mere change of opinion and on the same set of facts without any further material brought on record. The impugned reassessment order thus requires to be quashed as void-ab-initio as held by the Hon'ble Supreme Court in the case of CIT vs. Kelvinator of India Ltd. 320 ITR 561 (SC) and Hon'ble Guiarat High Court in the case of Mihir Textiles Ltd. Vs. Jt. CIT (2010} Tax LR 417 (Gui.) apart from host of other decisions. 1.1 The Id. CIT(A) has further erred in not appreciating the fact that order u/s.143(3) of the Act was passed after due application of mind and the details submitted as well as available on record. Hence, the reopening of assessment merely on change of opinion on the same set of facts without bringing on record any n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a business/trading loss u/s.28(1) of the Act." 2. Ground nos. 1, 1.1 2 have not been pressed by the ld. Counsel for the appellant. Therefore, the same are dismissed. 3. Ground no.3 is against confirming the addition of Rs. 2,50,980/- u/s. 40A(3) of the IT Act. The A.O. observed that the assessee is in the business of wholesale trading in household appliances and utensils. The A.O. observed that during the year under consideration assessee had made the total of such amount of cash to the tune of Rs.12,54,900/-. Therefore, he disallowed 20% to the said amount at Rs.2,50,980/- u/s. 40A(3) of the IT Act. The appellant argued at the time of assessment that the appellant made purchase from Sanatkumar N. Shah to the tune of Rs.47,08,250/- an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant. The appellant had not violated Section 40A(3) of the IT Act. He further relied upon in case of ITO vs. Rajesh Kr. Garg, ITAT, Kolkata, 'A' Bench in ITA No.532/Kol/2011 for A.Y. 2006-07, order dated 05th August, 2011, wherein identical issue has been considered by the Hon'ble Kolkata bench decided the appeal in favour of the assessee. Thus, he requested to delete the addition. At the outset, ld. Sr. D.R. vehemently relied upon the order of CIT(A) and requested to confirm the order of CIT(A). 6. We have heard the rival contentions and perused the material on record. On verification of the copy of account of Sanatkumar N. Shah, HUF, it reveals that the appellant had made cash payment of Rs.19,500/- in a single day more than one. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ards the addition of Rs.16,52,066/- u/s. 40A(3) I may submit that the payments were made to the drivers/sub-contractors who are nothing but agents of the assessee. Payment to the agent of the assessee in cash exceeding Rs. 20,000/-is permissible in 5 ITA 532/K/2011 Rajesh Kr. Garg. A.Y.06-07 view of Rule 6DD(1) of the Income Tax Rules, 2006. The assessee made payment exceeding Rs. 20,000/- otherwise than by A/c. Payee Cheques or A/c Payee Bank Draft to the drivers/sub -contractors who are nothing but agent of the assessee. In view of provisions contained in Rules 6DD(1) such payments are permissible. In view of the foregoing legal position I submit that the payment to drivers/sub-contractors (who are agents of the assessee) are permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is clear that it is not a bad debt because sale price has already been received from the market only that its employee had not deposited the sum. Further, the assessee had been charging the p l account for salary paid each month to Shri Rajeshbhai R. Mistry. Therefore, it was held that the deduction was thus not admissible u/s.36(1)(vii) of the IT Act. 8. The assessee carried the matter before the CIT(A) on this issue. Ld. CIT(A) confirmed the addition by observing that it is an embezzlement by the employee of the appellant and what legal action had been taken against him. Nothing had been brought out by the A.R. of the appellant to establish that the amount of Rs.2,13,842/- was actually embezzled by the employee of the appellant. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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