TMI Blog2015 (8) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... tention that the appellant has not established that it was the interest free funds that were actually advanced as interest free advances is without substance. Money has no identity. So long it is established that the interest free advances are made by an assessee who has adequate free reserves, it is sufficient to establish that the amounts advanced interest free cannot be added to the assessee's income. It was not contended that the interest free advances exceeded the interest free funds available with the appellant. Nor was it established that a particular advance received was in turn advanced by the assessee interest free.- Decided in favour of the assessee. - ITA No. 413 of 2014 - - - Dated:- 16-7-2015 - S. J. Vazifdar, ACJ And Gurmeet Singh Sandhawalia, JJ. For the Petitioner : Mr Alok Mittal, Adv. For the Respondent : Mr G S Hooda, Adv. JUDGMENT S. J. Vazifdar, Acting Chief Justice (Oral) 1. This is an appeal against the order of the Income Tax Appellate Tribunal reversing the order of the CIT (Appeals). The matter pertains to the assessment year 2009-10. 2. The appeal is admitted on the following substantial questions of law:- (1) Whether the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Stamp Registration Authority. The CIT (Appeals) held the transactions to be genuine. Accordingly, the CIT held that the bar against the grant of deductions under Section 40A(3) of the Act was not attracted. 5. It is important to note that the Tribunal did not upset these findings including as to the genuineness and the correctness of the transactions. It is also important to note that the Tribunal noted the contention on behalf of the appellant that there was a boom in the real estate market; that it was necessary, therefore, to conclude the transactions at the earliest and not to postpone them; that the appellant did not know the vendors and obviously therefore, insisted for payment in cash and that as a result thereof, payments had to be made immediately to settle the deals. The Tribunal did not doubt this case. The Tribunal, however, held that the claim for deduction was not sustainable in view of Section 40A(3) as the payments which were over ₹ 20,000/- were made in cash. The Tribunal, therefore, disallowed the same only on a construction of Section 40A(3). The Tribunal restricted the ambit of the proviso to the circumstances mentioned in Rule 6DD of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, in our opinion, the Tribunal was clearly in error in not travelling beyond the circumstances referred to in paragraph 4 of the Circular and to consider the explanation submitted by the assessee on its own merit. 17. Significantly paragraph 5 reproduced hereinbelow gives a clear indication that Rule 6DD(j) has to be liberally construed and ordinarily where the genuineness of the transaction and the payment and identity of the receiver is established, the requirement of Rule 6DD(j) must be deemed to have been satisfied. Paragraph 5 of the Circular reads as under [1977] 108 ITR (St.) 8, 9: 5. It can be said that it would, generally, satisfy the requirements of Rule 6DD(j), if a letter to the above effect is produced in respect of each transaction falling within the categories listed above from the seller giving full particulars of his address, sales tax number/permanent account number, if any, for the purposes of proper identification to enable the Income-tax Officer to satisfy himself about the genuineness of the transaction. The Income-tax Officer will, however, record his satisfaction before allowing the benefit of Rule 6DD(j). 18. It appears that fulfilment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cable or would have caused genuine difficulty to the payee. It is also open to the assessee to identify the person who has received the cash payment. Rule 6-DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft in the circumstances specified under the rule. It will be clear from the provisions of Section 40-A(3) and Rule 6-DD that they are intended to regulate the business transactions and to prevent the use of unaccounted money or reduce the chances to use black money for business transactions. [See: Mudiam Oil Company v. ITO[(1973) 92 ITR 519 (AP)] ]. If the payment is made by a crossed cheque drawn on a bank or a crossed bank draft then it will be easier to ascertain, when deduction is claimed, whether the payment was genuine and whether it was out of the income from disclosed sources. In interpreting a taxing statute the court cannot be oblivious of the proliferation of black money which is under circulation in our country. Any restraint intended to curb the chances and opportunities to use or create black money should not be regarded as curtailing the freedom of trade or business. 9. At the cost of repetition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced by the assessee interest free. 13. In the circumstances, the order of the Tribunal upholding the addition is also set aside. 14. Both the questions are, therefore, answered in favour of the appellant/assessee. The appeal is accordingly allowed. There shall be no order as to costs. 15. We pronounced the judgment in open Court on the conclusion of the arguments. While finalizing the judgment, we noticed a discrepancy between Rule 6-DD as downloaded from the internet which was tendered in Court and Rule 6-DD reproduced in several judgments including in Attar Singh Gurmukh Singh and others v. Income Tax Officer, Ludhiana and others, 1991(4) Supreme Court Cases 385, Smt. Harshila Chordia v. Income Tax Officer 2008 (298) ITR 349 (Rajasthan), Commissioner of Income Tax v. Ashoka Steel Industries and Flour Mills 2007(293) ITR 192 (P H), Commissioner of Income Tax v. Brij Mohan Singh and Co. 1994 (209) ITR 753 (P H) and Girdhari Lal Goenka v. Commissioner of Income Tax 1989 (80) CTR 140 (Calcutta). The material difference really is in clause 6-j of Rule 6-DD. On further research we found that Rule 6-DD was amended by the Income Tax (7th Amendment Rules), 2008. Sub Rule 2 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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