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2015 (10) TMI 246 - ITAT PUNE

2015 (10) TMI 246 - ITAT PUNE - TMI - Addition u/s 40A(3) - assessee had made cash payments exceeding ₹ 20,000/- for the purchases from a single party in a day during the relevant period - Held that:- The assessee does not fall within the exception given in Clause (k) of Rule 6DD. It is not the case of the assessee that the assessee or the suppliers of the materials are not having bank account. The exceptions in Rule 6DD are provided to mitigate the situations where, either of the parties .....

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ion of the provisions of the Income Tax Act. As far as agents referred in Rule 6DD(k) are concerned, the authorised representatives of the supplier of material cannot be equated with the Ďagentsí referred to in Rule 6DD(k) of Income Tax Rules.

The Assessing Officer had not made any addition by applying GP rate by rejecting the books of account of the assessee. It is the case of the assessee that no books of account are maintained. Further, except for the disallowance u/s. 40A(3) no ad .....

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Charging of interest u/s. 234A, 234B and 234C is mandatory and consequential (CIT Vs. Anjum M.H. Ghaswala -2001 (10) TMI 4 - SUPREME Court ). - Decided against assessee. - ITA No. 193/PN/2015 - Dated:- 4-9-2015 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri M.K. Kulkarni For The Revenue : Shri B.C. Malakar ORDER PER VIKAS AWASTHY, JM The appeal has been filed by the assessee impugning the order of Commissioner of Income Tax (Appeals)-IV, Pune dated 17-12-2014 for the a .....

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. 2) On the facts and circumstances of the case and in law the disallowance made by A.0. of ₹ 1,31,61,987/- and confirmed by CIT(A) is contrary to law and without jurisdiction. The same be quashed. 3) On the facts and circumstances of the case and in law the A.0. collected the information by issuing notices to many persons under section 133(6) of the Act which information was collected on the back of the assesseeappellant and used against him. There was serious contravention of the princip .....

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987/- u/s. 40A(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). Ground No. 4 is against the charging of interest u/s. 234A, 234B and 234C of the Act, whereas Ground No. 5 is general in nature. 3. The brief facts of the case are The assessee is an individual and is engaged in the business of making pharsan, shev, wafers, chivda and other snacks. The assessee filed his return of income for the assessment year 2010-11 on 11-10-2010, declaring income of ₹ 33,31,410/-. Surv .....

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ssee was required to maintain regular books of account in accordance with the provisions of section 44AA(2) and also should have got the accounts audited in accordance with the provisions of section 44AB. On verification of the documents impounded during survey, it was found that the assessee had made cash payments exceeding ₹ 20,000/- for the purchases from a single party in a day during the relevant period. Majority of the payments were made in cash exceeding ₹ 20,000/- to M/s. Lun .....

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, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) after analyzing the facts of the case, details of the cash payments made by the assessee and the explanation furnished for making such cash payments, held that the assessee has failed to establish that the payments by cash on regular basis were made under exceptional and unavoidable circumstances or out of business compulsions. The Commissioner of Income Tax (Appeals) uphe .....

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. 271A and non-audit of books of account u/s. 44AB. The statement of account supplied by the sellers of material would show that the transactions took place on weekly basis when the weekly bazaar was held at Amrutwadi i.e. the place of business of the assessee. That the representative of the suppliers of materials would visit the assessee on the weekly bazaar day, take order for supply of material for next week and collect the amount from the assessee for the material supplied in the earlier wee .....

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yments by cheque and/or draft etc. was not feasible. Therefore, such payments in cash were made out of business expediency and under exceptional and unavoidable circumstances. Since, the assessee had not maintained any regular books of account, the assessee had filed his return of income on estimate basis. The Assessing Officer accepted the sales figure of ₹ 3,46,11,731/- and the net income returned i.e. ₹ 33,31,410/-. No other addition except u/s. 40A(3) was made. Thus, the estimate .....

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). ii. CIT Vs. Smt. Santosh Jain; 296 ITR 324 (P&H). 5. Au contraire Shri B. C. Malakar representing the Department vehemently defended the findings of Commissioner of Income Tax (Appeals) and prayed for dismissing the appeal of the assessee. The ld. DR submitted that the assessee was mainly dealing with M/s. Lunkad Brothers from Pune. The place of business of the assessee is only 90 kms from Pune. It is not the case of the assessee that the assessee is not having bank account or there is no .....

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eported as 173 ITR 340 (A.P.) and in the case of T G Mutha Vs. ITO reported as 54 ITD 460 (Pune). 6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The assessee in its appeal has primarily raised two issues: i. Disallowance of ₹ 1,31,01,987/- u/s. 40A(3) by rejecting the submissions of the assessee and ignoring the provisions of Rule 6DD(k) of the Income Tax Rules, 1962, and ii. Levy of interest u/s. 234A, 234B .....

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rnover, the assessee is not maintaining books of account much less to say about the audit of accounts. A perusal of the materials available on record shows that the assessee is a recalcitrant and has scanty respect for the law of the land. The assessee has tried to take shelter of the exceptions provided under Rule 6DD(k) of the Act. For the sake of convenience the relevant extract of Rule 6DD(k) is reproduce as under: 6DD. No disallowance under sub-section (3) of section 40A shall be made and n .....

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ices on behalf of such person; 8. We are of the considered view that the assessee does not fall within the exception given in Clause (k) of Rule 6DD. It is not the case of the assessee that the assessee or the suppliers of the materials are not having bank account. The exceptions in Rule 6DD are provided to mitigate the situations where, either of the parties to the transaction does not have the benefit of banking facilities or are strained by some exceptional or unavoidable circumstances to dea .....

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supplier of material cannot be equated with the agents referred to in Rule 6DD(k) of Income Tax Rules. 9. The ld. Counsel for the assessee has tried to draw support from the decisions rendered in the cases of CIT Vs. Banwari Lal Banshidhar (supra) and in the case of CIT Vs. Smt. Santosh Jain (supra). In the said cases the Hon'ble High Courts deleted the disallowance made u/s. 40A(3) on the ground that the income of the assessee was estimated by applying GP rate by rejecting the books of acc .....

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