2016 (9) TMI 71

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..... the assistance of learned counsel for the Revenue. The issue pertains to exercise of revisional powers by the Commissioner under Section 263 of the Income Tax Act,1961 ['the Act' for short]. Upon reopening of the assessment, the Assessing Officer questioned the assessee about cash payments in excess of Rs. 20,000/- in terms of Section 40A(3) of the Act. The case of the assessee was that total expenditure of Rs. 3.98 crores was made for purchase of cotton directly from farmers, producers. Undisputedly, if such payments were for purchase of agricultural produce made to the cultivators or growers or producers of such produce, the provisions of Section 40A(3) would not apply. In this context, the assessee produced list of hundreds of ag .....

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..... he assessment was reopened on the ground that the purchases of URD Kapas of Rs. 3,98,60,119/- had been made in violation of provision of section 40A(3) r.w.s. 6DD(J) of the I.T.Rules, 1962. There is no dispute that the AO had issued a notice requesting the assessee to explain such purchases. In reply thereto, the assessee had submitted that the cash payment made by it are covered by the exception embedded under Rule 6DD(e)(i) as all such payments are made for agricultural produce. There is no dispute with regard to the legal position that in case the assessee makes purchase of agricultural produce and payments in excess of Rs. 20,000/- is made to the cultivator/grower or producer of such produce or products, in that event, the provisions of .....

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..... the file of the Assessing Officer for fresh adjudication and uninfluenced by observation on merits, revision proceedings cannot be faulted de hors the facts of the case not warranting assumption of jurisdiction under section 263. Such an approach will reduce the time limits for completion of assessments to an empty ritual, and make finality of proceedings meaningless. In the light of these discussions, as also bearing in mind entirety of the case, we quash the revision proceedings as unsustainable on merits. The assessee gets the relief accordingly." 5. As noted, the Assessing Officer in the process of framing assessment had made inquiries with the assessee regarding cash payments in excess of Rs. 20,000/-. The assessee pointed out that s .....

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