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TMI Blog2018 (5) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... e is engaged in the business of purchase and sale of SIM cards and recharge vouchers. The return was e-filed on 14/10/2010 declaring total income at Rs. 14,39,130/-. The assessment was completed on a total income of Rs. 4,28,39,240/- after making addition of Rs. 4,14,00,108/- under section 40A(3) of the Act. 4. Being aggrieved by the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Assessee filed detailed written submission before the ld. CIT(A) and it was contended that the object of enacting section 40A(3) is to check evasion of taxes and ensure that payments, in respect of which deductions are claimed by the taxpayers, are genuinely made and accommodation payments are not claimed by the taxpayers as de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paper book and submitted that as per the Demand Note assessee was required to make payment in cash and the genuineness of the payment to BSNL is not doubted by the Department. The ld. A.R. of the assessee further contended that as per Article 12 of the Constitution of India, definition of State includes local or other authorities within the territory of India or under the control of the Government of India. To elaborate this, the ld. A.R. of the assessee drew our attention to page 2 of the paper book, which is the copy of 'STATE' FOR PURPOSES OF FUNDAMENTAL RIGHTS, Chapter II, wherein regarding BSNL it is clearly stated that BSNL is a State within the meaning of Article 12 of the Constitution of India, since all the assets of the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, can be dispensed with if the assessee is able to prove the business expediency because of which it had to make cash payments and genuineness of the transactions have to be verified. In that case the Tribunal while allowing the appeal of the assessee held that detailed submissions along with corroborative evidences proved that the expenses incurred in cash were genuine which were paid through the Excise Department and there were practical expediency because of which the payments have to be made in cash. These facts were not controverted by the Assessing Officer or by the ld. CIT(A). The assessee under business expediency had to make payments in cash. Further, not a single transaction had been questioned at any stage. The ld. CIT(A) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enshrined in Article 12 includes local or other authorities within the territory of India or under the control of the Government of India. Therefore, it is clear that BSNL is a body which is an instrumentality of the agency of the Government and taking guidance from the order of the Pune Bench of the Tribunal in the case of Income Tax Officer, Ward 2(1), Pune vs. Smt. Sapna Sanjauy Raisoni (supra), we hold that BSNL is a State under Article 12 of the Constitution of India. The facts evolves and brings out that assessee was required by BSNL to make payments in cash which is evidenced from the Demand Note issued by BSNL which is placed on record. We have also gone through findings of the Chandigarh Bench of the Tribunal in the case of DCIT, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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