TMI Blog2013 (8) TMI 1088X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is proprietor of two concerns viz. (i) M/s Vaagesh Enterprises ( AE in short) ; and (ii) M/s Shiva Enterprise ( SE in short). During the course of assessment proceedings, the assessing officer observed that one of the assessee s proprietary concern AE had made purchases from assessee s another proprietary concern SE in cash exceeding Rs. twenty thousand on various occasions totaling to ₹ 30,63,087/-. Assessing officer asked as to why they should not be treated as payment in violation of provisions of sec. 40A(3), assessee pleaded that these concerns maintain separate books of accounts and the fact of the matter remains that they come under the ownership of only one assessee. Therefore, the interse payments belong to only one asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 112 ITR 134 (Guj.); (ii) Walford Transport (Estern India) Vs. CIT 240 ITR 902 (Gau.); (iii) Attar Singh Gurumukh Vs. ITO 191 ITR 667 (SC); (iv) J.B. Boda Co. Pvt. Ltd. Vs. CBDT 223 ITR 271 (SC). 2.2. CIT(A), however, confirmed the addition by applying Hon ble Andhra Pradesh High Court judgment in the case of Smt. Ch. Mangayamma Vs. Union of India (1999) 239 ITR 687, which held that Section 40A(3) cannot be considered as constitutionally invalid. CIT(A) further held that the assessee has offered no argument that cash payments were made on account of business expediency and exceptional and unavoidable circumstances. Provisions of Section 40A(3) are not merely a formality but they were introduced to discourage payment not throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec. 40A(3) contemplates presence of two parties i.e. assessee and another person. In this case it is a glaring fact there is no other person and these payments are interse transactions of only assessee. There is no other person with whom cash transactions are made. The word person also is defined as including assessee in individual capacity. Assessee s right hand is giving payment to assessee s left hand. In the absence of presence of another person, section 40A(3) is not attracted at all. On merits, reliance is placed on the above judgments. 4. Ld. DR on the other hand contends as under: (i) Section 40A(3) was not created in order to only curb black money but to ensure that the assessees make the payments by banking channels. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tious transactions, which is not alleged in this case. In the case of Attar Singh Gurumukh (supra) the Hon ble Supreme Court has held that Section 40A(3) enables the assessing officer to ascertain whether the payment is genuine and not from unaccounted money. Similarly, in case of J.B. Boda Co. Pvt. Ltd. (supra), also the Hon ble Supreme Court has held that nature and genuineness of the transaction and intention of the parties is to be considered. 5.2. The case law relied on by the CIT(A) of Smt. Ch. Mangayamma (supra) is not applicable as it decides the constitutional validity of section 40A(3) which is not the issue before us. 5.3. In our considered view, lower authorities have not alleged any tax evasion, deployment of black mone ..... X X X X Extracts X X X X X X X X Extracts X X X X
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