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TMI Blog2018 (11) TMI 1719X X X X Extracts X X X X X X X X Extracts X X X X ..... round No.1 and 4 are general in nature which does not require specific adjudication. 3. Ground No.3 is not pressed by the assessee during the appeal hearing, hence ground No.3 is dismissed as not pressed. 4. Ground No.2 is related to the disallowance u/s 40A(3) of the Income Tax Act, 1961 (hereinafter called as 'Act'). During the assessment proceedings, the Assessing Officer (AO) found that the assessee has made cash payments in excess of Rs. 20,000/- to farmers and the said expenditure was debited to Profit and Loss account in violation of section 40A(3) of the Act. The assessee submitted before the AO that the assessee had purchased the lands from the local farmers and they have insisted for cash payment and the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the remand report stating that the transactions appear to be genuine and the payments have been made on the insistence of the farmers. The AO has also submitted in the remand report that the payments were duly accounted in the books of accounts and the same were genuine. Therefore, the Ld.A.R submitted that the payments were made in cash as compulsion but not by choice and the recipients are identifiable. Therefore, the assessee requested to allow the deduction claimed by him and relied on the order of Hon'ble High Court of Andhra Pradesh in the case of Sri Lakshmi Satyanarayana Oil Mills Vs. CIT, AP, Hyderabad (2014) 49 Taxmann.com 363 (AP) and the decision of ITAT Jaipur Bench in the case of M/s A Daga Royal Art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s before coming to conclusion. For the sake of clarity and convenience, we extract relevant part of the order of the Coordinate Bench cited supra from para No.41 to 43 which reads as under: "41. It was submitted by the Ld AR that in order to secure the deal, assessee had no other option but to make the payment in cash. Cash payments were made from the disclosed sources being the amount withdrawn from bank. It was for sheer insistence of the seller that the payments were made in cash. Had the assessee denied the cash payment looking to the provisions of sections 40A(3), the deal could not have been finalized. In such circumstances, in the business interest and to complete the deal, the assessee had chosen to make the payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly identifiable in form of the withdrawals from the assessee's bank accounts and the said details were submitted before the lower authorities and have not been disputed by them. It is not the case of the Revenue either that unaccounted or undisclosed income of the assessee has been utilised in making the cash payments. 43. In the entirety of facts and circumstances of the case and respectfully following the legal proposition laid down by the various Courts and Coordinate Benches referred supra, we are of the view that the identity of the persons from whom the various plots of land have been purchased and source of cash payments as withdrawals from the assessee's bank account has been established. The genuineness of the tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payments are genuine, then the Acts provide for immunity from disallowance of expenditure, if the assessee proves to the satisfaction of the assessing officer that there exists a business expediency in making the cash payments." 8.2. In the instant case, there is no dispute that the payments are genuine, duly accounted in the books of accounts and the recipients are identifiable, and the facts are similar to that of the case laws relied upon by the assessee cited supra. Therefore, respectfully following the view taken by the Coordinate Benches of ITAT in the cases cited supra, we hold that the disallowance made u/s 40A(3) is not called for. Accordingly, we set aside the orders of the lower authorities and delete the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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