TMI Blog2022 (2) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... at no disallowance u/s.40A(3) of the Act, even in a case where the payments had been made by the assessee in cash beyond the prescribed limit could validly be made by invoking the provisions of Section 154 of the Act. In our considered view, as the AO had grossly erred in invoking the provisions of Section 154 of the Act for the purpose of disallowing the aforementioned amount u/s. 40A(3) of the Act, therefore, the order therein passed by him cannot be sustained and is accordingly liable to be vacated. We, thus, not being able to persuade ourselves to subscribe to the view taken by the lower authorities set aside the order passed by the CIT(A) and quash the order passed by the AO u/s.154 of the Act. Grounds of Appeal Nos.1 to 4 are allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rinciples of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in making disallowance of ₹ 2,47,380/- without considering the Audited Balance Sheet which clearly states that there is no amount inadmissible u/s 40A(3), is bad in law and against the facts and circumstances of the case. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 3. Controversy in the present appeal lies in a narrow compass, i.e., as to whether or not the Assessing Officer, vide his order passed u/s.154 of the Act, dated 07.03.2017, was justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the jurisdiction that was vested with him u/s.154 of the Act, therefore, the disallowance u/s.40A(3) of ₹ 2,47,380/- so made by him could not be sustained and was liable to be struck down. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that as the disallowance of the aforesaid amount in question u/s.40A(3) of the Act was not in the nature of a mistake which was glaring, patent, obvious and apparent from record, but in fact an issue which was clearly debatable, therefore, the same was by no means in the nature of a mistake that was rectifiable u/s.154 of the Act. Backed by his aforesaid contention, it was submitted by the Ld. AR that the order passed by the AO u/s.154 of the Act was not sustainable in the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t this stage, we may herein observe, that though Section 40A(3) contemplates disallowance of certain expenditure which is incurred by an assessee in cash beyond the prescribed limit, however, Rule 6DD of the Income Tax Rules, 1962 carves out a set of exceptions wherein the payments despite having been made in cash beyond the aforesaid prescribed limit are not to be disallowed. In the backdrop of our aforesaid observations, we are of a strong conviction, that no disallowance u/s.40A(3) of the Act, even in a case where the payments had been made by the assessee in cash beyond the prescribed limit could validly be made by invoking the provisions of Section 154 of the Act. In our considered view, as the AO had grossly erred in invoking the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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