TMI Blog2022 (8) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... d purchases is made on behalf of principal, and his income is only commission on net sales. In this regard, the assessee has placed agreement between the M/s. B M Hot Breads Pvt.Ltd. and the assessee. These fact needs to be verified by the AO to decide applicability of provisions of section 40A(3) of the Act. Hence, we set aside the issue to the file of the AO and direct the AO to reconsider the issue in light of averments of the assessee and also agreement between the parties and decide applicability of provisions of section 40A(3) - Appeal filed by the assessee is treated as allowed for statistical purposes. - I .T.A. No. 2781 /Chny/2018 - - - Dated:- 27-7-2022 - SHRI V. DURGA RAO , JUDICIAL MEMBER AND SHRI G. MANJUNATHA , ACCOUN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in this regard was brushed aside on flimsy reasons, thereby vitiating the related findings. 5. The CIT (Appeals) failed to appreciate that the sustenance of the addition made on invoking section 40A(3) of the Act on various facets was wrong, erroneous, unjustified, incorrect and not sustainable in law. 6. The CIT (Appeals) failed to appreciate that in any event commercial transactions were outside the scope of the provisions of section 40A(3) of the Act especially in view of the proviso below section 40A(3A) of the Act, thereby vitiating related findings. 7. The CIT (Appeals) failed to appreciate that further in any event the applicability of exceptional circumstances statutorily prescribed was not examined properly w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her as commission for selling hot breads. The assessee had accounted purchases and sales and declared profits in books of account. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has made cash payment in excess of prescribed limit u/s.40A(3) of the Act, for purchases and consequently, disallowed total purchases u/s.40A(3) amounting to Rs.2,58,98,591/- for payment in cash in excess of prescribed limit. On appeal, the learned CIT(A) confirmed additions made by the Assessing Officer on the ground that the assessee has violated provisions of section 40A(3) of the Act, and further, payments made by the assessee for purchases does not cover under any of exceptions provided under Rule 6DD of I.T. Rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side the issue to the file of the Assessing Officer for further verification. 6. We have heard both the parties, perused material available on record and gone through orders of the authorities below. There is no dispute with regard to fact that the assessee has accounted purchases in its books of account and made cash payments for said purchases in excess of prescribed limit provided u/s.40A(3) of the Act. Therefore, the Assessing Officer is right in applying provisions of section 40A(3) of the Income Tax Act, 1961, to cash payments for purchases in excess of prescribed limit. However, it was arguments of the assessee before us that he is working as commission agent for the principal for selling hot breads manufactured by M/s. B M Hot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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