2013 (10) TMI 282 - HC - Income Tax

High Court affirms Tribunal's decision on cash payments, no legal infirmity found

The High Court upheld the Income Tax Appellate Tribunal's decision to delete the addition of cash payments exceeding Rs.10,000 made by a sugar ... Violation of provisions of Section 40A(3) - Assessee having made cash payments in excess of Rs.10,000/- in contravention of the provision Section 40 A (3) of the Act, the said payments should be added to the income of the assessee for the assessment year 1990-91 – Assessee made cash payment of Rs.13,43,790/- - Held that:- Assessee had led evidence in detail to explain the payments made in cash in excess of Rs.10,000/- beyond banking hours - Payments were made in the bank account of the U. P. State Sugar Corporation Ltd., Bareilly on the instructions of the Corporation directly in the bank or in case of payments made after banking hours, the payments have been made at Mill counter as directed by the Corporation to enable them to meet their daily expenses and excise duty payments. The certificate was also filed before the Assessing Officer - Deleted of the addition of the amount of Rs.13,43,790/- for the assessment year 1990-91 – Decided against the Revenue. Issues:Challenge to the order of the Income Tax Appellate Tribunal regarding cash payments exceeding Rs.10,000 in violation of Section 40 A (3) of the Income Tax Act, 1961.Analysis:The case involved an appeal under Section 260-A of the Income Tax Act, 1961, filed by the Revenue challenging the Income Tax Appellate Tribunal's order regarding cash payments exceeding Rs.10,000 in contravention of Section 40 A (3) of the Act. The respondent-assessee, engaged in sugar manufacturing and trading, was selected for scrutiny due to cash payments totaling Rs.13,43,790. The Assessing Officer added this amount to the assessee's income for the assessment year 1990-91 and initiated penalty proceedings under Section 271 (1) (c). The assessee contended that cash payments were made due to urgent supplies and instructions from U.P. State Sugar Corporation, supported by documentary evidence. The Commissioner of Income Tax (A) accepted the assessee's explanation and directed deletion of the addition. The Revenue appealed to the Income Tax Appellate Tribunal solely on the deletion of the addition. The ITAT upheld the CIT (A)'s decision. The High Court found no legal infirmity in the deletion of the addition, upholding the ITAT's order and dismissing the appeal, stating that no substantial question of law was raised.The CIT (A) found the Assessing Officer failed to appreciate the facts and explanations provided by the assessee regarding cash payments. The CIT (A) noted that the genuineness of payments was not doubted, and the payments were verified from accounts and certificates issued by U.P. State Sugar Corporation. The certificate from the Corporation confirmed that cash payments were made after banking hours to meet daily expenses and excise duty payments, as instructed by the Corporation. The High Court observed that the assessee had presented detailed evidence explaining the cash payments, which were made in accordance with the Corporation's instructions. The High Court upheld the ITAT's decision, emphasizing that no legal infirmity was found in deleting the addition of Rs.13,43,790 for the assessment year 1990-91. The High Court concluded that the appeal did not raise any substantial question of law and dismissed it without costs.