Tribunal Upholds Ruling on Cash Payments Exemption

The Tribunal upheld the CIT(A)'s decision to delete the addition made on account of cash payments, ruling that the cash payments were protected under Rule 6DD(b) of the Income Tax Rules, 1962, as they were made to a government agent in compliance with specific rules related to excise duties. The Tribunal found that the assessee's cash payments to a territorial licensee bottling plant were exempt under Rule 6DD(b) as per government notification, dismissing the Revenue's appeal and affirming the lower court's decision.

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Issues:
1. Justification of deleting addition made on account of cash payments in violation of section 40A(3) of the Income Tax Act, 1961.

Analysis:
The appeal was filed by the Revenue against an order passed by C.I.T-(A)-Durgapur for A.Y. 2012-13. The main issue to be decided was whether the CIT(A) was justified in deleting the addition made on account of cash payments in violation of section 40A(3) of the Income Tax Act, 1961. The Tribunal rejected an adjournment application and proceeded to dispose of the appeal based on the material facts on record, including various orders of the Tribunal. The AO had found that the assessee paid a substantial amount in cash to a company and did not provide evidence of payment through account payee cheque or bank draft, resulting in the amount being brought to tax. However, the assessee argued that the cash payments were made in compliance with specific rules related to excise duties and were protected under Rule 6DD(b) of the Income Tax Rules, 1962.

The Tribunal considered the arguments presented and the specific circumstances of the case. It noted that previous judgments by the Kolkata benches of the ITAT had held that Rule 6DD(b) applied when payments were made to a government agent in legal tender under rules framed by the government. In this case, the assessee had purchased goods from a territorial licensee bottling plant and made cash payments, which were protected by the exemption under Rule 6DD(b) as per the notification issued by the government. Therefore, the Tribunal found no fault in the order of the CIT(A) and dismissed the grounds raised in the appeal by the Revenue. Consequently, the appeal by the Revenue was dismissed, and the order was pronounced in open court on 28.03.2018.

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