Tribunal allows appeal partially, citing exceptions under Rule 6DD. Assessing Officer directed to adjust.

The tribunal allowed the appeal in part. The disallowance under section 40A(3) of the Income Tax Act for payments to certain entities was deleted, citing exceptions in Rule 6DD of the Income Tax Rules. However, an addition towards the difference in purchases and profit was upheld due to lack of explanation from the assessee. The tribunal directed the Assessing Officer to make necessary adjustments accordingly.

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Issues Involved:
1. Delay in filing the appeal.
2. Disallowance under section 40A(3) of the Income Tax Act.
3. Addition towards difference in purchases and profit.

Detailed Analysis:

1. Delay in Filing the Appeal:
The assessee's appeal was delayed by 26 days. The tribunal reviewed the reasons provided in the condonation petition and found them convincing. Consequently, the delay was condoned, and the appeal was admitted for adjudication.

2. Disallowance under Section 40A(3) of the Income Tax Act:
- Facts: The assessee, a partnership firm engaged in trading country spirit, made payments in cash to M/s IFB Agro Industries Ltd and M/s Asansol Bottling & Packaging Co. Pvt Ltd for purchases. These payments exceeded Rs. 20,000, which led to a disallowance of Rs. 76,50,083 by the Assessing Officer (AO) under section 40A(3) of the Act. This disallowance was upheld by the Commissioner of Income Tax (Appeals) [CIT(A)].
- Tribunal's Findings: The tribunal referred to a previous order in the case of Ramnagar Pachai & C.S. Shop vs ITO, where it was held that cash payments made directly into the bank account of the payee fall under the exceptions provided in Rule 6DD of the Income Tax Rules. The tribunal also reviewed the relevant provisions of The West Bengal Excise Rules 2005 and The Bengal Excise Act, 1909, which mandated such payments.
- Conclusion: The tribunal concluded that the assessee's case fell under the exceptions in Rule 6DD(b) and Rule 6DD(k) of the Income Tax Rules. Therefore, no disallowance under section 40A(3) was warranted for payments made to M/s IFB Agro Industries Ltd and M/s Asansol Bottling & Packaging Co. Pvt Ltd. However, a disallowance for a payment of Rs. 3,48,392 to M/s United Spirits Ltd was upheld as it violated section 40A(3).

3. Addition towards Difference in Purchases and Profit:
- Facts: The AO made an addition of Rs. 81,809 based on information obtained under section 133(6) from M/s Asansol Bottling & Packaging Pvt Ltd, which showed higher sales to the assessee by Rs. 79,104. The assessee did not provide any explanation for this discrepancy.
- Tribunal's Findings: The CIT(A) upheld the addition as the assessee did not present any arguments. Similarly, no arguments were advanced before the tribunal.
- Conclusion: The tribunal dismissed the ground related to the addition of Rs. 81,809 due to the lack of explanation and arguments from the assessee.

Final Order:
The appeal was partly allowed. The tribunal directed the AO to delete the disallowance under section 40A(3) for payments made to M/s IFB Agro Industries Ltd and M/s Asansol Bottling & Packaging Co. Pvt Ltd but upheld the addition of Rs. 81,809 towards the difference in purchases and profit.

Order Pronounced:
The order was pronounced in the court on 13.07.2018.

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