TaxTMI 
TaxTMI 
1993 (3) TMI 164
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....lowance of Rs. 91,302 made by the Assessing Officer. (iv) The CIT(A) erred in sustaining the disallowance of Rs. 26,926 relating to provident fund penalty. 2. M/s Madhumilan Syntex Ltd. is the sister concern of the assessee-company, inasmuch as that Shri B.K. Modi is a Director in both the companies. The other directors of the companies or their family members and near relations. The Assessing Officer on the basis of Tax Audit Report found the assessee had made cash payments in excess of Rs. 10,000 totaling to Rs. 45,11,000. It was explained by the assessee that M/s Madhumilan Syntex Ltd was in need of money to discharge its statutory and other liabilities like payment of salaries and wages, entry tax and provident fund, etc. It was a....
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....to the identity of the payee and the genuineness of the payments. 4. The main reason for not making the payments by cheque to M/s Madhumilan Syntex Ltd. was that the condition was imposed by the bankers of the assessee-company not to issue cheques to the associate concern without the signature of the concurrent auditor appointed by the bankers and as such the payment was not possible through cheques as the circumstances did not permit the same. This plea was put forth by the assessee before the Assessing Officer in writing, the copy of which has been filed by the learned Departmental Representative alongwith her written arguments. Even in the assessment order, there is a reference to such explanation of the assessee. The correctness of t....
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....es, which was given by the assessee. There is force in the contention of the learned counsel for the assessee that the CIT(A) wrongly observed that it had not made the payment at Biora but at Indore. There appears merit in the stand of the assessee that the amount was required by the sister concern at Biora and was handed over to the sister concern at Biora. It needs to be borne in mind that when the Managing Director of both the companies is the common person and the other directors of the company are his family members and relations, it is not an easy job to find out strictly as to after withdrawal from the bank at Indore, who had taken money from Indore to Biora. All that must have had depended upon convenience and co-operation of the Ma....
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....ations of business expediency and other relevant factors are not excluded. Genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the Assessing Officer the circumstances under which the payment in the manner prescribed in s. 40A(3) was not practicable or would have caused genuine difficulty to the payee. It is also open to the assessee to identify the person who has received the cash payment. Rule 6DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft in the circumstances specified under the rule. It will be clear from the provisions of s. 40A(3) and r. 6DD that they are intended to regulat....
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....al) 140 : (1989) 179 ITR 122 (Cal): "The object of the provision of s. 40A(3) is to check evasion of taxes so that the payment is made from the disclosed sources. Both the payer and the payee would be showing in the respective account the payments made and received. It presupposes that the transactions must be genuine transactions. In this case, genuineness of the transactions had not been disputed by the Revenue authorities." "The identity of the payee who was an income-tax assessee was established and the genuineness of the transactions was not doubted or disputed. The circular of the Board is not exhaustive but only illustrative. The ITO has to take a pragmatic view of the matter. The ITO should take a practical approach to problem....
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....xpenses on account of customers' hotelling and travelling expenses. It was explained by the assessee that the expenditure of Rs. 89,989 related to the hotelling and travelling of the customers and the balance of the expenditure was for providing food, etc., to the employees at the office. The Assessing Officer, however, treated that the total expenditure on customers' hotelling and travelling was Rs. 2,14,756. He, therefore, disallowed the entire claim. On appeal, the CIT(A) endorsed the order of the Assessing Officer. He held that the entire expenditure was incurred on the customers. 11. Learned representatives of the parties are heard. The details of the expenditure filed at pages 113 to 121 of the paper book have been looked into. It ....