TaxTMI 
TaxTMI 
2011 (11) TMI 98
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....peals) may please be deleted. 4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal." 2. The brief facts till the assessment stage are noted by Ld. CIT(A) in para 2.1 to 2.2 of his order which are reproduced below: "2.1. The facts relating to the above additions are that the appellant is engaged in the export of sarees and dupattas by purchasing ready goods and second job lot sarees from local market. The total export sales shown by the appellant during the year is Rs. 98,40,719/-. The Assessing Officer, vide notice u/s 142(1) of the Act, dtd.14,6.2010, asked the appellant to furnish details including name and addresses of the creditors, as well as parties from whom purchases had been shown. In response to the same, the appellant took adjournment for 26,6.2010. Thereafter, another notice was issued on 29.6.2010 by the Assessing Officer, against which another adjournment was taken by the appellant. Since no details were submitted, the Assessing Officer issued further notices dtd.27.7.2010 and 10.8.2010. The authorized representative of the appellant appeared on 06.9.2010 and requested for further adjournment ....
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....espectively. All these cheques were non-account payee cheques. In para 8.1 of the order, the Assessing Officer has given the details of purchases made by the appellant of Rs. 86,64,830/- from M/s Bansidhar Fabrics, Ekta Export, Hanuman Tex, Raj Shree Silk Mills, Salasar Balaji, Shantilal Textiles, Shree Nathji Silk, Shree Balaji Textile, Manisha Silk Mills, Shree Krishna Textiles, and, against that, payment of Rs. 58,29,830/- has been made during the year otherwise than by a/c. payee cheques. In para 8.2 of the order, the Assessing Officer has reproduced section 40A(3) of the Act, and in para 8.3 of the order, his analysis of the above section, as well as legal position, and has also held therein that since the appellant has not submitted basic information of suppliers/creditors, it was not possible to verify, as to whether there has been any business expediency or exceptional and unavoidable circumstances, which necessitated such payments otherwise than by a/c. payee cheques and, therefore, it was a fit case for invoking provisions of section 40A(3)(a) of the Act, and disallowed the entire amount of Rs. 58,29,830/- under the above section. 2.2. In para 8 of the assessment order....
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..... A.R. that so far the applicability of Rule 6DD(k) is concerned, the matter may be restored back to the file of the A.O. for a fresh decision because this aspect was never raised before him. One more contention was raised by him before us that till assessment year 2007-08, the provisions of Section 40 A(3) were different and as per the same, in case of payment in subsequent year in respect of any liability incurred by the assessee for any expenditure, if the payment is made in a sum exceeding Rs. 20,000/-otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft and the allowance originally made shall be deemed as having wrongly made and the A.O. may recompute the total income of the assessee for the previous year in which such liability was incurred and make the necessary amendment, and the provisions of Section 154 shall be applicable and the limitation of 4 years shall be reckoned from the end of the assessment year of the previous year in which the payment was so made. It was his submission that because of these facts, and legal position applicable up to assessment year 2007-08, for the payments made by the assessee in the present year in relation to outstan....
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.... of this contention that there was an agent and the payments were made by the assessee as per the directions of the agent and hence, Rule 6DD(k) is applicable. After providing adequate opportunity to the assessee, the A.O. shall pass necessary order as per law on this aspect. 7. Now, there is one more aspect regarding the disallowance made by the A.O. in respect of the payments made by the assessee in the present year in connection with opening balance of creditors for expenses. In this regard, we find that there is amendment in the provisions of Section 40A(3) from the present assessment year and the applicable provisions of Section 40A(3) up to assessment year 2007-08 are as under: Section 40A(3) of the Income tax Act, 1961 as in force in assessment year 2007-08: "Where the assessee incurs any expenditure in respect of which payment is made, after such date (not being later than 31st day of March, 1969), as may be specified in this behalf by the Central Government by notification in the Official Gazette, in a sum exceeding twenty thousand rupees otherwise than by a A/c Payee cheque drawn on a bank or by a A/c Payee bank draft, [twenty per cent of such expenditure shall n....