2014 (7) TMI 332

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.... in deleting the addition of Rs. 14,81,711/- made by the AO u/s.40A(3) of the Act, without properly appreciating the facts of the case and the material brought on record by the AO. 1.2 In doing so, the Ld.CIT(A) has erred in law and on facts in not appreciating that the auditors in the tax audit report had specifically certified that the assessee had made payments to 18 parties other than by crossed bank draft or cheque and worked out the inadmissible expenditure u/s.40A(3) of the Act to the tune of Rs. 14,81,711/-. 1.3. The Ld.CIT(A)-VIII, Ahmedabad has erred in law and on facts in deleting the said addition though he has himself given a finding in the appellate order that the payments were not covered by exemption given under Rule 6....

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....rejected by the AO and the explanation given was also rejected. The assessee feeling dissatisfied with the action of the AO, preferred an appeal before the ld.CIT(A), who after considering the submissions and relying on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT vs. Mrinalini V.Sarabhai 265 ITR page 64 (Guj.) and the decision of the Coordinate Bench (ITAT Ahmedabad) rendered in the case of Bombay Conductors & Electricals Ltd. vs. Dy.CIT reported at 56 TTJ 580 (Ahd.), partly allowed the appeal and directed the AO delete the addition. Now, the Revenue has challenged the order of the ld.CIT(A) in this appeal. 3. Ground Nos.1 to 1.4 are inter-connected. The only effective ground in Revenue's appeal is against....

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....hat the facts are not in dispute with regard to the purchases made by the assessee-company. The assessee had made purchases from different parties being 18 transactions totalling to Rs. 74,08,555/- to whom the payments were not made otherwise than by an Account payee cheque or draft but were made by account payee cheques to other parties. The AO has not disputed these facts that in Bank statement, cheque number and amount clearly mention that the assessee had paid 'account payee cheques' to these different parties as per the specific direction and request made by these very parties from whom purchases were made. Copies of the bank statement filed in the paper-book Page Nos.16 to 27 confirm this fact. The confirmation of all these parties co....

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....ad made purchases from five parties; namely, Yasmin Corporation, Shah Steel Trading Co., Samrath Corporation, Shreeram Incorporation and Ganesh Steel Corporation. The assessee in place of making payment by way of 'account payee cheques' to aforesaid concerns, made the payment to different other parties as per the details given hereunder:- Sr.No. Date of debit Name of party 1. 08/12/2004 Shreeram Incorporation 2. 08/12/2004 Sai Tradelinks 3. 09/12/2004 Samarth Corporation 4. 20/12/2004 Sai Tradelinks 5. 22/12/2004 Sai Tradelinks 6. 22/12/2004 Shreeram Incorporation 7. 22/12/2004 Samarth Corporation 8. 07/01/2005 Samarth Corporation 9. 07/01/2005 Sai Tradelinks 10. 09/02/2005 S....