AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (4) TMI 368
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.... places and cannot reach during bank hours, since they cover lot of other places. Also due to no profit or meager profit they insist on spot payment in cash. The confirmations to this effect from the suppliers are also not considered by the A.O and learned CIT (A). 4) The learned CIT (A) and AO have deliberately brought the exempted assessee in to tax net without considering the facts that : (i) Cash payments are made under unavoidable circumstances and exceptional circumstances (ii) the genuineness of the transactions (üi) The identity of the persons to whom cash payment is made. Relied: (201) 320 FTR 185 (ALL). 5) The learned CIT(A) and AO have not appreciated the intention of the legislature when section 40A (3) was introduced. 6) The learned CIT(A) and A C have also not appreciated the fact that the list given in Rule 6 DD if 1 T Rule is not exhaustive, Rule 6 DD must be interpreted liberally as per the CBDT Circular No. 220 dated 31-05-1997. Relied: (2008) 298 ITR 349 (Raj). 7)The learned CIT(A) and AO have also made unnecessary effort by calculating proportionate expenses for trading business and banking business etc., though the Trading a/c is already charged with t....
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.... allocation of food grains, state governments hold the responsibility for distributing the same to the consumers through the established network of Fair Price Shops (FPS), Appellant is one such authorized FPS. 3. A public distribution shop, also known as fair price shop (FPS), part of India's public distribution system established by Government of India, is a shop which is used to distribute rations at a subsidized price to the poor. As of date there are about 4.99 lakh fair price shops across India. These shops are operated throughout the country by joint assistance of central and state government. The item from these shops are distributed to the poor families at much cheaper rates. Hence there is no element of profit involved. 4. The aggregate amount of Rs. 5,13,176/- which has been added back as income under section 40A(3) relates to payment made to distributors of kerosene on various dates. 5. Kerosene distributors distribute kerosene to various Fair Price Shops as per the orders of Chief Executive officer of Taluka Panchayat. Appellant society comes under the jurisdiction of Athani Taluka Panchayat. As per the orders of CEO, Taluka Panchayat Athani, three distributors namel....
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....ggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors." 8.2. With reference to discussion is above paragraphs, appellant is covered under the proviso to sub section 3A of section 40A of the Income Tax Act, 1961 and hence disallowance under section 40A(3) shall not be attracted. 9. Further Ld. A.O. has apportioned common expenditure in the ratio of 73974 (trading):4896301 (Credit facilities). Adopting such ratio is totally illogical as in case of trading 73974 is net income after deducting direct expenses where as in case of credit facilities 4896301 is the gross amount without deducting any expenses. Hence the apportionment of common expenses has to done based on a logical ratio. It should be either based on Gross income or time involved in each activity or actual amount of expenditure involved in each activity has to be considered. Hence we request you Sir to please re....
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....ssion under sub-section (3A) of section 40A where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees in the cases and circumstances specified hereunder, namely: (a) Where the payment is made to (i) the Reserve Bank of India or any banking company....... (ii) the State Bank of India or.... (iii) any co-op bank or.. (iv) any primary agricultural credit society or.... (v) the Life Insurance Corporation of India.,.. (b) where the payment is made to the Government and.... (c)where the payment is made by - (i) any fetter of credit.. (ii) a mail or telegraphic.. (iii) a book adjustment from any account..... (iv) a bill of exchange....... (v) the use of electronic clearing system... (vi) a credit card; (vii) a debit card; Explanation - For the.... (d) where the payment is made by way of adjustment against of any liability incurred by the payee..... (e) where the payment is made for the purchase of- (i) agricultural or..... (ii) the produce of animal husbandry..... (iii) fish or fish products; or (iv) the products of horticulture or.... (f) ....
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....see who is seeking to claim the benefit cf clause (i) in rule 6DD, has not only to satisfy that having regard to the nature of the business there was a genuine difficulty in complying with the requirements of section 40A(3), but he must also establish the genuineness of the payment and the identity of the payee. Unless he does that, he cannot take advantage of clause (j). It is not open to the assessee to say that he will only partly satisfy the requirements of clause (j) and would still be entitled to the benefit of the said clause. We may make it clear that the satisfaction that is relevant in such cases is the satisfaction of the income-tax Officer." 6.4 In the appellate proceedings, the appellant has submitted that some of the payments were made on Sundays and general holidays and therefore, to that extent his case was covered by the provisions of Rule 6DD(j). Further, the appellant has failed to establish the circumstances which compelled the appellant to make payments on bank holidays as held by the Hon'ble Delhi bench of the ITAT in the case of Jal Talkies Vs. ITO (ITAT,Delh) 57 TTJ 745 in the following words: "Making payments on bank holidays do not ipso facto permit the ....
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.... making of payments by crossed cheques/demand drafts impracticable or rendered cash payments unavoidable or out of sheer necessity. The case does not fall within the ambit of Rule 6DD(f) read with the CBDT circular and, therefore, the two revenue authorities were justified in making and sustaining the disallowance under Section 40A(3). This issue shall, therefore, stand decided against the assessee." (b) In the case of Commissioner Of Income-Tax vs. Padmavati Raje Cotton Mills Ltd. (1999)239 ITR 355 Cal it has been held that: "When the assessee has not established his case that there were unavoidable circumstances in the locality, bank facilities were not available or-the payment of cheque was not accepted in business, the claim of the assessee is hit by the provisions of Section 40A(3) of the Act." (c) In the case of Commissioner Of Income-Tax vs. Assam Tribune (1996) 221 ITR 488 Gauhatl, it has been held that: "the Tribunal Just directed the Commissioner of Income-tax (Appeals) to make enquiry whether the payments were entered in the books of account. In our opinion, this was not enough. It was also necessary to enquire whether there existed exceptional and unavoidable circum....