TaxTMI 
TaxTMI 
2011 (7) TMI 1183
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....er to make an addition of Rs. 17,42,815/- being 20% of total cash purchases of Rs. 87,14,079/- by applying section 40A(3) of the Act. 3. The relevant facts giving rise to this appeal are that the assessee is running a country liquor shop and had made cash purchases amounting to Rs. 87,14,079/- for purchase of liquor from two parties, namely M/s. Asansol Bottling Packaging Co. and M/s./ IFB Agro Industries Ltd. 4. During the course of assessment proceedings, when Assessing Officer enquired about the mode of payment of purchases, it was stated that the payments were deposited by the assessee directly to the sellers Bank a/c. The assessee is an old lady aged about 82 years. The assessee made cash and draft payments to purchase Liquor/ Sp....
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....ra) held that there was a violation of provision of section 40A(3) of the Act and the case of the assessee is not covered by the decisions cited by assessee. Hence, assessee is in further appeal before the Tribunal. 7. During the course of hearing, ld. AR reiterated the facts as mentioned before the authorities below that she is an old lady and operating the business as a proprietor depending solely on the supporting staff. It was also contended that if the transactions had been carried out through Banking operation, it would have taken 4-5 days to reach money from the assessee to payees and this would have effect the business of assessee. It was also contended that the Bank was also not located in nearby places from where the assessee w....
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....below. We have also gone through the cases cited by ld. AR and also the relevant Clauses of Rule 6DD of Income Tax Rules as applicable to the assessment year under consideration. 10. At the outset, we observe that the assessee has not disputed the fact that assessee made cash payments aggregating Rs. 87,14,079/-, the details of which are given by Assessing Officer at pages 2 to 7 of the assessment order and each of the payment is exceeding Rs. 20,000/- at a time. It is relevant to state that the payments aggregating Rs. 72,30,096/- made by assessee in cash to M/s. Asansol Bottling Packaging Co. comprising of each payment of Rs. 1,30,980/- and more. Similarly, we observe that cash purchases made by assessee from M/s. IFB Agro Industries L....
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....take away transaction from the clutches of section 40A(3) of the Act. In the case of the assessee, it is not the payment for the purpose of agricultural produce or purchases through agents to whom payments were made. Further the case of Chennai Bench, ITAT of Smt. N. Padma (supra) is also not relevant to the fact of the case of assessee because, in that case payments were made to distributors and not to the suppliers of the goods from which assessee made the payments. Similarly in the case of Delhi Bench, ITAT of Saral Motors & General Finance Ltd. (supra) is also not relevant to the facts of the case before us as in that case, payments were found to have been made in respect of loans given to various parties in course of its hire purchase ....