2002 (1) TMI 1303

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....peal by the assessee is direct¬ed against the order dated 8-12-1995 of CIT(A) upholding the addition of ₹ 1,37,956 out of addition of ₹ 1,52,956 made by the Assessing Officer under section 40A(3) of the Income-tax Act, 1961 pertaining to A.Y. 1989-90. 2. The brief facts are that assessee-firm derived its income from dying and printing of art silk fabrics on a job work basis. Durin....

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....made attempt to circum¬vent the provisions of section 40A(3) and he made the addition of ₹ 1,52,956. The assessee carried the matter in appeal and learned CIT(A) upheld the action of Assessing Officer to the extent of payment of ₹ 1,37,956. Aggrieved by the order of learned CIT(A), assessee is in appeal before us. 3. At the time of hearing before us on behalf of assessee Shri J.P.....

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....7,956 Continuing his argument counsel of the assessee submitted that labour contractor is required to make payment to the labourers in cash. 6-11-1988 was Sunday, the bank holiday. At any rate no payment has been made exceeding ₹ 10,000 at a time. Therefore, there is no violation of provisions contained in section 40A(3) of the Income-tax Act, 1961. Even otherwise the three parties to whom ....

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....h account payee cheque or bank draft. 5. After hearing both the sides, we have carefully gone through the orders of authorities below. Rival submissions were also considered. The purpose of section 40A(3), of the Act, in our opinion is not to penalise the assessee for making cash payment of an amount exceeding ₹ 10,000. The purpose is only preventive and to check evasion of tax and flow of ....