TaxTMI 
TaxTMI 
2017 (1) TMI 949
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll as on facts in deleting the addition of Rs. 32,38,796/- in respect of cash payments made to the parties splitting the amount to below Rs. 20,000/- in violation of provisions of section 40A(3) of the Act, inspite of the fact that it was having sufficient cash balance. 3. The Ld C!T(A) has erred in law as well as on facts in deleting the addition of Rs. 2,70,460/- made by the A.O. on account of interest corresponding to the amounts outstanding against debtors. 5. Therefore, the order of Ld CIT(A) may be set aside and that of the A.O be restored." 2. With the assistance of the ld. Representatives, I have gone through the record carefully. The assessment order is a very brief order running into two pages only. In order t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Reply filed on 13/03/2013 that reasons for service are not known. In the case of M/s Sona Sport Industries, Meerut reply stated that therequest has been made to comply with the notice by your honour. When the burden of proof lied with assessee, the same was not complied. Thus credit amount of Rs. 7,33,115/- and Rs, 6,96,120/- against Jai Timber & Plywood Gzb. & Sonu Sports Ind. Meerut remained unexplained. Records of the assessee produced in support but in the absence of stock register neither quantity of purchases could be verified nor correct G.P. could be verified. In view of these facts, sundry credit amount of Rs. 7,33,115/- and Rs. 6,96,120/- total at Rs. 14,29,235/- is treated as unexplained liability and added to the income of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essing started nor pending for recovery. In view of these facts, interest payment expenses @ 12% are disallowed equal to the old debtors of Rs. 22,53,582/- which comes to Rs. 2,70,460/-. [Addition: Rs. 2,70,460/-] Penalty proceedings u/s 271(1) (C) of I.T. Act; 1961 for the concealment of income are being initiated separately The income of the assessee is computed as under: Income Returned Rs. 20,680/- Add: Towards unexplained liability discussed as above. Rs. 14,29,532/- Add: Towards unexplained expenditure discussed as above. Rs. 32,38,796/- Add: Towards unverifiable old debtors discussed as above. Rs. 2,70,460/- Total Income Rs. 49,59,468/- Rounded off Rs. 49,59,470/- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not brought any adverse material evidence on record to suggest that the aforesaid sundry creditors were bogus. Rather, the fact on record is that the outstanding closing balance in respect of M /s Jai Timber Plywood, Ghaziabad at Rs. 7,33,115/- and in respect of M/s Sonu Sports, Meerut at Rs. 6,96,120/- have been paid in the subsequent years through cheues. Thus, in the light or the above facts, it is held that the AO was not justified to make addition totaling to Rs. 14,29 235/-, The same is directed to be deleted Ground of appeal No.2 is allowed." 4. After going through the record, I do not find any merit in ground No.1 of the Revenue's appeal. The ld. first appellate authority has recorded a finding of fact that sundry credi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, no deduction shall be allowed in respect of such expenditure." Thus, section 40A(3) is applicable where the payment for any expenditure or aggregate payment is made to a person in a day otherwise than account payee cheque or bank draft exceeded Rs. 20,000/-. Therefore, for applicability of section 40A(3), it is essential that the aggregate payment made to a person on any day should exceed Rs. 20,000/- That if the assessee makes the payments not exceeding Rs. 20,000/- every day, it cannot be said that the payment has been made to circumvent the provisions of section 40A(3) of the Act. Section 40A(3) would be applicable when the assessee makes payment exceeding Rs. 20,000/- in a day. If there is no payment exceeding Rs. 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ling expenses and car running and maintenance expenses.'" 6. The Revenue has not produced any evidence which can rebut this finding of fact recorded by the CIT(A). The disallowance u/s 40A(3) could be made if the assessee has made payment to a person in a day otherwise than account payee cheque or bank draft exceeding Rs. 20,000/-. The ld.CIT(A) has recorded a specific finding that no such payment was made by the assessee. I have gone through the finding of the AO also which has been extracted above, but, there is no clear-cut finding discernible from the order of the AO. Therefore, I do not see any reason to interfere in the finding of the ld.CIT(A). 7. As far as the third ground of appeal is concerned, the brief facts are that there....