TaxTMI 
TaxTMI 
2014 (9) TMI 1082
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....cord. 2. That ld.CIT(A) was wrong in disallowing expenses with out rejection of a/c books. 3. That ld.CIT(A) was wrong in disallowing payments of expenses u/s 40A(3) at Rs. 25,29,895.00 in respect of purchase made on Sundays/Holidays/Bank Closed days. 4. That ld.CIT(A) was wrong in disallowing payments of Rs. 38,84,575.00 on Sundays/Holidays/Bank Closed days against purchases made previously on credit bases. 5. That ld.CIT(A), was wrong in disallowing Rs. 28,10,102.00 being cash payments not exceeding Rs. 20,000.00. 6. That ld.CIT(A) was wrong in not considering the written submissions dt. 19.12.2012. 7. That ld.CIT(A) did not consider the written submissions and rejoinders and evidencin....
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.... further submitted that another ground on which learned CIT(A) did not allow the relief under Rule 6DDJ was that the assessee has not proved business exigency for making the payment on Sundays/bank holidays. He stated that as per Rule 6DDJ, there is no such requirement. That the assessee had further claimed that the sum of Rs. 28,10,102/- was cash payment not exceeding Rs. 20,000/- and the Assessing Officer has wrongly considered the same to be in violation of Section 40A(3). In the remand report, the Assessing Officer accepted these facts also. The learned CIT(A) sustained the disallowance in respect of payments below Rs. 20,000/- on the ground that the device has been adopted by the assessee so as to circumvent the provisions of law. He s....
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....f accounts of the assessee. Since the transactions are covered by rule 6DD(j) of Income Tax Rules therefore, no adverse comment is made regarding the same." 6. Thus, the Assessing Officer, after examining the necessary details including the assessee's books of account, arrived at the conclusion that the payments have been made in cash on Sundays or other bank holidays and, therefore, such transactions are covered by Rule 6DDJ of the Income-tax Rules. Again, in the remand report dated 29.11.2012, the Assessing Officer stated as under:- "(ii) Cash payments made on bank closed days Rs. 64,02,470/- On examination, it has been found that the payments have been made in cash on days when there were Sundays or other bank holida....
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.... the payment in the books maintained at the depot, then, so far as assessee is concerned, it has been able to prove that the payments have been made on bank holidays. When the depot informs the head office and when and how the head office records the payments, it is the matter between the depot and the head office. Therefore, in our opinion, when in two remand reports i.e., the remand report dated 26.10.2012 and the remand report dated 29.11.2012, the Assessing Officer, after examining the books of the assessee as well as the books of the depot which is maintained by Shri Prafful Bhatnagar, has arrived at the conclusion that the payments have been made on bank holidays, it cannot be denied the benefit of Rule 6DDJ merely because the payment....
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....t 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/-. Now, in the contention of the assessee as well as remand report, there is no discussion about the aggregate payment in a day. There is only discussion with regard to the payment not exceeding Rs. 20,000/-. We, therefore, set aside this aspect to the file of the Assessing Officer and direct him to verify the aggregate payment made by the assessee on each day and if the payment in a day does not exceed Rs. 20,000/-, then no disallowance under Section 40A(3) would be made. That if assessee makes the payment not exceeding Rs. 20,000/- every day, it cannot be said that the pay....