TaxTMI 
TaxTMI 
2016 (2) TMI 1098
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.... of the Income Tax Act, 1961 (in short 'the Act'). 2. Briefly, the facts of the case are that the assessee has purchased a land worth Rs. 20,92,000/- and claimed total expenses of Rs. 22,71,000/- in purchase account including stamp duty and other expenses. Rs. 20,92,000/- have been paid to seller in cash. The Assessing Officer added the amount under section 40A(3) of the Act as the expenses on purchase of land has been claimed as business expenses. 3. Before the learned CIT (Appeals), the assessee submitted that the seller of the land refused to accept the amount in cheque as it was his first dealing with the assessee and seller being an illiterate agriculturist without having any bank account. An affidavit of the purchaser in this re....
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....00/- made by him in respect of amount paid by the appellant for the purchase of land by applying provisions of section 40A (3) of the Income Tax Act, 1961. 2. That the Worthy CIT (A) has erred in not considering that the case of the appellant is well covered under exception given in Rule 6DD of the Income Tax Rules to which provisions of section 40A(3) are not applicable. 3. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off." 6. The learned counsel for the assessee reiterated the submissions made before the lower authorities. It was stated that the genuineness of the transactions has not been questioned by any lower authorities. Even the affidavit fi....
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....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 :] 9. Since reliance was placed on a latest judgment of the Hon'ble Jurisdictional Punjab & Haryana High Court in the case of Gurdas Garg (supra), after perusing the said judgment we find that a very apt guidance is provided by the Hon'ble High Court in deciding the issue in question. Therefore, at the very first instance, we would analyze the said judgment of the Hon'ble Jurisdictional High Court. In this case, the assessee was engaged in the business of trad....
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.... Vs. ITO (2008) 298 ITR 349, whereby it was held that there being no dispute about the genuineness of the transaction and the payment and identity of the receiver being disclosed, the disallowance under section 40A(3) of the Act cannot be made. The Hon'ble Rajasthan High Court relied upon a Circular of the CBDT dated 31.5.1977 reported in (1977) 108 (St.) 8. Further the Hon'ble Punjab & Haryana High Court also made a reference to a judgment of the Hon'ble Apex Court in the case of Attar Singh Gurmukh Singh Vs. ITO (1991) 4SCC 385, whereby it was held that the provisions of section 40A(3) of the Act and Rule 6DD of the Income Tax Rules were intended to regulate the business transactions and to prevent the use of unaccounted money....