TaxTMI 
TaxTMI 
2018 (5) TMI 433
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....e Act') vide his order dated 23.12.2011 for assessment year 2009-10. The grounds raised by the assessee per its appeal are as under:- "1. For that the assessment is bad in law relying on misconceived in facts as well as in law. 2. For that the Ld. CIT(A)-6/Kol is erred in confirming the addition of whole amount of payment made in cash in excess of Rs. 20,000/- in day aggregating to Rs. 15,83,647/- to SMS Auto for alleged violation of provision of Sec. 40A(3) of the Income Tax Act, 1961 read with Rule 6DD without considering the actual facts and circumstances and genuineness of case of your petitioner based on mere surmises and supposition. It is wholly bad and illegal and such expense being fully deductible business expens....
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....e. 4. Aggrieved, assessee preferred an appeal before Ld. CIT(A) The assessee before Ld. CIT(A) submitted that the sales were directly made by SMS Auto to the parties and assessee was acting as an agent of SMS Auto as delcredere agent. Therefore, assessee is entitled to make the payment in cash as per the provision of Rule 6DD of the IT Rules, 1962. The assessee also submitted that the AO has not verified the purchase register, cash memo for sales, or sale bill with VAT register of SMS Auto who claimed to have made sales through assessee. The assessee used to collect the sales proceeds from the customers on behalf of SMS Auto which was subsequently forwarded to SMS Auto. The confirmation received from SMS Auto does not have any details of....
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.... made the payments in cash on account of purchases and was an agent of SMS Auto. The material on record including the financial statements only go to prove that the appellant is a customer of SMS Auto and had made cash payments aggregating to Rs. 15,83,647/- in violation of provision of Sec. 40A(3) of the Act. Hence, the disallowance of Rs. 15,83,647/- made by the AO u/s 40A(3) is confirmed." Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. 5. Ld. AR for the assessee filed paper book which comprises pages 1 to 30 and submitted that the sales were made by SMS Auto directly to the parties and this fact is evident from the invoice raised by SMS Auto to the assessee stating that "sale through China Aut....
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....(A) that there is agency relationship between assessee and SMS Auto. The AO was very much aware of the address of SMS Auto but he did not exercise his power under the provision of law to verify the relationship between assessee and SMS Auto. 6.1 We also note that the assessee claimed to have acted as delcredere agent but assessee in the books of account has shown the transaction as purchased and sale in his books of account. Had assessee been acting as an agent of SMS Auto in the capacity of delcredere agent then he should have booked only the amount of commission income in his books of account. However, we note that books of account cannot be decisive in deciding whether assessee is delcredere agent. On perusal of other supporting evide....