TaxTMI 
TaxTMI 
2018 (12) TMI 814
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....ncome Tax Act, 1961 (here-in-after referred to as "the Act") dated 30.01.2014 relevant to Assessment Years (AY) 2011-12. 2. Assessee has raised following grounds of appeals. 1. ''The learned CIT(A-2 has erred in facts and in law, in confirmed addition Amt. of Rs. 4,45,460/- U/s.40A(3) of the I.T. Act 1961 on the ground that cash payment for freight charges were paid to clearing and forwarding against for clearing our goods for exports. 2. The Ld. CIT(A)-2 has further erred in facts and in law, in confirmed addition Amt. of Rs. 2,18,224/- on account of short cash balance on particular date, which was Learned income tax Officer has consider undisclosed income which is not justified. 3. The Ld. CIT(A)-2 has erred in facts and in law, in....
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....ses in cash exceeding the limit specified under the provision of section 40A(3) of the Act. Therefore, the AO disallowed the same for Rs. 4,45,460/- u/s40A(3) of the Act and added to the total income of the assessee. 8. Aggrieved assessee preferred an appeal before the Ld.CIT(A). The assessee before Ld. CIT(A) submitted that the payment was made to the clearing and forwarding agent, which was representing the reimbursement expenses of Air Freight and port charges. Therefore, the payment as discussed above falls under the exemption provided under Rule 6DD(g) as well as under Rule 6DD(k) of the Act, therefore, the same should be allowed as deduction. However, the Ld.CIT(A) disregarded the contention of assessee and confirmed the order of AO....
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....e explanation given by the appellant, it is noted that the appellant has not been able to give sufficient reason for making the cash payments for expenses. There is no doubt that the appellant is in the business of exporting herbs which are required to be exported urgently, however, this cannot be the reason and reasonable cause for making the payment in cash. The Air freight and Port agents is regular business people and some arrangement can always be made with them for making the payments in advance by cheque which can be later on adjusted at the time of making the payment to the transporting agency by that agent. It is also noted that the appellant has incurred freight charges of Rs. 89.16 lakh which has been mostly paid by cheque. There....
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....nitially the clearing and forwarding agent was demanding the payment from the assessee only in cash. Therefore, there was no alternative available except to make the payment in cash. 10.2 The AR also submitted that the payment made in cash is eligible for deduction after considering the commercial expediency of the business of the assessee. 11. On the other hand the Ld. DR, vehemently supported the order of authorities below. 12. We have heard the rival contentions and perused the materials available on record. In the instant case the assessee has made payment to its clearing and forwarding agent mostly through banking channel except in few instances where the payment was made in cash. The payment made by the assessee through banking cha....