TaxTMI 
TaxTMI 
2016 (6) TMI 1371
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....d supplying goods on hire. During the year assessee has claimed expenses for a sum of Rs.27,85,984/- on account of labour charges. The AO during assessment observed that out of the aforesaid sum the payment in cash for Rs.4,14,003/- was exceeding the single payment of Rs.20,000/-. Therefore the assessee has violated the provision of Sec. 40A(3) of the Act. Accordingly the AO disallowed the same and added back to the total income of assessee. 4. Aggrieved, assessee preferred an appeal before Ld. CIT(A), where assessee submitted that payments were made to casual workers who were hired on daily basis and in none of case payments exceed more than Rs.20,000/-. It was further submitted that assessee for making these wages payment has made single voucher but the payment was made to several labours. However the Ld. CIT(A) disregarded the claim of assessee and confirmed the action of AO by observing as under:- "I have carefully considered the appellant's submission and the basis of the disallowance made by the AO in this regard. Section 40A(3) is a very point section of the Act to be read with Rule 6DD of the IT Rules. Unless covered by the said rule, any single transactions in ....
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.... Sec.40A(3) of the Act. However we find that the genuineness of the expenses has not been doubted in the present case. We find that on similar issue, this Hon'ble Tribunal has allowed this issue in favour of assessee where the genuine of the payment was not doubted. In this connection we are putting our reliance in the case of Sri Manoranjan Raha vs. ITO in ITA No.1448/Kol/2011 dated 18.11.2015, wherein the Tribunal has held as under:- "4.3. We have heard the rival submissions and perused the materials available on record. We find that the payments made by cash in violation of section 40A(3) of the Act have been duly acknowledged by the recipient Shri Amit Dutta who had deposed before the learned AO and confirmed the fact of receipt of monies in cash. Hence the genuinity of payments made by the assessee stands clearly established beyond doubt. Even for the amounts enhanced by Learned CIT(A) in the sum of Rs. 54,01,473/-, the genuineness of the payments and the necessity to incur the said expenditure for the purpose of business of the assessee was never disputed by the Learned CIT(A). We hold that since the genuinity of the payments made to the parties is not doubted by the....
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....sessee preferred an appeal before Ld. CIT(A) who upheld the action of AO by observing as under:- "On examining the issue, I do not agree with the contention of the appellant. If the seller is not traceable at the address, the appellant should have produced him so that the transactions could be verified. There is no merit in this ground and accordingly it is rejected and the addition on this count amounting to Rs.1,24,108/- is confirmed." Being aggrieved by this order of Ld. CIT(A) assessee came in second appeal before us. 10. Before us Ld.AR submitted that the goods were also purchased from Mr. Samiran Dutta in the AY 2010-11 which is not before us for an amount of Rs.6,05,412/- and the same was added by AO as bogus purchase but Ld. CIT(A) deleted the addition made by AO that notice/s. 133(6) was issued and party confirmed the same. Shri Samiran Dutta was filing his income tax return u/s 44F which does not require maintenance of his books of account. In rejoinder Ld. DR submitted that each year is a separate year and party under consideration by the assessee failed to provide the address of the party and vehemently supported the orders of Authorities Below. 11.....
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....ons of the appellant have been considered. Section 41(1) becomes applicable only when past liability ceases or is remitted. A cessation of liability for the purpose of section 41(1) would mean irrevocable cessation so that there is no possibility of the liability being revived in future. The Calcutta High Court in the case of Kesoram Industries & Cotton Mills Ltd. v. CIT [1992] 196 ITR 845 (Cal) held that whether the liability of the assessee has been fully discharged is within the special knowledge of the se. he has to prove that in fact the liability subsists. Where the conduct and surrounding circumstances demonstrate that the amount has been remitted or forgone or the sum has ceased to be claimable, the liability of the assessee would cease. In this regard it was found that the appellant has not made any transactions with these parties but the AO. It is needless to say that year after year opening balances were carried forward to closing balances just to keep the balance of sundry creditors alive. In my view such sums have ceased to be claimable by the appellant. It would be a clear case of remission or cessation of the liability of the assessee. It is needless to say ....