TaxTMI 
TaxTMI 
2020 (9) TMI 492
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....ss of real estate development. The assessee filed its return of income on 12-06-2007 declaring an income of Rs. 3,48,240/-. A survey was conducted under Section 133A of the Act in the business premises of the assessee. The case of the assessee was selected for scrutiny and an order of assessment under Section 143(3) of the Act was passed on 29-12-2008 by which the Assessing Officer disallowed business expenditure to the tune of Rs. 17,52,527/- holding that the payment towards purchased of land during the assessment year was hit by Section 40A(3). 3. The assessee filed an appeal before the Commissioner of Income Tax (Appeals), who by an order dated 23-02-2011 confirmed the order of the Assessing Officer with regard to the disallowance of business expenditure of the assessee. The assessee filed its cross objections against the aforesaid order in the appeal preferred by the revenue before the Income Tax Appellate Tribunal. The tribunal by its order dated 05-10-2012 affirmed the order of the Commissioner of Income Tax (Appeals) with regard to the disallowance of business expenditure. In the aforesaid factual background, the instant appeal has been filed. 4. Learned counsel for the as....
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....LLY PASSI IN ITA 179/2012 DATED 06.10.2012 (P& H), 'CIT VS. R.S.SURIYA', (2015) 232 TAXMAN 126 (MAD), 'CIT VS. ARTHUR ANDERSEN & CO.', (2009) 318 ITR 229 (BOM), 'KALYANKUMAR RAY VS. CIT', (1991) 191 ITR 634 (SC), 'CIT VS. KHEMCHAND RAMDAS', (1938) 6 ITR 414 (PRIVY COUNCIL). 5. On the other hand, learned counsel for the revenue has submitted that Section 40A(3) provides for disallowance of cash expenditure incurred in excess of Rs. 20,000/- and that the aforesaid provision cannot be made applicable only if the case of the assessee falls within the exceptions provided under Rule 6DD of the Income Tax Rules. It is further submitted that the assessee has failed to prove by any cogent evidence that it was covered by any exceptions provided under Section 40A(3) of the Act read with Rule 6DD of the Income Tax Rules. It is also submitted that no substantial question of law arises in this appeal and that the order of the Tribunal is based on meticulous appreciation of evidence and it is not open for this court in the exercise of its appellate jurisdiction to interfere with the findings of fact made by the authorities. In support of the aforesaid submissions ....
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....iv) a bill of exchange made payable only to a bank (v) to (vii) 3[ *** ] Explanation.--For the purposes of this clause and clause (g), the term "bank" means any bank, banking company or society referred to in sub-clauses (i) to (iv) of clause (a) and includes any bank [not being a banking company as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949)], whether incorporated or not, which is established outside India; (d) where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee; (e) where the payment is made for the purchase of-- (i) agricultural or forest produce; or (ii) the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or (iii) fish or fish products; or (iv) the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products; (f) where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products; ....
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....uine and bonafide transactions are not taken out of the sweep of the Section and it is open for the assessee to furnish to the satisfaction of the assessing officer the circumstances under which the payment in the manner prescribed under Section 40A(3) was not practicable or would have caused genuine difficulty to the payee. It is also open to the assessee to identify the person who has received the cash payment. Rule 6DD provides that an assessee can be exempted from requirement of payment by a crossed cheque or a crossed bank draft in the circumstances specified in the Rule. It was further held that from conjoint reading of Section40A(3) and Rule 6DD, it is evident that they are intended to regulate the business transactions and to prevent the use of unaccounted money or reduce the chances to use black money for business transactions. 8. In the aforesaid well settled legal principles, we may now examine whether the assessee in the facts of the case has complied with the aforesaid requirement so as to enable him to claim exemption from provisions of Section 40A(3) of the Act. The Assessing Officer in the order dated 29.12.2008 inter alia has held as under: Cash payment on accou....