TaxTMI 
TaxTMI 
TaxTMI 
2021 (12) TMI 875
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case and is opposed to the principles of equity, justice and fair play 2. The Learned CIT(A) erred in disallowing Rs. 6,42,329/- u/s. 40A(3) of the Income Tax Act, 1961 ("Act") being cash payments made towards purchase of jelly, sand, bricks etc., without considering the nature, line of business of the Appellant. 3. The Learned CIT(A) failed to appreciate that the amount of Rs. 6,42,329/- had been incurred by the Appellant by entering into transactions with unorganized vendors which is in the ordinary course of business of the Appellant, 4. The Learned CIT(A) erred in disallowing Rs. 5,00,000/- u/s. 68 of the Act without considering the detailed explanations, submissions and evidences placed on record by the Appellant. 5. Without prejudice to the above, the Learned CIT(A) erred in charging interest u/s. 234A, 2348 and 234C of the Act. On the strength of the abovementioned grounds and such other grounds that may be submitted before or at the time of hearing of the Appeal, the Hon'ble ITAT may be pleased to set aside the order of the CIT-(A) dated 25.10.2017 and thus render justice." 3. The brief facts of the case are that the assessee company is engaged in the busine....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n towards unsecured loans u/s. 68 of the Act, the ld. CIT(A) observed that the assessee has failed to file confirmation from the creditors to prove identity, genuineness of transactions and creditworthiness of the parties, and thus, failed to discharge its onus and hence, there is no error in the reasons given by the AO to make additions towards unsecured loan u/s. 68 of the Act. Accordingly, confirmed additions made by the AO. Aggrieved by the Ld. CIT(A), the assessee is in appeal before us. 6. The first issue that came up for our consideration for all assessment years is disallowance of cash payments u/s. 40A(3) of the Act. The facts with regard to impugned dispute are that during the course of search, it was noticed that the assessee has made certain payments in cash in excess of prescribed limit for purchase of sand, blue metal, bricks and other material, and accordingly, during the course of assessment proceedings, the AO called upon the assessee to explain as to why cash payments made in contravention of provisions of section 40A(3) r.w.r. 6DD of Income Tax Rules, 1962 cannot be disallowed. In response, the assessee submitted that it is common in any construction business th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder Rule 6DD of IT Rules, 1962 and thus, there is no error in the reasons given by the Ld. CIT(A) to sustain the additions made by the AO and his order should be uphold. 9. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. Admittedly, provisions of section 40A(3) of the Act deals with cash payments for purchase of materials and services in excess of prescribed limit. As per said provisions, if cash payment is made in excess of prescribed limit, then same cannot be allowed as deduction while computing income from business or profession. Rule 6DD of IT Rules, 1962 provided certain exemptions for cash payments, as per said Rules, only payments made for purchase of material and other products and also payments made in a village or town, which on the date of such payment is not served by any bank. The said rules had also provided exception for purchase of products manufactured or processed without aid of power in cottage industry to the producer of such product. If you examine facts of the present case, in light of provisions of section 40A(3) of the Act r.w.r 6DD, we find that the AO has not doubted genuineness of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....for more than three years. The assessee has classified trade advance received from above party as unsecured loan because of time gap. During the course of assessment proceedings, the AO called upon the assessee to file necessary evidences to prove identity, genuineness of transactions and creditworthiness of the parties. The assessee has filed confirmation letter from the creditor. The AO did not accept confirmation letter filed by the assessee and according to him, such confirmation was not complete and further there was no proper address of the creditor. Therefore, he opined that unsecured loans received from M/s. Park Field Developers & Builders Pvt. Ltd., is not explained and thus, he has made additions u/s. 68 of the Act. 11. The Ld. AR for the assessee submitted that the Ld. CIT(A) has erred in not appreciating the fact that the assessee has discharged its onus to prove identity, genuineness of transaction and creditworthiness of parties. The Ld. AR further submitted that even otherwise, the assessee has treated said unsecured loan as cessation of liability and has offered the same for tax u/s. 41(1) of the Act for the assessment year 2014-15, where the AO has considered the....