TaxTMI 
TaxTMI 
2022 (4) TMI 741
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....wing grounds of appeal:- "1. Invalid & Bad Order a. The order dated 28-02-2019 passed by Commissioner of Income Tax (Appeals) 5, Ahmedabad confirming disallowance u/s 40A(3), is invalid & bad in law as it is violating principles of natural justice. b. The C1T (A) erred in not dealing with written submission filed in its proper perspective. c. The CIT (A) erred in not dealing with judgments relied & filed, d. The order passed by CIT (A) is non speaking order. 2. Without prejudice on merits Disallowance of expenses u/s 40A(3) - Rs. 32,65,805/- a. The CIT (A) erred in confirming disallowance of expenditure Rs. 32,65,805/- u/s 40A(3) holding that there were no exceptional circumstan....
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.... "7.5 In his reply, the assessee has taken the following plea: 1. That the advertisement was released in the evening at 7PM and banking hours were over and there was no chance to get demand draft or pay cheque. 2. That the newspapers have confirmed that they have accepted cash payment for printing advertisement of political parties. 3. That the newspapers have also confirmed that for political parties advertisement they refused to accept printing orders, otherwise than for payment made in cash." The ld. A.O. rejected the assessee's plea by holding that assessee has not been able to substantiate why payments could not be made by account payee cheque. The ld. A.O. held that assessee's reliance on P & H decis....
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....made contravention of section 40A(3) of the Act and accordingly, he disallowed the same. 4. In appeal before ld. CIT(A), he dismissed the assessee's appeal and confirmed the addition of Rs. 32,65,805/- made in contravention of Section 40A(3) of the Act by observing as below:- "7.9. Thus it is evident from the facts mentioned above that there is no extra ordinary circumstances and justification for making payment in cash to the news papers in the year under consideration. There is no terms and condition or agreement which says that only cash payment for advertisement from political party will be accepted. It is also noticed that in the earlier year or subsequent year no such payment was made in cash to the media houses. The situa....
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....en the auditors specifically certified the circumstances under which payments were required to be made in cash. The ld. counsel for the assessee submitted that the assessee had no option but to make payment in cash. The ld. Assessing Officer has not doubted the identity of the parties and business exigency is proved. The Ld. counsel for the assessee drew our attention to decision of Ahmedabad ITAT in the case of Vimal Micrones ITA No. 1887/Ahd/2013 wherein it was held that where genuineness of the payment and the identity of the payee is not doubted, additions u/s. 40A(3) should be deleted. He further placed reliance on several other decisions in support of arguments put before us. 6. In response, the ld. DR submitted that it is nowhere ....
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.... High Court held where principal company insisted that on payment by cheque supply would be delayed, cash payment made by agent in bank account of principal had to be allowed. In the case, assessee was working as an agent of Tata Tele Services Limited for distributing mobile cards and recharge vouchers. The Principal company Tata insisted that cheque payment from assessee's co-operative bank would not do, since realization took longer time and such payments should be made only in cash in their bank account. If assessee would not make cash payment and make cheque payments alone, it would have received recharge vouchers delayed by 4/5 days which would severely affect its business operation. The assessee, therefore, made cash payment. The ....