TaxTMI 
TaxTMI 
2022 (7) TMI 597
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....estions of law are proposed by the Revenue : "i) Whether on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in quashing the order passed u/s 263 of the Act even though the Assessing Officer had passed the assessment order without making inquiries or verification which should have been made to ascertain whether the parties to whom cash payments were made were milk producers and were covered by circumstances sated in clause(e)(ii) of Rule 6DD of Income Tax Rules. (ii) Whether on the facts and in the circumstances of the case and in law, the learned Tribunal was justified in quashing the order passed u/s 263 of the Act without giving a finding on the applicability of clause (a) of....
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....ions of section 40A(3) of the Act, 1961, after detailed inquiry was a plausible view. 7. It was submitted by learned advocate for the appellant that the Assessing Officer accepted the contention of the assessee that out of cash payment of Rs.93,56,628/-, payment of Rs.49,45,811/- was exempt under Rule 6DD of the Income Tax Rules,1962 without making necessary inquiries to confirm the fact that the parties to whom cash payments were made for purchase of milk were actually engaged in milk production or whether they were doing only trading in milk. 8. It was submitted that the Tribunal did not appreciate that Explanation 2(a) of section 263 as inserted by the Finance Act, 2015 with effect from 1.06.2015 stipulates that order passed by the....
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.... Dairy Pvt Ltd 1877750 2 Asmita Agro Vet Agency 1032750 3 BJiagwatimata Milk and Milk Products 410000 4 Dudh Ganga Milk Products 63700 5 Gangotri Dairy Products Pvt Ltd 79464 6 Jagdish Traders 62837 7 Karmbhoomi Dairy Products 61875 8 Laxmi Ice Factory-Dairy 50000 Total 36,38,376 The Id. PCIT observed that payments of Rs.36,38,376/- were made by assessee to traders in cash in excess of Rs.20,000/-, which is a violation of provisions of sect 40A(3) of the Act. The ld. PCIT was of the view that benefit of rule 6DD is available to milk producers and not to traders of milk, hence payment to traders in cash in excess of Rs.20,000/- is required to be disall....
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....concerned, the order passed by the assessing officer is neither erroneous nor prejudicial to the interest of revenue. 13. Learned Counsel also submitted before us that about the issue of cash payment in excess of Rs.20,000/-, assessee has submitted each and every documents during the re-assessment proceedings under section 143(3) r.w.s. 147 of the Act, which is evident from para 3 and 4 of the assessment order, which is reproduced below: "3. During the year, the assessee firm was engaged in the business of manufacturing of dairy products. In this case a survey action U/s. 133A of the Act was carried out on 22/01/2013 at the business premises of the assessee. During the course of survey proceedings, statement on oath u/s 13....
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....n 1026223 3 Salary 674981 4 Deposit return 1230000 4 Printed Poly film payment 390007 Total 4145883 2.1 The above payments made in cash during the year under consideration violated the provisions of section 40A(3) of the I T. Act. Therefore, you are asked to explain why the above amount of Rs.41,45,883/- should not be disallowed and added to the total income. " 4.1 In response to which, the assessee submitted his reply vide letter dated 18.03.2016 and agreed upon the proposed disallowances as communicated in the show cause notice. Accordingly, the total payments made to various parties of Rs.41,45,883/- in contravention to Section 40A(3) of the I.T. Act is disallowed and added ....