2022 (9) TMI 713

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....ess of Contract works. Assessee electronically filed its return of income for A.Y. 2015-16 on 10.09.2015 declaring net taxable income of Rs.10,56,220/-. The case was selected for scrutiny and thereafter assessment was framed u/s 143(3) of the Act vide order dated 28.12.2017 and the total income was determined at Rs.1,50,30,000/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A). CIT(A) vide order dated 28.06.2019 in Appeal No.CIT(A), Delhi-38/10206/2018-19 granted partial relief to the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal and has raised the following grounds: "1. CIT(A) has wrongly confirmed the additions of Rs.42,93,127/- u/s 40A(3) of the Act although as per records submitted to AO....

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....assessee is a small contractor undertaking contract work for Govt. agencies at far off locations in the desert of Rajasthan namely; Bikaner and Jaisalmer. In support of his aforesaid contention that the income is arising only out of contract work at remote locations, he pointed to the copy of the audited Profit and Loss account placed at page 6 of the paper book and the computation of income at page 3 of the paper book. From the aforesaid details, he pointed to the fact that the total contract receipts of the assessee for the year under consideration are Rs. 1,61,52,153 and which has been received from Govt. agencies namely Executive Engineer Border, Bikaner, Office of Chief Executive Engineer, Jaisalmer and Superintending Engineer, Jaisalm....

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....e submitted that the disallowance made by AO and upheld by CIT(A) be deleted. 7. Learned DR on the other supported the order of lower authorities. 8. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the disallowance u/s 40A(3) of the Act. 9. Reading of Section 40A(3) of the Act makes it clear that any payment in excess of 20,000/- should be made by crossed cheque or crossed bank draft. On failure to do so, the said payment would be disallowed. Admittedly, the assessee has made the payment in cash. However, it would be relevant to note that before us, Learned AR has pointed to the fact that entire business activity of the contract undertaken by assessee wa....