2023 (10) TMI 1285

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....is laid to the order dated 26.04.2023 passed by the Income Tax Appellate Tribunal [in short, "Tribunal"]. 4. Via the order, the Tribunal sustained the order of the Commissioner of Income Tax [in short "CIT(A)"] and rejected the appeal of the assessee. 5. The record discloses that for the aforementioned assessment year, the appellant/assessee had filed a return of income (ROI), whereby, he declared his total income as Rs. 2,23,140/-. 6. During the assessment proceedings, the Assessing Officer (AO) found that in respect of certain purchases aggregating to Rs. 2,77,13,513/-, payments had been made otherwise than by account payee cheque. 7. On enquiry, it was found that payments to suppliers had been made via bearer cheques. 8. T....

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....t the payment could not be made by way of a crossed cheque drawn on a bank or by a crossed bank draft- a. due to exceptional or unavoidable circumstances; or b. because payment in the manner aforesaid was not practicable, or would have caused genuine difficulty to the payee, having regard to the nature of the transaction and the necessity for expeditious settlement thereof, and also furnishes evidence to the satisfaction of the Income-tax Officer as to the genuineness of the payment and the identity of the payee. 2. It would be seen that where payment of a sum exceeding Rs. 2,500 is made, otherwise than by a crossed cheque/draft, the assessee besides furnishing evidence as to the genuineness of the paymen....

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....ount is given by the seller for payment to be made by way of cash. 5. It can be said that it would, generally, satisfy the requirements of rule 6DD(j), if a letter to the above effect is produced in respect of each transaction falling within the categories listed above from the seller giving full particulars of his address, sales tax number/permanent account number, if any, for the purposes of proper identification to enable the Income-tax Officer to satisfy himself about the genuineness of the transaction. The Income-tax Officer will, however, record his satisfaction before allowing the benefit of rule 6DD(j). 6. It is further clarified that the above circumstances are not exhaustive but illustrative. There could be cases....

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....we will not accept account payee cheques for the payment of our dues. Mr. Rajesh Kumar insisted for payment through banking channel only since he was receiving payments through bank. We then insisted for bearer cheque payment only." "Salasar Enterprises Deals in :R.S. Joist, M.S. Angle, M.S. Channel & All Kinds of Iron & Steel Auth. Dealer: RATHI STEEL LTD. FLAT NO. 1, PLOT NO. A/4/2932, SHRl RAM COLONY, BHOLA NATH NAGAR SHAHDARA, DELHI -110032 Ref. No ............. Dated .............. TO WHOM IT MAY CONCERN We herby [sic...hereby] confirm that Mr. Rajesh Kumar (Prop. Luxmi Trading Co., Shop No. 2 Mam Road, Jagatpur Road, Village Wazirabad, Delhi-110084) was a new entrant in....

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..... 20. Clearly, payments made by the assessee to the concerns violated Section 40A(3) of the Income-tax Act, 1961 [in short, "Act"] as they were not made through an account payee cheque drawn on a bank, account payee bank draft or through the use of electronic clearing system through a bank account, and therefore, to fall within the ambit of the 1977 circular, the appellant/assessee was required to establish the genuineness of the transactions. The appellant/assessee having failed to do so, led to the deduction being rightly disallowed for the subject payments. 21. Significantly, with effect from A.Y. 2009-10, Rule 6DD was substituted via Notification No. 97/2008 dated 10.10.2008 issued by the CBDT. For convenience, the portions of thi....