2024 (7) TMI 782

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....nsactions. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of Ld AO in making addition of an amount of Rs. 16,00,000/- on account of bank deposits. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of Ld AO in disallowing an amount of Rs. 5,70,000/- on account of license fee paid to the Excise department. 5. The appellant craves leave to add, amend or alter any of the grounds of appeal." 2. Facts giving rise to the present appeal are that the assessee is engaged in the business of trading of Liquor [Indian-made Foreign Liquor ("I.M.F.L")] and Beer. He filed his return of income, declaring income of INR 4,73,800/- on 29.09.2013. The case was selected for scrutiny assessment and a notice u/s 143(2) of the Income Tax Act, 1961 ("the Act") was issued on 03.09.2014. Thereafter, other statutory notices were issued u/s 142(1) of the Act to the assessee. In response thereto, Ld. Authorized Representative ("AR") of the assessee, Shri Mahesh Jain, CA attended the proceedings and furnished the details as called for from time to time. ....

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....amount of Rs. 2,00,38,777/- being cash payment exceeding Rs. 20,000/- in a day invoking the provisions of section 40A(3) of the Act. The findings of the Ld. AO are at Pg. 8 of his order. Before the Ld. Commissioner of Income Tax (Appeals) [CIT(A)], in his defense, the assessee explained that he had to make the purchases in cash as is the convention in the liquor trade, and in the absence of any findings given by the Ld. AO as to the transaction not being genuine, no disallowance under section 40A(3) of the Act could be made. Reliance was placed on a number of judgments of various Hon'ble High Courts and Hon'ble Benches of the Tribunal. The Ld. CIT(A), after considering in detail dismissed the ground of appeal raised by the assessee stating that the provisions of the Act, Rule, Circular and various judicial decisions relied on by the assessee did not support the case of the assessee. The findings of the Ld. CIT(A) are at Pg. 18, Para 5.2.5 of his order. The assessee is an individual dealing in trading of liquor and beer. In the year under consideration he has undisputedly made purchases in cash from three parties amounting to Rs. 2,00,38,777/-. This is a fact on record....

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....in an arbitrary manner and contrary to the settled position of law. Ld. Counsel for the assessee submitted that the Co-ordinate Benches of the Tribunal have held that if the purchases are genuine, in that event, no disallowance could be made by invoking the provision of section 40A(3) of the Act. Ld. Counsel for the assessee further relied on various case laws as mentioned in the written synopsis. To buttress the contention that if the payment has been made out of business expediency then the authorities would not be justified by invoking the provision of section 40A(3) of the Act. 9. Ld. Sr. DR for the Revenue opposed these submissions and supported the orders of the authorities below. Ld. Sr. DR took us through the order of Ld.CIT(A) and submitted that all the contentions of the assessee have been considered and correctly decided by Ld.CIT(A). He contended that the assessee failed to demonstrate business expediency for such cash payments. He contended that it was incumbent upon the assessee to prove that his case falls in one of the exceptions as embodied in Rule 6DD of the Income Tax Rules, 1962 ("the Rules"). A bald assertion would not be sufficient for coming to the conclusio....

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....ee failed to substantiate why additions should not be made as per the provisions of section 40A(3) of the Act. This finding of fact is not rebutted by the assessee by bringing any contrary material on record. The assessee was afforded sufficient opportunities to prove business expenditure and/or to demonstrate that his case falls into any exceptions. Ld. CIT(A) had examined all aspects of the matter and by way of well-reasoned order, he had declined to accept the contention of the assessee. Before us also, Ld. Counsel urged that the concerned parties had confirmed payments in cash. The TCS as per law had been deducted. In our considered view, the confirmation by seller and TCS at source ipso facto, would not be justifiable reason for making payment in cash. The assessee is required to prove that he had no option other than making payment in cash under the compelling, commercial expediency. In the present case, no such case is made out by the assessee. If we accept the contention of the Ld. Counsel for the assessee that genuineness of expenditure is not in doubt hence, provision of section 40A(3) will have no application. In that event, it will render the provision of section 40A(3)....