TaxTMI 
TaxTMI 
2025 (6) TMI 1391
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....That on the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in confirming the addition of Rs. 37,15,000/- made by the Assessing Officer to the total income of the appellant on account of cash payment made towards purchase of plot by invoking the provisions of Section 40A(3) of the Act without properly appreciating the facts of the case and submissions made before him/her. 2. The applicant reserves the right to add, alter and modify the grounds of appeal as taken by it." 2. The solitary issue in the present appeal pertains to disallowance of expenses made under Section 40A(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'), on account of the payment made for the same in cash in excess....
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....the Act. The assessee contended that the genuineness of the transaction and the transaction being free from vice of any device of evasion of tax, was relevant consideration which had to be looked into before making any disallowance under this Section. The Assessing Officer, however, was not convinced with the contention of the assessee and proceeded to disallow the entire amount of expenditure incurred in cash for purchase of land in violation of provisions of Section 40A(3) of the Act amounting to Rs. 37,15,000/-. 3. The matter was carried in appeal before the Ld. CIT(A) where the assessee reiterated the contentions made before the Assessing Officer. The Ld. CIT(A) found no infirmity in the order of the Assessing Officer and confirmed t....
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....ly and therefore, asked for relief against such addition. 4.3. I have perused the submissions of the assessee. I have also perused that the AO has cited the Rule of the Hon'ble Apex Court, in the case of Attar Singh Gurmukh Singh Vs. ITO, reported in 191 ITR 667, where the Hon'ble Supreme Court clearly stated that the provisions of Sec. 40A(3) is attracted in all the cases of business transactions and there are specific relief allowed, in circumstances as given in Rule 6DD of the Income Tax Rules. The assessee could not submit, why its case is excludable under any provision of Rule 6DD. 4.4. Under the circumstances, I do not find any merit in the submissions made by the assessee to give any relief in this regard. T....
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....Nos.658 & 659/Ind/ 2017]. 5. The Ld. DR, on the other hand, relied on the orders of the authorities below emphasising the fact that mere genuineness of the transactions would not save the assessee from rigors of Section 40A(3) of the Act as long as the assessee does not demonstrate any business exigency for incurring expenditure in cash, as provided by law in the proviso to the said section read along with the circumstances listed in Rule 6DD of the Income Tax Rules, 1962. As for the Ld. Counsel for the assessee's argument that since the impugned land was part of its closing stock and no expenditure therefore by the assessee, the contention of the Ld. DR was that this argument was devoid of any merit since the undisputed fact was that th....
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....e 6DD of the Income Tax Rules, 1962. 6.3 The contention of the Ld. Counsel for the assessee before us is that the Section has to be given a purposive interpretation and the purpose of introducing Section 40A(3) of the Act being to curb evasion of tax and the transactions undoubtedly being genuine, the provisions of Section 40A(3) are not attracted. He has referred to the decision of Hon'ble Jurisdictional High Court in the case of Achal Alloy (P) Ltd. (supra). We are not in agreement with same. The first and primary rule of interpretation is that words in a statute should be given their ordinary grammatical or natural meaning unless there is an intention to the contrary. The plain language of a statute must override any supposed intendme....
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....as not been distinguished by the Ld. Counsel for the assessee before us. 6.6 Even the reliance placed by the Ld. Counsel for the assessee on the decision of the Hon'ble Jurisdictional High Court in the case of Achal Alloy (P) Ltd. (supra), we find is completely misplaced. The Hon'ble Court in the said case noted not only genuineness of the transaction but also existence of business exigency for making the payment in cash when it found that the insistence on making the cash payment was founded on the fulcrum that the payees did not have any bank account and that, being illiterates required payment in cash. Therefore, the said decision is of no assistance to the assessee. 6.7 Therefore, the argument of the Ld. Counsel for the assessee t....