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2023 (2) TMI 1272 - AT - Income TaxAddition u/s. 40A(3) - payments in cash to the farmers - Submission of the AR that since the payments were made during the bank holidays as well as neither the assessee nor the payees had bank accounts - HELD THAT - On careful reading of Rule 6DD(j) of the IT Rules, 1962 and on perusal of the details of payments made by the assessee during the holidays, we find merit in the argument of the Ld. AR and hence we are of the opinion that the payments made by the assessee do not attract the provisions of the section 40A(3) of the Act and hence the Ld. AO is hereby directed to delete the addition to this extent. Decided in favour of assessee. Addition made u/s. 69 r.w.s 115BBE on account of deficit cash - HELD THAT - CIT(A) has discussed the issue at length before confirming the addition made by the Ld. AO and thereby denying the claim of the assessee. Even before us the assessee has not produced any cogent evidence in support of the expenditure claimed by assessee. Under these circumstances, we are inclined not to interfere with the decision of the Ld. CIT(A)on this issue and accordingly the relevant ground raised by the assessee is dismissed.
Issues:
1. Addition u/s. 40A(3) of the Act 2. Addition u/s. 69 r.w.s 115BBE of the Act on account of deficit cash Issue 1: Addition u/s. 40A(3) of the Act: The appeal was against the Ld. CIT(A)'s order confirming additions made by the Ld. AO u/s. 40A(3) of the Act. The assessee argued that due to the nature of the business (aqua trading), cash payments were necessary, especially in remote areas with limited banking facilities. The Ld. AR cited Rule 6DD(j) of the IT Rules, 1962, stating that since payments were made on bank holidays and neither the assessee nor the payees had bank accounts, section 40A(3) did not apply. The Ld. DR supported the Revenue Authorities' decision. The tribunal examined the provisions and the cash payments made during holidays, concluding that the payments totaling Rs. 16,00,268/- did not fall under section 40A(3), directing the Ld. AO to delete this addition partially. Issue 2: Addition u/s. 69 r.w.s 115BBE of the Act on account of deficit cash: The Ld. AO added Rs. 78,163/- for deficit cash, alleging a discrepancy between the cash balance in the books and the actual cash found. The assessee claimed the amount was used for urgent personal needs, but failed to provide evidence. The Ld. CIT(A) upheld the addition, emphasizing the lack of substantiated explanation by the assessee. The tribunal noted the absence of concrete evidence supporting the claimed expenditure and agreed with the Ld. CIT(A)'s decision, dismissing the ground raised by the assessee. Consequently, the appeal was partly allowed, with the tribunal declining to interfere with the CIT(A)'s ruling on this issue. In conclusion, the tribunal partially allowed the appeal, directing the deletion of the addition under section 40A(3) while upholding the addition on account of deficit cash. The decision was based on a detailed analysis of the arguments presented by both parties and a thorough examination of the relevant legal provisions and evidence provided.
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