2022 (12) TMI 176 - AT - Income Tax

Addition u/s 40A - cash purchases in excess of Rs.20,000/- to a single person in a single day in respect of dhall purchase and purchase of oil - HELD THAT - As before us the ld.counsel could not file any details that the assessee s case falls under any of the exception as provided under the Rule 6DD of the Income Tax Rules, 1962. In view of the above provision of sub-section (3) to section 40A which has been amended w.e.f. 01.04.2009 by the Finance Act, 2008 provides that the provisions of sub-section (3) of section 40A of the Act shall be attracted where the aggregate of the payments made to a single party otherwise by an account payee cheque drawn on a bank or account payee bank draft exceeds Rs.20,000/- in a day. It means that the provisions of section 40A(3) of the Act is very clear and assessee is unable to prove that his case falls under any of the exception as provided under Rule 6DD of the Income Tax Rules, 1962. Hence, we confirm the disallowance. - Decided against assessee.

Summary

Issues:
1. Jurisdictional issue of mandatory notice u/s.143(2) of the Income Tax Act.
2. Disallowance u/s.40A(3) for cash payments exceeding Rs.20,000 for purchase of dhall and oil.
3. Disallowance of bad debts claimed.

Jurisdictional Issue - Mandatory Notice u/s.143(2):
The appellant raised a jurisdictional issue in ITA No.3498/Chny/2018 for the assessment year 2013-14, contending that no mandatory notice u/s.143(2) had been issued by the Assessing Officer (AO), rendering the assessment invalid. The appellant cited legal precedents to support the argument. The Revenue produced the assessment records, including the notice u/s.143(2) of the Act, which had been received by the appellant. Consequently, the Tribunal dismissed the appellant's additional ground, as the notice had indeed been issued, and the records supported the Revenue's position.

Disallowance u/s.40A(3) for Cash Payments:
The common issue in both appeals pertained to the disallowance u/s.40A(3) for cash payments exceeding Rs.20,000 for the purchase of dhall and oil. The appellant contended that the purchases fell under Rule 6DD(e) concerning agricultural produce, exempting them from disallowance. However, the AO noted significant cash payments made by the appellant, which were confirmed during statements recorded in the survey. The Tribunal observed that the appellant failed to demonstrate eligibility for any exceptions under Rule 6DD. Referring to the provisions of section 40A(3) of the Act, the Tribunal upheld the disallowance, as the appellant could not establish compliance with the prescribed modes of payment. A consistent view was taken for both assessment years, resulting in the dismissal of the appellant's appeal on this issue.

Disallowance of Bad Debts Claimed:
In the assessment year 2013-14, the appellant's claim for bad debts amounting to Rs.4,94,28,399 was disallowed by the AO and upheld by the CIT(A). The appellant's counsel conceded this ground, expressing disinterest in pursuing it further. Consequently, the Tribunal dismissed the claim for bad debts as not prosecuted. The overall result of the appeals filed by the appellant was dismissal by the Tribunal.

In conclusion, the Tribunal addressed the jurisdictional issue of mandatory notice u/s.143(2), the disallowance u/s.40A(3) for cash payments exceeding Rs.20,000, and the disallowance of bad debts claimed. The Tribunal's decisions were based on a thorough examination of the facts, legal provisions, and the appellant's submissions, ultimately leading to the dismissal of the appeals.