2024 (6) TMI 542 - HC - Income Tax

Addition u/s 40A - cash payments in cash as the same had to be made on the last date of the assessment year and it was a Sunday and Bank holiday - HELD THAT - Restriction is imposed on the amount of transaction that a person can make in cash for business expenditure because any attempt by the assessee to show his income falsely as expenditure in business is thwarted and that the transaction made is traceable. Under such circumstances exemptions are made to cater to special exigencies where it is not possible for the transaction to be made through Bank and a person is forced to pay money by way of cash. The onus of proving that such a circumstance existed and indeed payment has been done in cash and the income has not escaped assessment is on the assessee In the instant case, the assessee is in the business of cloth. He has not produced any believable document before the AO to show that there was an exigency and he had to necessarily make payments on 31st March, 2013 itself to the persons as contended by him and he has also failed to show that he could not have made payment by way of cheque. He has also not produced any believable document to show that the said persons have infact received the said consideration and have declared the same in their income. Except the oral submission to that effect, no document has been produced. WP Dismissed.

Summary

Issues involved: Dispute regarding non-acceptance of cash expenditure claimed by the assessee for the assessment year 2013-14 under Section 40A (3A) proviso read with Rule 6DD (j) of the Income Tax Act, 1961.

The judgment pertains to the non-acceptance of a cash expenditure claimed by the assessee for the assessment year 2013-14. The assessee contended that he had to make cash payments totaling Rs. 3,47,717/- on the last day of the assessment year due to it being a Sunday and a bank holiday. The appellant claimed exemption u/s 40A (3A) proviso read with Rule 6DD (j) of the Income Tax Rules, 1962. However, the Commissioner of Income Tax (A) of Hubballi upheld the disallowance made by the Assessing Officer under Section 40A (3) of the Income Tax Act, 1961, stating that the assessee failed to provide a valid reason for making cash payments on a Sunday when banks were closed. The appellant failed to produce sufficient evidence to support his claim, and the Tribunal also found no reason to interfere with the lower authorities' orders. Consequently, the writ petition was dismissed as the appellant did not raise any substantial question of law necessitating the court's intervention.