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TMI Blog2010 (4) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... s justified in law in holding that the banking instruments which do not find place specifically in section 40A(3) of the Income-tax Act, 1961 being credible, cannot be denied with reference to the provisions of section 40A(3) of the Act? Whether the Tribunal has ignored the true nature of transaction which was initially between the supplier and the intermediaries and thereafter between the intermediaries and the assessee?" 2. The facts, as projected in the memo of appeal, are that the assessee in the relevant assessment year derived income from trading of steel and HDPE bags. The steel was mostly obtained from the Steel Authority of India Limited, Bhilai through certain intermediate parties. The assessee filed return declaring total incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred by the Revenue. 4. Shri Rajeev Shrivastava, learned counsel for the appellant/Revenue vehemently argued that sub-section (3) of section 40A clearly stipulates that any payment of more than Rs. 10,000 made in the relevant year towards expenditure incurred by the assessee to a person otherwise than by an account payee cheque drawn on a bank or account payee bank draft, is not deductible. It was not sufficient for the assessee merely to show that the purchases were genuine and payees were identifiable. He was also required to further prove that there exists some exceptional and unavoidable circumstances in which payments were made other than by crossed cheque drawn on a bank or crossed bank draft as per rule 6DD. Since the assessee coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the payment has not been doubted by the Assessing Officer. The aforesaid finding of the Tribunal has attained finality. The submission that the presumption under section 40A(3) is absolute is incorrect and the same is to be read with rule 6DD which mitigates the rigours of section 40A(3). The banker's cheques and pay orders are cheques issued by the bank on itself and the same are not payable in cash to bearer but credited to the bank account of the payee. All payments through banker's cheques/ pay orders were by crossed cheques. The CDRs are issued by the banks in favour of Government undertakings. All call deposit receipts were issued by banks in favour of Steel Authority of India, Bhilai, which is a public sector undertaking and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances. 9. Sub-section (3) as amended by the Finance Act, 2008, with effect from April 1, 2009 reads as under: "Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise, than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure." 10. At the relevant time the limit was Rs. 10,000 in place of Rs. 20,000. The proviso to section 40A(3) reads as under: "Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3) and this sub-section where a payment or aggregate of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the matter of CIT v. Achal Alloys P. Ltd. [1996] 218 ITR 46 (MP), it has been held that no question of law arises where the genuineness of the payment has not been doubted. 14. As already observed in the foregoing paragraphs, the Tribunal has categorically held that the Assessing Officer has not doubted the genuineness of the transactions. Even otherwise, the payments have been made through banker's cheques/pay orders/call deposit receipts issued in favour of the Steel Authority of India Limited, a Government of India undertaking. 15. In view of the aforesaid facts and keeping in view sub-clause (iv) of clause (d) of rule 6DD, we are of the opinion that the finding of the Commissioner of Income-tax (Appeals) and subsequent order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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