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TMI Blog2012 (9) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... as made final purchases from the Arhatiyas (commission agents / traders) and same cannot be treated as agents of the assessee firm within the meaning of Rule 6DD(k). Circular No. 34 dated 5.3.1970 makes it clear that the payment to Arhatiyas do not fall for exclusion under above sub clause. Thirdly, there is no material on record to show that there was exception or unavoidable circumstances for making payments in cash. Payments to same party were made by cheques and by cash also. Therefore, invoking the provisions of section 40A(3) of the Act was justified. On contention of assessee that authorities below have not doubted the genuineness of the payments made in cash it is held that those genuine and bonafide payments could not be taken o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid the same as cash to the growers and, therefore, its case is excluded from the rigours of Section 40A(3) of the Act. The Assessing Officer did not accept the explanation of the assessee and held that the sub-rule (f) of Rule 6DD excludes the payments made in cash for the purchase of agricultural produce provided the same is made to the cultivator, grower or producer of the agricultural produce. The Assessing Officer also observed that the traders who sold the agricultural produce to the assessee after purchasing from the growers cannot be said to be acting as the agents of the assessee. The Ass essing Officer also referred to Circular No. 34 dated 5.3.1970 which clarifies that the explanation of Rule 6DD will not apply to the payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business concerns, namely M/s Rakesh Kumar Naresh Kumar, Delhi, M/s Krishna Trading Co., Shimla, M/s Karol Bros., M/s Nirmla Fruit agencies, Shimla and M/s Shimla Vegetable Co. Shimla. Out of the said five concerns, the assessee had made purchases in cash exceeding Rs.20,000/- from three concerns, namely M/s Krishna Trading Co., M/s Nirmla Fruit Agency and M/s Shimla Vegetable Co. Out of the said three concerns, only one, namely M/s Nirmla Fruit Agency responded to the query letter of the A O u/s 133(6) of the I.T. Act. There was no response from the remaining two. Also there were no enquiries conducted from the remaining seven parties from which the assessee had made cash purchases above Rs.20,000/- as per the details given in the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icable only in the cases when the payments are made in cash for the purchase of the agricultural produce directly to the cultivators, growers or producers of the agricultural produce. The appellant has made no such payments to the cultivators, growers or producers of the agricultural produce. 3.3.3 Another argument taken by the appellant, in contradiction to the one above, that its case is covered under Rule 6DD(k) is also totally misleading. A reading of the said Rule makes it clear that it is applicable only to the payments made by a person to his agent who is required to make the further payment in cash on behalf of such person, in the instant case, the appellant has made final purchases from the Arhatiyas (Commission agents/traders) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus the appellant has made the payments in sums exceeding Rs.20,000/-, which is in clear violation of provisions of section 40A(3) as it stood even in the assessment year under consideration. The case laws relied upon by the appellant are not found to be : acceptable on the given facts of the appellant's case. 3.3.5 In view of the discussion above the disallowance made by the Id. A.O. amounting to Rs. 3,29,071/- is found to be in order and is upheld." 6. Shri Vishal Mohan, Advocate, appeared for the assessee and Shri Surinder Meena, appeared for the Revenue. 7. Shri Vishal Mohan, Ld. Counsel for the assessee reiterated the submis sions made before the lower authorities. He has also relied on the decisions cited before the CIT(A). S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Kailash Chander Rs. 29,733/- 7. M/s Krishna Trading Co. Rs. 1,77,408/- 8. M/s Gaurav Fruit Agency Rs. 30,000/-, 9. M/s Gian Shingh Sons Dalli Rs. 75,000/- 10. M/s B.K. Shop. No.9, Dalli Rs. 3,32,830/- Total Rs.16,40,357/- 10. M/s B.K. Shop. No.9, Dalli Rs. 3,32,830/- Total Rs.16,40,357/- In the instant case, the CIT(A) has correctly held that the case of the assessee is not covered either under Rule 6DD(f) or Rule 6DD(k) of Income-tax Rules, 1962. Rule 6DD(f ) makes it clear that the same is applicable only in the cases when the payments are made in cash for the purchase of the agricultural produce directly to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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