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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 ..... hat the assessee firm is in the business of commission agency and trading of vegetables and foods. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had made certain purchases in cash exceeding Rs. 20,000/-. The Assessing Officer required the assessee to justify the said payment in view of provisions of section 40A(3) of the Income Tax Act, 1961 (in short 'the Act'). In res ponse to the query, the assessee submitted that it deals in the purchase and sale of vegetables and fruits which are excluded by Rule 6DD of the Income-tax Rule, 1962 (in short 'the Rule'). It was also explained by the assessee that in many cases, it had made payments to the commission agents who paid the same as cash to the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessity of the bus iness. Reliance in this regard was placed on the case of CIT Vs Ashoka Steel Industries & Flour Mills (2007) 293 ITR 192 (P&H). It was also argued on behalf of the assessee before the CIT(A) that the case of assessee is covered under Rule 6DD(k) of the Income-tax Rules, 1962. 5. The CIT(A) upheld the disallowance made by the Assessing Officer amounting to Rs. 3,28,071/- observing as under:- 3.3 The rival submissions have been carefully considered with reference to the facts of the case, the relevant assessment records and the case laws relied upon. A perusal of the assessment records reveals that the assessing officer had called for the copy of account of the appellant from only five business concerns, namely M/s Rakes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justification for cash payments. Therefore the appellant's reliance on the case of CIT Vs Ashoka Steel Industries and Flour Mills supra is misplaced. With due respect to the Hon'ble High Court, the judgment in the given case was delivered in the wisdom of the court on its own facts. But in view of the facts of the appellant's case and also the categorical provisions of section 40A (3) read with Rule 6DD, the said-case is found to have no application here. 3.3.2 The appellant's argument that it was dealing in the purchase and sale of fruit and vegetable, and, therefore, its case was excluded under rule 6DD (f) is also misconceived. A plain reading of the said Rule makes it clear that the same is applicable only in the cases when the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural produce are not covered under this sub-clause. 3.3.4 The appellant's bald argument, without specifying any details, that the amounts of many purchase bills were small and therefore the individual transactions should be kept out of the rigours of Rule 6DD, is also found devoid of any force. The fact of the matter is that payments have been made in cash in sums exceeding Rs.20,000/- to the same party in one go. It is not the appellant's case that separate payments less than Rs.20,000/- each were made. In fact, as already mentioned above, such payments not exceeding Rs.20,000/- in cash recorded on consecutive dates have already been accepted by the Id. A.O. in the case of M/s Nirmla Fruit Agency. Thus the appellant has made the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts of the present case. 9. I have heard the rival submissions and have also perused the materials available on record. It is noticed that cash purchases above Rs. 20,000/- were made in contravention to Section 40A(3) of the Income Tax Act from the following parties . S.NO. Name of the Parties Amount 1. M/s Vikas Fruits Agency Dalli Rs.53,284/-7- 2. M/s Shimla,vegetabe Co. (SVCI) Rs. 5,50, 000/- 3. M/s Shimla vegetabe Co. (SVC) Rs. 1,43,612/-- 4. M/s Sharma Bro. Dalli Rs.32,836/- 5. M/s Nirmala Fruit Agency Rs. 2,15,654/- 6. M/s Naresh Kumar 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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