9911796707
TMI Blog2012 (11) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... d the cash payments, it can be presumed that the assessee has gained the confidence and the said parties started accepting the cheque payments by the assessee - payments made by the assessee in cash exceeding Rs.20.000/- ought to be accepted as having been made for the purpose of business expediency of the assessee firm - matter remanded to AO - I.T.A.No.123(B)/2011 - - - Dated:- 24-5-2012 - SHRI N.BARATHVAJA SANKAR, SMT. P.MADHAVI DEVI, JJ. Assesseee by : Shri Narendra Sharma, Advocate Respondent by : Shri B.Saravanan, JCIT O R D E R PER SMT P. MADHAVI DEVI, JM This is assessee s appeal for the assessment year : 2006-07. 2. In this appeal the assessee is aggrieved by the order of the CIT(A) in confirming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so that the amount does not exceed Rs.20,000/-. He observed that in relation to other payments also the assessee has not been able to give any justifiable reasons for not making payments by account payee cheques/DDs. He therefore, invoked provisions of sec.40A(3) of the IT Act, 1961 with respect to payments made other than by account payee cheque/DD s. He also considered the statement of Shri H.J.Narasimhamurthy, partner of the firm which was recorded on 24- 05-2004 during the course of survey to come to the conclusion that the assessee did not have any valid reasons to violate the provisions of sec.40A(3) of the IT Act, 1961. He also reproduced the questions and answers of the partner at page-3 of the assessment order. He also considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Bangalore and whether it was forced to make payments in cash. Taking the decision of the ITAT into consideration, the CIT(A) asked the assessee to furnish the details of the entire transactions to verify, if the parties had been paid otherwise by cash also. The assessee did not furnish any details before the CIT(A). But from the perusal of the assessee s balance sheet as on 31-03-2006 the CIT(A) noted that M/s Thirumala is shown as one of the creditors on account of purchases made on 23-06-2006 and that M/s Thirumala were allowing credit facilities to the assessee. He also observed that M/s Palaniswamy Gounder and M/s Sunrise Jewellers are also shown as creditors in the balance sheet. He observed that these parties were also paid in cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the AO while giving effect to the order of the ITAT had accepted the assessee s contention and has granted partial relief. He has filed copy of the Tribunal s order before us. 4.1 In the alternative, the learned counsel for the assessee also submitted that upto 31-03-2009, as the law stood at the relevant point of time, each payment has to be taken into consideration and if any of the payments exceeds Rs.20,000/- only then, the provision of Sec.40A(3) of the IT Act is attracted. He drew our attention to the payments made to M/s Palaniswamy Gounder on a single day and submitted that the AO considered the aggregate of the payments made for coming to the conclusion that the disallowance u/s 40A(3) of the IT Act, is to be made while each pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance is mandatory whenever the payment is exceeding Rs.20,000/-. The learned DR placed reliance upon the decisions of the jurisdictional High Court in the case of ACIT Vs Sri Saraswathi Iron Foundry reported in 287 ITR 313(Kar.)(2007) and also in the case of Mungi Bros. Vs ACIT, Belgaum reported in 296 ITR 665(Kar.)(2007) 6. Having heard both the parties and having considered the rival contentions, we find that the survey has been conducted on the assessee s premises u/s 133A of the IT Act, 1961 on 09-05-2006, subsequent to which the assessee has filed its return of income for the assessment year 2005-06 on 26-09-2006 and for the assessment year 2006-07 on 31-10-2006. The assessment for the assessment year 2005-06 was concluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee to prove the same by providing the relevant evidence. In the case before us, the assessee has not filed any evidence to show the commercial expediency. However, since the facts of the case before us are similar to the facts of the case for the assessment year 2005-06 and as the appeals are dealt with by the CIT(A) for both the assessment years in similar fashion, we are of the opinion, that the issue needs to be remanded to the file of the assessing authority with similar directions. However, the assessee cannot be permitted to take the same plea year after year that the assessee was a new customer to the parties in Bangalore and therefore, they have insisted on payments in cash. Therefore, the AO needs to examine as to whether ..... X X X X Extracts X X X X X X X X Extracts X X X X
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