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TMI Blog2013 (12) TMI 1114X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant : Sanjeev Sapra. For the Respondent : G.S. Virk. ORDER:- PER : Chandra Mohan Garg This appeal has been preferred by the assessee against the order of the Commissioner of Income Tax(A), Meerut dated 10.10.2011 in Appeal No. 265/08-09 for AY 2006-07. 2. The main grounds raised in this appeal read as under:- "1. That the ld CIT(A) has erred in law as well as on the facts of the case by confirming the disallowance of Rs. 3,27,488/- being the disallowance @ 20% of the cash payments of Rs. 16,37,440/- in excess of RS. 20,000/- each as made by the appellant to the various land owners for purchase of land in the normal course of its business of colonizers and real estate developers and the payments to the land owners were verifiable with reference to the purchase deeds executed in the presence of State Government official in whose presence the payments in cash were made. 2. That without prejudice to above, in any case the disallowance u/s 40A(3) under appeal is totally unjust, unlawful and deserves to be deleted. " 3. Briefly stated the facts of the case giving rise this appeal are that the case was selected for scrutiny and notices u/ss. 143(2) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K Leather Processors (P.) Ltd. 292 ITR 669 (Mad.) (iii) CIT v. Chowdhary company 217 ITR 431 (Alld.) (iv) CIT v. P. Praveen company 274 ITR 534 (Guj.) 7. Besides above case laws, assessee has also placed reliance on the judgment of Jurisdictional High Court of Delhi in the case of R.C. Goelvs Commissioner of Income Tax dated 04.12.2012 in ITA No. 636/2012 wherein their lordships considered the provisions of section 40A(3) of the Act and Rule 6DD(k) of the Income Tax Rules, 1962 and held as under:- "9. In the present case, the previously noted discussion would reveal that the assessee engages itself in executing catering contracts for Railways in respect of two trains. In those trains, its personnel are deployed for sale of small articles of daily necessity and use to the passengers. Perforce, the payments received by them are necessarily in cash. These amounts are collected and in turn handed over to the assessee. The assessee in terms of its contract is bound to maintain constant supplies in the trains and ensure that at no point in time can the passengers be deprived of these articles (which are food articles, soft drinks and other items necessary for travel). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd residing at the places which are not served by any bank or who have no bank account anywhere are covered by exception under Rule 6DD(h) of the Income tax Rules 1962 and, therefore, the same cannot be disallowed u/s 40A(3) of the Act. We find it appropriate to consider relevant paras of the above judgment which read as under:- "30. Even if it is assumed that payments were made at a town where banking facilities were available, in our view, the case of the appellant-company would still fall under the exception of r. 600. Rule 6DD(h) has to be interpreted liberally so as not to frustrate the object of the legislature. As held in several cases referred to above, the object of s. 40A(3) is not to disallow genuine payments and the r, 6DD has to be interpreted keeping in view the object of the main provision. The second proviso to s. 40A(3) refers to "the nature and extent of banking facilities available, considerations of business expediency and other relevant factors", which means that the object of the legislature is not to make disallowance of such cash payments which have to be compulsorily made by the assessee in view of absence of banking facilities at the place of paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the risk of receiving case at the town where the sale deed is to be registered before sub-registrar and which may be far way from the sellers' village. In this situation, the seller has to confirm before the sub-registrar that full payment as per recital of the sale deed has been received by him. At the same time, the government authority i.e. sub-registrar satisfied himself upon the identity of the seller to ensure that the payment has been made to the right person. For the sake of convenience in the receipt, the place is mentioned as the town where the document is registered. From the assessment order we observe that the Assessing Officer has not made any effort to examine the very fact whether the payments were made and received by the sellers at their villages or at the town where the sale deed was registered. 11. Considering the entire facts and proposition that the payments were made at villages where banking facilities did not exist is accepted. After careful consideration of practical situation, we also observe that even if it is assumed that payments were made at a town where banking facilities were available, the case of the appellant company would still fall under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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