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TMI Blog2014 (11) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... egarded as qualifying for allowances. The objective under the Act is to ensure that the income of an assessee is levied tax and every step is taken to ensure that no part of the income escapes the taxation - The prohibition contained under Section 40A(3) of the Act is more a matter, which genuinely falls in the realm of the Banking Regulation Act - A provision of that nature cannot be understood just in grammatical manner - In Commissioner of Income Tax v. Smt. Shelly Passi [2013 (3) TMI 219 - PUNJAB AND HARYANA HIGH COURT] it has been held that the cash deposited to the bank account of a recipient does not fall within the purview of Section 40A(3) – the order of the Tribunal is upheld – Decided against revenue. - I.T.T.A. No. 244 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds ₹ 20,000/-, but paid otherwise than through account payee cheque drawn on a bank or demand draft. The prohibition, however, is not absolute. The proviso to sub-section (3) of Section 40A of the Act directs that in case such payments are covered by the rule that is made in this behalf, they shall not be disallowed. A perusal of Rule 6DD of the Income Tax Rules, 1962 (for short the Rules) reveals that dozens of exceptions are carved out in this behalf. All payments made even in cash to Reserve Bank, State Bank of India or Industrial Development Corporations of various States, are brought under the purview of the Rule. Clause (j) of Rule 6DD conferred discretion upon the Assessing Officer to verify the circumstances under which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her statutory agencies, is recognized, there is no reason why the deposit of cash into the bank account of a recipient cannot be regarded as qualifying for allowances. Further, the objective under the Act is to ensure that the income of an assessee is levied tax and every step is taken to ensure that no part of the income escapes the taxation. The prohibition contained under Section 40A(3) of the Act is more a matter, which genuinely falls in the realm of the Banking Regulation Act. A provision of that nature cannot be understood just in grammatical manner. In Commissioner of Income Tax v. Smt. Shelly Passi [2013] 350 ITR 227 (P H), the Panjab and Haryana High Court took the view that the cash deposited to the bank account of a recipi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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