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TMI Blog2015 (8) TMI 1213X X X X Extracts X X X X X X X X Extracts X X X X ..... ciate that the theft was committed in the year 1989, whereas, the claim was written off in the assessment year 1993-94, despite the claim was rejected by the insurance company in the very next year of the theft and, therefore, such amount of insurance claim ought to be added in the income of the assessee. - Decided in favor of revenue. Additions made u/s 40A(3) - ITAT upholding the order of the CIT(A) in restricting the additions made u/s 40A(3) to 20% of the cash purchases in excess of ₹ 10,000/- Held that:- In the facts of the present case, 175 vouchers were also fabricated, because no vouchers were signed for the receipts of such cash. Moreover, Section 40A(3) of the Income Tax Act, 1961 imposes a limit of 20% of disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT are justified in upholding the order of the CIT(A) in restricting the additions made u/s 40A(3) of the Income Tax Act, 1961 to 20% of the cash purchases in excess of ₹ 10,000/-, by taking recourse to a prospective amendment made in Section 40A(3) of the IT Act, 1916 w.e.f. 01/04/1996? 3) Counsel for the appellant submitted that the respondentassessee had declared total loss of ₹ 15,03,098/- in the return of Income filed on 29th of October, 1993 for the assessment year 1993-94. Thereafter, notices were issued by the appellant upon the assessee; statement of P.N. Malhotra and other persons were also recorded on oath under Section 131 of the Income Tax Act. Thereafter, assessment order was passed by the A.O. on 26.09.1995 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly for the reason that the Commissioner (Appeals) allowed against the restriction put by the Commissioner (Appeals) upto 20% of the total cash transactions. ITAT vide order dated 14th December, 2005 dismissed the appeal preferred by the appellant and allowed the appeal preferred by the assessee. Counsel for the appellant submitted that the socalled theft was committed at the premises of the assessee on 10th September, 1989 for which insurance amount was claimed which was also rejected by the insurance company in the very next year. This amount was written off by the assessee in the assessment year 1993-94 which is not permissible. In the year 1993-94, no theft was committed at all, nor the insurance claim was denied by the insurance compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urance claim was made which was not granted by the insurance company and ultimately, the said amount of ₹ 1,17,775/- was written off in the assessment year 1993-94. Once, the factum of theft is proved, the disallowance of insurance claim written off by the A.O. has been rightly quashed and set aside by the ITAT. So far as cash transactions are concerned, it is submitted by the counsel for the assessee that as the bank account of the assessee was declared as Non-Performing Assets (NPA), they had entered into cash transactions. This aspect of the matter has been properly appreciated by the Commissioner (Appeals) as well as the ITAT and as per Section 40A(3) of the Income Tax Act, 1961, 20% of the total cash transaction was added to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1993-94 no theft was committed, but, it was in the year 1989 and, therefore, rightly A.O. as well as the Commissioner (Appeals) have dis-allowed the insurance claim written off. ITAT has failed to appreciate that the theft was committed in the year 1989, whereas, the claim was written off in the assessment year 1993-94, despite the claim was rejected by the insurance company in the very next year of the theft and, therefore, such amount of insurance claim ought to be added in the income of the assessee. 6) So far as cash transaction is concerned, it appears that there are several cash transactions in violation of Section 40A(3) of the Income Tax Act, 1961. They are 175 in numbers. There is a cash payment of ₹ 9000/- to 9900/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54/- is to be added in the income of the assessee. 8) Counsel for the respondent has relied upon a decision rendered by the Hon'ble High Court of Delhi in the case of Basu Distributor Pvt Ltd. Vs. Asst. Commissioner of Income Tax reported in [2012] 206 TAXMAN 45 (Delhi). 9) Looking to the aforesaid decision, it appears that very few were the cash transactions, whereas, in the facts of the present case, as stated herein above, on 175 occasions, cash payments of ₹ 9000 to 9900/- were made. On 22 occasions, cash payments were made of more than ₹ 10000/- to M/s. Puja Industries, on 05 occasions, cash transactions were made of more than ₹ 50000/- to M/s. Puja Industries. 10) In the facts of the present case, 175 vo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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