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TMI Blog2016 (8) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... e genuineness of the payment and the identity of the payee, and that payee insisted on cash payment the circumstance that there was a delay in making payment of the bills by itself would not take the case out of the ambit of exceptional or unavoidable circumstances referred to in r. 6DD(j). - Decided in favour of assessee Disallowance on account of short drawings - Held that:- The drawings is very law comparing to the status of the assessee as he was owing a multi-storey building, car etc. The drawings were utilised towards municipal tax liability, the electricity expenses, household expenses, using motor car running expenses, road tax, car insurance and maintenance, expenses towards social obligation, daughter’s education expenses. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestionnaire were issued and served upon the assessee. The assessee during the assessment proceedings submitted audited report, profit and loss account, balance sheet, bank statement, family tree, copy of purchase and sale ledger, party ledger, books of account comprising cash book, ledger etc. The AO during assessment proceedings found that the payment exceeding ₹ 20,000/- in cash for the purchases of tickets has been made to M/s Vira Enterprises and M/s Best Co. The AO gathered this information after issuing notice u/s.133(6) of the Act to the above stated parties. On query for the violation of the provisions of Section 40A(3) of the Act, read with rule 6DD of Income Tax Rules, it was submitted that the assessee was acting as a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney from the retailers on behalf of the assessee. Thereafter the amount which was payable by the assessee to the suppliers on account of purchases of lottery tickets used to be adjusted with the collections made by the supplier. However, ld. CIT(A) disregarded the claim of the assessee by observing as under :- 10. The appellant claimed that Rule 6DD(d) applies in his case. Rule 6DD(d) reads as under :- (d) where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee. The interpretation of same is mutual adjustment on bilateral basis and not adjustment on multilateral basis. In this case, as spelt out with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidering the business expediency and other relevant factors. As many retailers were not having bank account then it was necessary to collect the cash from them and accordingly payment was realised in cash. Ld. AR also submitted that the payment were made to the genuine parties and it should be allowed in terms of Hon ble Supreme Court Judgment in the case of Attar Singh Gurmukh Singh Vs. Income Tax Officer, 191 ITR 667. At the end ld. AR prayed for the deletion of the addition made by the AO. On the other hand the ld. DR vehemently supported the orders of the lower authorities. 6. We have heard rival parties and perused the materials available on record. From the foregoing discussion, we find that the AO has disallowed cash payment u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduced from the seller, M, who stated in the certificate that they asked the purchaser to make payment of different bills in cash as there was necessity of liquid funds for the expediency of the business . Dates of the bills and permanent account number were also mentioned in the certificate. Thus, the seller insisted upon the assessee's paying the bills in cash. The identity of the payee who was an income-tax assessee was established and the genuineness of the transactions was not doubted or disputed. The ITO has to take a pragmatic view of the matter. The ITO should take a practical approach to problems and strike a balance between the direction of law and hardship to the assessee. He should not enmesh himself in technicalities. Aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has satisfied the Assessing Officer as to the genuineness of the payment and the identity of the payee, and that payee insisted on cash payment the circumstance that there was a delay in making payment of the bills by itself would not take the case out of the ambit of exceptional or unavoidable circumstances referred to in r. 6DD(j). Further Ld. AR in support the claim of assessee that has submitted the confirmation from M/s Vira Enterprises stating that there was an agency between the assessee and Vira Enterprises which is placed on record. Respectfully following the aforesaid decisions, we are inclined to set aside the orders of lower authorities. AO is directed accordingly, hence, this ground raised by assessee is allowed. 7. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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