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TMI Blog2016 (10) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 40A(3) or (3A) of the Act and explain business expediency for making payment otherwise than by account payee cheques each year. These facts are not at all clear on record. The ‘Statement of Facts’ filed before the CIT(A) also does not appear to explain the cause for contravention of the provisions of section 40A(3) or section 40A(3A) of the Act. Thus, facts of the case, for departure from mandate of section 40A(3) or (3A) requires to be appreciated. In this view of the matter, we restore the matter back to the file of the Assessing Officer for examination of the relevant facts de novo in accordance with law in the light of the ratio laid down by the Co-ordinate Bench of the Tribunal in assessment year 2008-09. Needl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 91,21,150/-. The list of parties to whom such payments were made forms part of the assessment order. The aforesaid list reveals that the entire payment pegged at ₹ 2,91,21,150/- has been made in tranches to only one party namely J. A. Trading Company on various dates during the year. The addition of ₹ 1,95,73,979/- represents purchase on account of scrap in contravention of provision of section 40A(3). Similarly, another amount of ₹ 95,47,171/- represents payment towards sundry creditors outstanding in the preceding year where the payment has been purportedly made in contravention of clause (3A) to section 40A of the Act. The Assessing Officer recorded the statement on oath of the Chartered Accountant (CA), of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO(2014) 222 Taxman 318, when the assessee has failed to prove the business expediency and any other relevant factor which forced him to make payment otherwise by cross cheque or DD. 2. Whether on the facts and in the circumstance of the case, the learned Commissioner of Income tax (Appeals), Aurangabad was correct when the assessee has not proved the identity of the payee. 3. In the facts Circumstances of the case, the CIT(A) erred in relying on the decision of ITAT, Pune in assessee own case and decision of Gujrath High court without appreciating the fact that assessee has not proved the identify of payee and business expediency for violation of section 40A(3). 4. On the facts and in the circumstances of the case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein it has been held that only in instances where the assessee falls under any of exemptions covered in Rule 6DD of the Income Tax Rules, 1962, the assessee is entitled to claim an exemption under section 40A(3) of the Act. He next relied upon the decision of the Hon ble Madras High Court in the case of CIT vs. Venkatadhri Constructions, (2013) 31 taxmann.com 71 (Madras) relevant to assessment years 1993-94 and 1995-96 to support the case of the Revenue. He accordingly pleaded for reversal of the order of the CIT(A). 6. The Ld. Authorized Representative (AR) for the assessee Shri M. K. Kulkarni, on the other hand, submitted that the identical issue arose in the assessee s own case relevant to assessment year 2008-09 where the CIT(A) gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for the violation of the Sec. 40A(3). When the matter reached before the Tribunal, the Tribunal relied on the decision of Hon ble Supreme Court in the case of Attarsingh Gurumukh Singh, 191 ITR 667 and deleted the addition. In the present case, the assessee has produced confirmation of the parties showing the identity to whom the payments are made by bearer cheques. Moreover, it is not controverted before us that as per the evidence in form of copies of the bank cheques obtained from the concerned bank, all the respective parties have put their seals and signatures on said cheques for getting payments and that shows that the payments are received by the payees only. Moreover, assessee also demonstrated the genuineness of the payments by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally factual and requires ascertainment of certain facts. The assessee is duty bound to explain the circumstances which compelled him to discard the provisions of section 40A(3) or (3A) of the Act and explain business expediency for making payment otherwise than by account payee cheques each year. These facts are not at all clear on record. The Statement of Facts filed before the CIT(A) also does not appear to explain the cause for contravention of the provisions of section 40A(3) or section 40A(3A) of the Act. Thus, facts of the case, for departure from mandate of section 40A(3) or (3A) requires to be appreciated. In this view of the matter, we restore the matter back to the file of the Assessing Officer for examination of the relevant f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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