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TMI Blog2018 (3) TMI 1459X X X X Extracts X X X X X X X X Extracts X X X X ..... been filed by the assessee only before us for the first time. The contents of the affidavit requires examination by the lower authorities and hence in the interest of justice and fairplay, we deem it fit and appropriate, to remand this issue to the file of the ld AO to decided it afresh - Decided in favour of assessee for statistical purposes. - I.T.A No. 1291/Kol/2016 - - - Dated:- 21-3-2018 - Hon ble Shri M.Balaganesh, AM And Hon ble Shri S.S.Viswanethra Ravi, JM For the Appellant : Shri S.S. Gupta, FCA For the Respondent : Shri S. Dasgupta, Addl. CIT ( DR ) ORDER Per M.Balaganesh, AM 1. This appeal by the assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-13, Kolkata [in short th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emises of the assessee firm on 14.9.2007 and accordingly as per the Central Action Plan of the Central Board of Direct Taxes, this case was selected for scrutiny and accordingly notice u/s 143(2) of the Act was issued and served on the assessee in time. The ld AO observed that the assessee had reported Gross Turnover of ₹ 4,77,68,165/- and Net Profit of ₹ 78,30,630.77 at the rate of 16.39%. The ld AO observed that assessee firm had made cash payments above ₹ 20,000/- to the following parties :- a) M/s Oriental Gems Pvt Ltd - ₹ 2,45,073/- b) G.K.Gems and Jewellery - ₹ 2,88,554/- c) Behari Lal Shah Co. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules. Accordingly, he proceeded to make disallowance of ₹ 16,12,738/- u/s 40A(3) of the Act in the assessment. 6. The assessee pleaded before the ld CITA that the terms of section 40A(3) of the Act are not absolute and consideration of business expediency and other relevant factors are not excluded. Genuine and bonafide transactions are not taken out of the sweep of section. It was argued that the genuineness of the transactions and accounting by the payee in the instant case had not been disputed. The identity of the recipients stand very clearly established. The copy of money receipts were also produced from the payees in this regard. It was pleaded that the cash purchases against cash memos attached with the statement amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to plethora of decisions in support of the assessee. He stated that the disallowance was made by the lower authorities only for the reason that the assessee was not able to establish the pressing circumstances which warranted the assessee to make payments in cash. There was no evidence that the payees had insisted the assessee to make payments in cash. In this regard, it was only a verbal request of the payees which enabled assessee to make payments in cash. In support of this verbal request, the ld AR filed an affidavit duly sworn before the Notary Public dated 3.3.2018 from the partner of the assessee firm wherein at point 4, it was mentioned that the cash payments had to be made on the insistence of the suppliers and their refus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce u/s 40A(3) of the Act would result in abnormal net profits which is not practicable to earn in the business operated by the assessee. He further argued that the GP rate and NP rate disclosed by the assessee are accepted by the ld AO . He also argued that during the year under appeal, a survey u/s 133A of the Act was conducted in the business premises of the assessee and the ld AO had even cross verified the transactions of the assessee with the concerned suppliers and had not found any adverse remarks on the same. All the suppliers are registered with sales tax authorities and are assessed to income tax. In response to this, the ld DR vehemently argued that assessee had not proved the commercial expediency in the instant case for making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers are duly registered with sales tax authorities and having PAN. This affidavit has been filed by the assessee only before us for the first time. The contents of the affidavit requires examination by the lower authorities and hence in the interest of justice and fairplay, we deem it fit and appropriate, to remand this issue to the file of the ld AO , to decide the same in the light of the following direction that the suppliers had to be examined by the ld AO to ascertain whether they had insisted on the cash payments to be made and that they had refused to accept payments through cheques as mentioned in the affidavit. If on examination, it is found , that the suppliers indeed had done so, then no disallowance u/s 40A(3) of the Act is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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