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TMI Blog2018 (6) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... s devoid of business rationale and sense, as is the plea of the cash payments being made before the banking hours, i.e., opening of the bank (in the morning). Why, the assessee has also pleaded absence of bank account at Bathinda as among the reasons, which is plainly frivolous in-as-much as it is the assessee, operating as many as 5 vends thereat, who has to open a bank account; having already a bank account with Punjab we discern a valid justification for not clubbing the payments made by each vend to the common supplier/s. This is as excise rules would be applicable vend-wise; each responsible for maintaining its’ stock, as well as the stock record - we find substantial basis for reckoning the payments for the purposes of u/s. 40A(3)/(3A) separately for each vend. Needless to add, this consideration would have no application where there is transfer of cash, stock, etc. from one vend to another, in which case there is a common link/management, including of cash, with the payments to the supplier being therefore monitored at the group level The matter, in view of the foregoing, is accordingly restored to the file of the Assessing Officer for factual verification and adjudication o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) following the binding decision by the Hon'ble jurisdictional High Court in Gurdas Garg v. CIT (in ITA No. 413 of 2014 dated 16th July, 2015 [63 taxmann.com 289], the Revenue is in appeal, raising the following grounds: '1. The CIT(A) , Bathinda has erred in deleting the addition made u/s 40A(3) by holding the same as genuine and made on account of practical expediency without appreciating the fact that provisions of section 40A(3) read with Rule 6 DD of the Rules do not include "genuineness or business expediency." 2. The Ld. CIT(A), Bathinda has erred in placing reliance on the order of Hon'ble High Court in the case of Sh. Gurdas Garg without appreciating that the Hon'ble High Court, in that case allowed the appeal of the assessee by observing that the cash payments made by the assessee were covered under the exception provided under Rule 6DD(j) of the Rules whereas clause (j) of Rule 6DD was omitted w.e.f. 25.07.1995. 3. The Ld. C1T(A), Bathinda has erred in not appreciating that the Hon'ble High Court, in the case of Sh. Gurdas Garg has admitted that it noticed the fact of omission of clause (j) from Rule 6DD at the time of writing the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks maintained for each branch. Separate vend-wise purchase was justified on the ground of the Excise regulation prohibiting mixing or interlacing of the stock of one vend with the other. Separate trading and profit and loss account of each vend was stated to have been prepared, though a consolidated operating statement (of all the branches) was prepared at the close of the year, which accounts were audited as per the requirement of the Act for filing the return of income. In sum, the cash transactions beyond the specified limit on a single day had arisen only as the purchases made by the individual vends were clubbed/ reckoned together. If the said cash payments for the purchase of liquor were taken separately and independently for each vend, then the circumstance for nondeduction of such expenses, as ordained by the provisions of section 40A(3)/(3A), would not arise. In addition to the aforesaid argument, the impugned disallowance was assailed as being repugnant to the stipulations of the first proviso to section 40A(3A) which prohibited disallowance in such cases and under such circumstances as may be prescribed having regard to the nature and extent of banking facilities availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a relevant consideration for invoking section 40A(3)/(3A), which only seeks to regulate the mode of payment - nothing more and nothing less, i.e., of an otherwise allowable or admissible expenditure. It is not meant for tax realization, but to check evasion of tax, as is also apparent from Circular No. 3/2008 dated 12.03.2008 (299 ITR (St.) 8) and Circular no. 01/2009 dated 27.03.2009 (310 ITR (St.) 42), extracted by the ld. CIT(A) at paras 5 and 6 of his order. The matter in fact stands dealt with and explained at considerable length by the Tribunal per its special bench decision in ITO v. Kenaram Saha and Subhash Saha [2009] 116 ITD 1 (Kol)(SB); and more recently in Gurdas Garg v. Asst. CIT (in ITA No. 456/Asr/2013, dated 28/2/2014) (also referred to by the ld. CIT(A)) and Asst. CIT v. Darshan Kumar Mahajan (in ITA No. 566/Asr/2016, dated 18.04.2018), from which we therefore draw support. In fact, the matter stands squarely covered by the several decisions by the Hon'ble High Courts, including that by the Hon'ble jurisdictional High Court, as in Hari Chand Virender Paul v. CIT [1983] 140 ITR 148 (P&H) (also referred to by the special bench). Rather, as afore-stated, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be repeated each day, entitling thus the purchaser to the discount on its daily purchase. In other words, the argument is devoid of business rationale and sense, as is the plea of the cash payments being made before the banking hours, i.e., opening of the bank (in the morning). Why, the assessee has also pleaded absence of bank account at Bathinda as among the reasons, which is plainly frivolous in-as-much as it is the assessee, operating as many as 5 vends thereat, who has to open a bank account; having already a bank account with Punjab & Sind Bank at Muktsar - the location of the sixth vend. We, therefore, are hardly impressed with the said pleas, besides finding them irrelevant. 4.4 Be that as it may, we find some merit in the assessee's claim of each vend being managed separately, i.e., by one (or more) partner/s, with each vend maintaining separate accounts. If, therefore, each vend is maintaining separate books of account, having thus a separate account with the supplier, liable for payments thereto, i.e., against purchases made by it, and there is no interlacing of management, including purchase and sale; we discern a valid justification for not clubbing the payments made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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