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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 ..... the business of purchase and sale of country liquor, IMFL, beer, etc. for the financial year 2009- 10. During the year under consideration, the appellant-firm was allotted Excise licence for six (6) vends in Bathinda circle and four (4) in Muktsar circle. Accordingly, different branches were opened by taking premises on rent. The return of income for the said assessment year was subjected to the verification procedure under the Act, and income assessed at Rs. 11,30,640/- vide order dated 19/03/2013, as against the returned income of Rs. 9,80,640/- However, the said assessment was set aside vide order dated March 12, 2015 by the Principal Commissioner under the provisions of section 263 of the Act on the ground of it being erroneous and prejudicial to the interests of Revenue. Pursuant to the said revisional order, assessment was reframed on 04/03/2016 whereby an amount of Rs. 3,64,24,760/- was disallowed for violation of sections 40A(3)/40A(3A) of the Act for making payments in cash to one Shri Gurbaksh Singh, proprietor M/s. Cheema Wines and to M/s. Unique Wines, against purchase of liquor for sale at the firm's allotted vends. It is this assessment that led to an appeal by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise than by a crossed cheque/draft made to a person in a day shall be allowable u/s 40A(3) of the Act to the assessee only in cases and circumstances prescribed under Rule 6DD of the Rules specified from clause (a)| to (l), that the list is exhaustive and hence in a case not covered under various clauses of Rule 6DD, disallowance of expenditure exceeding twenty thousand rupees has to be made and was rightly made by the A.O. and that Section 40A(3) of the Act and Rule 6DD of the Rules have to be read together and not separately as suited the assessee. 6. The appellant craves leave to add or amend the grounds of appeal on or before the date of hearing of the appeal.' 4.1 Contesting the disallowance under section 40A(3)/(3A) of the Act, it was asseverated by the ld. counsel for the assessee, Sh. Sehgal, Advocate, that the said provision did not apply to the appellant in-as-much as all the transactions of cash payments for purchase of liquor were made by each vend (branch) independent of each other against separate permits issued by the Excise and Taxation Department. The sale bills bore the necessary permit number allotted to each vend. Submissions were made to emphasize th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pg. 11) of his order. That, in fact, defined the Revenue's case before us. Conceding thereto, being a matter of fact, he would however add that the prescription of the circumstances under first proviso to section 40A(3A) are in addition to that stipulated under rule 6DD of the Income Tax Rules, 1962 (the 'Rules' hereinafter). We could not disagree more in-as-much as the excepting circumstances, which would, where obtaining, operate to exclude section 40A(3)/(3A), are only that as prescribed as per rule 6DD of the Rules. The reading of the first proviso afore-referred makes this abundantly clear. In fact, as would be patent from a reading of the erstwhile Rule 6DD(j), the consideration of genuineness of the expenditure and/or that of the payments there-against was never a qualifying attribute even there-under. The reason is simple. Even as observed by the Bench during hearing, a non-genuine expenditure would stand to be ousted for allowance at the very threshold, i.e., under the section under which the deduction for the same in the computation of business income is being claimed, viz., s. 37(1) (for purchases, and any revenue expenditure generally), etc. The genuineness of an expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the facts of the case, we find a conflict in the findings by the AO as well as the ld. CIT(A) qua commercial expediency. While the AO states that the same has not been shown in any manner, i.e., as to how it was not practical to make the payment through the banking channel; the ld. CIT(A) justifies the same on the basis of the dealership being temporary in nature in-as-much as the licence for the trade was issued to the appellant-firm only for a year, and that, as stated, not making the payment in cash would have caused unnecessary delay and additional financial burden by way of bank charges, besides loosing out on discount/rebate, which are routinely deducted in the purchase invoices. Though there is no material on record to justify the same, we refuse to be drawn into this controversy, finding it irrelevant in the absence of its' prescription under rule 6DD, even as we cannot help wondering as to how in the days of electronic payments could discount be insisted upon for payment only in cash, which is both risky and time consuming. A nominal advance of the payment being made, per cheque, equal to the payment to be made on a single day, avowedly not exceeding Rs. 20,000/-, wo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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