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TMI Blog2018 (7) TMI 1462X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order passed under section 143(3) r.w.s 147 of the Act. 2. First we take quantum appeal i.e. ITA No.2215/Ahd/2016. 3. Grounds taken by the Revenue are not in consonance with the Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963 - they are descriptive and argumentative in nature. In brief, grievance of the Revenue is that the ld.CIT(A) has erred in deleting disallowance of Rs. 2,25,65,154/- which was disallowed by the AO with the aid of section 40A(3) of the Act. 4. Brief facts of the case are that the assessee is a cooperative society with 52% shareholding of Government of Gujarat. It is engaged in the business of manufacturing sugar and other products from sugarcane. It has filed its return of income under section 139(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,293/- as a disallowance under Rule 6DD which please note." Thereby the assessee has admitted that it had contravened the provisions of section 40A(3) of the Act. In view of the above, it is clear that the assessee had made payments of a sum exceeding twenty thousand rupees otherwise than by an account payee cheque drawn on a bank or account payee bank draft for purchase of sugarcane. The said payments in cash amounted to Rs. 2,25,65,154/- .Thus the assessee had contravened the provisions of sub section 3 of section 40A of the Act read with Rule 6DD. Hence, deduction to the tune of Rs. 2,25,65,154/- is disallowed and added back to the total income of the assessee. I am satisfied that, the assessee firm has furnished inaccurate particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of expenditure exceeds the sum of Rs. 20,000/- by disallowing any deduction in respect of such expenditure. However, when payment is made for purchase of agricultural or forest produce or the produce of animal husbandry or dairy or poultry farming etc. as per sub-clause (e) of rule 6DD or when the payment is made by any person to his agent who is required to make payment in cash for goods or services on behalf of such persons under clause (k) of Rule 6DD of Income Tax Rules, no disallowance under sub-section (3) of section 40A shall be made. In other words, exemptions are carved out under rule 6DD when purchase is of agricultural or forest produce etc. or when such purchase is made through agent who was required to pay in cash." I a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the disallowance under section 40A(3) would not be made. Similarly, subclause (k) provides that where payment is made by any persons to his agent who is required to make payment in cash for goods or services on behalf of such person. A perusal of the written submissions of the assessee filed before the AO would indicate that the assessee itself admitted about the violation of section 40A(3). It has itself made disallowance of Rs. 1.32 crores. A perusal of this details indicate twothree contradictory situations viz. if assessee has itself made disallowance of Rs. 1.32 crores whether it is part of total payment of Rs. 2.25 crores or not, and if yes, then how the AO has made disallowance of Rs. 2.25 cores ? He should have only made disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to taxes, if any, payable him, which shall not be less than but which shall not exceed three times of the amount of tax sought to be evaded by reason of concealment of income or furnishing of inaccurate particulars of income. In other words, the quantification of the penalty is depended upon the addition made to the income of the assessee. In the present case, the assessee has filed appeal before the CIT(A) against quantum addition. Adjudication of quantum addition was pending before the ld.CIT(A) and the penalty proceedings is solely depended upon the ultimate determination of income, therefore, appeal arising out of imposition penalty cannot be decided before adjudication of quantum appeal. On account of this simple procedural irregular ..... X X X X Extracts X X X X X X X X Extracts X X X X
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