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TMI Blog2019 (1) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... earlier and therefore, the payments cannot be made through banking channel. In our considered view, the Assessing Officer rightly examined the nature of transaction done by the assessee and on facts was not convinced that the assessee would fall under any one of the exceptional clauses under Rule 6DD of the Rules. CIT-A examined the nature of transaction and found that Section 40A(3) applies with full force to the facts of the assessee's case. Once again before the Tribunal, the facts were re-examined and the Tribunal pointed out that the assessee failed to demonstrate that the conditions of the bid required the assessee to effect payments in cash then and there and payments could not have been made by cheque or Demand Draft or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olding that the cash transactions amounting to ₹ 34,68,15,452/- were not allowable under Section 40A(3) of the Act? 2) Whether the Appellate Tribunal was right in disallowing the expenditure even though both the payee and payer are identified and the TCS has been collected by the seller? 3.The asseessee, an individual, filed his return of income for the assessment year under consideration (2013-14) on 30.11.2014 admitting a total income of ₹ 9,23,600/-. The case was selected for scrutiny and notice under Section 143(2) of the Act was issued on 02.09.2014. On 31.03.2015, the assessee filed a revised return of income without any change in the total income admitted in his original return dated 30.11.2014. The assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 40A(3) of the Act stated that the assessee had made cash payments in excess of ₹ 20,000/- towards purchase of old gold ornaments through bidding process from the said Finance Company and the said provision is squarely attracted to the assessee's case and accordingly issued show cause notice dated 18.03.2016. The assessee submitted a reply stating about the nature of transaction done by him, how a syndicate of bidders ranging from 10 to 25 persons would be formed and after successful bidding by the assessee, he will collect from each of the members of the syndicate and will distribute the gold according to the payments collected from them and will be taken as sales in the assessee's account as the Finance Company has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yee and payer are identified and the genuineness of the payments were established, the amount paid by cash could not be disallowed. In support of such claim, the assessee placed reliance on the decision of this Court in the case of Commissioner of Income Tax vs. Chrome Leather Co. Pvt Ltd. reported in 235 ITR 708. The assessee also referred to the other decisions of the other High Courts ad the Hon'ble Supreme Court to justify his stand. The CITA by order dated 28.11.2016 dismissed the appeal and in doing so held that Section 40A(3) of the Act is applicable to the facts and circumstances of teh assessee's case and teh assessee could not establish that he comes under the exempted categories listed under Rule 6DD of the Rules. As agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, the CITA and the Tribunal were highlights by the learned counsel. The method of transaction was explained and as to how the highest bidder should immediately deposit part of the auctioned amount with the auctioneer and since the assessee wuld not know as to how much amount has to be deposited, no bank draft could be obtained by the assessee. Therefore, it is contended that Section 40A(3) of the Act would not be attracted. 7.Mr.Karthik Ranganathan, learned Standing Counsel for the revenue sought to sustain the orders passed by the Assessing Officer as confirmed by the CITA and the Tribunal by referring to the findings recorded by the authorities and the Tribunal and pointed out that there is no substantial questions of law arisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bid required the assessee to effect payments in cash then and there and payments could not have been made by cheque or Demand Draft or any other mode. The Tribunal pointed out that there is no explanation as to what stopped the assessee from effecting payments through banking channel. Further, the Tribunal found that the agreement with syndicate members, if any, was not produced by the assessee before the lower authorities or before the Tribunal. Further the Tribunal held that the assessee could not demonstrate that he was representing any syndicate nor he could demonstrate that he was collecting cash from such syndicate members for making payments to the Finance Company. The decisions of the Tribunal cited by the assessee were distingui ..... X X X X Extracts X X X X X X X X Extracts X X X X
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