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TMI Blog2019 (5) TMI 1692X X X X Extracts X X X X X X X X Extracts X X X X ..... for prescribing various exceptional circumstances. Therefore, Rule 6DD cannot be mechanically applied and I have to consider the overall explanation of the assessee having regard to the business consideration. The assessee s explanation is that assessee had to make payment in business exigency as during the month of February, 2012, generally marriages takes place and during odd hours, the assessee made transactions and in some cases seller was insisting for cash payments. The payments had been made to the seller because of that reason. The genuineness of purchases had not been doubted by the AO. In this case, there is no dispute to the fact that the genuineness of the transaction and the payment and identity of the receiver are established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmitted gross error of law as well as fact in confirming the addition of ₹ 3,33,700.00 U/s.40A(3) made by the learned A.O., particularly when, the cash payments were made due to business exigency under the exceptional circumstances. Therefore, the impugned addition being not correct, needs to be deleted in the interest of justice. 4. For that, the learned C.I.T.(A) should have deleted the addition made by the learned A.O by applying section 40A(3) of the Act, particularly when the impugned addition is not sustainable in the eye of law and the provision has no application under the facts and in the circumstances of the case. 5. For that, the findings given by the learned C.I.T.(A) are contrary to the facts on record and to the explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iolation of section 40A(3) of the Act and, therefore, disallowed ₹ 3,33,720/- u/s. 40A(3) of the l.T Act, as the assessee's case did not fall under any of the circumstances prescribed under Rule 6DD of the l.T Rule,1962. 6. On appeal, the CIT(A) observed that the most of the payments made to parties falls on working day and not on Sunday or banking holidays, which could have prevented the assessee to route the transactions in banking channels. Therefore, he confirmed the action of the Assessing officer. 7. Ld counsel for the assessee submitted that the payments were made due to business exigencies and under exceptional circumstances. Ld A.R. submitted that most of the payments were made in the month of February, 2012, when maximum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than by an account payee cheque or an account payee bank draft, 100% of such expenditure will not be allowed as deduction and in such a situation provisions of section 40A(3) will be applicable. I find that assessee s claim is not covered by any of the exceptions provided under Rule 6DD. However, the first proviso below Section 40A(3) clearly takes into consideration the nature of expenses, banking facilities, consideration of business expediency and other relevant factors. Rule 6DD in intent and purpose takes into consideration all these aspects for prescribing various exceptional circumstances. Therefore, Rule 6DD cannot be mechanically applied and I have to consider the overall explanation of the assessee having regard to the business co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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