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TMI Blog2018 (11) TMI 1719X X X X Extracts X X X X X X X X Extracts X X X X ..... side the orders of the lower authorities and delete the addition. Appeal of the assessee is allowed. - I.T.A.No.300/Viz/2015 - - - Dated:- 30-11-2018 - Shri V. Durga Rao, Judicial Member Shri D.S. Sunder Singh, Accountant Member Appellant by : Shri M.Chandramouleswara Rao, AR Respondent by : Shri D.K.Sonowal, CIT DR ORDER D.S. Sunder Singh, This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [(CIT(A)]-3, Hyderabad vide ITA No.0626/2010-11/CIT(A)-1,Hyd/CIT(A)-3,Vsp/2015-16 dated 26.05.2015 for the assessment year 2007-08. 2. The assessee has raised as many as 4 grounds in this appeal. Ground No.1 and 4 are general in n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b clause of Rule 6DD and allow only such payments which are covered by Rule 6DD of IT Rules. 6. Against the order of the CIT(A), the assessee filed appeal before this Tribunal. During the appeal hearing, the Ld.AR submitted that the assessee has purchased the agricultural lands from the farmers and the Sale of agricultural land is not taxable in the hands of the farmers. The fact that the assessee has purchased the agricultural lands was not disputed by the revenue. The sellers have insisted for cash payments, therefore, the assessee has no option except to make the payment in cash. During the appeal proceedings the Ld.CIT(A) referred the matter to the AO and the AO submitted the remand report stating that the transactions ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f black money in the economy and encourage the assesses to make the transaction duly accounted and the habit of banking. In the instant case, the sellers of the land are farmers and they are identifiable. There are no instances of unrecorded expenditure made to the farmers, thereby the intention of the legislature in introducing 40A(3) is satisfied. The Coordinate Bench of ITAT Jaipur in the case of A Daga Royal Arts Vs. ITO (supra) held that if the intended purpose for which section 40A(3) is satisfied, no disallowance is required to be made u/s 40A(3) of the Act. The Coordinate Bench has considered plethora of decisions before coming to conclusion. For the sake of clarity and convenience, we extract relevant part of the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rever, the seller has insisted on cheque payments, the payment has been made by cheque. This makes out a case that the assessee has business expediency under which it has to make payment in cash and in absence of which, the transactions could not be completed. The second proviso to section 40A(3) refers to the nature and extent of banking facility, consideration of business expediency and other relevant factors which means that the object of the legislature is not to make disallowance of cash payments which have to be compulsory made by the assessee on account of business expediency. Further, the source of cash payments is clearly identifiable in form of the withdrawals from the assessee's bank accounts and the said details were submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Ch.Hanumantha Rao, Vs. ITO, Ward-2(2), Guntur vide I.T.A No.458/Viz/2014 dated 05.05.2017 has also taken similar view in respect of investments made and converted into stock-in-trade subsequently. For the sake of clarity and convenience, we extract relevant part of the order of this Tribunal which reads as under : Moreover, the lower authorities did not dispute the genuineness of payments. Further, each and every payment in cash are not automatically get disallowed under section 40A(3) of the Act. In a particular case where there exist a business expediency and other relevant factors and also the payments are genuine, then the Acts provide for immunity from disallowance of expenditure, if the assessee proves to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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