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TMI Blog2020 (1) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... ur charges and for making certain purchases, where, it is very difficult to make payment through banking channels. In this situation, the provision attached to sub-section (3) of section 40A is to rescue the assessee from the rigour of disallowance under section 40A(3) of the Act. Keeping in view the totality of facts and circumstances and nature of work undertaking by the assessee, the disallowance restricted by the CIT(A) of ₹ 4,24,045/- cannot be held as sustainable. We accordingly, direct the AO to delete the same. Addition u/s 68 - unexplained cash credit - HELD THAT:- When the assessee has furnished his bank accounts , PAN No. and proof of address, it cannot be presumed that the identity and creditworthiness has not been proved. The onus shifted on the AO to contradict explanation of the assessee but there is no exercise by the AO in this regard for dismissing explanation and corroborative evidence by the assessee. Once there is proof of taking and repaying the loan, the addition in this regard is not called for. - ITA No.390/CTK/2014 - - - Dated:- 2-1-2020 - Shri Chandra Mohan Garg, Judicial Member And Laxmi Prasad Sahu, Accountant Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. 3. At the outset, ld counsel for the assessee submitted that he does not press Ground No.1 and Ground Nos.5 to 9 of appeal. Hence, these grounds are dismissed as not pressed. 4. Apropos Ground Nos.2 to 4 of appeal, ld counsel for the assessee submitted that an amount of ₹ 2 lakhs was paid to Shri K.C.Swain as machine hire charges for the assessment year 2007-08 and no tax has been deducted. Ld counsel further referred to the paper book from pages 72 to 107, containing cash book of the assessee for the period 1.4.2007 to 31.3.2008, and submitted that from the above, it is clearly discernible that payments to Shri K.C.Swain has been made in small amounts which are less than ₹ 20,000/- in a day. Therefore, the provisions of section 40(a)(ia) of the Act cannot be applied. Ld counsel submitted that these payments are machine hire charges, which were not made in a single day and, therefore, provisions of section 40(a)(ia) are also not applicable. 5. Replying to above, ld DR submitted that prior to 1.10.2009, the assessee has made payment of ₹ 2 lakhs in a year to Shri K.C.Swain, which is exceeding ₹ 50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of section 40A(3) has to be disallowed. 10. Placing rejoinder, ld counsel submitted that the assessee has shown payment of ₹ 82,92,867/- as labour charges and out of which ₹ 4,24,045/- has been paid in cash under compelling circumstances, therefore, such kind of payment may kindly be deleted. 11. On careful consideration of the rival submissions, we are of the considered view that section 40A(3) of the Act is applicable in the assessment year 2008-09, which clearly provides that where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on bank or account payee bank draft, the payment so made shall be deemed to be the profits and gains of business or profession and, accordingly chargeable to income tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceed twenty thousand rupees, but the provision has been attached to the said section, wherein, it has been provided having regard to the nature and extent of banking facilities available, considerations of business expedienc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and assisted the work of the assessee without any remuneration. He submitted that Mr Kiran K Mallavarrap has given the loan to the assessee though the brother of the assessee as he was not directly related to the assessee. Hence, the amount has been received through the banking channel of the brother of the assessee as his brother could withdraw the amount at the work place of the assessee being supervising the work. He submitted that Mr Kiran K Mallvarrap is an income tax assessee with PAN No.AGBPK 7459 G and residing at Bangalore, Karnataka. Since he was residing in a far place, it was not possible on the part of the assessee to produce him before the AO. However, Mr Kiran Mallavarap has submitted his bank statement evidencing the payment of unsecured loan to Debkamal Dutta, brother of the assessee and the said loan was repaid by the assessee through RTGC which is evident from the customer foil of bank and also from the bank statement. This fact has been confirmed by the AO in the remand report. The repayment of loan has been credited to the bank account of the assessee in HDFC Bank A/c. No.01841000021552 in Bangalore has also been confir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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