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TMI Blog2020 (11) TMI 607X X X X Extracts X X X X X X X X Extracts X X X X ..... might conceivably be two opinions. Since the assessee in the given facts, had proved that there is commercial / business expediency in making cash purchases, the mistake cannot be stated to be obvious and apparent from record in view of the judgment in the case of M/s.M.K.Agrotech Pvt. Ltd. [ 2019 (1) TMI 37 - KARNATAKA HIGH COURT] and the order of Jaipur ITAT in the case of M/s.A.Daga Royal Arts [ 2018 (6) TMI 1240 - ITAT JAIPUR] .For the aforesaid reasoning and the judicial pronouncements, I hold that the disallowance u/s 40A(3) in a 154 proceedings is uncalled for and I quash the same. - Decided in favour of assessee. - ITA No.1862/Bang/2019 - - - Dated:- 18-11-2020 - Shri George George K, Judicial Member For the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) if the genuineness of the expenditure were proved. The Appellant prays for leave to add, modify, delete or introduce additional Grounds of Appeal at any time before the Appeal is disposed off. Based on these and such other grounds that may be adduced from time to time, the Appellant requests the Honourable Income Tax Appellate Tribunal to consider the petition in the light of principles of justice and cancel the addition made by the Assessing Officer. 3. The brief facts of the case are as follow: The assessee is a partnership firm engaged in the business of manufacturing and fabrication of machine components. The assessment u/s 143(3) was completed vide order dated 30.08.2016. Subsequently, the A.O. issued notice u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore the provisions of section 40A(3) were clearly applicable to the appellant s case and hence the two sums mentioned above were to be disallowed. The disallowance being in accordance with the law, it did not become a debatable issue. Omission to disallow the two amounts u/s 40A(3) was a mistake apparent from the record, hence the AO was justified in rectifying the mistake u/s 154 of the Act. The order u/s 154 dated 19.07.2018 is upheld. The grounds of appeal are dismissed. 5. Aggrieved by the order of the CIT(A), the assessee has filed this appeal before the Tribunal. The assessee has filed two paper books enclosing therein the written submissions filed before the CIT(A), invoices of cash purchases, bank statement of the assessee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid period, the assessee had received certain orders and to fulfil its orders, the assessee was in urgent need of raw material. Since the suppliers were not willing to extend credit and in view of business expediencies, the raw materials were purchased by paying cash. It was further stated that the products manufactured out of these raw materials were sold and proceeds were offered for tax. The above submission / assertion by the assessee was not controverted by the Income Tax Authorities nor by the learned Standing Counsel before the Tribunal. 7.1 Rule 6DD(j) of the I.T.Rules was inserted with effect from 01.04.1970. Rule 6DD(j) of the I.T.Rules inserted w.e.f. 01.04.1970 was a residuary rule whereby under exceptional or unavoidable cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s expediency and other relevant factors are concerned, as existed at relevant point in time and as considered by the Hon ble Supreme Court and the provisions of section 40A(3) as exist now and relevant for the impugned assessment year i.e. AY 2013-14. However, Rule 6DD(j) has been amended and by notification dated 10.10.2008, it now provides for an exception only in a scenario where the payment was required to be made on a day on which banks were closed either on account of holiday or strike. A question which arises for consideration is whether the legal proposition so laid down by the Hon ble Supreme Court regarding consideration of business expediency and other relevant factors has been diluted by way of delegated legislation in form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the transaction has been established as evidenced by the registered sale deeds and lastly, the test of business expediency has been met in the instant case. Further, as held by the Hon ble Rajasthan High Court in case of Harshila Chordia (supra), the consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A(3) has been brought on the statute books has been clearly satisfied in the instant case. Therefore, being a case of genuine business transaction, no disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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