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TMI Blog2021 (2) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... ulated limit notwithstanding the fact that the transactions were genuine and the parties were identifiable. Respectfully following the judgment, we uphold the disallowance sustained in the first appeal. This ground fails. Addition u/s 14A read with Rule 8D - Interest disallowance - HELD THAT:- Authorities below did not accept the contention, in principle, by opining that interest free funds available with the assessee could not be deemed to have been utilised for making investments in sources yielding exempt income. In this regard, it is noticed that the Hon ble Supreme Court in CIT (LTU) Vs. Reliance Industries Limited [ 2019 (1) TMI 757 - SUPREME COURT] has approved the view that where interest free funds available with the assessee were sufficient to meet its investment and at the same time loan was raised, it can be presumed that the investments were made from interest free funds and hence, no disallowance of interest should be made to that extent. It is appropriate to send the matter back to the file of AO for examining the assessee s contention about the availability of interest free funds available with him and then decide the amount of interest disallowable u/s.14A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 1962 (hereinafter called `the Rules ). In response, the assessee submitted that the cash payment was made due to urgent requirements of the seller, who was a senior citizen and it was not possible for him to go frequently to the bank. It was also emphasized that the transactions were genuine. The AO issued summons to the seller and recorded his statement on 07-03-2018. In response to query no.7, Mr. Devikinandan Hariprasad Agrawal admitted of having four accounts in three banks, namely, Bank of Baroda, Mahesh Urban Cooperative Bank, Parbhani, Peoples Cooperative Bank, Hingoli (CC account and CA account). He, however maintained that he insisted for cash payment. The AO also examined the bank statement of Mr. Devikinandan Hariprasad Agrawal and found that there were several transactions of cash payments and cash withdrawals along with transactions through cheques. He, therefore, refused to accept the assessee s contention of the case falling under Rule 6DD. The ld. CIT(A) echoed the view taken by the AO on this score. 4. I have heard both the sides through Virtual Court and gone through the relevant material on record. The assessee purchased two plots, admittedly as stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ousand rupees may be made to a person in a day, otherwise than by an account payee cheque etc. under rule 6DD without inviting wrath of section 40A(3). This rule opens by stating that: `No disallowance under sub-section (3) of section 40A shall be made . where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or , exceeds ten thousand rupees in the cases and circumstances specified hereunder, namely:- . Thereafter clauses (a) to (l) provide for such cases and circumstances. The case of the assessee admittedly does not fall in any of the clauses. 7. The ld. AR has canvassed a view that even though the case does not fall under any of the specific clauses of rule 6DD, the disallowance should be deleted as it was a genuine business transaction covered within the words `business expediency as used in the proviso to section 40A(3A). 8. On a conjoint reading of section 40A(3) read with the first proviso to section 40A(3A) on one hand and rule 6DD on the other, it is manifest that the proviso provides for the cushion from disallowance in the cases and the circumstances as may be prescribed having regard to the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. The ld. AR tried to invoke clause (j) for seeking relief, which, at the material time, provided: Where the payment was required to be made on a date on which banks were closed either on account of holiday or strike . The assessee, has neither demonstrated nor was it a case before the authorities below that there was a bank holiday or the bank was closed because of strike on the date on which the transaction took place. 11. The ld. AR heavily accentuated on the genuineness of transaction towards pitching a case of non-disallowance. In my view, this argument does not hold water. Section 40A(3) of the Act has been inserted to regulate genuine business transactions through banking channel rather than permitting them in cash. If a transaction itself is not genuine, the same will not fall for consideration under this provision and will warrant full disallowance at the threshold rather than calling for disallowance under section 40A(3) of the Act only to the extent of cash payment in excess of ₹ 10,000/- on a day. It is only where a genuine transaction has been recorded but in violation of section 40A(3) by making cash payments etc. that the rigour of the section is triggered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction as a ground for not making disallowance u/s 40A(3) of the Act. 14. Turning to the facts of the instant case, it is found as an admitted position that the assessee as well as the seller of the plots had bank accounts at the material time and still the transaction was carried out in violation of section 40A(3) without bringing the case in any of the specific clauses of Rule 6DD. 15. On an overview of the view canvassed by various Hon ble High Courts on the point - some deleting the disallowance on the basis of the genuineness of the transactions while others sustaining the disallowance - what matters for the Tribunal is to follow the binding precedent, being, the judgment of Hon ble jurisdictional High Court. That being the position, the Pune Tribunal is bound by the judgment of the Hon ble jurisdictional High Court in Madhav Govind Dulshete (supra) sustaining the disallowance in case of cash payments exceeding the stipulated limit notwithstanding the fact that the transactions were genuine and the parties were identifiable. Respectfully following the judgment, I uphold the disallowance sustained in the first appeal. This ground fails. 16. The only other ground in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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