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TMI Blog2012 (11) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... ectly deposited into the bank account of the suppliers without obtaining any confirmation from the payees and without verification of the varacity of the assessee s contentions. 3. The grievance of the revenue is also that the CIT(A) has erroneously relied upon the decision of the ITAT in the case of Sri Renukeshwara Rice Mills reported in 93 ITD 263 without satisfying himself as to whether the facts in both the cases are identical. 4. The brief facts of the case are that the assessee company which is in the business of hiring and transportation filed its return of income for the assessment year 2005-06 on 28-10-2005 declaring an income of ₹ 15,84,933/-. During the assessment proceedings u/s 143(3) of the IT Act, 1961 the AO obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income of the asseessee. 5. Aggrieved, the assessee preferred an appeal before the CIT(A) who after considering the decisions of the ITAT in the case of M/s Renukeshwara Rice Mills (cited supra), held that the cash payments directly into bank account of the suppliers enables verification of the transaction from origin to the conclusion and ensures that the payee alone receives the payment and also as there is no case of any unaccounted money that could be said to have been employed to make the payments, there is no violation of sec.40A(3) of the IT Act. He thus, allowed the assessee s appeal. 6. Aggrieved, the revenue is in appeal before us. 7. The learned DR, while supporting the order of the AO, submitted that the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank accounts of the payees will not attract the provisions of sec.40A(3) of the IT Act as held by the Tribunal in the case of M/s Renukeshwara Rice Mills. He submitted that the assessee being a company has to act through its employees and the employees have only deposited the amount in the bank account of payees on behalf of the assessee. Therefore, the employees cannot be said to be acting as agents of the assessee company. He submitted that it is not the case of the assessee that the transaction falls with in any of the exceptions enumerated under Rule 6DD of the IT Rules, but it is the case of the assessee that the deposits of the payment directly in to the bank accounts of the payees do not attract the provisions of Sec.40A(3) of the IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of issuing cheque/DD the assessee prepared a challan and along with the cash the challan was presented to the bank of the payee for the credit of the same in the account of payee. In the result, it is ensured that the payee alone receives the payment and the origin and conclusion of transaction is traceable. Thus, payment of sum directly in the bank account of payee fulfils the criteria for ensuring the object of introduction of Sec.40A(3). This is not a direct payment to the payee but only to the credit of this bank account without the payee actually receiving the cash. We accordingly, hold that such payment is not in violation of provisions of sec.40A(3) and hence no disallowance is called for . Therefore, the Tribunal in the case of M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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