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TMI Blog2022 (4) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... newspaper companies for political advertisements and they refused to accept payment through any other mode than by way of cash payment - HELD THAT:- We are of the considered view that in the facts of the instant case, no disallowance u/s 40A(3) is called for. The assessee has identified the parties to whom payments were made. The parties have confirmed receipt of payment in cash. The assessee has laid down the circumstances which necessitated payments in cash, being payment for advertisement for political parties on account of State elections, outside of banking hours. In a few instances, the assessee has obtained letter from the parties to the effect that it was at their insistence that cash payment was made. Exceptions contained in Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional circumstances covered by the proviso of Section.40A(3) of the Act. b. The CIT (A) erred in stating that factual position examined by the AO has no explanation by the appellant. c. The CIT (A) erred in not dealing with written submission that on facts of the case there was no alternative for Appellant to make payment other than in cash. There was reasonable cause. d. The order passed by CIT (A) without considering and dealing with the case laws relied and copies filed, is unjustified & illegal. e. The action of CIT (A) to confirm disallowance of expenditure of ₹ 32,65,805/- u/s 40A(3) is invalid & bad in law on facts & law. 3. The appellant craves for leave to add, alter or amend all or any grounds before final he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is to the effect that payment after banking hours is allowable, is misplaced since the assessee has not been able to prove that there was any business exigency which necessitated payments after banking hours. Regarding the second plea of assessee that the newspapers have confirmed that the parties have accepted cash payments for printing advertisements of political parties and for which assessee placed reliance on the case of J. Rajmohan Pillai 267 ITR 561, the ld. A.O. held that the above decision was rendered in respect of erstwhile rule 6DD(j), which provisions are no longer in existence for the assessment year under consideration. On the third plea of the assessee that newspapers have confirmed that they refused to accept printin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where covered by the exceptional circumstances mentioned in proviso of section 40A(3) of the Act. The AO in the assessment order has examined the factual position and the contention of the appellant in detail for which the appellant has no explanation. The case law relied on by the appellant are not applicable in the facts and circumstances of the appeal under consideration. In view of the above factual and legal discussion, the disallowance made by the AO is confirmed. Thus the ground of appeal is dismissed." 5. Before us, the counsel for the assessee submitted that the payments in cash were made since firstly, payments were made to newspapers for political advertisements and secondly, payments were made after banking hours at 7.00 P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than in cash. The ld. D.R. drew our attention to para 7.8 and 7.9 of CIT(A)'s order that opportunity was given to the assessee to justify the extra-ordinary circumstances as to why payments in cash were necessitated, but assessee has not been able to bring forth such extra-ordinary circumstances. There is nothing on record to prove that the orders for publication were given by assessee after office hours. The assessee has not made similar payments in any prior or further Assessment Year. 7. We have heard the rival contentions and perusal the material on record. The Ld. counsel for the assessee has relied on the case of KGLNetwork (P.) Ltd. v. ACIT [2018] 97 taxmann.com 400 (Delhi - Trib.) where it was held that where in course of business, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case, no disallowance under section 40A(3) was to be made in respect of payment made to principal. In the case of Sri Laxmi Satyanarayana Oil Mill v. CIT [2014] 49 taxmann.com 363 (Andhra Pradesh), assessee made certain payment for purchase of ground nut in cash exceeding prescribed limit. The assessee submitted that he made payment in cash because seller insisted on that and also gave incentives and discounts. Further, seller also issued certificate in support of this. The High Court held that since assessee had placed proof of payment of consideration for its transaction to seller, and later admitted payment and there was no doubt about genuineness of payment, no disallowance could be made under section 40A(3). Division Bench of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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