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TMI Blog2022 (5) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... actions 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 40A(3) - assessee contended that the payment was covered under Rule 6DD(k) being payment made to an agent. The AO rejected this contention, which got affirmed in the first appeal - HELD THAT:- Instant case, it is seen that the assessee made payment to contractors and such payments were as such recorded as expenditure in the books of account of the assessee. In such circumstances, it cannot be said that the contractors were agents of the assessee for the provision of labour. Had the payments been made by the assessee to contractor and then, in turn, to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices. A return was filed declaring total income of Rs.1,10,61,126/-. During the course of assessment proceedings, the AO observed that the assessee made certain payments through bearer cheques amounting to Rs.24,65,500/- which were in violation of section 40A(3) of the Act. On being called upon to put forth its stand, the assessee submitted that all the payments were made to Kharjul family members through bearer cheques during the course of carrying out its business activity. Commercial expediency was stated to be the reason for making payments through bearer cheques. The AO discussed one-by-one all the payments by observing that such amounts were paid through bearer cheques while certain other payments to all such persons were also made th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Vaduganathan Talkies and others Vs. ITO (2020) 428 ITR 224 (Mad.) , the Hon ble Karnataka High Court in Nam Estates Pvt. Ltd. Vs. ITO (2020) 428 ITR 186 (Kar.) and the Hon ble Calcutta High Court in Bagmari Tea Company Ltd. Vs. CIT (2001) 251 ITR 640 (Cal.) have confirmed the disallowance where the payment was made in cash exceeding the stipulated amount notwithstanding the genuineness of the transaction. 6. The assessee in Madhav Govind Dulshete (supra) was engaged in the business of sale of Kerosene which was purchased from notified dealers. He made purchases of Kerosene from certain companies. Some of the payments were made in cash while others were in cheque. The AO made disallowance by invoking section 40A(3) in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents amounting to Rs.7,87,800/- which was accepted by the AO. Remaining amount of Rs.20.05 lakh was paid to contractors towards weekly bill of labour. The assessee contended that the payment was covered under Rule 6DD(k) being payment made to an agent. The AO rejected this contention, which got affirmed in the first appeal. 9. After considering the rival submissions and perusing the relevant material on record, it is found as an admitted position that the assessee paid the amounts in question to the labour contractors in violation of section 40A(3) of the Act. The case of the assessee is that the payments were covered under clause (k) of Rule 6DD, which provides that no disallowance will be made where the payment is made by any person t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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