9911796707
TMI Blog2022 (12) TMI 686X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee company was engaged in the business of purchase and sale of used vehicles and construction equipments/machineries and old vehicles were purchased from the individual persons who were working as small roadside contractors and were residents of distant and separate states. The gross sales/receipts of the business were of Rs.64,71,100/- and purchases were of Rs.72,20,414/-. Thus, the appellant company was not subjected to audit as per the provisions of section 44AB of the Act. However, the assessee-company had obtained the tax audit report and furnished the same voluntarily. Based on the remarks made in the said tax audit report, the A.O. observed that the assessee had made payment in cash exceeding the limit specified u/s 40(A)(3) of the Act on purchase of five old vehicles/JCB Machines on various s dates as under: Sr No Name of the seller Date of payment made to Shri Mohan Singh Rawat or his authorized representative Date of possession of the asset i.e. date on which purchase booked in books of the Amount 1 Jaychandra Rammanohar 03-08-2014 06.08.2014 6,89,500/- 2 Vimalchand Rammanohar 24-08-2014 01.09.2014 7,35,900/- 3 Jayveer Singh Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld.CIT(A) considered the allowability of assesses claim the impugned transactions not being covered u/s 40A(3) of the Act in the light of Rule 6DD of the Rules, which prescribed circumstances in which the payment in cash could be made without inviting any disallowance under section 40A(3) of the Act. He found that the assessee's explanation fit only in two circumstances mentioned in the rule viz. (i) in clause 'g' where payment made in village or town not served by the bank is specified to be exempt from rigour of section 40A(3) of the Act; and (ii) in clause (k) which stipulates payment made in cash by any person to his agent who is required to make further payment in cash on behalf of the assessee. Referring to both clauses, he found that the assessee's case did not fit into either, since in both the cases . He found the assesses case as not fitting into clauses-g of Rule 6DD noting that where the assessee operated from and where the sellers resided both were serviced by the banks. As for applicability of clause (k) he found that it was not proved beyomd doubt that the agent who received cash from the person selling vehicles was required to make payment in cash for goods and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Explanation.-For the purposes of this clause and clause (g), the term "hank" means any bank, banking company or society referred to in sub-clauses (i) to (iv) of clause (a) and includes any bank [not being a banking company65- as defined in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949)], whether incorporated or not, which is established outside India; 66(d) where the payment is made by way of adjustment against the amount of any liability incurred by the payee for any goods supplied or services rendered by the assessee to such payee; 67(e) where the payment is made for the purchase of- (i) agricultural or forest produce; or (ii) the produce of animal husbandry (including livestock, meat, hides and skins) or dairy or poultry farming; or (iii) fish or fish products 68; or (iv) the products of horticulture or apiculture, to the cultivator, grower or producer of such articles, produce or products; (f) where the payment is made for the purchase of the products manufactured or processed without the aid of power in a cottage industry, to the producer of such products; 69(g) where the payment is made in a village or town, which on the date of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in a village or town on the dates mentioned in the money receipts could not be served by any bank to these persons who claimed to be residing in the village or town mentioned in the money receipt as well as in the sworn affidavits (not duly notarized or identified by the Notary). Therefore, the appellant's claim for the exception provided under Rule 6DD(g) of the IT. Rules cannot be substantiated. 5.3 Further, it is an undisputed fact that the appellant is a company comprising of the Board of Directors and has its own bank accounts and the cash has been found to be withdrawn from the said bank accounts. However, the appellant did not file the copy of any of the said bank accounts and also the details of other vehicles purchased by payments made through cheques. It is true that the persons to whom the vehicles/used machinery sold were not residents of the state of Gujarat but all were residents of the Uttar Pradesh state and in remote places. However, the appellant did not adduce any evidence to prove as to how the persons residing at the remote places were contacted and persuaded for selling their old vehicles or construction machinery. 5.4 St has been claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee contended therefore that the assessee having proved genuineness of the transaction, there is no scope for making any disallowance under section 40A(3) of the Act. He relied upon various decision of the Hon'ble High Courts, particularly jurisdictional High Court decision in the case of Anupam Tele Service Vs. ITO, (2014) 43 taxmann.com 199 (Guj). The ld.DR relied on the order of the ld.CIT(A). 7. We have heard rival contentions gone through the orders of the authorities below and also case laws referred to before us. The issue before us related to the disallowance of expenses incurred in cash as per the provision of section 40A(3) of the Act. It is not disputed that before the ld.CIT(A) the assessee had furnished all evidences to prove genuineness of the transaction by giving all details of the seller of the vehicles, their names, address, identity proof and also furnished their affidavits affirming on oath that they had received cash on selling vehicles to the assessee, besides also stating that they had no bank account. It is also fact on record that the assessee had explained that he had purchased these vehicles through an agent, Shri Mohansingh Rawat, who was produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is no finding of the Ld.CIT(A) to the effect that the agent was not genuine .Further it is a fact on record that the agent had appeared before the AO and confirmed the said fact to him that he had acted as agent for the assessee in the impugned transactions taking cash from him for making payment further to the sellers. The sellers on affidavits have stated that they did not have any bank account and had therefore insisted on receiving money in cash. It is amply clear that the situation envisaged in clause (k) of Rule 6DD is clearly satisfied in the present case, and therefore, the assessee is entitled to be exempt from the rigours of section 40A(3). The ld.CIT(A), we find has mis-appreciated/misunderstood clause (k) of Rule 6DD of the Rules. The ld.CIT(A) we find has stated inapplicability of clause (k) by stating that it has not been proved beyond doubt that the agent who received cash from the person selling vehicles was required to make payment in cash for goods or services on behalf of such person to third party, which means that the ld.CIT(A) has understood clause (k) to mean that the agent should be receiving cash from the sellers. But this cannot be the interpretati ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
