9911796707
TMI Blog2023 (10) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961 (hereinafter the 'Act') and by the ACIT, Central Circle, Salem for the assessment years 2013-14 to 2017-18 vide orders dated 09.02.2021 / 10.02.2021 u/s. 143(3) r.w.s. 147 of the Act. 2. The facts and circumstances in all these six appeals of assessee are exactly identical, even the grounds raised are also identical and hence, I will take the facts from lead year i.e., 2012-13 in ITA No. 117/CHNY/2023 and will decide the issue. 3. The first issue in these two appeals i.e., ITA Nos. 117 & 118/CHNY/2023 is as regards to reopening of assessment. The ld. counsel for the assessee despite a query from Bench, has not argued the issue of reopening and hence, the same is dismissed as 'not-pressed'. 4. Coming to issue on merits, the only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 40A(3) of the Act and assessee does not fall under any of the exempted categories as per Rule 6DD of the Income Tax Rules, 1962 and hence, he disallowed the cash payments made in excess of Rs. 20,000/- by invoking the provisions of section 40A(3) of the Act at Rs. 34,76,920/-. Aggrieved, assessee preferred appeal before CIT(A). 6. The CIT(A) noted that the assessee is a contractor and has purchased rice from rice mills who are the processor and not from the grower/purchaser/cultivator therefore, it is does not fall under any of the exceptions covered under Rule 6DD of the Rules. For this, he observed in para 6.3.8 & 6.3.9 as under:- 6.3.8 From the above observation made by the AO it is very clear that the Appellant as a trader has purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08] 298 ITR 349 (Rajasthan), In this case the assessee was an agent collected consideration for the sale price of scooter/mopeds from the customer from place and remitted to the principal agent at another place. To facilitate this transaction the assessee remitted received cash frorm the customer to the bank account of the principal agent and in turn the principal agent at another place has withdrawn the cash from his account by way of cheque. This transaction effected for immediate delivery of vehicle to the customer. The Hon'ble High Court has held that this is the business expediency and considered that the disallowance w/s 40A(3) will not apply to the Appellant's case. 6.2 The assessee also argued that the assessee's business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racted in such circumstances as the commercial expediency is one of the exception carved out in the provisions of section 40A(3) of the Act as well as Rule 6DD. The ld. counsel admitted that the assessee is a trader in rice and has made payment in cash for purchase of rice from rice mills or the purchasers of rice. He argued that the undisputed facts are that the farmers are the cultivators and growers of agricultural goods called paddy likewise the rice mills who are producing the product called rice is the producer of the agricultural produce and therefore, eligible for exemption under Rule 6DD of the Rules negating the applicability of section 40A(3) of the Act. 7.1 Another facet argued by ld. counsel for the assessee is that the rice m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2023 for estimating the profit rate. 8. On the other hand, the ld. Senior DR heavily relied on the order of CIT(A) and stated that the CIT(A) rejected the assessee's contention in regard to the assessee being grower / purchaser / cultivator or agent or assessee's case falling under business expediency for various paras reproduced above. The ld. Senior DR argued that estimation of profit rate is not possible in case where the disallowance of expenses is made by invoking the provisions of section 40A(3) of the Act as the assessee has made payment in excess of Rs. 20,000/- in cash and these are deeming provisions except the exceptions provided in Rule 6DD of the Rules. According to him, the assessee's case did not fall under any of the excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, I'm of the view that on the disputed purchase, the AO can apply a higher profit rate instead of profit rate declared by assessee of 0.26%. The assessee has filed complete table capturing the facts of disputed addition, total purchases and percentage of disputed purchases as under:- Assessment years Total purchases Disputed purchases Percentage of disputed purchases 2012-13 Rs. 2,73,99,767/- Rs. 9,70,000/- 3.54% 2013-14 Rs. 4,37,63,535/- Rs. 25,33,770/- 5.79% 2014-15 Rs. 5,03,76,882/- Rs. 34,83,765/- 6.92% 2015-16 Rs. 7,20,88,311/- Rs. 39,54,510/- 5.49% 2016-17 Rs. 5,55,48,658/- Rs. 9,06,262/- 1.63% 2017-18 Rs. 7,12,06,498/- Rs. 1,96,500/- 0.28% Further, the assessee has also computed the net profit, total tur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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