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| The Tax Publishers2020 TaxPub(DT) 1915 (Kol-Trib) INCOME TAX ACT, 1961
Section 263, 40A(3)
Purpose of section 40A(3) is only preventive and to check evasion of tax and flow of unaccounted money or to check transactions which are not genuine and may be put as camouflage to evade tax by showing fictitious or false transactions. Further, exceptions contained in Rule 6DD of Income Tax Rules are not exhaustive and the said rule must be interpreted liberally. Accordingly, no disallowance was called for if genuinity of payments made by assessee stood clearly established beyond doubt.Matter remanded.
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Revision under section 263 - Erroneous and prejudicial order - AO not having made disallowance under section 40A(3) even though assessee had directly deposited cash in the bank account of supplier and such cash payment not being covered within exceptions laid out under rule 6DD. -
Pr. CIT invoked jurisdiction under section 263 on the ground of AO not having made disallowance under section 40A(3) even though assessee had directly deposited cash in the bank account of supplier and such cash payment was not covered within exceptions laid out under rule 6DD. Held: Purpose of section 40A(3) is only preventive and to check evasion of tax and flow of unaccounted money or to check transactions which are not genuine and may be put as camouflage to evade tax by showing fictitious or false transactions. Further, exceptions contained in Rule 6DD of Income Tax Rules are not exhaustive and the said rule must be interpreted liberally. Accordingly, no disallowance was called for if genuinity of payments made by assessee stood clearly established beyond doubt.Matter remanded.
Supported by: Binod Kumar Burnwal [2018 (12) TMI 1693 - ITAT KOLKATA] , Haridas Som [2019 (9) TMI 685 - ITAT KOLKATA]
REFERRED :
FAVOUR : Matter remanded
A.Y. :
IN THE ITAT, KOLKATA BENCH
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