| The Tax Publishers2020 TaxPub(DT) 4428 (Kol-Trib) INCOME TAX ACT, 1961
Section 40A(3)
Where disallowance under section 40A(3) was deleted by CIT(A) on the ground that genuineness of payment in cash as well as identity of payee had not been disputed, however, taking note of the decision of Tribunal in assessee's own case for earlier assessment year, the order of CIT(A) was set aside and the issue was remanded to AO with a direction that no disallowance of expenditure to be resorted to under section 40A(3) if the same were found to be genuine.
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Business disallowance under section 40A(3) - Cash payments exceeding prescribed limit - Genuineness of payment in cash as well as identity of payee not in dispute -
Assessee was engaged in business/trading of fishes and fish food as well as sales of plastic crates. AO found that the assessee made payment in cash to an entity 'S' for purchase of plastic crates. Therefore, he disallowed the said payment under section 40A(3) for the reason that there was no business expediency. However, CIT(A) noted that genuineness of purchase, genuineness of payment in cash as well as identity of payee had not been disputed by the AO, thus, disallowance under section 40A(3) was deleted by him. Aggrieved, Revenue was in appeal. Held: It was found that assessee was purchasing fishes from fishermen/farmers and in turn, he was selling articles for storage of fishes (plastic crates), for which payments were made in cash by the farmers/fishermen, which were promptly deposited by the assessee in bank account of his sundry debtor, i.e., 'S'. Since there was risk in carrying large quantity of cash from the rural areas, the assessee had been consistently adopted such modus of remittance of payment to 'S'. Further, genuineness of said modus operandi had not been doubted by AO. Further, CIT(A) made a clear finding of genuineness of purchase/payments made in cash, which finding of fact had not been assailed and accordingly, he deleted disallowance under section 40A(3). However, taking note of the decision of Tribunal in assessee's own case for earlier assessment year, the impugned order of the CIT(A) was set aside and the issue was remanded to the AO with a direction that no disallowance of expenditure to be resorted to under section 40A(3) if the same were found to be genuine and paid to 'S'.
REFERRED : CIT v. CPL Tannery (2009) 318 ITR 179 (Cal.) : 2009 TaxPub(DT) 0706 (Cal-HC) CIT v. Crescent Export Syndicate [ITA No. 202 of 2008 dated 30-07-2008] Rampada Panda v. I.T.O. [ITA No. 67/Kol/2013 for the assessment year 2008-09 dated 7-10-2015] : 2015 TaxPub(DT) 5075 (Kol-Trib)
FAVOUR : Matter remanded
A.Y. : 2015-16
IN THE ITAT, KOLKATA BENCH
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