Uttamsing R. Pawar, Jalgaon V. Income-tax Officer,

ITA 1477/PUN/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9148 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 13-03-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 05-07-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 40A(3)

Judgement Text

SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.1477/PUN/2016 / ASSESSMENT YEAR : 2010-11 SHRI UTTAMSINGH R. PAWAR, AT POST, VADODA, MUKTAI NAGAR, JALGAON 425 306 PAN :AKOPP1510G . /APPELLANT VS. ITO, WARD-2(4), JALGAON . / RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI AJAY MODI, JCIT / DATE OF HEARING : 13.03.2018 / DATE OF PRONOUNCEMENT: 23.03.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS IS THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDE R OF CIT(A)-2, NASHIK, DATED 27-04-2016 FOR THE ASSESSMENT YEAR 201 0-11. 2. GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : ON FACTS AND IN LAW, 1. THE LD.CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE U/S.40A(3) OF RS.13,66,642/- OUT OF THE TOTAL DISALLOWANCE OF RS.17,21,642/- WITHOUT APPRECIATING THAT NO SUCH DISALLOWANCE WAS WARRANTED ON THE FACTS OF THE CASE. 2. THE LD.CIT(A) FAILED TO APPRECIATE THAT THE CASH PA YMENTS MADE BY THE ASSESSEE TO M/S. J.K. WINES WAS COVERED UNDER T HE EXCEPTIONS PROVIDED IN RULE 6DD AND HENCE, THERE WAS NO QUESTI ON OF MAKING ANY DISALLOWANCE IN RESPECT OF THE CASH PAYMENTS MA DE BY THE ASSESSEE TO THE SAID PARTY AND THE DISALLOWANCE MAD E SHOULD BE DELETED. 3. THE LD.CIT(A) FURTHER ERRED IN NOT APPRECIATING THA T THE PAYMENTS MADE BY THE ASSESSEE TO M/S. J.K. WINES WERE GENUIN E AND DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE A ND CONSIDERING THE 2 RELEVANT FACTS OF THE CASE, NO DISALLOWANCE U/S.40A (3) WAS REQUIRED TO BE MADE IN RESPECT OF THE CASH PAYMENTS MADE BY THE ASSESSEE. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR D ELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE INCLUDE THAT THE ASSESSEE IS INDIVIDUAL AND IS A RETAIL TRADER OF LIQUOR FOR HUMAN CONSU MPTION. ASSESSEE FILED THE RETURN OF INCOME ON 26-09-2010 DECLAR ING TOTAL INCOME OF RS.4,90,080/-. THERE WAS SCRUTINY OF ACCOUNTS AN D THAT LED TO THE DISCOVERY OF CASH PAYMENTS IN VIOLATION OF PROVISION S OF SECTION 40A(3) OF THE ACT AMOUNTING TO RS.17,21,642/-. ASSESSEE RE LIED ON THE EXEMPTIONS PROVIDED IN RULE 6DD(G) OF THE I.T. RULES, 1961. AS SESSEE ALSO SUBMITTED THAT THERE ARE NO BANKING FACILITIES IN THE V ILLAGE VADODA, MUKTAI NAGAR, TALUK, JALGAON DISTRICT. THEREFORE, ASSESSEE MA DE THE PAYMENTS IN CASH. OTHERWISE, ASSESSEE HAS A BANK ACCO UNT ELSEWHERE AND THE PAYMENTS TO OTHERS WAS MADE THROUGH BANKING FACILITIES. ASSESSEE ALSO RAISED AN ARGUMENT THAT SO LONG AS SUCH PAYMENTS ARE GENUINE AND NOT DOUBTED BY THE REVENUE, ADDITION ON ACC OUNT OF SECTION 40A(3) OF THE ACT CANNOT BE RESORTED TO. REJECT ING THE ARGUMENTS MADE BY THE ASSESSEE, AO PROCEEDED TO MAKE ADDITION OF RS.17,21,642/- INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT AND THE ASSESSEE INCOME IS DETERMINED AT RS.22,32,345/-. 4. DURING THE FIRST APPELLATE PROCEEDINGS SIMILAR ARGUMENTS WERE RAISED BEFORE HIM. CIT(A) REBUTTED ALL THESE ARGUMENTS RELA TING TO NON- APPLICABILITY OF PROVISIONS OF SECTION 40A(3) OF THE ACT WHEN PA YMENTS ARE OTHERWISE GENUINE, APPLICABILITY OF THE EXEMPTIONS PROVI DED IN RULE 6DD(G) OF THE I.T. RULES, 1962 ETC AND GRANTED PART RELIEF TO THE ASSESSEE. RELIEF GRANTED IS IN RESPECT OF THE CASH PAYMEN TS MADE BY THE ASSESSEE ON THE CLOSED HOLIDAYS, SUCH AS SUNDAYS, GANDHI JAYANTI, 3 REPUBLIC DAY ETC. EVENTUALLY, THE ADDITION TO THE EXTENT OF RS.13,66,643/- IS CONFIRMED. 5. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFO RE THE TRIBUNAL WITH THE GROUNDS MENTIONED ABOVE. 6. BEFORE US, REGARDING THE GENUINENESS OF THE CASH PAY MENTS, LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURDAS GARG VS. CIT 63 TAXMAN N.COM 289 (PUNJAB & HARYANA) AND SUBMITTED THAT THEY ARE RELEVANT FOR THE PROPOSITION THAT WHERE GENUINENESS OF TRANSACTION MADE IN CASH IN EXCESS OF RS.20,000/- WAS NOT DISBELIEVED BY THE AUTHORITIE S, THE SAME CANNOT BE DISALLOWED U/S.40A(3) OF THE ACT. REGARDING THE APPLICABILITY OF THE EXEMPTIONS PROVIDED IN RULE 6DD(G) OF THE I.T. RULES, 1 962, LD. COUNSEL FOR THE ASSESSEE READ OUT THE RELEVANT PROVISION S OF RULES AND ARGUED THAT THERE ARE NO BANKING FACILITIES IN THE VILLAGE V ADODA, AND THEREFORE, THE PROVISIONS OF SECTION 40A(3) CANNOT BE INVOKED. 7. PER CONTRA, LD. DR FOR THE REVENUE RELIED ON THE ORDE RS OF THE AO AND THE CIT(A). HE DREW MY ATTENTION TO THE FOLLOWING DECIS IONS AND SUBMITTED THAT THE GENUINENESS OF THE TRANSACTION IS NOT A DETERMINING FACTOR IN MATTERS RELATING TO INVOKING OF PROVISIONS OF SECT ION 40A(3) OF THE ACT : 1. ASSOCIATED ENGIENERING ENTERPRISE VS. CIT 81 TAX MAN 91 (GAU) 2. SMT. JYOTHI CHALLARAM VS. CIT 39 TAXMANN 001 (AP) 3. T.G. MUTHA VS. ITO 54 ITD 460 (PUNE) 8. I HEARD BOTH THE PARTIES AND PERUSED THE ORDERS O F THE REVENUE AND THE DECISIONS RELIED ON BY THE PARTIES. TO START WITH , EXEMPTIONS PROVIDED IN RULE 6DD(G) OF THE I.T. RULES, 1962 ARE EXTRACT ED HERE AS UNDER : 4 (G) WHERE THE PAYMENT IS MADE IN A VILLAGE OR TOWN , WHICH ON THE DATE OF SUCH PAYMENT IS NOT SERVED BY ANY BANK, TO ANY PERS ON WHO ORDINARILY RESIDES, OR IS CARRYING ON ANY BUSINESS, PROFESSION OR VOCATION, IN ANY SUCH VILLAGE OR TOWN THE ABOVE RULE INDICATES THAT THE PAYER OF THE CASH NEE DS TO BE EITHER BE RESIDENT OF THE VILLAGE OR SHOULD BE CARRYING ON THE BUSINESS IN THE SAID VILLAGE, WHERE NO BANKING FACILITIES ARE AVAILABLE ON TH AT DATE. IN THE INSTANT CASE, THE PAYER IS M/S. G.K. WINES WHO IS NEITHER A RESIDENT NOR CARRYING ON THE BUSINESS ACTIVITIES IN THE S AID VILLAGE. ASSESSEE IS A RESIDENT OF JALGAON, THEREFORE, I AM OF THE VIE W THAT THE PROVISIONS OF RULE 6DD(G) WILL NOT HELP THE ASSESSEE. REGARDING THE GENUINENESS OF THE TRANSACTIONS RELATED A RGUMENTS, I AM OF THE VIEW THAT THE DECISIONS CITED ABOVE SHALL GO AGAINST THE ASSESSEE. I HAVE ALSO GONE THROUGH THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ITO VS. M/S. DHANASH REE ISPAT IN ITA NO.794/PUN/2013, DATED 31-05-2017 RELIED ON BY THE ASSESSEE. I FIND THIS PART OF THE ARGUMENT OF THE LD. COUNSEL FOR THE A SSESSEE IS ALREADY ATTENDED TO BY THE PUNE BENCH OF THE TRIBUNAL IN THE SAID CASE. CONTENTS OF PARA NO.6 TO 9 ARE RELEVANT. 6. THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. INCOME TAX OFFICER (SUPRA) UNDER SIMILAR CIRCUMSTANCES DELETED THE DISALLOWANCES MADE U/S. 4 0A(3) BY HOLDING AS UNDER : 4. AS TO THE VALIDITY OF SECTION 40A(3), IT WAS UR GED THAT, IF THE PRICE OF THE PURCHASED MATERIAL IS NOT ALLOWED TO B E ADJUSTED AGAINST THE SALE PRICE OF THE MATERIAL SOLD FOR WAN T OF PROOF OF PAYMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAFT, THEN THE INCOME TAX LEVIED WILL NOT BE ON THE INCOME BUT IT WILL BE ON AN ASSUMED INCOME. IT IS SAID THAT THE PROVISION AUTHO RISING LEVY OF TAX ON AN ASSUMED INCOME WOULD BE A RESTRICTION ON THE RIGHT TO CARRY ON BUSINESS, BESIDES BEING ARBITRARY. 5. IN OUR OPINION, THERE IS LITTLE MERIT IN THIS CO NTENTION. SECTION 40A(3) MUST NOT BE READ IN ISOLATION OR TO THE EXCL USION OF RULE 6DD. THE SECTION MUST BE READ ALONG WITH THE RULE. IF RE AD TOGETHER, IT WILL BE CLEAR THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT THE BUSINESS ACTIVITIES. THERE IS NO RESTRICTION ON THE ASSESSEE IN HIS 5 TRADING ACTIVITIES. SECTION 40A(3) ONLY EMPOWERS TH E ASSESSING OFFICER TO DISALLOW THE DEDUCTION CLAIMED AS EXPEND ITURE IN RESPECT OF WHICH PAYMENT IS NOT MADE BY CROSSED CHEQUE OR ' CROSSED BANK DRAFT. THE PAYMENT BY CROSSED CHEQUE OR CROSSED BAN K DRAFT IS INSISTED ON TO ENABLE THE ASSESSING AUTHORITY TO AS CERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF TH E INCOME FROM UNDISCLOSED SOURCES. THE TERMS OF SECTION 40A(3) AR E NOT ABSOLUTE. CONSIDERATIONS OF BUSINESS EXPEDIENCY AND OTHER REL EVANT FACTORS ARE NOT EXCLUDED. GENUINE AND BONA FIDE TRANSACTION S ARE NOT TAKEN OUT OF THE SWEEP OF THE SECTION. IT IS OPEN T O THE ASSESSEE TO FURNISH TO THE SATISFACTION OF THE ASSESSING OFFICE R THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED IN SECTION 40A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OPEN TO THE ASSESSEE TO IDENTIFY THE PERSON WHO HAS RECEIVED THE CASH PAYME NT. RULE 6DD PROVIDES THAT AN ASSESSEE CAN BE EXEMPTED FROM THE REQUIREMENT OF PAYMENT BY A CROSSED CHEQUE OR CROSSED BANK DRAF T IN THE CIRCUMSTANCES SPECIFIED UNDER THE RULE. IT WILL BE CLEAR FROM THE PROVISIONS OF SECTION 40A(3) AND RULE 6DD THAT THEY ARE INTENDED TO REGULATE BUSINESS TRANSACTIONS AND TO PREVENT THE U SE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLAC K MONEY FOR BUSINESS TRANSACTIONS. ( MUDIAM OIL COMPANY V. ITO [1973] 92 ITR 519 (AP)). IF THE PAYMENT IS MADE BY A CROSSED CHEQ UE DRAWN ON A BANK OR CROSSED BANK DRAFT, THEN IT WILL BE EASIER TO ASCERTAIN, WHEN DEDUCTION IS CLAIMED, WHETHER THE PAYMENT WAS GENUINE AND WHETHER IT WAS OUT OF THE INCOME FROM DISCLOSED SOURCES. IN INTERPRETING A TAXING STATUTE, THE COURT CANNOT BE OBLIVIOUS OF THE PROLIFERATION OF BLACK MONEY WHICH IS UNDER CIRCULA TION IN OUR COUNTRY. ANY RESTRAINT INTENDED TO CURB THE CHANCES AND OPPORTUNITIES TO USE OR CREATE BLACK MONEY SHOULD N OT BE REGARDED AS CURTAILING THE FREEDOM OF TRADE OR BUSINESS. 7. THE HONBLE RAJASTHAN HIGH COURT IN THE CASE OF SMT. HARSHILA CHORDIA VS. INCOME TAX OFFICER (SUPRA) DELETED THE DISALLOWANCES MADE U/S. 40A(3) BY OBSERVING THAT NO DISALLOWANCE U/S. 40A(3) COULD BE MADE BY TAKING A HYPER TECHNICAL VIEW WHERE THE TRANSACT IONS ARE GENUINE. 8. THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF GURDAS GARG VS. COMMISSIONER OF INCOME TAX (SUPRA) WHILE CONSIDERING SIMILAR ISSUE WHERE DISALLOWANCES U/S. 40A(3) WAS M ADE DELETED THE DISALLOWANCE BY OBSERVING THAT WHERE GENUINENESS OF TRANSACTION MADE IN CASH IN EXCESS OF RS.20,000/- WAS NOT DISBELIEVE D BY AUTHORITIES, THE SAME CANNOT BE DISALLOWED U/S. 40A(3) OF THE ACT. 9. IN THE PRESENT CASE, THE PAYMENT MADE BY THE ASS ESSEE TO THE INDIVIDUAL TRUCK DRIVER HAS NOT BEEN DISPUTED. IT IS NOT THE CASE OF DEPARTMENT THAT THE PAYMENTS MADE BY THE ASSESSEE A RE NOT GENUINE OR THE PAYEES ARE NOT IDENTIFIABLE. THE ASSESSEE HAS SUFFICIENTLY EXPLAINED THE CIRCUMSTANCES UNDER WHICH THE PAYMENTS HAVE BEE N MADE TO THE TRUCK DRIVERS IN CASH. THE ASSESSING OFFICER MADE DISALLOWANCE BY TAKING A PEDANTIC VIEW OF THE CASH TRANSACTIONS. W HERE CASH PAYMENTS ARE MADE UNDER BONAFIDE CONDITIONS AND NO DOUBT IS RAISED OVER GENUINENESS OF THE PAYMENTS AND THE PAYEES ARE IDEN TIFIABLE; NO DISALLOWANCES U/S. 40A(3) IS WARRANTED. THUS, IN V IEW OF THE FACTS OF CASE AND VARIOUS DECISIONS DISCUSSED ABOVE, WE DO N OT FIND ANY ERROR IN THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS ) IN DELETING DISALLOWANCES OF RS.60,73,403/- MADE BY THE ASSESSI NG OFFICER U/S. 40A(3) OF THE ACT. WE CONCUR WITH THE FINDINGS OF COMMISSIONER OF INCOME 6 TAX (APPEALS). ACCORDINGLY, GROUND NOS. 1 AND 2 RA ISED BY THE DEPARTMENT IN APPEAL ARE DISMISSED. CONSIDERING THE ABOVE, THIS ARGUMENT RAISED BY THE ASSES SEE IS DISMISSED. FURTHER, I EXAMINED THE ORDER OF CIT(A) ON THIS ISSUE AND FIND IT RELEVANT TO EXTRACT THE CONTENTS OF PARA NO.5.2 FOR THE SAKE OF COMPLETENESS OF THIS ORDER. THE SAID PARA IS REPRODUCED AS UNDER : 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME IT HAS BEEN NO TICED THAT THE A.O. HAS REJECTED ALL THE CONTENTIONS RAISED BY THE APPELLAN T DURING ASSESSMENT. THE FIRST CONTENTION RAISED BY THE APPELLANT IS TH AT THE APPELLANT HAD MADE PAYMENTS TO THE SUPPLIER J.K. WINES AT VIL LAGE VADODA, WHERE NO BANKING FACILITIES ARE AVAILABLE AT THE TIME OF PAYMENT AND HENCE COVERED BY EXCEPTION, PROVIDED IN RULE 6DD(G). ON PERUSAL OF THE PROVISION OF RULE 6DD(G), IT HAS BEEN NOTICED THAT THE PAYMENT IS RECEIVED BY A PERSON, I.E. M/S. J.K.WINES, WHO WAS CARRYING ON ITS BUSINESS AT JALGAON, WHERE AMPLE BANKING FACILITIES ARE AVAILAB LE AND HENCE EXCEPTION TO RULE 6DD(G) IS NOT APPLICABLE TO THE C ASE UNDER APPEAL. THE ABOVE PROPOSITION IS SUPPORTED BY OBSERVATIONS OF T HE TRIBUNALS IN THE FOLLOWING CASES WHERE IT HAS BEEN LAID DOWN AS UNDE R : I) VIRUPA TOWNSHIPS VS. ACIT (2014) 62 SOT 0083 (VISAKHAPATTANNAM) IN THIS CASE IN PARA 19, THE HONBLE ITAT HAS OBSER VED AS UNDER : SO FAR AS ADDITION OF THE REST OF THE AMOUNT SUSTAI NED BY THE CIT(A) IS CONCERNED, THOUGH ASSESSEE HAS STATED THAT SUCH PAY MENTS COME WITHIN THE AMBIT OF SUB-RULE(G) OF RULE6DD, HOWEVER, ASSES SEE IS REQUIRED TO SUBSTANTIATE THE FACT BY PRODUCING CREDIBLE EVIDENC E THAT THERE IS NO BANKING FACILITIES AVAILABLE IN THOSE AREAS TO WHOM PAYMENTS WERE MADE, ORDINARILY RESIDES OR NOT CARRYING ON ANY BUSINESS OR PROFESSION. II) DCIT VS. ABHINANDANA HOUSING PVT. LTD. (2014) 42 CC H 0015 (HYD-TRIB) IN THIS CASE IN PARA 7, THE HONBLE ITAT, HAS OBSER VED AS UNDER : AS FAR AS THE AMOUNT OF RS. 18,62,375 CLAIMED TO HAV E BEEN PAID TO THE LAND OWNERS IN PLACES WHERE NO BANKING FACILITY WAS AVAILABLE THEREBY ATTRACTING CLAUSE (G) OF RULE 6DD, AO OBSERVED THAT PERSONS TO WHOM PAYMENTS WERE MADE ARE RESIDING IN VILLAGES LOCATED IN DISTRICTS OF GUNTUR AND KRISHNA, WHICH ARE MOST DEVELOPED DISTRI CTS IN THE STATE AND ARE COVERED BY BANKING FACILITIES. THEREFORE, HE DI SALLOWED THE CASH PAYMENTS MADE OF RS. 18,62,375. THE HONBLE ITAT HA D DISALLOWED THE CASH PAYMENTS MADE TO THE PERSONS, WHERE THEY WERE CARRYING ON BUSINESS/RESIDING WHERE BANKING FACILITY WAS AVAILA BLE. FROM THE ABOVE OBSERVATIONS/FINDINGS OF THE HONBLE TRIBUNALS, IT IS EVIDENT THAT RULE 6DD(G) IS APPLICABLE WHERE THE PE RSON TO WHOM CASH PAYMENT WAS MADE IS CARRYING ON BUSINESS AT A PLACE WHERE BANKING FACILITY IS NOT AVAILABLE. THE RULE IS NOT APPLICA BLE WHERE THE PERSON MAKING PAYMENT RESIDES IN A VILLAGE, WHERE BANKING FACILITY IS NOT 7 AVAILABLE. IN THE CASE UNDER APPEAL PAYMENT IS MAD E TO M/S. J.K. WINES, JALGAON, WHERE THE BANKING FACILITY IS AVAILABLE AN D HENCE NO EXCEPTION UNDER RULE 6DD(G) IS APPLICABLE. IN VIEW OF THE AB OVE FACTS AND DISCUSSION, THE FIRST CONTENTION OF THE APPELLANT I S REJECTED. THE SECOND CONTENTION RAISED BY THE APPELLANT IS TH AT THE PAYMENTS MADE ON BANK HOLIDAYS ARE COVERED BY EXCEPTION PROVIDED IN RULE 6DD(J) AND HENCE DISALLOWANCE U/S.40A(3) IN RESPECT OF SUCH PA YMENTS IS NOT JUSTIFIED. IN THIS REGARD IT HAS BEEN NOTICED THAT THE APPELLANT HAS MADE FOLLOWING PAYMENTS ON BANK HOLIDAYS. DATE AMOUNT REMARK 14/06/2009 15,000/- SUNDAY 14/06/2009 18,000/- SUNDAY 06/09/2009 17,000/- SUNDAY 06/09/2009 16,000/- SUNDAY 27/09/2009 18,000/- SUNDAY 27/09/2009 17,000/- SUNDAY 28/09/2009 18,000/ DASHARA (VIJAYA DASHMI) 28/09/2009 18,000/ DASHARA (VIJAYA DASHMI) 08/11/2009 19,000/- SUNDAY 08/11/2009 19,000/- SUNDAY 17/01/2010 19,000/- SUNDAY 17/01/2010 16,000/- SUNDAY 24/01/2010 18,000/- SUNDAY 24/01/2010 19,000/ SUNDAY 26/01/2010 19,000/ REPUBLIC DAY 26/01/2010 19,000/ REPUBLIC DAY 31/01/2010 19,000/ SUNDAY 31/01/2010 17,000/- SUNDAY 14/02/2010 19,000/ SUNDAY 14/02/2010 15,000/- SUNDAY TOTAL 3,55,000/- THE RULE 6DD(J) READS AS UNDER : (J) WHERE THE PAYMENT WAS REQUIRED TO BE MADE ON A DAY ON WHICH THE BANKS WERE CLOSED EITHER ON ACCOUNT OF HOLIDAYS OR STRIKE. THEREFORE THE ABOVE MENTIONED PAYMENTS ARE COVERED BY RULE 6DD(J) OF THE I.T. RULES, 1962. THE CONTENTION OF THE A.O. T HAT ON GANDHI JAYANTI AND REPUBLIC DAY, SHOP WAS CLOSED AND HENCE NO CASH PAYMENT COULD HAVE BEEN MADE CANNOT BE ACCEPTED AS THOUGH THE SHO P WAS CLOSED, THE PAYMENT CAN BE MADE FROM OFFICE OR RESIDENCE TO THE SUPPLIER. FURTHER THE APPELLANT HAS NOT MADE ANY PAYMENT ON GANDHI JA YANTI. IN VIEW OF THE ABOVE FATS AND DISCUSSION, THE SECOND CONTENTIO N OF THE APPELLANT IS ACCEPTED AND THE ADDITION OF RS.3,55,000/-. IS DELE TED. THE THIRD CONTENTION OF THE APPELLANT IS THAT THE C ASH PAYMENTS MADE BELOW RS.20,000/- SHOULD NOT BE DISALLOWED BUT SUBS EQUENT PAYMENT AFTER CONSIDERATION OF WHICH, THE TOTAL PAYMENT EXC EEDED RS.20,000/- ONLY SHOULD BE DISALLOWED. THE ABOVE CONTENTION OF THE APPELLANT CANNOT BE ALLOWED AS THE PROVISIONS OF SECTION 40A(3) READ S AS UNDER : WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPE CT OF WHICH PAYMENT OR AGGREGATE OF PAYMENTS MADE TO A PERSON I N A DAY, OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE, DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, EXCEEDS TWENTY THOUSAND R UPEES, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPEN DITURE 8 FROM THE ABOVE PROVISION, IT IS CLEAR THAT ALL THE CASH PAYMENTS MADE ON A DAY TOTAL OF WHICH EXCEEDS RS.20,000/- ARE TO BE DISALLOWED. THE THIRD CONTENTION OF THE APPELLANT IS THEREFORE REJECTED. THE FOURTH CONTENTION OF THE APPELLANT IS THAT THE OBJECT OF SECTION 40A(3) IS TO CURB BLACK MONEY AND NOT TO PUT AN IMPEDIMENT , OVER TRADE AND BUSINESS AND AS ALL THE TRANSACTIONS WITH M/S. J.K. WINES ARE DULY RECORDED IN THE BOOKS OF ACCOUNTS, DISALLOWANCE U/S .40A(3) IS NOT JUSTIFIED. THE APPELLANT HAS NOT BROUGHT ON RECORD THE BUSINESS EXIGENCY AND COMPELLING CIRCUMSTANCES FOR MAKING CASH PAYMEN T TO SUPPLIER, WHO IS HAVING BANK ACCOUNTS AND THE APPELLANT IS ALSO B ANK ACCOUNTS AS IS EVIDENT FROM APPELLANTS BALANCE SHEET. IN VIEW OF THE ABOVE FACTS AND RATIO LAID DOWN BY HONBLE ITAT, PUNE IN THE CASE O F T.G. MUTHA VS. ITO 54 ITD 460, RELIED ON BY THE A.O., THE FOURTH CONTE NTION OF THE APPELLANT IS REJECTED. IN NUTSHELL THE ADDITION U/S.40A(3) OF RS.17,21,642 /- IS DELETED TO THE EXTENT OF RS.3,55,000/- AND CONFIRMED TO THE EXTENT OF RS.13,66,642/-. THE A.O. IS DIRECTED ACCORDINGLY. GROUND NO.1 IS P ARTLY ALLOWED. 9. IN MY OPINION, THE ORDER OF THE CIT(A) AND FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GRO UNDS RAISED BY THE ASSESSEE ARE DISMISSED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 23 RD DAY OF MARCH, 2018. SD/- (D.KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 23 RD MARCH, 2018. SATISH / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A)-2, NASHIK 4. / THE CIT-2, NASHIK 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// //TRUE COPY// SENIOR PRI VATE SECRETARY , / ITAT, PUNE