ITO, Gorakhpur V. M/s Vijay Kumar Vikas Kumar, C/oVikas kumar Jaiswal, Gorakhpur

ITA 401/ALLD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7881 (ITAT-ALLAHABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 16-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJKUMAR LACHHIRAMANKA
• Assessee Lawyers: M K AGARWAL
• Keywords: Commercial expediency
• Section: 40A(3); 154; 92; 68

Judgement Text

1 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD/2 014 IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD BENCH ALLAHABAD BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AND MS.SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.401/ALLD/2014 A. Y: 2008-09 INCOME TAX OFFICER, WARD-2(1), GORAKHPUR 273001 VS. M/S VIJAY KUMAR VIKAS KUMAR, C/O. VIKAS KUMAR JAISWAL, MOTIMAHAL, HAZARIPUR, GORAKHPUR- 273408 PAN: AAGFV2404B (APPELLANT) (RESPONDENT) C.O NO. 40/ALLD/2014 A. Y: 2008-09 M/S VIJAY KUMAR VIKAS KUMAR, C/O. VIKAS KUMAR JAISWAL, MOTIMAHAL, HAZARIPUR, GORAKHPUR- 273408 PAN: AAGFV2404B VS. INCOME TAX OFFICER, WARD-2(1), GORAKHPUR 273001 (APPELLANT) (RESPONDENT) REVENUE BY SHRI RAJKUMAR LACHHIRAMANKA, CIT DR ASSESSEE(S) BY : SHRI M. K. AGARWAL, ADV / DATE OF HEARING : 29/06/2017 /DATE OF PRONOUNCEMENT: 22/09/2017 ORDER PER BENCH: THE APPEAL IS FILED BY THE REVENUE AND CROSS OBJECT ION IS FILED BY ASSESSEE AGAINST THE ORDER DATED 25/2/2014 PASSED BY CIT(A)- III, LUCKNOW. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- (ITA NO. 401/ALLD/2014) 1. THAT THE LEARNED CIT (APPEALS)-LLL, LUCKNOW HAS ERRED ON FACTS AND 2 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD/2 014 LAW BY DELETING THE ADDITION OF RS. 44,24,845/- MAD E BY THE A.O. U/S 40A(3) OF I.T.ACT,1961 WITHOUT CONSIDERING THE FACTS OF TH E CASE. 'SECTION 40A(3)(A)' CLEARLY SPEAKS: WHERE THE ASSES SEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH A PAYMENT IS MADE I N A SOME EXCEEDING TWENTY THOUSAND RUPEES OTHERWISE THAN BY AN ACCOUNT PAYEE BANK DRAFT, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPEN DITURE.' '40A(3)(B): 'WHERE AN ALLOWANCE HAS BEEN MADE IN TH E ASSESSMENT FOR ANY YEAR IN RESPECT OF ANY LIABILITY INCURRED BY TH E ASSESSEE FOR ANY EXPENDITURE AND SUBSEQUENTLY DURING ANY PREVIOUS YE AR THE ASSESSEE MAKES PAYMENT IN RESPECT THEREOF, OTHERWISE THAN BY AN AC COUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, THE PAYMENT SO MADE SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR PROFESSI ON AND ACCORDINGLY CHARGEABLE TO INCOME TAX AS INCOME OF THE SUBSEQUEN T YEAR IF THE AMOUNT OF PAYMENT EXCEEDS RS. 20,000/-. 'THE HON'BLE HIGH COURT OF KERALA IN THE CASE OF M/ S KAMATH MARBLES VS. INCOME TAX OFFICERS CONSIDERED THE VALIDITY OF SECTION 40A(3) OF THE INCOME TAX ACT,1961 READ WITH RULE 6DD OF THE INCOME TAX R ULES, WHEREIN IT IS HELD THAT CASH PAYMENT EXCEEDING PRESCRIBED LIMIT IN VIEW OF PROVISIONS OF CLAUSE (H) OF RULE 6DD READ WITH CLAUSE (K) ITSELF PROVIDES SUFFI CIENT LIBERALIZATION OF RIGOR OF SECTION 40A(3) THEREFORE SAID SECTION CANNOT BE SAI D TO BE VIOLATIVE OF RIGHTS OF PARTIES TO CARRY IN ANY TRADE OF BUSINESS.' 'THE HON'BLE SUPREME COURT HAS UPHELD THE CONSTITUT IONAL VALIDITY OF SECTION 40A(3) OF THE INCOME TAX ACT,1961 IN THE CA SE OF AVTAR SINGH GURUMUKH SINGH ETC. VS. INCOME TAX OFFICER [1991] 9 7 CTR 251.' 'IN THE CASE OF SRI RADHIKA PRAKASHAN (RAIPUR) PVT. LTD. VERSUS COMMISSIONER OF INCOME TAX, THE HON'BLE HIGH COURT OF MADHYA PRADESH, INDORE BRANCH, IT HAS BEEN HELD THAT ' THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF EXPLANATION THAT PARTY HAS I NSISTED ON PAYMENT IN CASH 3 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD/2 014 AND HAD EXPRESSED UNWILLINGNESS TO RENDER SERVICES OTHERWISE, THUS THERE IS NO CASE OF EXCEPTIONAL OR UNAVOIDABLE CIRCUMSTANCES FOR MAKING PAYMENT IN CASH HAD BEEN MADE OUT AND THEREFORE IN THE ASSESSE E'S APPEAL THERE IS NO MERIT.' IN VIEW OF THE ABOVE FACTS IT IS PRAYED THAT THE OR DER OF LD. CIT (A) IS BAD IN LAW AND NEEDS TO REVISE AND ORDER OF A.O. MAY BE RESTOR ED. (C.O NO. 40/ALLD/2014) 1. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THIS CA SE THE LEARNED CIT APPEALS 3 RD LUCKNOW WAS PERFECTLY JUSTIFIED ON LEGAL & FACTUAL ISSUES IN DELETING ADDITION/ DISALLOWANCES MADE U/S 40A (3) AMOUNTING TO 4424845/- ON THE BASIS OF CIT GORAKHPUR ORDER DATED 26/03/2012 PASSE D U/S 264 FOR AY. 2009-10 IN CASE OF RAM NIVAS, EXCISE CONTRACTOR, SA TGURU, RAMNAGAR,MAHARAJGANJ & ALSO IN CASE OF BUDHAI PRASA D , EXCISE CONTRACTOR, MAHARAJGANJ, BASED ON SC, HC & ITAT JUDGMENTS. 2. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THIS CA SE THE LEARNED CIT APPEALS 3 RD LUCKNOW WAS PERFECTLY JUSTIFIED ON LEGAL & FACTUAL ISSUES IN DELETING ADDITION/ DISALLOWANCES MADE U/S 40A (3) AMOUNTING TO RS. 4424845/- FOLLOWING ON THE BASIS OF RATION IN SC INDIA CIVIL APPELLATE JURISDICTION , CIVIL APPEAL NO. 4708- 4709 OF 2002 STATE OF UP & OTHERS V/S MOHAN MAKIN BREVERAGES LTD. ANOTHER WITH CIVIL APPEAL NO. 4711 OF 2002, CIVIL APPEAL NO OF 4712 OF 2002, CIVIL APPEAL 4713 OF 2002 IN WHICH PARA 16, 17 & 18 IN CASE OF A.B ABDUL KADIR V/S STATE KERELA, AIR 1962 SC 92 2 & ALSO INNUMERABLE JUDGMENTS CITED BY CIT IN PARA 25,26 & 27 IN CASE O F UNION OF INDIA V/S A SANAYASI RAO & OTHERS -1996(3) SCC 465 & ALSO PAGE 6 OF PAPER BOOK FILED ON 09/5/2012 & ALSO PAGE 8 PARA 5 & 6 M/S SHASHI ENTERPRISES V/S ITO 1 1 (3) LKO BENCH & ALSO KERELA HC ORDER IN CASE OF CIT V/S INTERSEAS (2010) 233 CTR KERELA. 4 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD/2 014 3. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THIS C ASE THE LEARNED CIT APPEALS 3 LUCKNOW WAS PERFECTLY JUSTIFIED ON LEGAL & FACTUA L ISSUES IN DELETING ADDITION/ DISALLOWANCES MADE U/S 40A (3) AMOUNTING TO RS. 4424845/- AS PER FINDING ON PAGE 4 IN PARA 1 OF APPELLATE ORDER BY HOLDING THAT BOOKS OF ACCOUNTS & PURCHASE VOUCHERS ETC. WERE EXAMINED BY AO. & NOTHING ADVERSE HAS BEEN FOUND & THE PURCHASES HAS BEEN MADE FROM A SINGLE PARTY M/S SARRIYIA DISTILLEY SARDAR NAGAR, GORAKHPUR & AO WRO TE IN THE ORDER THAT THE PURCHASES STANDS VERIFIED & IT W AS ALSO MENTIONED IN THE 133 (6 ) INFORMATION RECEIVED FROM SARRIYIA DISTILLERY & PURCHASES HAVE BEEN MADE IN CASH & COMMODITY DEALT BY THE APPELLANT IS NOT SOLD IN THE OPEN MARKET UNLESS AUTHORIZED BY THE EXCISE. THE BUSINESS OF THE ASSES SEE IS RUN ON CASH BASIS AS EXCISE DUTY HAS TO BE PAID IN CASH TO THE GOVERN MENT & IT IS THE COMMERCIAL EXPEDIENCY OF THE BUSINESS THAT PURCHASES ARE MADE IN CASH & BECAUSE OF THIS 40A (3) CANNOT BE APPLIED AS IT IS COVERED IN EXCEPTION CLAUSE RU LE 6DD & THE ADDITION OF RS. 4424845/- DELETED. 4. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THIS C ASE THE LEARNED CIT APPEALS 3 RD LUCKNOW WAS PERFECTLY JUSTIFIED ON LEGAL & FACTUAL ISSUES IN DELETING ADDITION/ DISALLOWANCES MADE U/S 40A (3) AMOUNTING TO RS. 4424845/- & THE FACTS OF THE CASE LAWS RELIED BY RESPONDENT ARC NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE & LEARNED CIT APPEALS 3 RD OFFICE WAS LEGALLY JUSTIFIED IN DELETING ADDITION OF RS. 4424845/-. 5. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THIS CA SE THE LEARNED CIT APPEALS 3 RD LUCKNOW WAS LEGALLY JUSTIFIED IN NOT GIVING ANY FIN DING IN RESPECT OF GROUND NO. 3 RAISED IN GROUNDS OF APPEAL IN FORM NO . 35 REGARDING ADDITION OF RS.200000/- U/S 68 TOWARDS UNSECURED LOANS FROM WHO M 11 PERSONS LOANS WERE TAKEN DURING THE YEAR AND REPAID NEXT YEAR RAN GING FROM 9000/- TO 19500/- FROM WHOM CONFIRMATORY LETTERS FILED AND N O ENQUIRY MADE FROM ANY PERSON BY ITO. 6. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THIS CASE THE LEARNED CIT APPEALS 5 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD/2 014 3 RD LUCKNOW WAS NOT LEGALLY JUSTIFIED IN NOT GIVING ANY FINDING IN RESPECT OF GENUINE DEPOSITS OF 11 PERSONS RANGING FROM 9000/- TO 19500/- ADDED U/S 68 OF IT ACT BY ITO FRO WHICH APPLICATION U/S 154 H AS BEEN FILED IN CIT APPEALS 3 RD OFFICE ON 17/4/2014 & NO ORDER TILL YET HAS BEEN P ASSED. 7. THAT ON THE FACTS & IN THE CIRCUMSTANCES OF THIS CASE THE LEARNED CIT APPEALS 3 RD LUCKNOW WAS NOT LEGALLY JUSTIFIED IN CONFIRMING ADD ITION OF RS.367324/- IN RESPECT OF SUNDRY CREDITORS LIABILITY IN RESPECT OF CREDIT SUPPLIES APPEARING IN B/S AMOUNTING TO RS.367324/- OF M/S SARRIYIA DISTIL LERY SARDAR NAGAR, GORAKHPUR AND THE SAME ADDITION IS NOT LEGAL AS THE PAYMENT HAS BEEN MADE NEXT YEAR AND THE SAME ADDITION U/S 68 IS UNJUSTIFI ED. 3. THE ASSESSEE DERIVES INCOME FROM TRADING OF LIQU OR. RETURN SHOWING INCOME OF RS.5,650/- WAS FILED ELECTRICALLY ON 26/9 /2008. DURING THE COURSE OF HEARING, BOOKS OF ACCOUNTS WERE PRODUCED AND WER E TEST CHECKED. ON PURCHASE OF RS.44,98,194/- SALES WAS SHOWN AT RS.53 ,05,643/- GROSS PROFIT SHOWN AT RS.8,07,449/- WHICH WAS 15.22% OF THE TURN OVER. THE SALE SHOWN WAS PROPORTIONATE TO PURCHASES. CONSEQUENT UPON, VE RIFICATION OF PURCHASES AND PAYMENT AGAINST THE SAME INFORMATION, AFTER BEI NG CALLED FOR U/S 133 (6) OF THE ACT WAS RECEIVED FROM M/S SARAYA DISTILLERY, GO RAKHPUR VIDE ITS LETTER DATED 11/12/2010 RECEIVED BY ASSESSING OFFICER ON 13/12/2010 FROM WHERE PURCHASES WERE MADE BY THE ASSESSEE WAS VERIFIED. CONSEQUENTLY, THE ASSESSING OFFICER OBSERVED THAT PURCHASES AS PER IN VOICES EXCEEDING RS.20,000/- EACH COMES TO RS. 44,24,845/-, SINCE T HE ASSESSEE INCURRED SUCH EXPENDITURE ON PURCHASES IN RESPECT OF WHICH PAYMEN T MADE OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT EXCEEDED RS.20,000/- DEDUCTION FOR THE SAME WAS NOT ALLOWABLE U/S 40A (3) OF THE ACT. THEREFORE, THE ASSESSING OFFICER ADDED TH E SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO ADDED RS.3,67,324/- U/S 68 OF THE ACT AS THE ASSESSEE COULD NOT EXPLAIN THE LIABILITY TOWARDS SUNDRY CREDITORS. THE ASSESSING OFFICER ALSO ADDED RS.2 L AC IN RESPECT OF UNSECURED 6 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD/2 014 LOANS U/S 68 OF THE ACT. BEING AGGRIEVED BY THE SA ME, THE ASSESSEE FILE APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE A PPEAL OF THE ASSESSEE. 4. THE LD. DR SUBMITTED THAT THE CIT(A) HAS NOT TAK EN INTO COGNIZANCE OF ALLAHABAD HIGH COURT DECISION IN CASE OF CIT VS. TR ADERS SAPNA AS WELL AS CIT VS. RAM NARAYAN SHYAM NARAYAN 189 ITR 470. THE LD. DR SUBMITTED THAT THE CIT(A) HAS PASSED JUST A CASUAL ORDER WITHOUT APPRE CIATING THE FACTUAL ASPECTS REGARDING DISALLOWANCE U/S 40A(3) MADE BY THE ASSES SING OFFICER AS THE SAID TRANSACTION IS ABOVE RS. 20,000/- AND IS MADE IN CA SH WHICH IS NOT ALLOWABLE AS A DEDUCTION IN RESPECT OF ANY EXPENDITURE INCURR ED BY THE ASSESSEE. THE LD. DR TOOK COGNIZANCE OF RULE 6DD IN SPECIFIC CLAUSE 8 . THE LD. DR FURTHER SUBMITS THAT IN THIS PARTICULAR CASE THE ASSESSEE D ID NOT SATISFY THE ASSESSING OFFICER AS TO WHY THE PAYMENT COULD NOT BE MADE BY A CROSS CHEQUE DRAWN ON A BANK OR BY A CROSS BANK DRAFT. THE PAYMENT WAS MOR E THAN RS.20,000/- AND NOT BELOW TO RS.20,000/- AND THE ASSESSEE COULD NOT PRODUCE SUCH RECEIPTS AND AS SUCH HE FAILED TO ESTABLISH THAT EACH PAYMEN T WAS MADE BELOW RS.20,000/-. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED AMOUNT OF RS.44,24,845/- U/S 40A(3) OF THE ACT. THE LD. DR RE LIED UPON THE HONBLE ALLAHABD HIGH COURT DECISION IN CASE OF CIT VS. SAP NA TRADERS DATED 26 TH OCTOBER, 2006. THE LD. DR ALSO SUBMITTED THAT SARAI IS NOT GOVERNMENT AND, THEREFORE, PAYMENT MADE TO SARAI IN CASH WAS NOT EX PLAINED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AS THERE IS NO RECEIPT OR ANY DOCUMENTARY PROOF PRODUCED BEFORE THE ASSESSING OFFICER. THEREFORE, T HE LD. DR SUBMITTED THAT THE ORDER OF CIT(A) HAS TO BE SET ASIDE TO THIS EXT ENT. AS RELATES TO GROUND NO. 6 AND 7 OF THE CROSS OBJECTION, THE LD. DR SUBMITTED THAT THE FINDINGS GIVEN BY THE ASSESSING OFFICER AND THE CIT(A) ARE JUST AND C ORRECT. 5. THE LD. AR SUBMITTED THAT THE ASSESSEES CASE IS ENTIRELY COVERED BY THE DECISION OF THE ITAT, ALLAHABAD BENCH IN CASE OF RA M NIWAS VS. ITO BEING ITA NO. 322/ALLD/2013 ORDER DATED 11/12/2015. THE LD. AR SUBMITTED THAT THE HON'BLE SUPREME COURT IN CASE OF BASAWARAJ & ORS VS . SPECIAL LAND 7 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD/2 014 ACQUISITION OFFICER, CIVIL APPEAL NO. 6974/2013 JUD GMENT DATED 22 ND AUGUST 2013, HELD THAT IF AN ILLEGALITY AND IRREGULARITY H AS BEEN ADDED IN FAVOUR OF AN INDIVIDUAL OR A GROUP OF INDIVIDUALS OR WRING ORDER HAS BEEN PASSED BY A JUDICIAL FORUM OTHERS CANNOT INVOKE THE JURISDICTIO N OF THE HON'BLE HIGH COURT OR HON'BLE SUPREME COURT FOR REPEATING OR MULTIPLYI NG THE SAME IRREGULARITY OR ILLEGALITY OR FOR PASSING A SIMILARLY WRONG ORDER. THE LD. AR ALSO RELIED UPON THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN CAS E OF CIT VS. BANWARI LAL BANSHIDHAR 1998 229 ITR 229 WHEREIN IT IS HELD THAT NO DISALLOWANCE COULD HAVE BEEN MADE IN VIEW OF THE PROVISIONS OF SECTION 40A(3) READ WITH RULE 6DDJ AS NO DEDUCTION WAS CLAIM BY THE ASSESSEE IN R ESPECT OF THE PURCHASES. IN THE PRESENT CASE ALSO, THE ASSESSEE HAS NOT CLAI MED ANY DEDUCTION IN RESPECT OF PURCHASES. 6. AS RELATES TO CROSS OBJECTIONS, GROUND NO. 6 AN D 7, THE LD. AR SUBMITTED THAT NO WHERE IT IS SAID THAT THESE ARE BOGUS PARTI ES AS THE GENUINENESS, CREDITWORTHINESS WAS NOT DOUBTED BY THE ASSESSING O FFICER. THE LD. AR FURTHER SUBMITTED THAT THE BOOKS WERE ACCEPTED BY THE ASSES SING OFFICER AND IT WAS NEVER DOUBTED AT ANY STAGE OF ASSESSMENT PROCEEDING S. AS RELATED TO THE ISSUE REGARDING 2,00,000/- THE LD. AR SUBMITTED THAT THE SAME WAS ALSO ESTABLISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE CIT(A) WHILE DELETING THE ADDITION ON A CCOUNT OF DISALLOWANCE U/S 40A(3) HAS NOT TAKEN INTO ACCOUNT THE FACT THAT THE ASSESSEE HAS NOT PRODUCED THE PROOF AS TO HOW THE SARAI IS BOUND TO BE PAID I N CASH. THERE WAS NO RECEIPT GIVEN BY THE ASSESSEE TO THE ASSESSING OFFICER TO T HAT EXTENT. THE SARAI IS NOT A GOVERNMENT. THIS ASPECT WAS NOT CONSIDERED BY THE C IT(A). THE SECTION 40A(3) OF THE ACT WHICH IS APPLICABLE IN ASSESSEES CASE F OR A.Y. 2008-09 IS AS UNDER: (3)(A) WHERE THE ASSESSEE INCURS ANY EXPENDITURE I N RESPECT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING TWENTY THOUSAND RUPEES OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE A SUM EXCEEDING TWENTY T HOUSAND RUPEES 8 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD/2 014 OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF SUCH EXPENDITURE; (B) WHERE AN ALLOWANCE HAS BEEN MADE IN THE ASSESSM ENT FOR ANY YEAR IN RESPECT OF ANY LIABILITY INCURRED BY THE ASSESSEE F OR ANY EXPENDITURE AND SUBSEQUENTLY DURING ANY PREVIOUS YEAR (HEREINAFTER REFERRED TO AS SUBSEQUENT YEAR) THE ASSESSEE MAKES PAYMENT IN RESPECT THEREOF , OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAY EE BANK DRAFT, THE PAYMENT SO MADE SHALL BE DEEMED TO BE THE PROFITS A ND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME-TAX AS INCOME OF THE SUBSEQUENT YEAR IF THE AMOUNT OF PAYMENT EXCEEDS TW ENTY THOUSAND RUPEES: PROVIDED THAT NO DISALLOWANCE SHALL BE MADE AND NO PAYMENT SHALL BE DEEMED TO BE THE PROFITS AND GAINS OF BUSINESS OR P ROFESSION UNDER THIS SUB- SECTION WHERE ANY PAYMENT IN A SUM EXCEEDING TWENTY THOUSAND RUPEES IS MADE OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAW N ON A BANK OR ACCOUNT PAYEE BANK DRAFT, IN SUCH CASES AND UNDER S UCH CIRCUMSTANCES AS MAY BE PRESCRIBED, HAVING REGARD TO THE NATURE AND EXTENT OF BANKING FACILITIES AVAILABLE, CONSIDERATIONS OF BUSINESS EX PEDIENCY AND OTHER RELEVANT FACTORS. THIS WAS APPLICABLE TILL 31.03.2008 I.E. FOR A.Y. 2 008-09. AS PER THE PRESENT FACTS OF THE CASE, THE PAYMENTS WERE MADE MORE THAN RS.20,000/- IN CASH AND THE ASSESSEE HAS NOT GIVEN ANY DOCUMENTARY PROOF TO THAT EFFECT BEFORE ANY OF THE AUTHORITIES. THUS, THE LD. ARS CONTENTION THA T THE ASSESSEES CASE FALLS IN THE AMBIT OF SECTION 40A(3) OF THE ACT DOES NOT SURVIVE. THE CASE LAWS REFERRED TO BY THE LD. AR WILL NOT BE APPLICABLE IN THE PRESENT CASE AS THE SARAI IS NOT A GOVERNMENT WHICH IS MAJOR DISTINGUISHING F ACTOR IN THE PRESENT CASE THAN FROM THE CASE LAWS REFERRED BY THE LD. AR. ESP ECIALLY THE HONBLE ALLAHABAD HIGH COURT DECISION IN CASE OF BANWARI LA L BANSHIDHAR (SUPRA) IS ON RULE 6DD(J) OF THE INCOME TAX RULES, 1962 AND WILL NOT BE APPLICABLE IN THE PRESENT CASE AS THE SAME IS NO LONGER IN THE STATUE . THE PAYMENT MADE TO SARAI DOES NOT AMOUNT TO PAYMENT MADE TO THE GOVERNMENT. THE LD. DR HAS RIGHTLY POINTED OUT THAT THE PAYMENT WAS MORE THAN RS.20,00 0/- AND NOT BELOW TO RS.20,000/- AND THE ASSESSEE COULD NOT PRODUCE SUCH RECEIPTS AND AS SUCH HE 9 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD/2 014 FAILED TO ESTABLISH THAT EACH PAYMENT WAS MADE BELO W RS.20,000/-. THEREFORE, THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED AMOUNT OF RS.44,24,845/- U/S 40A(3) OF THE ACT. HENCE, THE DELETION OF SAID ADDI TION IS SET ASIDE AND THE ORDER OF THE ASSESSING OFFICER IS UPHELD ON THIS ISSUE. 8. AS RELATES TO CROSS OBJECTION GROUND NO. 6 AND 7 , THE CIT(A) HAS GIVEN ELABORATE FINDING. THE CIT(A) HAS RIGHTLY HELD THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE INFORMATION AND DETAILS RECEIVED F ROM SARAYA DISTILLERY AS PER WHICH NO PAYMENT WAS OUTSTANDING TO IT BY THE ASSES SEE AND AS SUCH THE LIABILITY SHOWN WAS NOT AT ALL EXPLAINED BY THE ASS ESSEE. THEREFORE, THE ORDER OF THE CIT(A) IS UPHELD TO THAT EXTENT. THUS, GROUND N O. 6 AND 7 OF THE CROSS OBJECTION ARE DISMISSED. AS RELATES TO OTHER GROUND S OF THE CROSS OBJECTIONS THE SAME ARE IN SUPPORT OF THE CIT(A)S ORDER WHICH WAS ALREADY DECIDED AGAINST THE ASSESSEE FOR THE REASON GIVEN HEREINABOVE. THE SAME ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 22ND DAY OF SEPTEMBER, 2017 . (R. K. PANDA) (SUCHITRA KAMBL E) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22/09/2017 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 10 ITA NO. 401/ALLD/2014 & C.O NO. 40/ALLD /2014 5. DR: ITAT AS SISTANT REGISTRAR ITAT ALLAHABAD DATE 1. DRAFT DICTATED ON 14/07/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 14/07/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 22.09.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 22.09.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.