ITO, W-2, Barnala V. The Truck Operator Union, Barnala

ITA 893/CHANDI/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 0733 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-09-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 05-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business expenditure; Income from undisclosed sources; TDS
• Section: 40A(3); 40(a)(ia); 208; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘B’, CHANDIGARH BEFORE SMT.DIVA SINGH, JUDICIAL MEMBER AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER ITA No. 893/Chd/2019 (Assessment Year: 2015-16) The ITO Ward-2, Barnala बनाम The Truck Operator Union, Dhanaula Road, Barnala थायी लेखा सं./PAN NO: AAAAT6497M नधा रती क ओर से/Assessee by : Shri Deepak Aggarwal, Advocate राज व क ओर से/ Revenue by : Shri Sarabjeet Singh, CIT, DR स ु नवाई क तार ख/Date of Hearing: 21/09/2022 उदघोषणा क तार ख/Date of Pronouncement: 14/10/2022 आदेश/ORDER Per Vikram Singh Yadav, Accountant Member: This is an appeal filed by the Revenue against the order of Learned Commissioner of Income Tax (Appeals), Patiala [in short the ‘Ld. CIT(A)’] passed u/s 250(6) of the Income Tax Act, 1961 (in short ‘the Act’) dated 18/03/2019 for assessment year 2015-16, wherein the Revenue has taken the following grounds of appeal: 1. In the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 3,81,18,083/- made by the Assessing Officer on account of freight payments made by the assessee in cash exceeding Rs. 35,000/- to various truck operators during the year under consideration in complete violation of section 40A(3) of the Income Tax Act, 1961. 2. It is prayed that the order of Ld. CIT(A) be set aside and that of the Assessing Officer be restored. 3. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard and finally disposed off. 2 2. Briefly the facts of the case are that the assessee, a truck operator union, filed its return of income disclosing income of Rs. 7,07,410/- in the status of Association of Persons (AOP). The case of the assessee was selected for scrutiny and during the course of assessment proceedings, the AO observed that the assessee has made payment to various truck operators exceeding Rs. 35,000/- in cash per person per day in complete violation of Section 40A(3) of the Act and vide order sheet entry dt. 17/07/2017, the assessee was directed to explain why amount paid in cash to its members may not be disallowed under section 40A(3) of the Act. 3. In response, the assessee submitted that the provision of Section 40A(3) are not applicable as the assessee is a truck union and its members collectively formed truck union to watch the interest of its members. The truck union received freight against transportation of goods by its members and the same is distributed amongst its members according to their contribution and the truck union has therefore not made any payment to third party. In support, reliance was placed on the Hon’ble Punjab & Haryana High Court decision in case of CIT Vs. Truck Operator Union (ITA No. 821 of 2010). 4. The reply so filed by the assessee was considered but the same was not found acceptable to the AO. As per the AO, the ratio of the judgment of Hon’ble Punjab & Haryana decision in case of Truck Operator Union does not apply in the instant case as the same relates to provisions contained in Section 40(a)(ia) of the Act wherein it was held that there was no separate contract between the Union and its members for performance of the work as required for applicability of section 194C(2) of the Act where as in the present case, the matter relates to cash payment made in contravention of section 40A(3) of the Act. Thereafter referring to the provision of section 40A(3) as well as the exceptional circumstances provided under Rule 6DD, it was held by the AO that no circumstances have been narrated by the assessee under which the payment in the manner prescribed under section 40(A)(3) was not practicable or would have caused genuine difficulty to the assessee. It was held by the AO that the list as provided in Rule 6DD is exhaustive and a person can be exempted from the requirement of payment by a crossed cheque or crossed bank draft only in the circumstances specified under the Rule 6DD. It was held by the AO that the assessee offered no argument which may prove that the cash payments were made 3 due to exceptional / unavoidable circumstances covered under rule 6DD. It was held that the provision of section 40A(3) are not merely a formality but they were introduced to discourage payment other than through the banking channel. It was held by the AO that where the payment has been made to members of the Union, it cannot be presumed by any stretch of imagination that the assessee is at liberty to violate the provision of section 40A(3) of the Act and in support the reliance was placed on the decision of Hon’ble Kolkata High Court in the case of CIT Vs. Tirupati Trading Co. wherein it was observed that where the assessee was unable to explain any unavoidable / exceptional circumstances covered under Rule 6DD, addition made under section 60A(3) were justified. Accordingly, an amount of Rs. 3,81,18,083/- paid in cash by the assessee union in contravention of section 40A(3) was disallowed and added to the returned income of the assessee. 5. Being aggrieved, the assessee carried the matter in appeal before the Ld. CIT(A) and the submission made before the AO were reiterated stating that the assessee is a truck union and it received freight against transportation of goods by its members and the same were distributed amongst its members according to their share in freight and the payment has not been made to any third party and in support reliance was placed on the Hon’ble Punjab & Haryana High Court decision. It was further submitted that the truck operator union is a collective associates of various truck owners found to end cut throat competition amongst the members and to distribute work equally amongst its members and the role of the truck operator union is to do economic engineering so that the customer do not fleece truck operators to have good bargain and the fact that the poor truck operators can meet their ends easily. It was submitted that the truck operator union is acting as an agent of its members and after charging small amount for utilization and upkeep of place, provision for watering, chairs, etc., it distribute the remaining sum amongst its members according to service provided by them to the party and for the purposes, the truck operation union executed agreement with the party to provide the commercial vehicle with in its area. 6. It was further submitted that the truck operator union did not own any truck of its own and the person who execute work was actually member of the truck union and they pay membership fee apart from small amount retained by the truck operator union to meet its running expenses and net surplus income is carried forwarded to the 4 next year to be used for welfare of the truck operators and in support of its contention, the assessee relied on the decision of Hon’ble Gauhati High Court in case of Janam Bhumi Vs. CIT(1997) 225 ITR 0517 and decision of Coordinate Hyderabad Benches in case of G.A. Road Careers Vs. ITO (2010) 29 CCH 0445. 7. It was further submitted that the major supplies are loaded at night and assessee has to pay freight immediately to ensure smooth supplies and loading sites is far away and truckers are from the villages which are mostly not served by banks or do not maintain any bank accounts. Further most of the truckers are semi-literate and they are not in a position to collect money in cheque and get encashed from the bank. It was accordingly submitted that the complete records have been maintained by the assessee and the identity, genuineness of the transactions are not in dispute and given the business expediency for making cash payment, the disallowance so made by the AO should be deleted. 8. The Ld. CIT(A) considering the submissions of the assessee held that the issue under consideration needs to be looked at firstly from the perspective that where the payments are made to members of the Union and not made to the third party, whether the provision to section 40A(3) are applicable and secondly, on account of business expediency. Regarding the payment of amount to the members of the Union, the Ld. CIT(A) referred to the decision of Hon’ble Punjab & Haryana High Court in case of CIT-1 Vs. Truck Operator Union wherein the Hon’ble High Court treated the payment as one to its member ableit under section 40(a)(ia) has some value in the instant case though the issue of contractual obligation is not relevant in the instant case. Further the Ld. CIT(A) referred to the decision of Hon’ble Gauhati High Court in the case of Janam Bhumi Vs. CIT (supra) wherein it was held that where the payer and the payee are one and the same person and the genuineness of the payment is not in dispute, provision of section 40A(3) are not applicable. Drawing support from the decision of the Hon’ble Gauhati High Court, the Ld. CIT(A) held that in view of the factual matrix of the case, the assessee AOP is not itself in the business of running trucks on hire but works as a facilitator for its members and retains an insignificant amount in terms of materiality qua the total turnover which does not meet the ingredients of a commercial commission but at best comprises a fee which is used for the benefit of its members and it was 5 accordingly held that the payment to members of the AOP do not come within the ambit of Section 40A(3) of the Act. 9. Referring to the submission of the assessee regarding business expediency that the major supplies are loaded at night, freight has to be paid immediately to ensure smooth supplies and loading site is far away and the truckers are from the villages which are mostly not served by the banks or do not maintain any bank accounts and referring to the decision of Hon’ble Supreme Court in case of Attar Singh Gurmukh Singh Vs. ITO (1991) 4 SCC 385 and decision of Hon’ble Gujarat High Court in case of Anupam Tele Services Vs. ITO (2014) 43 taxmann.com 199, it was held that the judicial opinion appears to exclude from the mischief of section 40A(3) those transactions which are duly confirmed and vouched by an audit trail where the sellers identity is thoroughly confirmed and the transaction verifiable and only when these are predicated on clear business expediency, the existence of severe and urgent business expediency and the non availability of banking channels or other exception as so provided in Rule 6DD are met. 10. It was held by the Ld. CIT(A) that in the instant case there is nothing on record to doubt the genuineness of the expenses as the transaction have an unimpeachable audit trail through TDS deducted by the Party with whom the appellant enters in contract with regard to freight as also the details of the truck owners to whom payments have been made. Further the payment in cash more than Rs. 35,000/- per day under section 40A(3) comprise 10.31% of the total freight payments of Rs 35,05,78,051/- and these payments could be governed by the business expediency cited by the appellant given that trucks leave at night and travel through areas without banking facilities and accordingly the addition of Rs. 3,81,18,083/- so made by the AO was directed to be deleted. 11. Against the said findings and order of the Ld. CIT(A) the Revenue is in appeal before us. During the course of hearing, the ld CIT DR supported the order of the AO and submitted that the AO has given individual details of cash transactions which have exceeded the prescribed threshold attracting provisions of section 40A(3) of the Act. It was submitted that as against the general threshold of Rs 20,000/-, the legislature itself taking into consideration the nature of business of truck operators has increased the 6 prescribed threshold to Rs 35,000/- and therefore, in such circumstances, where the said threshold is also breached, the assessee has to provide suitable explanation as to how its case falls under any of the exceptions specified under Rule 6DD. It was submitted that during the course of assessment proceedings, the assessee has not come foreward and provided any explanation in this regard as to how the payment in the manner prescribed u/s 40A(3) was not practicable or would have caused genuine difficulty to the payee. It was further submitted that even during the appellate proceedings, as can be seen from the order of the ld CIT(A), the assessee has merely come out with a generic explanation and the ld CIT(A) has simply accepted the said explanation holding that the payments so made by the assessee could be governed by the business expediency. It was accordingly submitted that the order of the ld CIT(A) deserve to be set-aside and that of the AO be confirmed. 12. Per contra, the Ld. AR supported the decision of Ld. CIT(A) and submitted that it is an admitted fact that during the course of assessment proceedings, the assessee was unable to provide the desired explanation as to how the payment in the manner prescribed u/s 40A(3) was not practicable or would have caused genuine difficulty to the payee. It was submitted that however, during the appellate proceedings, the assessee has provided the necessary explanation in terms of the fact that major supplies are loaded at night and assessee has to pay freight immediately to ensure smooth supplies and loading sites is far away and truckers are from the villages which are mostly not served by banks or do not maintain any bank accounts. Further most of the truckers are semi-literate and they are not in a position to collect money in cheque and get encashed from the bank. It was further submitted before the ld CIT(A) that the complete records have been maintained by the assessee and the identity, genuineness of the transactions are not in dispute and given the business expediency for making cash payment, the disallowance so made should be deleted. It was submitted that after due examination and verification of the submissions so made and being satisfied with the explanation so submitted by the assessee regarding the business expediency for making the cash payments to its members, the ld CIT(A) has deleted the addition u/s 40A(3) of the Act. It was further submitted that it is not case where the assessee has made cash payments in respect of all the transactions undertaken during the year and in this regard, it was submitted that 90% of the payments have been 7 made through the banking channel and remaining 10% of the payments given the business expediency where the payments were required to be paid in cash, the payments have been made in cash. It was further submitted that the identity of the members to whom the payments have been made, the genuineness of the transactions so undertaken have been duly established and the same have not been disputed by the Assessing officer. Further, in support of his contentions, the reliance has been placed on the following decisions namely, ITO Vs. Kailash Sharma (2021) 62 CCH 0445 (Chd Trib), J. D. Wines Vs. Addl. CIT (2019) 57 CCH 0271 (Del Trib), Anupam Tele Services Vs. ITO (2014) 88 CCH 0035 (Guj HC) and Smt. Harshila Chordia Vs. ITO (2006) 74 CCH 0899 (Raj HC). 13. We have heard the rival contentions and purused the material available on record. The matter relating to provisions contained in Section 40A(3), the legislative’s intent behind introduction of section 40A(3), whether genuine and bonafide transactions are covered within the sweep of section 40A(3) or not, and whether the exceptions provided in Rule 6DD are exhaustive or not, the Jaipur Benches of the Tribunal (speaking through one of us) in case of in case of M/s A Royal Daga Arts vs ITO Ward-2(2), Jaipur [2018] 94 taxmann.com 401 (Jaipur - Trib.) had an occasion to examine the same at length in light of decision of the Hon’ble Supreme Court in case of Attar Singh Gurmukh Singh vs. ITO (supra), the decision of Gujarat High Court in case of Anupam Teleservices (supra) and the decision of the Hon’ble Rajasthan High Court in case of Harshila Chordia vs ITO (Supra), as relied upon in the instant case, besides other Coordinate Benches decisions and it would therefore be relevant to refer to discussions and relevant findings therein which read as under: “18. We have heard the rival contentions and perused the material available on record. It would be relevant to refer to the provisions of section 40A(3) of the Act which reads as under: “(3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure. (3A) Where an allowance has been made in the assessment for any year in respect of any liability incurred by the assessee for 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 payee bank draft, the payment so made shall be deemed to be the profits and 8 gains of business or profession and accordingly chargeable to income-tax as income of the subsequent year if the payment or aggregate of payments made to a person in a day, exceeds twenty thousand rupees: Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3) and this sub-section where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft exceeds twenty thousand rupees, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors : Provided further that in the case of payment made for plying, hiring or leasing goods carriages, the provisions of sub-sections (3) and (3A) shall have effect as if for the words "twenty thousand rupees", the words "thirty-five thousand rupees" had been substituted. (4) Notwithstanding anything contained in any other law for the time being in force or in any contract, where any payment in respect of any expenditure has to be made by an account payee cheque drawn on a bank or account payee bank draft in order that such expenditure may not be disallowed as a deduction under sub-section (3), then the payment may be made by such cheque or draft; and where the payment is so made or tendered, no person shall be allowed to raise, in any suit or other proceeding, a plea based on the ground that the payment was not made or tendered in cash or in any other manner.” 19. The aforesaid provisions have to be considered and interpreted in light of various authorities which have been quoted at the Bar and relied upon by the ld AR and ld DR in support of their respective contentions. 20. In case of Attar Singh Gurmukh Singh v. ITO (supra), the matter which came up for consideration before the Hon’ble Supreme Court, the facts of the case were that assessee had made payment in cash exceeding a sum of Rs. 2,500/- for purchase of certain stock-in-trade. Payments were not allowed as deductions in the computation of income under the head “profits and gains of business or professions” as the same were held to be in contravention of section 40A(3) read with that 6DD of the Income rules. In that factual background, the question regarding validity of section 40A(3) and applicability of the said provisions to payment made for acquiring stock-in-trade came up for consideration before the Hon’ble Supreme Court. 21. The Hon’ble Supreme Court referring to the provisions of section 40A(3) and Rule 6DD and in particular, Rule 6DD(j), as existed at relevant point in time, has held as under:- “6. As to the validity of section 40A(3), it was urged that if the price of the purchased material is not allowed to be adjusted against the sale price of the material sold for want 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 authorizing levy tax on an assumed income would be a restriction on the right to carry on the business, besides being arbitrary. 7. In our opinion, there is little merit in this contention. Section 40A(3) must not be read in isolation or to the exclusion of rule 6DD. The section must be read along with the rule. If read 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 trading activities. Section 40A(3) only empowers the Assessing Officer to 9 disallow the deduction claimed as expenditure in respect of which payment is not made by crossed cheque or crossed bank draft. The payment by crossed cheque or crossed bank draft is insisted on to enable the assessing authority to ascertain whether the payment was genuine or whether it was out of the income from disclosed sources. The terms of section 40A(3) are not absolute. Consideration of business expediency and other relevant factors are not excluded. The genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the Assessing Officer 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 payment. Rule 6DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft 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 the business transactions and to prevent the use of unaccounted money or reduce the chances to use black-money for business transactions. – Mudiam Oil Co. v. ITO [1973] 92 ITR 519 (AP). If the payment is made by a crossed cheque on a bank or a 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 circulation in our country. Any restraint intended to curb the chances and opportunities to use or create black-money should not be regarded as curtailing the freedom of trade or business.” 22. Further, the Hon’ble Supreme Court upheld the applicability of section 40A(3) to payment made for acquiring stock-in-trade and raw materials and also affirmed the decision of Hon’ble Rajasthan High Court in case of Fakri Automobiles v. CIT [1986] 160 ITR 504 (Raj) to the effect that the payments made for purchasing stock-in-trade or raw material should also be regarded as expenditure for the purposes of section 40A(3) of the Act. 23. The Hon’ble Supreme Court has therefore upheld the constitutional validity of section 40A(3) of the Act and has held that the provisions are not intended to restrict the business activities and restraint so provided are only intended to curb the chances and opportunities to use or create black money and the same should not be regarded as curtailing the freedom of trade or business. The Hon’ble Supreme Court has thus laid great emphasis on the intention behind introduction of these provisions and it would therefore be relevant to examine whether in the present case, there is any violation of such intention and if ultimately, it is determined that such intention has been violated, then certainly, the assessee deserves the disallowance of the expenditure so claimed. 24. The Hon’ble Supreme Court referring to the provisions of section 40A(3) as existed at relevant point in time which talks about considerations of business expediency and other relevant factors and Rule 6DD(j) which provides for the exceptional or unavoidable circumstances and the fact that the payment in the manner aforesaid was not practical or would have caused genuine difficulty to the payee and furnishing the necessary evidence to the satisfaction of the Assessing Officer as to the genuineness of the payments and the identity of the payee has held that: “The terms of section 40A(3) are not absolute. Consideration of business expediency and other relevant factors are not excluded. The genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the 10 assessee to furnish to the satisfaction of the Assessing Officer 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 payment. Rule 6DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft in the circumstances specified under the rule.” 25. Here, it is relevant to note that there has been no change in the provisions of section 40A(3) in so far as considerations of business expediency and other relevant factors are concerned, as existed at relevant point in time and as considered by the Hon’ble Supreme Court and the provisions of section 40A(3) as exist now and relevant for the impunged assessment year i.e. AY 2013-14. However, Rule 6DD(j) has been amended and by notification dated 10.10.2008, it now provides for an exception only in a scenario where the payment was required to be made on a day on which banks were closed either on account of holiday or strike. A question which arises for consideration is whether the legal proposition so laid down by the Hon’ble Supreme Court regarding consideration of business expediency and other relevant factors has been diluted by way of delegated legislation in form of Income Tax Rules when the parent legislation in form of section 40A(3) to which such delegated legislation is subservient has been retained in its entirety. Alternatively, can it be said that what has been prescribed as exceptional circumstances in Rule 6DD as amended are exhaustive enough and which visualizes all kinds and nature of business expediency in all possible situations. 26. If we look at the legislative history of section 40A(3) and Rule 6DD, we find that initially, section 40A(3) provides for disallowance of 100% of the expenditure unless the matter falls under exception as provided in Rule 6DD(j) Later on, section 40A(3) has been amended to provide for disallowance of 20% of the expenditure incurred in cash and Rule 6DD(j) was omitted. Thereafter, by virtue of another amendment, disallowance under section 40A(3) was increased from 20% to 100%, however, Rule 6DD(j) was not reintroduced in original form to provide for exceptional and unavoidable circumstances rather it was restricted to payment by way of salary to employees and thereafter, by virtue of latest amendment in year 2008 to payments made on a day on which the banks were closed on account of holiday or strike. 27. We donot believe that by virtue of these amendments, the legal proposition so laid down by the Hon’ble Supreme court regarding consideration of business expediency and other relevant factors has been diluted in any way. At the same time, we also believe that Rule 6DD as amended are not exhaustive enough and which visualizes all kinds and nature of business expediency in all possible situations and it is for the appropriate authority to examine and provide for a mechanism as originally envisaged which provides for exceptional or unavoidable circumstances to the satisfaction of the Assessing officer whereby genuine business expenditure should not suffer disallowance. 28. Further, the Courts have held from time to time that the Rules must be interpreted in a manner so as to advance and not to frustrate the object of the legislature. The intention of the legislature is manifestly clear and which is to curb the chances and opportunities to use or create black money and to ascertain whether the payment was genuine or whether it was out of the income from disclosed sources. And Section 40A(3) continues to provide that no disallowance shall be made in such cases and under such circumstances as may be prescribed having regard to the nature and extent of the banking facilities available, consideration of business expediency and other relevant factors. In our view, given that there has been no change in the provisions of section 40A(3) in so far as consideration of business expediency and other relevant factors are 11 concerned, the same continues to be relevant factors which needs to be considered and taken into account while determining the exceptions to the disallowance as contemplated under section 40A(3) of the Act so long as the intention of the legislature is not violated. We find that our said view find resonance in decisions of various authorities, which we have discussed below and thus seems fortified by the said decisions. 29. We refer to the decision of the Hon’ble Rajasthan High Court in case of Smt. Harshila Chordia vs. ITO (supra), where the facts of case were that the assessee had made certain cash payments towards purchase of scooter/mopeds which exceeded Rs. 10,000/- in each case to the principal agent instead of making payment through the cross cheques or bank draft. The Assessing Officer invoked the provisions of section 40A(3) and held that they were no exceptional circumstances falling under rule 6DD which could avoid consequences of the provisions of section 40A(3) of the Act. The ld. CIT(A) held that such exceptional circumstances did exist. However, the findings of the ld. CIT(A) were reversed by the Tribunal and the matter came up for consideration before the Hon’ble High Court. 30. The Hon’ble High Court observed that the principal reason which weighed with the Tribunal in discarding the explanation furnished by the assessee was that the case of the assessee did not fall in any of the clauses enumerated in the circular issued by the CBDT about the explanatory note appended to clause (j) was to operate as it was existing at the relevant time and enumerated circumstances in the circular was exhaustive of exceptional circumstances. The Hon’ble High Court observed that the Tribunal has erroneously assumed that enumeration of instances in the circular in which the provisions of clause (j) under rule 6DD would operate to be exhaustive of such circumstances and had not been properly understood its implication. It was further observed by the Hon’ble High Court that primary object of enacting section 40A(3) in its original incarnation was two-fold, firstly, putting a check on trading transactions with a mind to evade the liability to tax on income earned out such transaction and, secondly, to inculcate the banking habits amongst the business community. The consequence which was provided was to disallow of deduction of such payments/expenses which were not through bank either by crossed cheques or by demand draft or by pay order. It was further held by the Hon’ble High Court that: “......Apparently, this provision was directly related to curb the evasion of tax and inculcating the banking habits. Therefore, the consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration which has been overlooked by the Tribunal. 31. It was accordingly held by the Hon’ble High Court that it is the relevant consideration for the assessing authority under the Income Tax Act that before invoking the provisions of section 40A(3) in light of Rule 6DD as clarified by circular of the CBDT that whether the failure on the part of the assessee in adhering to requirement of provisions of section 40A(3) has any such nexus which defeats the object of provision so as to invite such a consequence. This is particularly so, because the consequence provided u/s 40A(3) for failure to make payments through bank is not absolute in terms nor automatic but exceptions have been provided and leverage has been left for little flexing by making a general provision in the form of clause (j) in rule 6DD. Thereafter, the Hon’ble High Court refers to the clause 6DD(j) and the circular dated 31st May, 1977 issued by the Board in the context of what shall constitute exceptional and unavoidable circumstances within the meaning of section Clause (j). The Hon’ble High Court observed that the circular in paragraph 5 gives a clear indication that rule 6DD(j) has to be liberally 12 construed and ordinarily where the genuineness of the transaction and the payment and the identity of the receiver is established, the requirement of rule 6DD(j) must be deemed to have been satisfied. The Hon’ble High Court observed that apparently section 40A(3) was intended to penalize the tax evader and not the honest transactions and that is why after framing of rule 6DD(j), the Board stepped in by issuing the aforesaid circular and this clarification, in our opinion, is in conformity with the principle enunciated by the Supreme Court in CTO vs. Swastik Roadways reported in [2004] 2 RC 539; [2004] 3 SCC 640. 32. The legal proposition that arises from the above decision of the Hon’ble Rajasthan High Court is that the consequences, which were to befall on account of non- observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration and which should be examined before invoking the rigours of section 40A(3) of the Act. 33. In case of Anupam Tele Services v. Income Tax Officer, the matter which came up for consideration before the Hon’ble Gujarat High Court, the facts of the case were that the assessee who is involved in the business of distribution mobile and recharge vouchers of Tata Tele Services Ltd had made payment of Rs. 33,10,194/- to Tata Tele Services Ltd., by cash on different dates. The assessee had made such payment through account payee cheques till 22nd Aug, 2005, when a circular was issued by Tata Tele Services Ltd., requiring the appellant to deposit cash at the company’s office at Surat. In that factual background , the Hon’ble High Court held as under:- “17. Rule 6DD of the IT Rules, 1962 provides for situations under which disallowance under s. 40A(3) shall not be made and no payment shall be deemed to be the profits and gains of business or profession under the said section. Amongst the various clauses, cl. (j) which is relevant, read as under: (j) where the payment was required to be made on a day on which the banks were closed either on account of holiday or strike; 18. It could be appreciated that s. 40A and in particular sub-cl. (3) thereof aims at curbing the possibility of on-money transactions by insisting that all payments where expenditure in excess of a certain sum (in the present case twenty thousand rupees) must be made by way of account payee cheque drawn on a bank or account payee bank draft. 19. As held by the Apex Court in case of Attar Singh Gurmukh Singh (supra). "..In our opinion, there is little merit in this contention. Sec. 40A(3) must not be read in isolation or to the exclusion of r. 6DD. The section must be read along with the rule. If read 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 trading activities. Sec. 40A(3) only empowers the A.O. to disallow the deduction claimed as expenditure in respect of which payment is not made by crossed cheque or crossed bank draft. The payment by crossed cheque or crossed bank draft is insisted on to enable the assessing authority to ascertain whether the payment was genuine or whether it was out of the income from undisclosed sources, The terms of s. 40A(3) are not absolute. Considerations of business expediency and other relevant factors are not excluded. Genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the A.O. the circumstances under which the payment in the manner prescribed in s. 40A(3) was not practicable or would have caused genuine difficulty to the payee. It is also open to the assessee to identify the 13 person who has received the cash payment. Rule 6DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft in the circumstances specified under the rule. It will be clear from the provisions of s. 40A(3) and r. 6DD that they are intended to regulate business transactions and to prevent the use of unaccounted money or reduce the chances to use black money for business transactions:” 20. It was because of these considerations that this Court in case of Hynoup Foods (P.) Ltd. (supra) observed that the genuineness of the payment and the identify of the payee are the first and foremost requirements to invoke the exceptions carved out in r. 6DD(j) of the IT Rules,1962. 21. In the present case, neither the genuineness of the payment nor the identity of the payee were in any case doubted. These were the conclusions on facts drawn by the CIT(A). The Tribunal also did not disturb such facts but relied solely on r. 6dd(j) of the rules to hold that since the case of the assessee did not fall under the said exclusion clause nor was covered under any of the clauses of r. 6DD, consequences envisaged in s. 40A(3) of the Act must follow. 22. In our opinion, the Tribunal committed an error in coming to such a conclusion. We would base our conclusions on the following reasons: (a) The paramount consideration of section 40A(3) is to curb and reduce the possibilities of black money transactions. As held by the Supreme Court in Attar Singh Gurmukh Singh (supra), section 40A(3) of the Act does not eliminate considerations of business expediencies. (b) In the present case, the appellant assessee was compelled to make cash payments on account of peculiar situation. Such situation was as follow- (i) the principal company, to which the assessee was a distributor, insisted that cheque payment from a co-operative bank would not do, since the realization takes a longer time; the assessee was, therefore, required to make cash payments only; (iii) Tata Tele Services Ltd. assured the assessee that such amount shall be deposited in their bank account on behalf of the assessee; (iv) It is not disputed that the Tata Tele Services Ltd. did not act on such promise; (v) if the assessee had not made cash payment and relied on cheque payments alone, it would have received the recharge vouchers delayed by 4/5 days and thereby severely affecting its business operations. We would find that the payments between the assessee and the Tata Tele Services Ltd. were genuine. The Tata Tele Services Ltd. had insisted that such payments be made in cash, which Tata Tele Services Ltd. in turn assured and deposited the amount in a bank account. In the facts of the present case, rigors of s. 40A(3) of the Act must be lifted. 23. We notice that the Division Bench of the Rajasthan High Court in case of Smt. Harshila Chordia vs. ITO (2007) 208 CTR (Raj) had observed that the exceptions contained in r. 6DD are not exhaustive and that the said rule must be interpreted liberally.” 14 34. In case of M/s Ajmer Food Products Pvt. Ltd., Ajmer vs. JCIT (supra), a similar issue has come up before the Co-ordinate Bench and speaking through one of us, it was held as under: “4.5 The genuineness of the transaction as well as the identity of the payee are not disputed. Further, the appellant has explained the business expediency of making the cash payments to both the parties which has not been controverted by the Revenue. Following the decision of Gujarat High Court in case of Anupam Tele Services (supra) and Rajasthan High Court in case of Harshila Chordia (supra), the addition of Rs. 45,738/- under section 40A(3) is deleted.” 38. We further note that in case of M/s ACE India Abodes limited (DB Appeal No. 45/2012 dated 11.09.2017), a similar issue has come up before the Hon’ble Rajasthan High Court regarding payment for purchase of land from various agriculturist for which the assessee has paid consideration in cash and shown the land as its stock-in-trade. The Hon’ble Rajasthan High Court referring to the intent behind introduction of section 40A(3) and catena of decisions right from Attar Singh Gurmukh Singh, Smt. Harshila Chordia, Gurdas Garg, Anupam Tele Services referred supra has decided the issue in favour of the assessee and against the department. 39. The issue which is being disputed before us has to be considered and decided in light of facts on record and the legal position which emerges from the above referred decisions. The facts of the case are that during the year under consideration, the assessee firm has purchased 26 pieces of plot of land in the month of April and May, 2012 from various persons for a total consideration of Rs. 2,46,28,425/-, out of which payment amounting to Rs. 1,71,67,000/- were made in cash to various persons, payment amounting to Rs. 59,48,920/- were made in cheque to various persons, and Rs. 8,15,700/- and Rs. 6,84,296/- were paid in cash towards stamp duty and court fee respectively. During the course of assessment proceedings, the assessee submitted copies of the sale deed, the particulars of which find mention on page 7 and 8 of the assessment order. On perusal of the said details, it is observed that the said details contains the name of the seller, date of sale deed, plot no., purchase value, stamp duty, Court fee and mode of payment – cash/cheque. Therefore, as far as the identity of the persons from whom the purchases have been made and genuineness of the transactions of purchase of various plots of land and payment in cash is concerned, the same is evidenced by the registered sale deeds and there is no dispute which has been raised by the Revenue either during the assessment proceedings or before us. The identity of the sellers and genuineness of the transactions is therefore fully established in the instant case. 40. From perusal of the assessment order, it is further noted that the AO, on perusal of the details of the properties purchased, as per copies of the sale deed furnished, held that the assessee had made cash payments regularly and no specific circumstances have been brought to his knowledge that the cash payments were made due to some unavoidable circumstances. It was held by the AO that maximum cash payments were made to persons residing in Jaipur city and in single family, repeated cash payments were made which itself shows that there were no unavoidable circumstances to make cash payments to the sellers. What is therefore relevant to note that the AO has appreciated the necessity of determining the unavoidable circumstances which could have led the assessee to make cash payments. During the course of assessment proceedings, it was submitted by the assessee that the payment for purchase of land has been made in cash because the sellers were new to the assessee and refused to accept the cash. It was submitted that the delay in making the cash payment, it could have lost the land deals. In this regard, the ld AR submitted before us that the assessee had purchased the lands both through cash and cheques. Based on the requirement of 15 the seller, assessee had selected the mode of payment. For the sellers, who had insisted the payments in cash, assessee had withdrawn the cash from bank on the same date of registry and made the payments to seller accordingly. The withdrawals from bank and payments to seller have been tabulated below as per dates below:- Date Bank Grand Total Cumulative balance Utilization Net Balance ICICI Bank Yes Bank Date Amount 18,00,000 5-Apr-12 14,50,000 3,50,00 18,00,000 18,00,000 5,07,00 9-Apr-12 - 9,00,000 9,00,000 27,00,000 9-Apr-12 21,93,000 3,34,000 11-Apr-12 - 2,00,000 2,00,000 29,00,000 11-Apr-12 3,73,000 3,34,000 12-Apr-12 - - - 29,00,000 - - 3,34,000 13-Apr-12 - - - 29,00,000 - - 11,97,100 19-Apr-12 - 30,00,000 30,00,000 59,00,000 23-Apr-12 21,36,900 11,57,000 24-Apr-12 30,00,000 25,00,000 55,00,000 1,14,00,000 24-Apr-12 55,40,100 11,57,000 25-Apr-12 - - - 1,14,00,000 - - 11,57,000 30-Apr-12 - - - 1,14,00,000 - - 11,57,000 4-May-12 - - - 1,14,00,000 - - 11,57,000 7-May-12 - - - 1,14,00,000 - - 11,57,000 8-May-12 19,00,000 23,00,000 42,00,000 1,56,00,000 8-May-12 38,55,000 15,02,000 12-May-12 - - - 1,56,00,000 - - 15,02,000 14-May-12 - - - 1,56,00,000 - - 15,02,000 15-May-12 - - - 1,56,00,000 - - 15,02,000 16-May-12 - 15,00,000 15,00,000 1,71,00,000 - - 30,02,000 17-May-12 - 15,00,000 15,00,000 1,86,00,000 17-May-12 30,69,000 14,33,000 Total 63,50,000 1,42,50,000 1,86,00,000 1,71,67,000 41. It was submitted by the ld AR that in order to secure the deal, assessee had no other option but to make the payment in cash. Cash payments were made from the disclosed sources being the amount withdrawn from bank. It was for sheer insistence of the seller that the payments were made in cash. Had the assessee denied the cash payment looking to the provisions of sections 40A(3), the deal could not have been finalized. In such circumstances, in the business interest and to complete the deal, the assessee had chosen to make the payments in cash fortified through registered sale deed. The payment has been made out of the explained sources, through the registered document and as a disclosed transaction. 42. We find force in the contentions so raised by the ld AR. The transactions have been executed by the assessee within a span of one and half month and there are transactions where the payment has been made through cheque and there are transactions where the payment has been made through cash. The said contentions are supported by the fact that on the same day, there are cash and cheque payments as evidenced from the details of the transactions appearing at page 7 and 8 of the assessment order. It is therefore clear that the assessee was having sufficient bank balance and only at the insistence of the specific sellers, the assessee has withdrawn cash and made payment to them and wherever, the seller has insisted on cheque payments, the payment has been made by cheque. This makes out a case that the assessee has business expediency under which it has to make payment in cash and in absence of which, the transactions could not be completed. The second proviso to section 40A(3) refers to “the nature and extent of banking facility, consideration of business expediency and other relevant factors” which means that the object of the legislature is not to make disallowance of cash payments which have to be compulsory made by the assessee on account of business expediency. Further, the source of cash payments is clearly identifiable in form of the withdrawals from the assessee’s bank accounts and the said details were submitted before the lower authorities and have not 16 been disputed by them. It is not the case of the Revenue either that unaccounted or undisclosed income of the assessee has been utilised in making the cash payments. 43. In the entirety of facts and circumstances of the case and respectfully following the legal proposition laid down by the various Courts and Coordinate Benches referred supra, we are of the view that the identity of the persons from whom the various plots of land have been purchased and source of cash payments as withdrawals from the assessee’s bank account has been established. The genuineness of the transaction has been established as evidenced by the registered sale deeds and lastly, the test of business expediency has been met in the instant case. Further, as held by the Hon’ble Rajasthan High Court in case of Harshila Chordia (supra), the consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration. The intent and the purpose for which section 40A(3) has been brought on the statute books has been clearly satisfied in the instant case. Therefore, being a case of genuine business transaction, no disallowance is called for by invoking the provisions of section 40A(3) of the Act.” 14. Similarly, we find that the Coordinate Chandigarh Benches in case of ITO vs Kailash Sharma (supra) has held as under: “8. A perusal of the above provisions of Section 40A(3) of the Act read with Rule 60D of the IT Rules would show that as per the provisions of Section 40A(3), any payment more than the prescribed limit made to a party other than by an Account Payee Cheque/ banking channel would not be allowed as a deduction of expenditure. However, proviso to the said Section 40A(3) of the Act provides mat in such cases and under such circumstances, as may be prescribed having regard to the nature and extent of banking facilities available, considerations of business expediencies and other relevant factors, the disallowance under the provisions of Section 40A(3) will not be made. A holistic view of the provisions of Section 40A(3) would give a view that effort has been made to discourage the business payments through cash transactions except under such cases and such circumstances where either due to some difficulty or other consideration of business expediency and other relevant factors, transaction had to be done through cash payments. Such cases and circumstances had been prescribed under Rule 6DD of the IT Rules as reproduced above. A perusal of Rule 6DD shows that a list of certain cases has been given therein wherein the transactions through cash payments has been justified considering the difficulties due to non-availability of banking facilities and also considering certain nature of business where generally the transaction has to be carried out through cash payments only, e.g. transaction done with low income group who either do not have bank account or otherwise need immediate cash to make their both ends meet. Besides that the payments made to Reserve Bank of India or a banking company, the co-operative bank, any primary Agricultural Credit Society, Life Insurance of India and any payment made to Government, if so required to be made in legal tender have also been included in the list besides other parties/cases as mentioned above. 8.1 The perusal of provision of Section 40A(3) of the Income Tax Act read with Rule 6DD of the IT Rules reveal that the purpose of enactment of the above provisions is to make it difficult for the concerned recipient to evade taxation of their income. If the payment would be made to them through banking channel as provided under the provisions of Section 40A(3) of the Act, it would be difficult for them to leave it unaccounted or in other terms that such payments will be subject to scrutiny and verification as the data of 17 deposits of such payments in the bank accounts of such recipients would be available to the Assessing Officer. However, the payment made to Government, banks, Life Insurance companies etc. has been put in exclusion clause because there is no likelihood of keeping such receipts unaccounted. However, considering the business expediency, difficulties faced and other relevant factors, payment in certain cases and circumstances for the payments made in cash and under those cases and circumstances, no disallowance is attracted u/s 40A(3) of the Act. The list provided under Rule 6DD, in our view, is not exhaustive, rather it gives a picture as to under what cases and circumstances, such payments would be out of necessity, business expediency or such other factors necessitating such payments to be made in cash. There may be a numerous factors and circumstances under which due to some difficulty or business expediency, an assessee has to make the transaction/ payment in cash, however, in our view, all such cases, circumstances, examples of business expediency, difficulties and other all such factors, in our view, cannot be summed up in a list. Such type of factors and circumstances may differ from case to case and all the cases cannot be looked into by straight away finding their mention under the list provided under Rule 6DD. The list provided under Rule 6DD, in our view gives an example of exceptional circumstances which may be considered as exception to the applicability to the provisions of Section 40A(3) of the Act and therefore, the list is a guiding tool but is not exhaustive. The proviso to Section 40A(3) of the Income Tax Act has taken care of the conditions under which the payment made by other than banking channel have been kept outside the purview of Section 40A(3) so that the normal business activity should not be affected. Hon'ble Supreme Court in the case of Attar Singh Gurmukh Singh V ITO (supra) has held as under : "Section 40-A(3) must not be read in isolation or to the exclusion of Rule 6-DD. The section must be read along with the rule. If read 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 trading activities. Section 40- A (3) only empowers the assessing officer to disallow the deduction claimed as expenditure in respect of which payment is not made by crossed cheque or crossed bank draft. The payment by crossed cheque or crossed bank draft is insisted on to enable the assessing authority to ascertain whether the payment was genuine or whether it was out of the income from disclosed sources. The terms of Section 40-A(3) are not absolute. Consideration of business expediency and other relevant factors are not excluded. The genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the assessing officer the circumstances under which the payment in the manner prescribed in Section 40-A(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 payment. Rule 6-DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft in the circumstances specified under the rule. It will be clear from the provisions of Section 40-A(3) and Rule 6-DD that they are intended to regulate the business transactions and to prevent the use of unaccounted money or reduce the chances to use black money for business transactions. " 9. In our humble view, the above observations of the Hon'ble Supreme Court I hold good despite the fact that the list under Rule 6DD has been amended in the year 2008. 10. As observed by us that the said list cannot be exhaustive to list all the cases in various facts and circumstances of practicability, necessity and business expediency. As observed by the Id. CIT(A), the assessee in this case has explained about the practical 18 difficulty and business expediency for making certain payments in cash stating that the milk being a perishable item and the fast moving consumer good, it had to be picked up early from the supply point in the early morning hours. The assessee was bound to make payments on daily basis since no credit sales were allowed by the sole supply agency M/s Verka Milk Agency of the M/s Hoshiarpur Distt. Co-operative Milk Producer Union Ltd. The product was released only upon making full payment for the purchase. The AO has not disbelieved the business expediency, practical difficulty in making payment in cash to the said Milk Agency. A certificate has also been produced from the General Manager, Verka, Hoshiarpur that the assessee was a cash carry dealer for supplying Verka Milk and fresh milk products in Palampur and adjoining areas. The assessee has also explained that the milk was to be lifted daily and the payments were to be collected in the evening which were to be made to the Verka Agency in the morning itself and further the Verka Milk Agency did not provide milk on credit basis and further the payment was made to the Union of Producers of milk. Considering the above practical aspects, factors and circumstances and business expediency, in our view, the Id. GIT(A) was justified in deleting the disallowance made by the AO. We do not find any merit in the appeal of the Revenue and the same is, accordingly, dismissed.” 15. There is thus no dispute on the legal proposition as so laid down by the Hon’ble Supreme Court regarding consideration of business expediency and other relevant factors before invoking the rigors of section 40A(3) which continues to hold the field and has not been diluted in any way by any subsequent legislative amendment. Given that there has been no change in the provisions of section 40A(3) in so far as consideration of business expediency and other relevant factors are concerned, the same continues to be relevant factors which needs to be considered and taken into account while determining the exceptions to the disallowance as contemplated under section 40A(3) of the Act so long as the intention of the legislature is not violated. Further, the Courts have held from time to time that the Rules have to be interpreted in a manner so as to advance and not to frustrate the object of the legislature. The intention of the legislature is manifestly clear and which is to curb the chances and opportunities to use or create black money and to ascertain whether the payment was genuine or whether it was out of the income from disclosed sources. And Section 40A(3) continues to provide that no disallowance shall be made in such cases and under such circumstances as may be prescribed having regard to the nature and extent of the banking facilities available, consideration of business expediency and other relevant factors. We therefore concur with the views expressed by the ld CIT(A) where he says that the established jurisprudence appears to exclude from the mischief of section 40A(3) those transactions which are duly confirmed and vouched by an audit trail where the sellers identity is thoroughly confirmed and the transaction verifiable and only when these are predicated on clear business expediency, the existence of severe and 19 urgent business expediency and the non availability of banking channels or other exception as so provided in Rule 6DD are met. 16. In light of aforesaid legal position, the issue which is being disputed before us has to be examined to see whether the explanation so furnished by the assessee satisfy the test so laid down to escape the rigour of section 40A(3) and whether the explanation so furnished is supported by any demonstrative verifiable evidence which provides credence to such an explanation and which has been examined by the ld CIT(A) while allowing relief to the assessee. 17. In the instant case, we find that the AO has referred to as many as 899 individual transactions which have been entered into by the assessee during the financial year where the payments have been made exceeding Rs 35,000/- per person per day and the details of such transactions in terms of date of transaction, the truck number and the amount paid has been specified in the body of the assessment order. Therefore, we find that the AO was clear and legally correct to identify each of such transactions exceeding the prescribed threshold attracting the rigour of section 40A(3). In response to the show-cause, no explanation has been submitted or circumstances narrated before the AO which prove that cash payments were made due to exceptional and unavoidable circumstances. It is only during the appellate proceedings before the ld CIT(A) that the assessee came forward with the explanation that major supplies are loaded at night and assessee has to pay freight immediately to ensure smooth supplies and loading sites is far away and truckers are from the villages which are mostly not served by banks or do not maintain any bank accounts. Further, it was submitted that most of the truckers are semi-literate and they are not in a position to collect money in cheque and get encashed from the bank. It was further submitted before the ld CIT(A) that the complete records have been maintained by the assessee and the identity, genuineness of the transactions are not in dispute and given the business expediency for making cash payment, the disallowance so made should be deleted. 18. The ld CIT(A), thereafter, records his findings that “in the instant case there is nothing on record to doubt the genuineness of the expenses as the transaction has an unimpeachable audit trail through TDS deducted by the Party with whom the appellant enters in contract with regard to freight as also the details of the truck owners to whom 20 payments have been made. Further the payment in cash more than Rs. 35,000/- per day under section 40A(3) comprise 10.31% of the total freight payments of Rs 35,05,78,051/- and these payments could be governed by the business expediency cited by the appellant given that trucks leave at night and travel through areas without banking facilities and accordingly the addition of Rs. 3,81,18,083/- so made by the AO was directed to be deleted.” 19. In our view, the percentage of cash payments vis-à-vis overall payments made during the year may demonstrate the mix and mode of payments but at the same time, the question is not of materiality of cash payments rather the question is of necessity of making the cash payment and the circumstances which lead to such payment in cash instead of through normal banking channels. Further, how the ld CIT(A) has arrived at such a sweeping finding in respect of each of 899 transactions that the transaction has an impeachable audit trail, details of individual owners are available and business expediency has been explained and examined in respect of each of such transactions is not clear. Whether any additional information/documentation called for/examined or submitted by the assessee by way of additional evidence during the appellate proceedings is not emerging from the impugned order especially where nothing has been submitted during the course of assessment proceedings. Further, nothing has been brought on record by the ld AR during the course of hearing as to how the ld CIT(A) has arrived at such a finding. In our view, each of the transactions have to be examined and tested in terms of identity of the truck owner, being the member of the assessee’s trade Union, the specifics and particulars of transaction undertaken and business expediency or other circumstances as so narrated by the assessee for making the cash payment duly supported by suitable documentation and a generic and sweeping explanation across all transactions and acceptance thereof doesn’t help the assessee from the rigours of section 40A(3). Where the legislative mandate is to examine each of the transactions exceeding the prescribed threshold as so done by the AO and as also seen in the aforesaid decisions decided by the Hon’ble Courts and Tribunal, the ld CIT(A) while exercising his quasi- judicial function has to examine each of such transactions and it is equally incumbent on the assessee and it cannot get away by making a generic explanation which can fit all situations and circumstances. Therefore, in the interest of substantial justice to 21 provide one more opportunity to the assessee, we set-aside the matter to the file of the AO to examine the matter afresh in light of aforesaid discussions and as per law after providing reasonable opportunity to the assessee. Needless to say, where the assessee chooses not to participate or furnish necessary information/documentation as so called for, the Assessing officer will be at liberty to decide the matter as per law. 20. In the result, the appeal of the Revenue is allowed for statistical purposes. Order pronounced on 14/10/2022 . Sd/- Sd/- (DIVA SINGH) (VIKRAM SINGH YADAV) याय क सद य/Judicial Member लेखा सद य/Accountant Member Dated: 14/10/2022 AG आदेश क % त&ल'प अ*े'षत/ Copy of the order forwarded to : 1. अपीलाथ+/ The Appellant 2. %,यथ+/ The Respondent 3. आयकर आय ु -त/ CIT 4. आयकर आय ु -त (अपील)/ The CIT(A) 5. 'वभागीय % त न0ध, आयकर अपील य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar