Sri Wilfred Xavier Rebello , Hassan V. Income Tax Officer Ward-2 , Hassan

ITA 951/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5924 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 28-03-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DK JHA
• Keywords: Income from undisclosed sources; TDS
• Section: 40A(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE S HRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER I.T . A. NO. 951 /BANG/20 18 (ASSESSMENT YEAR : 20 10 - 11 ) SRI WILFRED XAVIER REBELLO, PROP. M/S. REBELLO INDUSTR IES, PUMP HOUSE ROAD, BELUR - 573 115 HASSAN DISTRICT. . APPELLANT. VS. INCOME TAX OFFICER, WARD 2, HASSAN. .. RESPONDENT. APPELLANT BY : SHRI NARENDRA SHARMA, ADVOCATE. R E SPONDENT BY : SHRI D.K. JHA, ADDL. CIT (D.R) DATE OF H EARING : 23.05.2018. DATE OF P RONOUNCEMENT : 27 .0 6 .201 8 . O R D E R PER SHRI A. K. GARODIA, A .M . : THIS APPEAL IS FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), MYSORE DT.19.01.2018 FOR THE ASSESSMENT YEAR 2010 - 11. 2 IT A NO. 951 /BAN G/20 18 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : 3 IT A NO. 951 /BAN G/20 18 4 IT A NO. 951 /BAN G/20 18 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE THAT ON PAGE NOS.54 TO 56 OF THE PAPER BOOK IS THE COPY OF FORM NO.16A ISSUED BY THE ASSESSEE TO SRI . N. KHANAVAZ FOR THE PERIOD FROM 1.4.2009 TO 31.6.2010 AND AS PER THE SAME, THE ASSESSEE HAS MADE TOTAL PAYMENT OF RS.20.07 LAKHS OUT OF WHICH THE ASSESSEE HAS DEDUCTED RS.27,990 AS TDS AND THEREAFTER , THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT VIDE PAPER BOOK PAGES 57 TO 60, A COPY OF ACKNOWLEDGEMENT FOR HAVING FILED RETU RN OF INCOME BY SHRI NAWAZ KHAN ALONG WITH COMPUTATION OF TOTAL INCOME IS AVAILABLE . HE SUBMITTED THAT THE RETURN OF INCOME WAS FILED BY SHRI NAWAZ KHAN ON 23.8.2011 AND COMPUTATION OF INCOME IS AVAI LABLE ON PAGE 58 OF PAPER BOOK AND FROM THE SAME, IT CAN BE SEEN THAT HE HAS DECLARED AN INCOME OF RS.2,56,840 @ 10 % OF GROSS RECEIPTS FROM LABOUR CONTRACTS OF RS.25,68,400. HE SUBMITTED THAT THE AMOUNT BY THE PRESENT ASSESSEE TO HIM OF RS.20.07 LAKHS STANDS INCLUDED IN THE SAID GROSS RECEIPT OF RS.25,68 ,400 ON WHICH SHRI NAWAZ KHAN HAS DECLARED INCOME @ 10% AND THEREFORE , THE IMPUGNED AMOUNT OF RS.20.07 LAKHS PAID BY THE ASSESSEE TO SHRI NAWAZ KHAN HAS BEEN CONSIDERED BY HIM TO DECLARE HIS INCOME AND ON SUCH INCOME, TAX IS PAID BY THE PAYEE. THE LEAR NED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT AS PER THE SAME COMPUTATION , HE HAS CLAIMED TDS CREDIT OF RS.27,990 WHICH IS THE AMOUNT OF TDS DEDUCTED BY THE ASSESSEE AS PER , THE TDS CERTIFICATE IN FORM 16A PLACED AT PAGES 54 TO 56 OF PAPER BOOK. HE SUBMITTED THAT IN VIEW OF THIS, IT SHOULD BE ACCEPTED THAT THIS AMOUNT OF RS.20.07 LAKHS PAID BY THE ASSESSEE TO SHRI NAWAZ KHAN IS INCLUDED IN THE GROSS RECEIPTS OF RS.25,68,400 ON WHICH INCOME IS DECLARED BY SHRI NAWAZ KHAN . HE PLACED RELIANCE ON THE 5 IT A NO. 951 /BAN G/20 18 TRIBUNAL ORDER RENDERED IN THE CASE OF PRABIR KUMAR MULLICK VS. ITO IN ITA NO.1603/ KOL /2011 DT.1. 6.2016 AND SUBMITTED COPY OF THIS TRIBUNAL ORDER AND DRAWN OUR ATTENTION TO PARA NO.11 OF THE SAID TRIBUNAL ORDER AND POINTED OUT THAT SINCE THE GENUINENESS OF THE TRANSACTION BEING FREE FROM EVASION OF TAX IS NOT DISPUTED , NO DISALLOWANCE CAN BE MADE UNDER SECTION 40A(3) OF THE IT ACT. HE HAS ALSO PLACED RELIANCE ON ANOTHER TRIBUNAL ORDER RENDERED IN THE CASE OF MR. N IRMAL KUMAR DAS VS. ACIT IN ITA NO. 39 1/KOL/2014 DT.11.12.2015 AND DRAWN OUR ATTENTION TO 3 RD PARA ON PAGE NO.7 OF TH IS TRIBUNAL ORDER. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF AUTHORITIES BELOW AND PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF SRI SUDH I R J V VS. ITO IN ITA NO.32/BANG/ 2013 DT.5.7.2013 AND SUBMITTED A COPY OF TH IS TRIBUNAL ORDER AND DRAWN OUR ATTENTION TO THE PARA 7.4 OF THIS TRIBUNAL ORDER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE PARA NO. 11 OF THE TRIBUNAL ORDER RENDERED IN THE CASE OF PRAVEEN KUMAR MULLICK VS . ITO (SUPRA) ON WHICH RELIA NCE WAS PLACED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE. THE SAME IS AS UNDER: - 11. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATE RIALS AVAILABLE ON RECORD. AFTER EXAMINING ON THE FACTS OF THE CASE AND HEARING THE RIVAL CONTENTIONS OF BOTH THE PARTIES WE FIND THAT THE AO HAS DISALLOWED THE PURCHASES WHERE THE PAYMENT WAS EXCEEDING MORE THAN RS. 20,000/ - IN ACCORDANCE WITH THE PROVISI ON OF SECTION 40A(3) . IN OUR VIEW THIS ISSUE NEEDS TO BE ADJUDICATED FROM DIFFERENT DIMENSIONS AS ENUMERATED BELOW : 1) WHAT WERE THE PROVISIONS OF SEC TION 40A(3) THEN APPLICABLE FOR THE ASSESSMENT YEAR 2008 - 09. 2) THE PURPOSE OF INTRODUCTION OF THE SECTION 40A(3) IN THE INCOME TAX ACT . 3) CASE LAWS OF VARIOUS COURTS. 6 IT A NO. 951 /BAN G/20 18 THE PROVISIONS OF THE SECTION 40A(3) OF THE ACT THEN APPLICABLE FOR THE ASSESSMENT YEAR 2008 - 09 READS AS UNDER : 40A . ( 1)... (3)(A) WHERE THE ASSESSEE INCURS ANY EXPENDITURE IN RESPE CT OF WHICH PAYMENT IS MADE IN A SUM EXCEEDING TWENTY THOUSAND RUPEES 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; (3)(B)WHERE AN ALLOWANCE HAS BEEN MAD E 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 A NY 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 GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME - TAX AS INCOME OF THE SUBSEQUENT YEAR IF THE AMOUNT OF PAY MENT 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 THIS SUB - SECTION WHERE ANY PAYMENT IN A SUM EXCEEDING TWENTY THOUSAND RUPEES IS MADE OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE DRAWN ON A BANK OR ACCOUNT PAYEE BANK DRAFT, 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 EXPE DIENCY AND OTHER RELEVANT FACTORS.' AFTER READING THE PROVISIONS OF SECTION 40A ( 3) WE FIND THAT CERTAIN EXCEPTIONS HAVE BEEN PROVIDED WHICH WERE THEN APPLICABLE FOR THE ASSESSMENT YEAR 2008 - 09 AND ONE OF THEM IS WITH REGARD TO THE BUSINESS EXPEDIENCY OF THE ASSESSEE. FROM THE SUBMISSION OF THE ASSESSEE WE FIND THAT THE ASSESSEE WAS THE ONLY AUTHORIZED DEALER IN ASANSOL FOR THE SUPPLY OF COUNTRY LIQUOR AND AUTHORIZED EXCISE VENDORS. THE ASSESSEE CAN TAKE THE DELIVERY OF THE GOODS ONLY AFTER DEPOSITING THE PAYMENT WITH THE COMPANY. THE ASSESSEE WAS TO KEEP SUFFICIENT STOCK OF COUNTRY LIQUOR AS PRESCRIBED BY THE EXCISE DEPARTMENT AND IN CASE STOCK FALLS SHORT OF THE PRESCRIBED LIMIT OTHERWISE THE DEPARTMENT USED TO IMPOSE PENALTY. THEREFORE THE ASSESSEE AVOIDED THE PROCESS OF DEPOSITING THE ITA NO.1603.KOL/2011 A.Y. 2008 - 09 PRABIR KR. MULLICK V. ITO WD - 3(1), ASL. PAGE 12 CASH IN HIS BANK ACCOUNT AND THEREAFTER GETTING THE DEMAND DRAFT IN THE NAME OF THE COMP ANY IN ORDER TO KEEP THE STOCK 7 IT A NO. 951 /BAN G/20 18 WITHIN THE PRESCRIBED LIMIT AT ALL THE TIMES. IT IS ALSO IMPORTANT TO NOTE THAT THE COMPANY WAS ALSO NOT ACCEPTING THE ACCOUNT PAYEE CHEQUE OF THE ASSESSEE AS IT WILL TAKE COUPLE OF DAY TIME IN CLEARANCE. SO IN OUR CONSIDERED VIEW THE EXCEPTION PROVIDED IN THE PROVISIONS OF SECTION 40A ( 3) WITH REGARD TO THE BUSINESS EXPEDIENCY THEN APPLICABLE FOR THE ASSESSMENT YEAR 2008 - 09 IS MET BY THE ASSESSEE. 11.1 THE PROVISION OF SECTION 40A ( 3) WAS INSERTED BY THE FINANCE ACT 1968. THE PURPOSE FOR BRINGING THE SECTION WAS MENTIONED IN THE EXPLANATORY NOTE PARA 73 WHICH READ AS UND ER: IT WILL BE PERTINENT TO GO INTO THE INTENTION BEHIND INTRODUCTION OF PROVISIONS OF SECTION 40A ( 3) OF THE ACT AT THIS JUNCTURE. WE FIND THAT THE SAID PROVISION WAS INSERTED BY FINANCE ACT 1968 WITH THE OBJECT OF CURBING EXPENDITURE IN CASH AND TO COUNTER TAX EVASION. THE CBDT CIRCULAR NO. 6P DATED 06.07.1968 REITERATES THIS VIEW THAT 'THIS PROVISION IS DESIGNED TO COUNTER EVASION OF A TAX THROUGH C LAIMS FOR EXPENDITURE SHOWN TO HAVE BEEN INCURRED IN CASH WITH A VIEW TO FRUSTRATING PROPER INVESTIGATION BY THE DEPARTMENT AS TO THE IDENTITY OF THE PAYEE AND REASONABLENESS OF THE PAYMENT.' 11.2 IN THIS REGARD, IT IS PERTINENT TO GET INTO THE FOLLOWING D ECISIONS ON THE IMPUGNED SUBJECT: - ATTAR SINGH GURMUKH SINGH VS ITO REPORTED IN (1991) 191 ITR 667 (SC) ' SECTION 40A ( 3) OF THE INCOME - TAX ACT, 1961 , WHICH PROVIDES THAT EXPENDITURE IN EXCESS OF RS.2,500 (RS.10,000 AFTER THE 1987 AMENDMENT) WOULD BE ALLOWED TO BE DEDUCTED ONLY IF MADE BY A CROSSED CHEQUE OR CROSSED BANK DRAFT (EXCEPT IN SPECIFIED CASES) IS NOT ARBITRARY AND DOES NOT AMOUNT TO A RESTRI CTION ON THE FUNDAMENTAL RIGHT TO CARRY ON BUSINESS. IF READ TOGETHER WITH RULE 6DD OF THE INCOME - TAX RULES, 1962, IT WILL BE CLEAR THAT THE PROVISIONS ARE NOT INTENDED TO RESTRICT BUSINESS ACTIVITIES. THERE IS NO RESTRICTION ON THE ASSESSEE IN HIS TRADING ACTIVITIES. SECTION 40A(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 PAYME NT BY CROSSED CHEQUE OR CROSSED BANK DRAFT IS INSISTED UPON TO ENABLE THE ASSESSING AUTHORITY TO ASCERTAIN WHETHER THE PAYMENT WAS GENUINE OR WHETHER IT WAS OUT OF INCOME FROM UNDISCLOSED SOURCES. THE TERMS OF SECTION 40A(3) ARE NOT ABSOLUTE. CONSIDERATION 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 SATISFA CTION OF THE ASSESSING OFFICER THE CIRCUMSTANCES UNDER WHICH THE PAYMENT IN THE MANNER PRESCRIBED 8 IT A NO. 951 /BAN G/20 18 IN SECTION 40A(3) WAS NOT PRACTICABLE OR WOULD HAVE CAUSED GENUINE DIFFICULTY TO THE PAYEE. IT IS ALSO OP EN 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 BUSINESS TRANSACTIONS AND TO PREVENT THE USE OF UNACCOUNTED MONEY OR REDUCE THE CHANCES TO USE BLACK MONEY FOR BUSINESS TRANSACTIONS.' CIT VS CPL TANNERY REPORTED IN (2009) 318 ITR 179 (CAL) 'THE SECOND CONTENTION OF THE ASSESSEE THAT OWING TO BUSINESS EXPEDIENCY, OBLIGATION AND EXIGENCY, THE ASSESSEE HAD T O MAKE CASH PAYMENT FOR PURCHASE OF GOODS SO ESSENTIAL FOR CARRYING ON OF HIS BUSINESS, WAS ALSO NOT DISPUTED BY THE AO. THE GENUINITY OF TRANSACTIONS, RATE OF GROSS PROFIT OR THE FACT THAT THE BONA FIDE OF THE ASSESSEE THAT PAYMENTS ARE MADE TO PRODUCERS OF HIDES AND SKIN ARE ALSO NEITHER DOUBTED NOR DISPUTED BY THE AO. ON THE BASIS OF THESE FACTS IT IS NOT JUSTIFIED ON THE PART OF THE AO TO DISALLOW 20% OF THE PAYMENTS MADE U/S 40A(3) IN THE PROCESS OF ASSESSMENT. WE, THEREFORE, DELETE THE ADDITION OF RS. 17,90,571/ - AND GROUND NO.1 IS DECIDED IN FAVOUR OF THE ASSESSEE. ' CIT VS CRESCENT EXPORT SYNDICATE IN ITA NO. 202 OF 2008 DATED 30.7.2008 - JURISDICTIONAL HIGH COURT DECISION 'IT ALSO APPEARS THAT THE PURCHASES HAVE BEEN HELD TO BE GENUINE BY THE LEARNED CIT(APPEAL) BUT THE LEARNED CIT(APPEAL) HAS INVOKED SECTION 40A(3) FOR PAYMENT EXCEEDING RS.20,000/ - SINCE IT IS NOT MADE BY CROSSED CHEQUE OR BA NK DRAFT BUT BY HEARER CHEQUES AND HAS COMPUTED THE PAYMENTS FALLING UNDER PROVISIONS TO SECTION 40A(3) FOR RS.78,45,580/ - AND DISALLOWED @ 20% THEREON RS.15,69,116/ - . IT IS ALSO MADE CLEAR THAT WITHOUT THE PAYMENT BEING MADE BY BEARER CHEQUE THESE GOODS COULD NOT HAVE BEEN PROCURED AND IT WOULD HAVE HAMPERED THE SUPPLY OF GOODS WITHIN THE STIPULATED TIME. THEREFORE, THE GENUINENESS OF THE PURCHASE HAS BEEN ACCEPTED BY THE LD. CIT(APPEAL) WHICH HAS ALSO N OT BEEN DISPUTED BY THE DEPARTMENT AS IT APPEARS FROM THE ORDER SO PASSED BY THE LEARNED TRIBUNAL. IT FURTHER APPEARS FROM THE ASSESSMENT ORDER THAT NEITHER THE ASSESSING OFFICER NOR THE CIT(APPEAL) HAS DISBELIEVED THE GENUINENESS OF THE TRANSACTION. THERE WAS NO DISPUTE THAT THE PURCHASES WERE GENUINE.' ANUPAM TELE SERVICES VS ITO IN (2014) 43 TAXMANN.COM 199 (GUJ) ' SECTION 40A(3) OF THE INCOME - TAX ACT, 1961, READ WITH RULE 6DD OF THE INCOME - TAX RULES, 1962 - BUSINESS DISALLOWANCE - CASH PAYMENT ITA NO.1603.KOL/2011 A.Y. 2008 - 9 IT A NO. 951 /BAN G/20 18 09 PRABIR KR. MULLICK V. ITO WD - 3(1), ASL. PAGE 14 EXCEEDING PRESCRIBED LIMITS (RULE 6DD(J) - ASSESSMENT YEAR 2006 - 07 - ASSESSE E WAS WORKING AS AN AGENT OF TATA TELE SERVICES LIMITED FOR DISTRIBUTING MOBILE CARDS AND RECHARGE VOUCHERS - PRINCIPAL COMPANY TATA INSISTED THAT CHEQUE PAYMENT FROM ASSESSEE'S CO - OPERATIVE BANK WOULD NOT DO, SINCE REALIZATION TOOK LONGER TIME AND SUCH PA YMENTS SHOULD BE MADE ONLY IN CASH IN THEIR BANK ACCOUNT - IF ASSESSEE WOULD NOT MAKE CASH PAYMENT AND MAKE CHEQUE PAYMENTS ALONE, IT WOULD HAVE RECEIVED RECHARGE VOUCHERS DELAYED BY 4/5 DAYS WHICH WOULD SEVERELY AFFECT ITS BUSINESS OPERATION - ASSESSEE, T HEREFORE, MADE CASH PAYMENT - WHETHER IN VIEW OF ABOVE, NO DISALLOWANCE UNDER SECTION 40A (3) WAS TO BE MADE IN RESPECT OF PAYMENT MADE TO PRINCIPAL - HELD, YES [PARAS 21 TO 23] [IN FAVOUR OF THE ASSESS EE]' SRI LAXMI SATYANARAYANA OIL MILL VS CIT REPORTED IN (2014) 49 TAXMANN.COM 363 (ANDHRA PRADESH HIGH COURT) ' SECTION 40A(3) OF THE INCOME - TAX ACT, 1961, READ WITH RULE 6DD OF THE INCOME - TAX RULES, 1962 - BUSINESS DISALLOWANCE - CASH PAYMENT EXCEEDING PRESCRIBED LIMIT (RULE 6DD) - ASSESSEE MADE CERTAIN PAYMENT OF PURCHASE OF GROUND NUT IN CASH EXCEEDING PRESCRIBED LIMIT - ASSESSEE SUBMITTED THAT HER MADE PAYMENT IN CASH BECAUSE SELLER INSISTED ON THAT AND ALSO GAVE INCENTIVES AND DISCOUNTS - FURTHER, SELLER ALSO ISSUED CERTIFICATE IN SUPPORT OF THIS - WHETHER SINCE ASSESSEE HAD PLACED PROOF OF PAYMENT OF CONSIDERATION FOR ITS TRANSACTION TO SELLER, AN D LATER ADMITTED PAYMENT AND THERE WAS NO DOUBT ABOUT GENUINENESS OF PAYMENT, NO DISALLOWANCE COULD BE MADE UNDER SECTION 40A(3) - HELD, YES [PARA 23] [IN FAVOUR OF THE ASSESSEE]' CIT VS SMT. SHELLY PASSI REPORTED IN (2013) 350 ITR 227 (P&H) IN THIS CASE THE COURT UPHELD THE VIEW OF THE TRIBUNAL IN NOT APPLYING SECTION 40A(3) OF THE ACT TO THE CAS H PAYMENTS WHEN ULTIMATELY, SUCH AMOUNTS WERE DEPOSITED IN THE BANK BY THE PAYEE. 11.3 IT IS PERTINENT TO NOTE THAT THE PRIMARY OBJECT OF ENACTING SECTION 40A(3) WERE TWO FOLDS, FIRSTLY, PUTTING A CHECK ON TRADING TRANSACTIONS WITH A MIND TO EVADE THE LIABILITY TO TAX ON INCOME EARNED OUT OF SUCH TRANSACTION AND, SECONDLY, TO INCULCATE THE BANKING HABITS AMONGST THE BUSINESS COMMUNITY. APPARENTLY, THIS PROVISION WAS DIRECTLY RELATED TO CURB THE EVASION O F TAX AND INCULCATING THE BANKING HABITS. THEREFORE, THE CONSEQUENCE, WHICH WERE TO BE FALLEN ON ACCOUNT OF NON - OBSERVATION OF SECTION 40A(3) MUST HAVE NEXUS TO THE FAILURE OF SUCH OBJECT. THEREFORE, TH E GENUINENESS OF THE TRANSACTIONS BEING FREE FROM VICE OF ANY DEVICE OF EVASION OF TAX IS RELEVANT CONSIDERATION. WITH REGARD TO THE PURPOSE OF BRINGING THE PROVISIONS OF SECTION THERE IS NO DOUBT ABOUT THE IDENTITY OF THE PARTY. THE LD. AR HAS DIRECTLY DE POSITED THE CASH IN THE ACCOUNT OF THE COMPANIES AND HAS PRODUCED THE SALES BILLS OF THE COMPANY. THE AO HAS ALSO VERIFIED THE TRANSACTIONS FROM THE COMPANIES BY ISSUING NOTICE UNDER SECTION 133(6) OF TH E ACT. SO IN THE INSTANT CASE, THERE IS NO EVASION OF TAX BY CLAIMING THE BOGUS EXPENDITURE IN CASH. 10 IT A NO. 951 /BAN G/20 18 6. FROM THE ABOVE PARA S , IT IS SEEN THAT AS PER PARA 11. 3 OF TH AT TRIBUNAL ORDER , THE ASSESSEE IN THAT CASE, DIRECTLY DEPOSITED CASH IN THE BANK ACCO UNT OF THE PAYEE. THE TRIBUNAL IN THAT CASE HAS REFERRED TO A JUDGMENT OF HON BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF ANUPAM T ELE SERVICES VS. ITO (SUPRA) AND IN THAT CASE ALSO, CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE PAYEE. IN THE PRESENT CAS E, THIS IS NOT THE CASE THAT CASH IS DEPOSITED IN THE BANK ACCOUNT OF THE PAYEE. IN FACT, IN THE PRESENT CASE, CASH IS WITHDRAWN FROM THE BANK ACCOUNT OF THE ASSESSEE AGAINST BEARER CHEQUES AND IT IS NOT SHOWN THAT THE SAID CASH WAS DEPOSITED IN THE BANK A CCOUNT OF THE PAYEE. AS PER THE ACCOUNT PAYEE OR CROSSED CHEQUE ALSO, THE MONEY IS DEPOSITED IN BANK ACCOUNT OF THE PAYEE AND ONLY THE MODE OF SUCH DEPOSIT IS DIFFERENT. HENCE, IT IS SEEN THAT THE FACTS IN THE PRESENT CASE ARE DIFFERENT AND THEREFORE , NEI THER THIS TRIBUNAL ORDER RENDERED IN THE CASE OF PRABIR KUMAR MULLICK VS. ITO (SUPRA) NOR THE JUDGMENT OF HON BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF ANUPAM TELE SERVICES VS. ITO (SUPRA) IS APPLICABLE IN THE PRESENT CASE BECAUSE THE FACTS ARE DIFFE RENT. SAME IS THE CASE IN THE CASE OF THE JUDGMENT OF HON BLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CIT VS. SMT. SHELLY PASSI (SUPRA) BECAUSE I N THAT CASE ALSO, THE COURT UPHELD THE VIEW OF THE TRIBUNAL IN NOT APPLYING SECTION 40A(3) OF THE ACT TO THE CASH PAYMENTS WHEN ULTIMATELY, SUCH AMOUNTS WERE DEPOSITED IN THE BANK BY THE PAYEE. 7. NOW WE EXAMINE THE APPLICABILITY OF VARIOUS OTHER JUDICIAL PRONOUNCEMENTS NOTED BY THE TRIBUNAL IN THAT CASE. IN THE CAS E OF SRI SATYANARAYAN OIL MILL VS. CIT (SUPRA), IT IS NOTED BY HON BLE ANDHRA PRADESH HIGH COURT THAT THE SELLER IN THAT CASE INSISTED FOR CASH PAYMENT BUT IN THE PRESENT CASE, THIS IS NOT THE CASE OF THE ASSESSEE AND HENCE, THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE. SIMILARLY , AS PER THE JUDGMENT OF HON BLE CALCUTTA HIGH COURT RE NDERED IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE (SUPRA), IT WAS NOTED THAT WITHOUT THE PAYMENT BEING MADE BY BEARER CHEQUE THESE GOODS COULD NOT HAVE BEEN PROCURED AND IT WOULD HAVE HAMPERED THE SUPPLY OF GOODS WITHIN THE STIPULATED TIME BUT IN THE PRESENT CASE, THIS IS NOT THE CASE OF THE ASSESSEE AND HENCE, THIS JUDGMENT IS ALSO NOT AP PLICABLE IN THE PRESENT CASE. IN THE CASE OF ATTAR SINGH GURMUKH SINGH VS. ITO REPORTED IN (1991) 191 ITR 667 (SC) AND NOTED BY TRIBUNAL IN THIS CASE, IT WAS OBSERVED THAT IT IS OPEN TO THE ASSESSEE TO 11 IT A NO. 951 /BAN G/20 18 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 T HE PAYEE. THERE IS NO SUCH CLAIM IN THE PRESENT CASE AND THEREFORE, THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE. SIMILARLY, IN THE CASE OF CIT VS. CPL TANNERY REPORTED IN (2009) 318 ITR 17 9 (CAL), IT WAS NOTED BY HON BLE CALCUTTA HIGH COURT THAT THE SECOND CONTENTION OF THE ASSESSEE THAT OWING TO BUSINESS EXPEDIENCY, OBLIGATION AND EXIGENCY, THE ASSESSEE HAD TO MAKE CASH PAYMENT FOR PURCHASE OF GOODS SO ESSENTIAL FOR CARRYING ON OF HIS BUSI NESS. B UT IN THE PRESENT CASE, THIS IS NOT THE CASE OF THE ASSESSEE AND HENCE, THIS JUDGMENT IS ALSO NOT APPLICABLE IN THE PRESENT CASE. 8. LEARNED AR OF THE ASSESSEE HAS ALSO PLACED RELIANCE ON ANOTHER TRIBUNAL ORDER RENDERED IN THE CASE OF MR. N IRMAL KUMAR DAS VS . ACIT (SUPRA). IN PARA 5 OF THIS TRIBUNAL ORDER IT IS NOTED THAT WHEN THE ASSESSEE TRIED TO MAKE PAYMENT OF ARREAR WAGES BY ACCOUNT PAYEE CHEQUES, THE WORKERS RAISED HUE AND CRY AND UNION LEADERS INSISTED FOR CASH PAYMENT. AS A RESULT, THE A SSESSEE WAS FORCED TO ISSUE BEARER CHEQUES IN LIEU OF ACCOUNT PAYEE CHEQUES. IN THE PRESENT CASE, THIS IS NOT THE CASE OF THE ASSESSEE AND HENCE, THIS TRIBUNAL ORDER IS ALSO NOT APPLICABLE IN THE PRESENT CASE. 9 . IN VIEW OF ABOVE DISCUSSION, WE FIND TH AT NONE OF THE JUDGMENTS CITED BY THE LEARNED AR OF THE ASSESSEE INCLUDING VARIOUS OTHER JUDICIAL PRONOUNCEMENTS TAKEN NOTE OF BY THE TRIBUNAL IN THE CASE OF PRABIR KUMAR MULLICK VS. ITO (SUPRA) IS RENDERING ANY HELP TO THE ASSESSEE IN THE PRESENT CASE AND THEREFORE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT 9A). 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THE 27TH DAY OF JUNE , 201 8 . SD/ - ( LALIET KUMAR ) JUDICIAL MEMBER SD/ - ( A.K. GARODIA ) ACCOUNTANT MEMBER BANGALORE, DT. 27 .06.2018 *REDDY GP 12 IT A NO. 951 /BAN G/20 18 COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNA L BANGALORE.