Maa Saraswati Steel Industries,, ... vs Income-Tax Officer,, on 28 April, 2017
14. Similarly, we find that the Coordinate Chandigarh Benches in case of ITO vs
Kailash Sharma (supra) has held as under:
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1 - 6 of 6 (0.22 seconds)J.D. Wines, Gurgaon vs Addl. Cit, Gurgaon on 30 October, 2019
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
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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.
A Daga Royal Arts, Jaipur vs Ito, Jaipur on 15 May, 2018
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.)
S.K. Enterprises, Ajmer vs Jcit, Ajmer on 24 March, 2017
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:
Asst. Commissioner Of Income Tax, ... vs Southern Power Distribution Company Of ... on 12 September, 2018
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
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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.
Hans Road Carriers Pvt.Ltd.,, ... vs The Ito, Ward-2(1)(3),, Ahmedabad on 4 March, 2020
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
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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.
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