IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH "D" BEFORE SHRI D K TYAGI JUDICIAL MEMBER AND SHRI B P JAIN ACCOUNTANT MEMBER

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1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH "D" BEFORE SHRI D K TYAGI JUDICIAL MEMBER AND SHRI B P JAIN ACCOUNTANT MEMBER M/s Ratilal Maganlal Soni, Devgadh Baria, District: Dahod, Panchmahal ITA no.886/ahd/2009 (Assessment Year: ) V/s The Income-tax Officer, Ward-2, Baroda PAN: AZJPS 3924 P [Appellant] [Respondent] Assessee by:- Revenue by:- Shri J P Shah, AR Shri R K Vohra, DR Date of Hearing: Date of Pronouncement: O R D E R PER SHRI B P JAIN, AM:- This appeal by the assessee arises from the order of learned CIT(A)-VI, Baroda, dated for Assessment Year The assessee has raised the following grounds:- [1] On the facts and circumstances of the case, the learned CIT(A) erred in law and facts upholding the disallowance made by A.O. of the genuine cash purchases of Rs /- from various parties. The learned CIT(A) failed to appreciate the evidence substantiating the exceptional nature of cash transactions carried out by your appellant.

2 2 The aforesaid additions being uncalled for, your appellant prays to quash the same in interest of justice. [2] On the facts and circumstances of the case, the learned CIT(A) erred in law and facts upholding the additions made by A.O. by treating the cash purchases as not covered by rule 6DD(j) of the IT Act, Your appellant therefore prays that the above additions made by the A.O. being uncalled for, be quashed in the interest of justice. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 2 The brief facts in both the grounds of appeal are that the assessee had made certain cash payments to different persons totaling to Rs.4,98,363/- on account of purchases made during the year, which attracted the provisions of section 40A(3) of the Income-tax Act, The assessee submitted the explanation which was not found satisfactory by the AO and, therefore, he made a disallowance of the said purchases and added to the income of the assessee. 3 The learned CIT(A) confirmed the action of the AO. 4 We have heard the rival contentions and perused the facts of the case. It was argued by the learned counsel for the assessee, Mr. J P Shah that most of the cash payments had been deposited directly to the Bank Accounts of the sellers since the assessee is carrying on the business of Silver Ornaments making and selling the same since 1967 in Devgadh baria, District: Dahod which is about 210 Kms. Away

3 3 from Ahmedabad and which takes about 5 to 6 hours to reach Ahmedabad and there were only two buses to travel from Devgadh Baria to Ahmedabad and by the time the assessee reaches Ahmedabad, Bank normally close and at times, payments have to be made in cash after banking hours. He invited our attention to pages 26 and 27 of the paper book which is a letter dated written to the ITO, Ward-2, Dahod making this explanation which has not been considered by the AO. He further invited our attention to page 5 of the paper book where the seller M/s Girishchandra R Chokshi & Brothers has given certificate that the assessee had deposited the cash against the purchases made by him directly into the Bank of the seller. This evidence also was not considered by the AO. The learned counsel for the assessee, Mr. J P Shah also invited our attention to pages 23 and 24 of the paper book where the sellers have given certificates of receiving payments after banking hours. The said certificates have also been ignored by the lower authorities. 6 The learned DR, on the other hand, relied upon the orders of both the authorities below. The learned DR further argued that the assessee has not placed on record any exceptional circumstances which can be covered under Rule 6DD read with section 40A(3) of the Act. 7 We have heard the rival contentions and perused the facts of the case. We are convinced with the arguments made by the learned counsel for the assessee, Mr. J P Shah that the

4 4 assessee all the way travelling from Devgadh Baria, District Dahod to Ahmedabad, had made the purchases in cash. The explanation of the assessee that he has made the payments in cash which has directly been deposited by the assessee into the Account of M/s Girishkumar Ramanlal Chokshi & Brothers on different dates which is evident from the certificate dated issued by M/s Girishkumar Ramanlal Chokshi & Brothers., has not been proved to be false by the Revenue. Rather, no cognizance has been given to the said certificate. The explanation of the assessee that the cash has been deposited directly into the Bank of the seller, appears to be genuine. There is no dispute to the genuineness of the purchases made by the assessee. At the most, the assessee could have made the Account Payee Draft from the same Bank and could have deposited the same into the Bank Account of the seller which would have tantamounted the same thing as the assessee had done by depositing the cash into the Account of the seller. In our view, the very purpose of section 40A(3) of the Act has been met by the assessee. As regards the payments made for purchases from Chokshi Govindlal Ganpatlal & Co. and M/s Shree Corporation, the assessee has placed on record the certificates from the said concerns that they have received the cash after the banking hours. This explanation of the assessee appears to be satisfactory which has been ignored by the AO. The said explanation is an exception to section 40A(3) of the Act and is covered under Rule 6DD of Income Tax Rules, Therefore, in the

5 5 circumstances and facts of the case, the explanation of the assessee appears to be satisfactory and the provisions of section 40A(3) cannot be attracted and the AO is not justified in disallowing the expenditure for such cash purchases made by the assessee. The order of the learned CIT(A) is accordingly reversed. Thus, both the grounds of appeal of the assessee are allowed. 8 In the result, the appeal filed by the assessee is allowed. Order pronounced in the court today on Sd/- Sd/- (D K TYAGI) (B P JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated : Copy of the Order forwarded to: 1. M/s Ratilal Maganlal Soni, Devgadh Baria, District: Dahod, Panchmahal The Income-tax Officer, Ward-2, Baroda 3. The CIT Concerned 4. The Ld. CIT (Appeals)-VI, Baroda 5. The DR, Ahmedabad 6. The Guard File

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER Assessment Year: 2008-09, 41-A, Film Center, 38, Tardeo