Disallowance 40(A)(3) for cash payment deleted when payee was new. When genuiness of payment not doubted there was every possibility that party refused to cheques / Demand draft – ITAT
ABCAUS Case Law Citation
ABCAUS 2372 (2018) 06 ITAT
During the course of the assessment proceedings, the Assessing Officer observed that the assessee had made cash payment to few parties. The assessee pointed out that he was dealing with these parties for the first time and these persons were not ready to accept the same by cheque / demand draft, therefore, he had no choice but to make the payments in cash.
The Assessing Officer did not accept this contention of the assessee and disallowed the payments u/s 40(A)(3) of the Income Tax Act, 1961.
On appeal, the CIT(A) observed that the transactions were not frequent and accepted the contention that the other party did not agree to cheque payment. The CIT (A) accordingly deleted addition.
The Tribunal noted that the Assessing Officer had not doubted the genuiness of the expenditure. The AO had also not doubted that the assessee was not having any frequent transactions with these parties.
The Tribunal opined that there was every possibility that the parties must have refused to take the payment by cheques/ Demand draft.
Accordingly, the ITAT decline to interfere with the finding of the CIT (A) and rejected the ground of the Revenue.
Download Full Judgment Click Here >>
In absence of mala fide intention bank should not be treated as assessee in default for late deduction and deposit…
Whether bank account was fraudulently open in the name of assessee is question of fact. High Court declined to entertain…
SBI Concurrent Auditor Empanelment of Chartered Accountant Firms for FY 2024-25 SBI Concurrent Auditor Empanelment of CA Firms for FY…
Change in the constitution of Appellate Authority for CAs CSs and Cost Accountants In 2015, the Ministry of Corporate Affairs…
Trade Tax Department was unjustified in retaining refund beyond stipulated period and adjusting it against default notices issued subsequently. In…
Notice issued u/s 143(2) prior to filing of return of income by the assessee was invalid. Before filing ITR provisions…