Amit Kedia Vs ACIT (ITAT Kolkata)
Kolkata ITAT: Section 69C Cannot Be Invoked on Recorded Sales Receipts; Cash Payments under Section 40A(3) Deleted on Commercial Expediency
The Kolkata ITAT deleted additions made under section 69C and section 40A(3) in the case of a wholesale hardware trader. The Tribunal found that the Assessing Officer had wrongly treated entries in loose sheets found during a survey as unexplained cash expenditure, whereas the impounded documents actually represented amounts received from debtors against sales, many of which were duly recorded in the books of account and corroborated by ledger accounts and cheque details. Holding that sales receipts cannot be characterised as unexplained expenditure, the Tribunal ruled that the very invocation of section 69C was misconceived and directed deletion of the entire addition. The Tribunal also deleted the disallowance under section 40A(3) in respect of cash payments towards salary, audit fees and sales promotion expenses, accepting the assessee’s explanation that the payments were made due to commercial expediency, as the recipients had declined to accept payment by cheque. The same relief was extended mutatis mutandis to the connected assessment years 2015-16, 2017-18 and 2018-19, resulting in all the assessee’s appeals being allowed.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
