Case Law Details
Bharat Agro Industries Vs ITO (ITAT Raipur)
The first allegation concerns infringement of Section 40A(3) of the Act and consequent applicability of Section 40(a)(ia) of the Act. In this regard, it is the case of the assessee that purchases were made from villagers/Tribals who are procuring the seeds and supplying the same to the assessee. Payments were made to the suppliers only. The Sarpanch of several villages have provided sworn statements to the effect that supplies of seeds were made. The copy of identity proof of Sarpanch, villagers and tribals were also furnished. It is thus contended that the payments made by the assessee are covered by the exceptions provided to Rule 6DD(e). It was pointed out that the village area etc. is naxalite prone resulting in handicap in strict compliance of cheque payment. It is thus the case of the assessee that in such a situation, where the PCIT has not raised any doubt about the genuineness of the expenditure, provisions of Section 40A(3) of the Act is not necessarily attracted in view of the several decisions rendered in this regard.
It is further claimed that the PCIT was himself under some obligations to carry out the minimal enquiry.
In the course of hearing, the learned counsel for the assessee in response to an enquiry from the bench presented cassia tora seeds for which expenses were incurred. The Cassia tora seeds, which is used for the business of the assessee which are procured from villagers and tribals in naxalite area. The case of the assessee is thus quite peculiar. Coupled with this, the purchase of cassia tora seeds is not under any kind of doubt. The view taken by the AO in favour of the assessee appears to be consistent with the long line of judicial precedent and thus plausible. Hence, the view of the AO admitting the bonafide claim towards purchase and other expenses while framing assessment order cannot be attacked as ‘erroneous’ per se. The action of the AO being consistent with the fact situation and judicial view, ought not to have been set aside by the Revisional Commissioner. In this view of the matter, we set aside the action of the PCIT under s.263 of the Act on this score.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
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