Case Law Details
ITO Vs Rahul Bharatbhushan Jain (ITAT Ahmedabad)
Therefore, for applicability of s. 40A(3) of the Act, if a person makes different payments in cash to same person in excess of Rs 20,000 (w.e.f. A.Y. 2018-19 Rs 10000/-) in a single day even though on separate cash memos, such aggregate payment will be disallowed u/s 40A(3). For example if A makes three payments of Rs 8000 each to the same person during different time of the day and obtains three different cash memos, yet the transaction will be covered by section 40A(3) and such expenditure will be disallowed. Now, in the instant case, the Ld. Counsel for the assessee has submitted that no payment (single or aggregate) has been made to a single party in excess of Rs. 20,000/-. In principle, we agree with the contention of the assessee that if the above is true and correct, then there is no reason to disturb the findings of Ld. CIT(A). However, from data submitted before us, it is unclear to us whether separate invoices have been raised by various parties and accordingly separate payments disbursed to them are within the permissible limit of Rs. 20,000/-. For instance, in the above example of M/s Laxmi Offset, though the assessee, has given a break-up of expense amount to Rs. 44,220/- , but it is unclear from records, whether separate invoices have been raised by respective parties and separate payments have been made to them, not exceeding Rs. 20,000/- in aggregate, or entire payment of Rs. 40,220/- has been made in aggregate to M/s Laxmi Offset on consolidated invoice raised by it. The assessee has not furnished any supporting vouchers or invoices raised by the various parties against which payments have been made. Similar payments to various parties have also been observed from the Chart furnished by the assessee at pages 18 to 20 of the paper book containing branch wise details of printing expenses. In the case of ACIT v. Shree Shanmughar Gunny Stores 146 ITR 600 (Mad), it was held that a single payment exceeding the specified amount made to a party would be covered by the sub-section, though it relates to different items of expenditure. The assessee has submitted before Ld. AO that assessee settles account with printer, once or twice a month as per outstanding amount. However, payments have been made to different parties as per their separate invoices raised by them and no payment is in excess of limit specified u/s 40A(3) of the Act. We are therefore in agreement with the Ld. Counsel for the assessee who has provided detailed branch-wise breakup of expenses incurred in cash, that if separate invoices have been raised in respect of each payment by various parties and payment on a single day to a party does not exceed Rs. 20,000/- then there is no reason to disturb the findings of the Ld. CIT(A). We therefore restore the case to the file of Ld. AO with a direction for verification on a limited point whether separate invoices were raised by various parties and separate payments have been made by assessee not exceeding Rs. 20,000/- against such individual invoices as per Chart furnished by the assessee.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The appeal filed by Revenue and Cross Objection filed by the assessee are against the order of the ld. Commissioner of Income Tax (Appeals), Ahmedabad-10 in Appeal no. CIT(A), Ahmedabad-10/10642/2015-16 vide order dated 25/09/2015 passed for the assessment year 2011-12.
2. The Revenue has raised following grounds of appeal:-
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