Case Law Details
Fazal Frozen Food (P) Ltd. Vs JCIT (ITAT Delhi)
Ld. Counsel for the assessee pleaded that the disallowance is being made on the ground that the payments are being made in cash and higher than Rs.20,000/-. They are entered in the books Rs.20,000/- per transaction. He submitted that the assessee’s books have not been faulted and the same have not been rejected. If the suppliers did not maintain books of account, the assessee could not be faulted for that and disallowance cannot be made in the hands of the assessee.
Addition has been made by holding that payment are made in violation of section 40A(3) of the Act without any defect pointed out in assessee’s books of accounts.
ITAT held that in this case disallowance u/s 40A(3) of the Act has not been found from the books of accounts of the assessee. Rather the plea is that the suppliers have not maintained proper books of accounts. Hence, it could not be co-related. We note that the disallowance u/s 40A(3) in this case has not been made on the basis of anything found from the assessee’s books. Rather this case has been made out that the suppliers did not maintain books of account and same could not be traced. We also rely upon the ITAT order in assessee’s own case for Assessment Year 2007-08 referred above. The suppliers are small type of butchers living in various locations and are illiterate as noted by the Tribunal. Instead of money receipts, assessee was using slip system, which in such areas is not uncommon. The recipients of such type of slips do not preserve such slips and this is not uncommon phenomenon. Therefore, in our considered opinion, the disallowance made u/s 40A(3) is not reasonable and hence, we set-aside the orders of the authorities below and deleted the addition.
FULL TEXT OF THE ORDER OF ITAT DELHI
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