Pappadiyil Brothers Vs ITO (ITAT Cochin)
Assessee, a partnership firm engaged in wholesale & retail grocery business, had filed its return declaring income of ₹18.02 lakh. AO completed the assessment u/s 143(3) determining income at ₹1.00 Cr. While doing so, AO made two major additions – ₹64.98 lakh being cash deposits in specified bank notes during demonetisation & ₹17.35 lakh disallowed u/s 40A(3) for cash payments exceeding ₹20,000.
On appeal, CIT(A) deleted the demonetisation addition of ₹64.98 lakh but confirmed the disallowance of ₹17.35 lakh u/s 40A(3).
Assessee contended before Tribunal that certain cash payments above ₹20,000 were made on Sundays & public holidays. Such transactions fall within the exceptions provided under Rule 6DD, hence could not be disallowed u/s 40A(3). It was pleaded that the matter may be remanded to AO for fresh verification. Dept did not object to remand.
Tribunal held that Rule 6DD provides specific exemptions for cash payments made on Sundays & public holidays. Since Assessee had claimed that part of the impugned payments were covered by such exceptions, the matter required verification. Accordingly, Tribunal found merit in restoring the issue to AO for limited examination.
AUTHOR’S COMMENTS
it my be noted that clause (j) in Rule 6DD which read as under:
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