Ace Developers Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that addition made under section 40A(3) of the Income Tax Act merely on the basis of certain rough noting made on loose sheets found during the course of survey unsustainable.
Facts- The assessee in the present case is a partnership firm. The assessee is engaged in the business of development of residential property. The residential premises of the partner was subject to search u/s. 132 of the Act dated 24th of June 2016 whereas the premises of the assessee was subject to survey u/s. 133A of the Act. As a result of survey and search operation, many documents were impounded containing various information about the payment made by the assessee in cash as well as through bearer cheque to various parties being subcontractor, labour, suppliers and towards commission etc. Based on such documents, the AO found that the assessee has made payments against certain expenses in cash or though bearer cheque which is exceeding the specified limit under the provisions of section 40A(3) of the Act.
As per the AO, the impugned payment in cash exceeding the specified limit was not allowable as deduction and accordingly the AO disallowed the same under the provisions of section 40A(3) of the Act and added to the total income of the assessee.
