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Case Law Details

Case Name : Sumit Industries Vs. ITO (ITAT Jodhpur)
Appeal Number : ITA No. 12/JODH/2018
Date of Judgement/Order : 10/02/2018
Related Assessment Year : 2012-13
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Sumit Industries Vs. ITO (ITAT Jodhpur)

The brief facts of the case are that the assessee has made payment in cash otherwise than by an account payee cheque drawn on a bank or account payee bank draft in excess of twenty thousand rupees aggregating in a single day in contravention of section 40A(3) of the Act. Since the assessee has incurred expenditure otherwise than an account payee cheque exceeding Rs. 20,000/-, no deduction shall be allowed in respect of such expenditure. Hence, an amount of Rs.1,86,628/- is disallowed under section 40A(3) of the Income-tax Act, 1961 and added back to the total income of the assessee.

The ld. CIT(A) confirmed the action of the AO.

We have heard the rival contentions and perused the facts of the The disallowance was made by the AO for the cash payment made to JVVNL on various dates more than Rs.20,000/- for electricity bills. Now the payment made is a payment made to the government or otherwise where the ld. CIT(A) has held that JVVNL is a company incorporated under the Companies Act. In this regard it was submitted by the assessee that Government of Rajasthan established Rajasthan Electricity Regulatory Commission in January 2000 vide which JVVNL was declared to be an authorised and accorded body of Government of Rajasthan. The AO failed to understand that only the production and supply of power vested in private hands but not distribution of power.

The AO has not considered the business expediency and transactions are genuine and bonafide, since cheque payments normally take two to three days in clearance and therefore this aspect was not considered by any authorities below. The ld. Counsel for the assessee also relied upon the decision of High Court of Rajasthan at Jodhpur in S.B. Civil Writ Petition No.7239/2017 in the case of Surender Kumar Vyas and Others, where it has been held by the Hon’ble Court vide para 32 to 35 that Nigam will come within preview of Department of Government of Rajasthan. The relevant findings in paras 32 to 35 of the Hon’ble Court are reproduced hereinbelow:

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