Case Law Details
Govind Ramprashad Baheti Vs ITO (ITAT Pune)
The assessee admittedly runs Baba Ramdev Krishi Seva Kendra involving primarily rural customers engaged in agricultural activities. And that he carries out his business activities regarding sale of various agricultural products only. There is further no dispute that the recipient herein is also engaged in very line of business activities only.
Coming to assessee’s former claim of Rs.50,000/, we note from a perusal of his paper book that he had deposited cash of Rs.50,000/- in bank; which in turn, was credited to the account of M/s. Subhash Fertilizer Pvt. Ltd.. The same could hardly be termed as violation of section 40A(3) per se. The factual position could hardly be different qua the latter payee Shriram Fertilizers, Nanded as well as these parties are carrying out the respective business activities involving farming sector only wherein not all the customers have their bank accounts since residing in remote areas. Hon’ble Gujarat high court in Anupam Tele Services vs. ITO [2014] 366 ITR 122 (Guj.) holds that the overwhelming genuine business transactions are nowhere sought to be covered u/s 40A(3) of the Act. Faced with this situation and keeping in mind peculiar business activity of the assessee as well as his twin payees, we hold that he has sufficiently proved by way of reasonable explanation regarding overwhelming circumstances leading him to make cash payment in issue. We accordingly direct the Assessing Officer to delete the impugned disallowance.
FULL TEXT OF THE ORDER OF ITAT PUNE
This assessee’s appeal for assessment year 2008-09 arises against the CIT(A)-1, Aurangabad’s order dated 27.06.2018 passed in case no. ABD/CIT(A)/335/2013-14, involving proceedings u/s 143(3) r.w.s. 263 of the Income Tax Act, 1961; in short “the Act”.
Heard both the parties. Case file perused.
2. We note at the outset that the assessee herein challenges correctness of both the lower authorities’ action invoking section 40A(3) cash payments disallowance involving twin parities, namely, M/s Subhash Fertilizer Pvt. Ltd. and M/s Shriram Fertilizers, Nanded to the tune of Rs.50,000/- and Rs.4,85,000/-; respectively.
3. Mr. Jasnani vehemently argued in light of hon’ble apex court’s landmark decision in Attar Singh Gurmukh Singh vs. ITO [1991] 191 ITR 667 (SC) that is the purpose of the impugned statutory provision is to prevent flow of unaccounted money in business activities. And also that once the assessee could not prove the overwhelming exigencies over and above those specified in Rule 6DD of the Income Tax Rules, 1962, the impugned section 40A(3) disallowance deserves to be upheld.
4. We have heard vehement rival contentions and find no reason to sustain this impugned disallowance. The assessee admittedly runs Baba Ramdev Krishi Seva Kendra involving primarily rural customers engaged in agricultural activities. And that he carries out his business activities regarding sale of various agricultural products only. There is further no dispute that the recipient herein is also engaged in very line of business activities only.
5. Coming to assessee’s former claim of Rs.50,000/, we note from a perusal of his paper book that he had deposited cash of Rs.50,000/- in bank; which in turn, was credited to the account of M/s. Subhash Fertilizer Pvt. Ltd.. The same could hardly be termed as violation of section 40A(3) per se. The factual position could hardly be different qua the latter payee Shriram Fertilizers, Nanded as well as these parties are carrying out the respective business activities involving farming sector only wherein not all the customers have their bank accounts since residing in remote areas. Hon’ble Gujarat high court in Anupam Tele Services vs. ITO [2014] 366 ITR 122 (Guj.) holds that the overwhelming genuine business transactions are nowhere sought to be covered u/s 40A(3) of the Act. Faced with this situation and keeping in mind peculiar business activity of the assessee as well as his twin payees, we hold that he has sufficiently proved by way of reasonable explanation regarding overwhelming circumstances leading him to make cash payment in issue. We accordingly direct the Assessing Officer to delete the impugned disallowance. The assessee succeeds in his instant sole substantive grievance.
6. This assessee’s appeal is allowed in above terms.
Order pronounced on this 07th day of October, 2022.
