Case Law Details
New Kalpana Ent Udyog Vs ITO (ITAT Agra)
The assessee firm is engaged in the business of running a brick kiln where coal is used as a primary fuel. As per the Ld. A.R. coal is supplied to these brick kilns by agents of the coal supplier at the brick kiln itself and these agents ask for cash payments, as they have to make the payment to the truck drivers for the fare as well as for the coal amount to their principals. The auditors in their tax audit report have also not mentioned of any violation of provisions of section 40A(3), as these payments have been made on account of business expediency where insistence of cash by the agents and truck drivers has been established by the appellant.
From the record, it is seen that the banking facility at village Ballarpur were not there as has been rightly observed by the Ld. CIT(A) at para 5.2.2 of his appellate order.It is also noticed that since, the truck drivers and the coal agents deliver the coal at night because of heavy vehicles cannot ply during the daytime and insistance for cash payments, hence the assessee was obliged to do the cash payments as per business practice in that area where lots of brick kilns are there. The Ld. A.O. has not found any fault with the payment nor has disbelieve the payment made for the coal suppliers who are duly registered with the VAT department. The payment has not been doubted by the A.O. or by the Ld. CIT(A), hence looking to the facts that the payments were made after the banking hours and that too at village Ballarpur, where there are no banking facilities, we are of the considered opinion that even this amount of Rs.27,07,320/- should not have been disallowed u/s 40A(3) read with Rule 6DD of the Income-Tax Rules as the Ld. CIT(A) had observed in respect of payments made to truck drivers where he deleted the part cash payment of Rs. 2,58,194/-. In that matter, the CIT(A) was not justified in confirming part additions under the same set of facts.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal by the assessee,is directed against the order of Ld. CIT(A), dated 17-10-2014 passed u/s 143(3) of the Income Tax Act, 1961 for AssessmentYear 2010-2011, wherein assess has raised the following grounds.
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