Radheyshyam Gupta Vs PCIT-9 (ITAT Kolkata)
ITAT Kolkata held that the transaction of purchase of old gold jewellery in exchange of sale of new jewellery is covered under rule 6DD (d) and hence exempted from the provisions of section 40A(3) of the Income Tax Act. Further, there is no violation of provisions of section 40A(3) as there is no actual transaction of payment of cash.
Facts-
The Ld. PCIT (Principal Commissioner of Income Tax) assuming jurisdiction u/s. 263 of the Act called for assessment records and after examining the same the Ld. PCIT issued the show cause notice mainly alleging that assessee has made cash payment of Rs. 2,24,63,103/- for purchase of old gold jewellery and in terms of section 40A(3) such expenditure is not allowable.
Being aggrieved, the assessee has preferred the present appeal.
Conclusion-
We find that detailed enquiry has been conducted on the issue referred in show cause notice by the AO and complete details with necessary evidence/explanation has been filed by the assessee on multiple occasions and thus, it remains uncontroverted fact that an independent enquiry was carried out by the ld.AO and after due consideration of facts and proper application of mind a permissible view has been taken for assessing the income of the assessee. It is also worth noting that no independent enquiry has been conducted by Ld. PCIT on his own before setting aside the order of Assessing Officer. Therefore, on this ground itself the impugned proceeding u/s. 263 deserves to be quashed as the ld.AO has conducted adequate enquiry on the said issue.
In our considered view there is no violation of provisions of section 40A(3) of the Act in the case of assessee as alleged by Ld. PCIT in the impugned order, as there is no actual transaction of payment of cash for making purchases exceeding the limit as prescribed u/s. 40A(3) of the Act.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
