Bappanalli Brothers Vs ACIT (ITAT Banglore)
CIT(A) concluded that the payments were not made directly to the cultivator and therefore the Assessee has not proved existence of circumstances set out in Rule 6DD(e) of the rules.
ITAT held that The reasons given by the CIT(A) for treating the payment in question not to the Agriculturists but to R.G.Bhat, who is alleged to be an intermediary, cannot be sustained especially when the two agriculturists have affirmed in an affidavit that they received payment through R. G. Bhat and when the cheques in question, though bearer cheques, were cheques issued in their names respectively. Therefore, payment in question to the two Agriculturists cannot be disputed. Both the parties however agreed that the matter can be remanded to the AO for the purpose of verifying the nature of crop grown by the two agriculturists, though the CIT(A) has not disputed this aspect in the impugned order. For this limited purpose, we remand the issue to the AO who shall consider the evidence on record and other evidence that may be filed to prove the Assessee’s case and after affording opportunity of being heard to the Assessee.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal by the Assessee against the order dated 16.2.2022 of CIT(A) – 2, Panaji, Goa, relating to AY 2012-13.
2. The Assessee is a partnership firm engaged in the business of dealing in betelnut, cardamom, pepper and ginger. In the order of assessment passed for AY 2012-13, the AO disallowed a sum of Rs.11,92,500 by invoking the provisions of Sec.40A(3) of the Income Tax Act, 1961 (Act), with the following observations:
“3. During the course of scrutiny proceeding, the assessee was asked to produce books of accounts alongwith bills/vouchers for verification. On verification, it has been observed that the assessee has made the following payments otherwise than by account payee cheque/draft which is in contravention of section 40A(3)of the Act.
