The assessing officer accumulated various payments made on a single day for making dis allowance under section. 40A(3). While carrying out this exercise the assessing officer summarized all payments to a transport agency rather than a truck owner/driver. The payments made by the assessee to truck drivers are not disputed by the assessing officer. All the payments are genuine and payees are identifiable. The learned Authorized Representative submitted that the assessing officer has taken a hyper-technical view in interpreting the provisions of section 40A(3) to make dis allowance. The assessee has made payment according to market practice followed in trading of sponge iron.
The learned Authorized Representative contended that the term person‟ used in section 40A(3) has to be interpreted separately for each transaction. The assessing officer has erred in clubbing various transactions on a single day. The learned Authorized Representative contended that the assessing officer has failed to take into consideration the fact that the transporters are providing trucks to various vendors. The same is used by different suppliers on different dates. Thus, this makes evidently clear that the payments are made to the truck drivers towards the cost of transportation.
No disallowance under section. 40A(3) is warranted if cash payments are made under bona fide conditions and no doubt is raised over genuineness of the payments and the payees are identifiable
In the present case, the payment made by the assessee to the individual truck driver has not been disputed. It is not the case of Department that the payments made by the assessee are not genuine or the payees are not identifiable. The assessee has sufficiently explained the circumstances under which the payments have been made to the truck drivers in cash. The assessing officer made dis allowance by taking a pedantic view of the cash transactions. Where cash payments are made under bona fide conditions and no doubt is raised over genuineness of the payments and the payees are identifiable; no dis allowances under section. 40A(3) is warranted. Thus, in view of the facts of case and various decisions discussed above, we do not find any error in the findings of Commissioner (Appeals) in deleting dis allowances of Rs. 60,73,403 made by the assessing officer under section. 40A(3) of the Act. We concur with the findings of Commissioner (Appeals). Accordingly, ground Nos. 1 and 2 raised by the Department in appeal are dismissed.
