DCIT Vs Chandmiya Miyajan Qureshi (ITAT Mumbai)
CBDT Circular Can’t Override Rule 6DD: ITAT Mumbai Upholds Deletion of ₹5.85 Cr 40A(3) Addition on Meat Purchases
Assessee, engaged in processing & supply of buffalo waste meat, filed return declaring ₹5.44 crore. Assessment was reopened u/s 147, where AO noticed payments aggregating ₹5,85,85,652 made in cash/bearer cheques towards purchase of meat & invoked disallowance u/s 40A(3), alleging violation of Rule 6DD & non-compliance with CBDT Circular No. 8/2006. AO held that Assessee failed to produce veterinary certificates, declarations from meat producers & confirmations as prescribed in the circular, and therefore disallowed the entire sum.
Before CIT(A), Assessee contended that its case squarely falls under Rule 6DD(e)(ii), which expressly exempts payments for the produce of animal husbandry—including meat—made otherwise than by account-payee instruments. CIT(A) accepted the claim, noting that purchases during FY 2011-12 were ₹4.96 crore, total payments ₹7.17 crore, and that almost all payments were by bearer cheques to meat producers; AO’s figure of ₹5.85 crore cash payments was factually incorrect. CIT(A) further held that CBDT Circular cannot insert new conditions not found in Rule 6DD.
At the Tribunal, Revenue argued that circular-prescribed documents were mandatory & CIT(A) ignored evidentiary defects. Assessee relied on Supreme Court rulings in UCO Bank (237 ITR 889) & PCIT v. Gee Square Exports (100 taxmann.com 462), wherein the Apex Court held that CBDT circulars cannot impose additional burdens or override statutory rules.
Tribunal agreed with CIT(A), observing that once a payment satisfies Rule 6DD(e)(ii)—i.e., purchase of meat from producers—the protection from 40A(3) applies. Rule 6DD itself does not require veterinary certificates or declarations; these conditions in CBDT Circular 8/2006 cannot curtail the statutory exemption. Tribunal also noted inconsistencies in AO’s computation of cash payments & accepted that payments were largely through bearer cheques duly recorded in books.
Holding that the assessee validly satisfied Rule 6DD & that no disallowance could be made u/s 40A(3), Tribunal upheld deletion of the entire ₹5.85 crore addition & dismissed Revenue’s appeal
FULL TEXT OF THE ORDER OF ITAT MUMBAI
