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If banking facilities are not available at the place where land is purchased no disallowance u/s 40A(3) of the Income Tax Act,1961. Unsubstantiated material found in pen drive cannot be considered as a conclusive evidence to make additions
Payments were made to truck drivers, who insisted for payment in cash was not exceptional case, because the assessee has not made payments to individual truck owners but to various brokers through whom the trucks were engaged, and therefore, the case of the assessee was not covered by the exceptions mentioned in Rule 6DD.
As regards the payments of Rs.20,000/- or more, the assessee has not substantiated his claim that the payments of Rs.20,000/- or more with regard to the purchases were made for Rs.20,000/- or less before the AO. It is also not on record whether such claim was actually made before the AO or not. With regard to the claim before the ld. CIT(A), all the vouchers are self made vouchers and without any authenticity of the name and complete address of the recipient. From the claim of the assessee before the ld. CIT(A), the payments are claimed to have been made on different hours on the same day and accordingly on different dates.
Learned counsel for the revenue submitted that the assessee had violated the provisions of Section 40A(3) of the Act and therefore the addition of Rs. 60,19,000/- made by the Assessing officer was wrongly deleted by the Tribunal. Relying upon the judgment of this Court in CIT v. SAS Educational Society [2009] 319 ITR 65 (Punj. & Har.), it was submitted that the Tribunal had erroneously accepted the plea of the assessee whereas in view of the express provisions of section 40A(3) of the Act, any amount paid in cash in excess of Rs. 20,000/- was inadmissible.
That section 40A(3) must not be read in isolation or to the exclusion of Rule 6DD. This section must be read along with the Rule 6DD and if read together it is clear that the provisions of the section are not intended to restrict the business activities.
Ordinarily where the Income-tax Officer is satisfied about the genuineness of the transaction and payment and identification of the cash payment is established, the Income-tax Officer shall record his satisfaction about the fulfilment of the conditions for allowing the benefit of Rule 6DD(j). Apparently, Section 40A(3) was intended to penalize the tax evader and not the honest transactions and that is why after framing of Rule 6DD(j)
