News Update

India, Oman resolve to expediate talks for DTAATight schedule for Monsoon Session - 46 bills to be passed in 24 daysGovt proposes to amend law for Fastags for all commercial vehiclesCBDT Instruction No 3/18 - Board asks CCITs to wrap up withdrawal of appeals by Aug 20, 2018I-T - If assessee fails to establish urgent nature of business necessities for taking loans from its Directors in cash, such transaction warrants levy of penalty u/s 271D: ITAT Special BenchOECD employment rate raises by 0.2% in Q1SC asks Parliament to enact new law to deal with mobocracyST - If GOI department could be treated as using 'Residential Complex' constructed by NBCC for its 'personal use', how another Corporate body could be denied benefit of that type of user of 'Residential Complex' to be occupied by its Managerial Staff: HCPlace of removal - Valuation under CE & Customs Laws - past and present (See 'TOG INSIGHT' on '')India mulling safeguard duty on Chinese and Malaysian solar panelsGovt hikes basic import duty on many textile goodsIMF says India to be fastest growing economy in 2019CBDT prescribes registration form for Non-resident applicantsIs disallowing supplementary claim under MEIS & SEIS Scheme by DGFT valid?CX - On being pointed out, Assessee immediately reversed Credit wrongly availed - there cannot be said to be any fraud through which it wanted to evade Duty - setting aside of interest & penalty cannot be faulted: HCIGST refund - CBIC launches another fortnightly drive till July 30I-T - Complaint received against assessee is a reason to suspect but it is not a reason to believe that some income has escaped assessment untill AO verifies content of information before initiating re-assessment: ITATWCO Secretary General lauds India's efforts to use technology for trade facilitationBrahMos successfully test-fired from Balasore Test RangeIndia-Oman Joint Commission Meeting begins in MuscatHi-tech maritime labs launching programmes for traineesChina's GDP logs 6.8% growth in first half of fiscal20 hurt in pandal collapse during PM's Midnapore political rallyExports - Accountability of inputs - DGFT eases norms for Advance Authorisation holdersCustoms - CBIC expands list of exempt items for handicraft sectorI-T - Even if soil separated from land and put in containers it continues to be specie of land and income from growing mushrooms in such containers under controlled environment is agri income exempt u/s 10(1): ITAT Special BenchWTO - Govt officials attend workshop on SPS control, Inspection & approval proceduresI-T - Surplus generated by agriculturist on sale of his agri land is no basis to deny exemption u/s 2(14) and treat sale consideration as business income: HCSecond Year of GST - A year to amend mistakesCommittee set up to examine 'decriminalisation' of offences under Companies Act
I-T - Additions cannot be made u/s 40A(3) sans rejecting books of account: HC


By TIOL News Service

AHMEDABAD, JULY 13, 2018: THE ISSUE IS - Whether additions can be initiated by the Department u/s 40A(3), without even rejecting the books of account. NO IS THE VERDICT.

Facts of the case

The assessee, who is a Commission Agent for purchase/sale of food-grain and holds the licence issued by the Agricultural Produce Market Committee, filed his return declaring income of Rs.25,400/- whereas the income was assessed u/s 143(3) at Rs.1,20,592/-. Subsequently, the case was reported u/s 147 on the ground that assessee had purchased goods of Rs.2,83,55,337/- wherein payments exceeding Rs.20,000/- were made in cash to various parties. The AO therefore called upon the assesee to furnish particulars with respect to the payments made to various farmers. Though the said amount was shown to be paid to various farmers and even the receipts were produced, however, the assessee could not furnish those farmers, by pleading that farmers were known by village name they come from and it was difficult to track them now. The AO did not accept such explanation, and made disallowance of Rs.2,83,55,377/- u/s 40A(3), without rejecting the Books of Accounts.

On appeal, the FAA relying upon Rule 6DD(e)(i), deleted the disallowance u/s 40A(3) by observing that as the payment was made for agricultural produces, it was open for the assessee to make the payment in cash above Rs.20,000/-. On further appeal, the ITAT confirmed the order passed by the FAA.

On appeal, the HC held that,

++ assessee is engaged in the business as a Commission Agent for purchase/sale of food-grain/agricultural produces and is also holding licence issued by the Agricultural Produce Market Committee. In the Books of Accounts, the assessee has shown the amount of Rs.2,83,55,337/- paid to various farmers. However, as the payments were exceeding Rs.20,000/- in cash, the AO made the disallowance u/s 40A(3). However, considering Rule 6DD(e)(i) and when the payment was made by cash exceeding Rs.20,000/-, it was permissible if the same was paid for purchase of agricultural produces. It is required to be noted that in the present case, in the Books of Accounts, the said payment was shown to be paid to various farmers and even the receipts were also produced but the assessee could not produce the farmers/ list of farmers for which a reasonable explanation was also given. However, without rejecting the Books of Accounts, the AO made the addition u/s 40A(3) which is rightly deleted by the CIT(A) and rightly confirmed by the ITAT.

(See 2018-TIOL-1326-HC-AHM-IT)


TIOL Tube Latest

GST 1st Anniversary - A Hardlook (Episode 2) | simply inTAXicating

What's New

CGST Notification
CGST Rate Notification
CGST Circular
Income Tax Notification
Income Tax Circular
Customs Tariff Notification
Customs NT Notification
Customs Circular
Anti Dumping Notification
DGFT Notification
DGFT Public Notice
DGFT Circular
RBI Circular