The Indore bench of the Income Tax Appellate Tribunal (ITAT) has held that the addition cannot be sustained for making cash payment exceeding monetary limit if the same was due to the instance of the seller.
An addition was made against the assessee following the search proceedings by the department in respect of cash payments amounting to Rs.32,93,500/- by invoking provisions of section 40A(3) of the Income Tax Act.
The assessee contended that the payment in cash exceeding the monetary limit so prescribed was due to the business expediency as the sellers of the land insisted on making payments in cash. It was contended that the assessee had no intention of evading tax.
While admitting the contentions of the assessee, the Tribunal held that “It is stated by the Ld. Counsel for the assessee that the cash payment was made on the insistence of the seller of the land. It is further stated that the amount is duly recorded in the sale deeds and there is no doubt raised about the genuineness of the transaction by the authorities below. He, therefore, submitted that in the light of the various case laws, addition by invoking provisions of section 40A(3) of the Act was not justified. Looking to the totality of the facts and in view of the fact that the assessee had to make payment on the insistence of the sellers respectively and following the judgment of Hon’ble Rajasthan High Court in the case of Smt. Harishila Chordia Vs. ITO in 298 ITR 92 and more particularly in the case of Anupam Teleservices Vs. ITO in tax appeal No.556 of 2013 of Hon’ble Gujarat High Court, we do not see any reason to interfere in the finding of the Ld. CIT(A) and the same is hereby affirmed.”
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