SYRA BANO,NEW DELHI vs. ITO, WARD- 35(1), NEW DELHI

The grievance of the assessee read as under :-

Briefly stated the facts of the case are that during the course of the assessment proceedings and on verifying the party, sale and purchase the Assessing Officer noticed that payments of Rs.14185500/- were made in a day otherwise than by an account payee cheque drawn on a bank or account payee bank draft exceeds Rs.20,000/- which is in contravention and violation of section 40A(3). The details of such payments are as under :-

The assessee was asked to show cause why the payment of Rs.14185500/- should not be disallowed u/s.40A(3) of the Act. The assessee replied as under :-

The reply of the assessee did not find any favour with the Assessing Officer who proceed by disallowing Rs.14185500/- u/s. 40 A(3) of the Act.

Assessee strongly agitated the matter before the CIT(A) and reiterated that the payments are covered by CBDT circular No.220(F.No.206/17/76-IT(A-II) dated 31.05.1977 it was strongly contended that the payees have given certificate stating that they insisted the payment to be made by bearer cheque.

After considering the facts and the submissions the CIT(A) held as under :-

Before us the counsel once again stated what has been stated before the lower authorities and relied upon the decisions which were relied before the CIT(A).

Per contra the DR strongly supported the findings of the CIT(A).

We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that payments amounting to Rs.14185500/- were made to six parties mentioned elsewhere by bearer cheque. Though the assessee has heavily relied upon the certificates / letters given by the payees stating that the payee have refused to accept account payee cheques from the assessee, we find that all the certificates from the different payees are similarly worded and we fail to understand once the bearer cheque were acceptable to the payees why the same was not accepted as account payee cheques. The assessee has not brought any commercial exigencies / urgencies for making the purchases through bearer cheque. We find that many payments have been made through RTGS which means that the assessee was well conversant with the banking transaction and banking operations, therefore, we do not find any justifiable cause or exceptional circumstances for the impugned payments through bearer cheques which is in violation of the provisions of section 40 A(3) of the Act. We find that the CIT(A) has clearly distinguish the facts with the facts of the judgments relied upon by the assessee. We, therefore, do not find any reason to interfere with the findings of the CIT(A).

In the result, the appeal filed by the assessee is dismissed.