DEVCARE SOLUTIONS,CHENNAI vs. ITO NON CORP CIR 22(1), TAMBARAM

Page - 2 - of 6 5.4 of his order. Before us also the Ld.Counsel reiterated the same set of arguments relying on the same documents. 4.0 The Ld.DR vehemently argued in favour of the order of lower authorities. It was stated that in the absence of any cogent demonstrative evidence forthcoming from the assessee, a presumption qua genuineness of impugned expenses cannot be drawn. 5.0 We have heard rival submissions in the light of material available on records. It is an undisputed fact of the case that the assessee has not provided any evidence in the form of qualifications of the parties, agreements entered with them, details of amounts paid to them through banking channels etc thus far. It is trite law that it is the assessee which is required to lead evidence in its case in support of claims made. The assessee was therefore required to provide all the above evidence for examination of the lower authorities. Mere tax deduction by the assessee can be a factor to justify the claim, but cannot be the sole factor. The assessee was required to explain the commercial expediency of the impugned expenses including the genuineness of the transactions, identify of persons etc. Accordingly, we are of the opinion that there is no case of any interference to be made in the order of Ld.First Appellate Authority. The same is therefore confirmed and grounds of appeal nos. 2 to 5 raised by the assessee are dismissed.

Page - 3 - of 6 6.0 The next issues raised by the assessee through grounds of appeal nos. 6 to 8 are regarding addition of Rs.66,61,467/- made by the Ld. AO by invoking provisions of section 40A(3) of the act. The Ld. Counsel drew our attention to para 6 of the Ld. AO’s order. During the course of assessment proceedings the Ld.AO noted that the assessee had withdrawn huge amount of cash amounting to Rs. 80,14,000/- from its account with HDFC bank. In response to show cause notice of the Ld.AO, the assessee provided copy of its cash book. The Ld. AO noted from the perusal thereof that cash expenses of amounts aggregating to Rs.66,61,467/- was in respect of cases where expenditure exceeded the threshold limit u/s 40A(3) of Rs.10,000/-. As evident from para 7 of the order, in the absence of any effective rebuttal from the assessee, the Ld. AO made the impugned addition. Before the Ld.CIT(A) the assessee had argued that the Ld.AO has misunderstood the fact of the case. The assessee had argued before the Ld.CIT(A) that it had genuine and compelling circumstances for making cash payments in excess of threshold limit u/s 40A(3) of Rs.10,000/-. Thus, rent amount of Rs.3,60,000/- was paid in cash as per the request of the land lords who were also incidentally partners of the firm. Stipend of Rs. 21,84,147/- was paid to some students hired for US projects since they did not have any bank account. Similarly, salary / outsourcing charges of Page - 4 - of 6. Rs.40,16,237/- were paid to temporary / contractual staff since they did not have any bank account. 7.0 The Ld.DR relied upon the order of lower authorities. 8.0 We have heard the rival submissions in the light of material available on records. Section 40A(3) of the act has been brought on the statute with the objective of curbing cash transactions so that a bona-fide identifiable trail of expenses is available on records. Rule 6DD of the Income Tax rules presumes situations where it may not be possible to comply with the said threshold limit of Rs.10,000/- and hence certain exceptions have been made to allow for cash expenses in exceptional circumstances, chiefly being non-availability of adequate banking facilities, low end laborers etc. We find sufficient force in the findings of the Ld.CIT(A) that the assessee does not have any justified grounds in support of its claim. The argument of land lord insisting for cash payments cannot be a justified ground. Similarly, stipend payments and salary etc to white collar workforce located in metropolis of Chennai could have been easily given by cheque as argument of non-availability of adequate banking facilities in Chennai cannot be accepted. Accordingly, we do not feel any need to interfere with the order of the Ld.CIT(A) as this stage. The addition made by the Ld.AO of Rs.66,61,461/- is therefore confirmed and all the grounds of appeal raised by the assessee are dismissed. Page - 5 - of 6 9.0 The next issue raised by the assessee through its appeal no.9 is regarding violation of principles of natural justice to the extent of using information against it, which was gathered at its back. Upon consideration of the matter, we have noted that no specific detail or arguments were brought to our knowledge in support of the impugned ground. There is nothing in the order of lower authorities which alludes towards utilization of any information gathered at its back. Consequently, the ground of appeal no.9 has been found to be infructuous and is therefore dismissed. 10.0 In the result the appeal of the assessee is dismissed. Order pronounced on 30th , April-2025 at Chennai.