SUMER SINGH MEMORIAL EDUCATION SOCIETY,FARIDABAD vs. IT)(EXEMPTION), FARIDABAD

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ITA 5411/DEL/2018Status: DisposedITAT Delhi05 March 2019AY 2015-164 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee failed to provide any justification for making cash payments in violation of Section 40A(3) and did not establish any business exigency or fall under any exceptions. Therefore, no interference was warranted in the CIT(A)'s order.

What were the facts?

The assessee society made cash payments exceeding Rs. 20,000 for various expenditures. The Assessing Officer disallowed these expenses under Section 40A(3) of the Income Tax Act. The CIT(A) confirmed the disallowance except for a small amount related to bus repair.

What were the issues?

Whether cash payments exceeding Rs. 20,000 made by the assessee were in violation of Section 40A(3) and if there were any valid exceptions or business exigencies to justify such payments.

Which sections of the Income-tax Act were involved?

Section 40A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES “SMC” : DELHI

Before: SHRI BHAVNESH SAINI

Hearing: 25.02.2019Pronounced: 05.03.2019

For Assessee : Shri Mahender Gupta, C.A. For Revenue : Shri S.L. Anuragi, Sr. D.R. Date of Hearing : 25.02.2019 Date of Pronouncement : 05.03.2019 ORDER This appeal by assessee has been directed against the order of Ld. CIT(A), Faridabad, dated 19th July 2018, for the assessment year 2015-2016, challenging the addition of Rs.2,62,782/- under section 40A(3) of the Income Tax Act, 1961.

2 ITA.No.5411/Del./2018 M/s. Sumer Singh Memorial Education Society, Faridabad.

2.

The A.O. noted that registration under section 12A have been denied to the assessee. During the year under consideration, the society is engaged in the educational activities and other activities by running School. The assessee produced books of account and other details before assessing officer which revealed that assessee- society has made cash payments of expenditure exceeding Rs 20,000/-, details of which, are noted at page-2 of the assessment order, totaling to Rs.2,83,652/-. Since these payments were made in violation provision of section 40A(3) of the Income Tax Act, the same was added to the income of the assessee.

2.1. The Ld. CIT(A) noted that assessee has filed vouchers and bills of the expenses disallowed by the A.O. but no specific submission have been made to substantiate as to why the payment for these expenses are made in cash. The assessee was unable to prove that these payments are made on account of any business exigency or fall under the exceptions of Rule 6DD of I.T. Rules. The Ld. CIT(A), however, find that expenses of Rs.20,870/- was incurred on 3 ITA.No.5411/Del./2018 M/s. Sumer Singh Memorial Education Society, Faridabad. bus repair which could be considered in the nature of business exigency. The Ld. CIT(A), therefore, deleted this addition and confirmed the addition of the balance amount of Rs.2,62,782/-.

3.

After considering rival submissions, I am of the view that no interference is called for in the matter. The assessee in the written synopsis filed the details of bills and vouchers of the same, which clearly established the findings of the A.O. that assessee made cash payment of all these expenditure in one day exceeding Rs.20000/-. Section 40A(3) of the Income Tax Act provides that where the assessee incurs any expenditure, in respect of which, a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a Bank or Account Payee Bank Draft exceeds Rs.20,000/-, no deduction shall be allowed in respect of such expenditure. The proviso of the same also provides that no disallowance shall be made under this provision considering the nature and exception of Banking facilities available, consideration of business exigencies and other relevant 4 ITA.No.5411/Del./2018 M/s. Sumer Singh Memorial Education Society, Faridabad. factors. The assessee has made cash payments in violation of provisions of Section 40A(3) of the Income Tax Act and assessee has also failed to explain any business exigency or other relevant factors for seeking any exemption under the provision to Section 40A(3) of the Income Tax Act. No interference is therefore called for in the matter. The appeal of assessee stands dismissed.

4.

In the result, appeal of assessee is dismissed. Order pronounced in the open Court.

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