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Facts
The assessee made payments to employees in cash, which were added to income by the AO and confirmed by CIT(A). The assessee also had two Sundry creditor accounts that were allegedly God's accounts, into which capital was drawn and credited towards payments to religious trusts.
Held
The Tribunal considered the submissions and noted that employees had filed returns showing salary income. It also considered that the sundry creditor accounts were for religious trusts. In the interest of justice, the addition made by the AO and confirmed by the CIT(A) was deleted.
Key Issues
Whether cash payments to employees were to be added to income, and whether the amounts in the sundry creditor accounts were allowable as deductions.
Sections Cited
Section 40A(3) of the Income Tax Act
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2 small type employees and they demanded the cash as it could be impossible to route the transactions through their bank accounts. It was also the submitted by the assessee that the employees have filed their returns and shown the income in their hands. The Ld. AR has drawn our attention to the returns filed by the employees at pages 11 & 12 and 13 &14, wherein the salary income has been included. It was the prayer that the said additions may be deleted.
In reply the Ld. Sr DR submitted that the assessee was not allowed to make payment of excess of Rs.20,000/- other than by account payee cheque or bank draft or through account transferred.
We have considered the rival submissions. Considering the genuineness of the transactions and the fact that the employees have shown their income in the returns of income filed by them, in the interest of justice the addition made by the AO and confirmed by the Ld.CIT(A) stands deleted.
It was the further submissions of the ld. AR that the second addition was in respect of two Sundry creditors namely Sri Satiji Mata having the closing balance Rs.1,83,563.40/- and Shri Ganeshji Maharaj having closing balance Rs.678.25/-. It was the submission that these were basically God’s account and these were amounts that the assessee was drawing out of his capital account and crediting to the said two accounts towards the payments to two religious trust. It was submission that the same has liable to be allowed.