TARUN KUMAR GUPTA,MEDINIPUR vs. I.T.O.,WARD-39(2), MEDNAPORE
What did the Tribunal hold?
The Tribunal held that only the payment exceeding Rs. 20,000 to N. Sushila was in contravention of Section 40A(3). Other cash payments for gold purchases did not exceed the threshold limit in a single instance, thus not violating the provision.
What were the facts?
The assessee, engaged in gold and silver jewellery business, made cash purchases of gold. The AO disallowed a portion of these expenses under Section 40A(3) as payments exceeded Rs. 20,000 in a single day to one person. The CIT(A) confirmed this disallowance.
What were the issues?
Whether cash payments for gold purchases exceeding Rs. 20,000 in a single day to one person are disallowable under Section 40A(3) of the Income Tax Act.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, KOLKATA BENCH ‘(SMC
Before: Shri P.M. Jagtap, KZ]
order : December 13, 2019 ORDER This appeal filed by the assessee is directed against the order of Ld. CIT(A) – 25, Kolkata dated 28.02.2019 and the solitary issue involved therein relates to the addition of Rs. 1,57,840/- made by the AO and confirmed by the Ld. CIT(A) on account of disallowance u/s 40A(3) of the Income Tax Act, 1961.
At the outset, it is noted that there is a delay of 39 days on the part of the assessee in filing this appeal before the Tribunal. In this regard, the assessee has filed an application seeking condonation of the said delay and keeping in view the reasons given therein, I am satisfied that there is a sufficient cause for the delay of 39 days on the part of the assessee in filing this appeal before the Tribunal. Even the ld. DR has not raised any objection in this regard. The delay on the part of the assessee in filing this appeal is accordingly condoned and the said appeal is being disposed of on merit.
Assessment Year: 2009-10 Shri Tarun Kumar Gupta
The assessee in the present is an individual who is engaged in the business of manufacturing and trading of gold and silver jewelleries. The return of income for the year under consideration was filed by him on 24.09.2009 declaring a total income of Rs. 8,81,110/-. During the course of assessment proceedings, it was noticed by the AO that the assessee has purchased gold in cash from the following parties: “i. From N. Sushila on 15.01.2009 Rs. 20,104/-. ii. From M/s. M Ramesh & Co. on 03.06.2008 Rs. 19,998/- and Rs. 19,816/- on 23.08.2008, Rs. 19,270/- & 19,634/- and on 23.03.2009 Rs. 19,331/- and Rs. 19,770/-.” Since the above expenditure incurred by the assessee on purchase of gold in cash from one person in a day exceeded Rs. 20,000/-, the AO invoked the provision of section 40A(3) and made a disallowance of Rs. 1,57,840/-. On appeal, the Ld. CIT(A) confirmed the said disallowance. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.
I have heard the arguments of both the sides and also perused the relevant material available on record. The learned counsel for the assessee has submitted that none of the payments, except the payment of Rs. 20,104/- made of N. Sushila on 21.07.2008, exceeded the sum of Rs. 20,000/- to a person on the single occasion. He has contended that since these payments were made in cash against the purchase of gold not exceeding Rs. 20,000/- in a single instance prior to the amendment made in section 40A(3) of the Act, there was no contravention of the said provisions and the disallowance made u/s 40A(3) to that extent is not sustainable, I find merit in this contention of the learned counsel for Assessment Year: 2009-10 Shri Tarun Kumar Gupta the assessee and since the ld. DR has also not raised any material contention to rebut or dispute the same, I sustain the disallowance made by the AO and confirmed by the ld. CIT(A) u/s 40A(3) to the extent of Rs. 20,104/- only.
In the result, the appeal of the assessee is partly allowed. Order Pronounced in the Open Court on 13th December, 2019.
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