RAJIV SHISHIR NAGAR ,HOWRAH vs. ITO, WARD - 46(3), KOLKATA , KOLKATA

The assessee sole substantive ground challenges both the lower authorities’ action invoking sec. 40A(3) disallowance of carriage, freight and travelling expenses of ₹12,91,444/- on account of cash payment made in a single day. Mr. Singh strongly supports the impugned disallowance on the Rajiv Shishir Nagar Vs. ITO Wd-46(3), Kol. Page 2 ground that assessee could not prove the relevant facts and circumstances forming reason of the impugned cash payment. He fails to dispute that both the lower authorities have nowhere doubted genuineness of the impugned expenditure. Hon'ble jurisdictional high court’s judgment in CIT vs. Crescent Export Syndicate in of 2008 decided on 30.07.2008 reads as under:- “The learned Counsel appearing for the appellant argued that the assessee is 100% export oriented firm, exporting leather goods viz. Wallets and different types of bags. The total export turnover during the year (FOB value) Rs.19,81,73,720/- and purchases shown at Rs.11,65,97,523/. Out of the said purchase, the purchase from 15 parties amounting to R.83,44,822/- and the seller could not be produced in assessment, hence the AO disallowed the entire purchase and added Rs.83,44,822/-. In appeal, before the ld. CIT(A)-XIX, Kolkata the appellant submitted that it maintains stock book inventorised the purchase of leather, leather issued for cutting, and issued to fabricator finally for finishing the goods as per export order. The ld. CIT(A) directed the A O to examine those books and to submit the remand report. In the remand report the AO has admitted on verification for the purchase details, it is seen that the purchases amounting to Rs.83,44,822/- made from different parties are entered in the tock register and put to the various stages of manufacturing process. The assessee also produced bills in respect of all purchase made from these 15 parties and finally the ld. CIT(A) has held as regards the purchase, it is seen that these were recorded in the tock register, their consumption is also recorded therein, up to the stage of final production. All these records are audited. They are produced before the Assessing Officer for examination who had not been able to print out any defect in it. Under the circumstances the purchases are considered to be genuine. So the purchases have been held to be genuine. It also appears that’s the purchases have been held to be genuine by the learned CIT (Appeal) but the learned CIT (Appeal) has invoked section 40A(3) for payment exceeding Rs.20,000/- since it is not made by crossed cheque or bank draft but by hearer cheques and has computed the payments falling under provisions to Section 40A(3) for Rs78,45,580/- and disallowed @ 20% thereon Rs.15,69,116/-. It is also made clear that without the payment being made by bearer cheque thee goods could not have been procured and it would have hampered the supply of goods within the stipulated time. Therefore, the genuineness of the purchase has been accepted by the ld. CIT (Appeal) which has also not been disputed by the department