Jaswant Sehgal vs Income Tax Officer Under Faceless Assessment Unit

PER SATBEER SINGH GODARA, JM:

This assessee’s appeal ITA No. 6456/Del/2026 for assessment year 2015-16, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], passed in DIN & Order No. ITBA/NFAC/S/250/2026-27/1088405636(1), involving proceedings u/s 143(3) r.w.s. 263 r.w.s. 144B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’); respectively.

Heard both the parties. Case file perused.

We now advert to the sole substantive issue between the parties. The assesseee/appellant, engaged in the business of a wine contractor, appears to be aggrieved against both the learned lower authorities’ respective assessment and lower appellate findings invoking section 40A(3) expenditure disallowance amounting to Rs. 33,23,055/- which forms the sole subjective issue for the tribunal’s apt adjudication.

That being the case, there is not much a dispute between the parties regarding the assessee’s cash payments made to M/s City Wines. We make it clear that although the assessee has claimed that the same do not exceed the statutory limit of Rs. 20,000/- a day; as it was applicable at the relevant point of time, the fact however remains that the learned Assessing Officer’s assessment order has duly prepared a tabulation chart of impugned cash payments. We thus see no merit in the assessee’s first and foremost argument raised during the course of hearing to the very effect.

Next comes the assessee’s latter substantive ground/argument that keeping in mind the fact that he is engaged in liquor sales, we are of the considered view that the same indeed involves a predominantly unorganized sector involving cash sales which followed his cash payment made to M/s City Wines. It is in this factual backdrop that the Revenue vehemently quotes Attar Singh Gurmukh Singh Vs. ITO reported in (1991) 191 ITR 667 (SC) that the statutory restriction on the quantum of such cash expenses in a day is to control and curbing practice of ploughing of black money back in business transactions. It could hardly dispute that case law Anupam Tele Services v. Income Tax Officer (2014) 366 ITR 122 (Guj.) has settled the issue after considering hon’ble apex court’s preceding decision that the purpose of section 40A(3) of the Act is nowhere is to disallow the overwhelming genuine business payments of an assessee. We are accordingly of the considered view that given the fact that the assessee is engaged in unorganized liquor sales business mainly involving cash component receipts; his action making impugned cash expenses payments to M/s City Wine in the RAD mode could indeed be held as duly explained. We, accordingly find merit in his sole substantive ground/argument seeking to delete the impugned section 40A(3) disallowance of Rs. 3323055/-, in very terms.

No other ground or argument has been pressed.

This assessee’s appeal is allowed.