Assessee need to prove that why payments could not be made by crossed cheques/demand draft or that these were made out of sheer necessity u/s. 40A(3)

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 M/s Purvanchal Construction Works (P) Ltd. Vs. ACIT (ITAT Delhi)

  ITA No. 3/D/2011, Date of pronouncement

There is no dispute that the case of the assessee does not fall within any of the exception provided in rule 6DD of the IT Rules,1962 nor the ld. AR on behalf of the assessee made any such claim before us. Only plea of the ld. AR is that affidavits furnished by the assessee of six persons placed at page 7 to 12 of the paper book and certain documents were not considered by the ld. CIT(A). Indisputably, in this case a survey was conducted in the premises of the assessee on 27.2.2007,when certain impounded documents revealed cash payments exceeding Rs. 20,000/- each.

On the basis of material found during the survey assessee surrendered undisclosed income of Rs. 3 crores. The impounded documents revealed cash payments exceeding Rs. 20,000/- each to the extent of Rs. 2,86,79,431/- . The AO also referred to certain documents at Page 22 of Annexure D-8 (or page 148 of Annexure D-27) ; Page 15 of Annexure D-8 (or page 115 of Annexure D-27) ; Page 01 of Annexure D-50 (or page 59 of Annexure D-28) in his order while making the disallowance. The ld. AR claimed before us the payments were actually below Rs. 20,000/- each while documents impounded reflected payments due and not actually made.

However, no evidence has been placed before us in support of this assertion. The affidavits of six persons all dated 22.12.2009 filed at the fag end of assessment proceedings and after more than three years of the relevant transactions are not corroborated by any material whatsoever. These affidavits dated 22.12.2009 were obviously filed at the instance of the assessee to serve his interest and such self-serving affidavits hardly achieve any purpose, especially when no cogent material has been placed before the lower authorities and even before us in support of contents of the affidavits.

The ld. CIT(A) on perusal of the documents impounded during the survey, found that the ld. AR has not been able to point out that the entries contained in old ledger at page 21 are not correct. Annexure D-8 page 22 revealed that the assessee company made cash payments to Mr. Jamurati amounting to Rs. 1,57,000/- and same has been debited from the cash balance on 08.06.2006. Similarly, cash payment of Rs. 1,16,000/- was made to Mr. P. K. Suraj on 12.05.2006, Rs. 1,16,400/- to Mr. Ramzan Ali on 11.12.2006 and Rs. 1,21,700/- to Ainul on 16.01.2007. All these payments were made in single transaction as cash of that amount has been debited from the cash balance.

The ld. CIT(A) also rejected the plea on behalf of the assessee that these figures were aggregate of the cash payments, being not supported by the evidence available on the record. In these circumstances, the ld. CIT(A) upheld the disallowance. There is nothing to suggest that the relevant material has not been considered by the lower authorities. Not even a whisper has been made before us as to why the aforesaid payments could not be made by crossed cheques/demand draft or that these were made out of sheer necessity. The transactions are of wholesale nature. We do not understand that how payments by crossed cheques/demand drafts can in such circumstances be held to be impracticable. Since the ld. AR has not placed before us any material, controverting the aforesaid findings of facts recorded by the ld. CIT(A) so as to enable us to take a different view in the matter, we are not inclined to interfere.