आयकर अपील(cid:547)य अ(cid:876)धकरण, चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘A’, CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT &

SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 665/CHD/2023 (cid:467)नधा(cid:91)रण वष(cid:91) / Assessment Year : 2013-14 ITO, Jasvir Singh, Kurukshetra बनाम Village Diwana Vs. Tehsil Pehowa, Distt. Kurukshetra

136128 èथायी लेखा सं./PAN NO: CNQPS4895G अपीलाथ(cid:568)/Appellant (cid:292)×यथ(cid:568)/Respondent ( Physical Hearing )

(cid:467)नधा(cid:91)(cid:464)रती क(cid:551) ओर से/Assessee by : Sh. Parikshit Aggarwal, CA राजèव क(cid:551) ओर से/ Revenue by : Shri Manav Bansal, CIT DR सुनवाई क(cid:551) तार(cid:547)ख/Date of Hearing : 26.06.2025 उदघोषणा क(cid:551) तार(cid:547)ख/Date of Pronouncement : 11.08.2025 आदेश/Order Per Krinwant Sahay, AM:

Appeal in this case has been filed by the Revenue against the order dated 12.09.2023 of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi.

2. Grounds of appeal are as under: -

1. Whether on the facts and in the circumstances of the case, the CITIA) has erred in deleting the addition of Rs.3,11,58,000/- made on account of disallowance of expenditure in cash in violation of section 40A(3) of the I.T. Act, 1961 by ignoring the fact that the AO had rightly made the addition on the facts having sufficient reasons and material available on record.

2. Whether on the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs.3,11,58,000/-, when none of the exceptions laid down under Rule 6DD of the Income Tax Rules is involved in the assessee case.

3. Whether on the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition made of Rs.3,11,58,000/-u/s 40A(3) of IT Act, 1961 by holding that the cash payments were made as the appellant faced genuine difficulties, were not found made only on one or two occasions but repeatedly many times as well as the fact is that the assessee had made almost 50% of total purchases during the year in cash in violation of Section 40A(3) of IT Act, resulting into defeating the basic purpose of insertion of section 40A(3) of IT Act, 1961.

3. Although the Revenue has taken three grounds of appeal but the only issue involved is a deletion of addition made by the AO of Rs. 3,11,58,000/- disallowing the expenditure in cash in violation of section 40A(3) of the Income Tax Act, 1961 (in short 'the Act').

4. The Ld. CIT(A) has given a very detailed findings on this issue in the appellate order which is as under:-

On the only issue at hand i.e., addition u/s 40A(3) of the Act, Hon'ble ITAT has restored the matter back to CIT(A) directing to adjudicate the issue afresh in accordance with law after examining and considering all facts and jurisprudence relating to the issue.

The matter was referred back by Hon'ble ITAT because the CIT (A) had not considered the submission of the appellant and confirmed the addition by passing a non-speaking order. The main contention of the appellant are as under: -

 As Para 3.1 and 3.2 of the order, the AO has confirmed the genuineness of the purchases as the same is supported by Form 26AS.

 The payments were made to M/s Piccadily Agro Industries for purchase of liquor as the appellant had to procure liquor immediately for allotment of license and had to pay Rs.5.94 Cr. plus Rs. 1.67 Cr to the Haryana State Excise for license fees and excise duty i.e. more than Rs. 2 lakhs per day. Which means even 4-5 days, delay could have affected the business operations of the assessee badly.

 The Assessee being in the first year of trade had no such credibility with the suppliers and therefore had to work on whims and wills of supplier to avoid the cost burden and to earn some profit as delay in procurement would have adverse effect on business. The supplier has refused to supply the goods, unless the amount is received by him in his bank account. Further assessee had deposited every payment to M/s Piccadily