आयकर अपीलीय अिधकरण िद(cid:671)ी पीठ “जी”, िद(cid:671)ी

঒ी िवकास अव(cid:830)थी, (cid:586)ाियक सद(cid:735) एवं

঒ी एम. बालगणेश, लेखाकार सद(cid:735) के सम঴

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER &

SHRI M. BALAGANESH, ACCOUNTANT MEMBER आअसं.2790/िद(cid:671)ी/2022 (िन.व. 2014-15) ITA No. 2790/DEL/2022 (A.Ys. 2014-15)

Sabha Chand, 25-KA-6, Jyoti Nagar Housing Board Lal, Kothi, Jaipur, Rajasthan 302005 PAN No: ASQPC-9509-C ...... अपीलाथ(cid:7278)/Appellant बनाम Vs.

Income Tax Officer, Ward-2, NNL, Haryana 132001 ..... (cid:7079)ितवादी/Respondent Assessee by : Ms. Rano Jain, Ms Sakashi Rustagi, Advocates &

Ms. Mansi Jain, Chartered Accountant Department by : Shri Mahesh Kumar, CIT(DR)

सुनवाई क(cid:7409) ितिथ/ Date of hearing : 19/05/2025 घोषणा क(cid:7409) ितिथ/ Date of pronouncement : : 14/08/2025 आदशे /ORDER PER VIKAS AWASTHY, JM:

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘the CIT(A)’]

dated 16.09.2022, for Assessment Year 2014-15.

2. Ms. Rano Jain, appearing on behalf of the assessee submitted at the outset that she is not pressing ground no. 3 and 4 of appeal. Thus, the solitary issue that arises for adjudication in this appeal is in ground no. 2 of appeal. She submitted that the assessee has assailed addition of Rs.3,91,03,198/- u/s. 40A(3) of the Income Tax Act,1961(hereinafter referred to as ‘the Act’). Narrating facts of the case, she submitted that the assessee is engaged in retail sale of liquor. During the period relevant to assessment year under appeal, the total turnover of the assessee is Rs.6,56,16,760/- with a net profit of Rs.5,58,454/- i.e. 0.85%. During the course of assessment proceedings, the Assessing Officer (AO) made addition of Rs.3,91,03,198/- on account of cash purchases of liquor from M/s. Ganga Wines Narnaul. She submitted that payment in cash was made on account of business expediency. The nature of assessee’s business is such that substantial trading is done in cash. The assessee was forced to pay cash for purchase of liquor as the seller was not ready to give credit facility and goods were only allowed to be lifted after payment. On certain occasions the bill was issued by the seller but the assessee was not allowed to lift the goods before payment. Under such circumstances the assessee had no other option to make payment immediately in cash. The ld. Counsel further referred to CBDT Circular No. 220 [F.No.206/17/76-IT(A)] dated 31.05.1977, wherein at point no. 4 and 5 it is clarified that all the circumstances in which the conditions laid down in Rules 6DD(i) of the Income Tax Rules, 1962, would be applicable cannot be spelt out, however, some of them which would seem to meet requirements of the said Rule have been listed. The ld. Counsel thus, prayed for deleting additions made u/s. 40A(3) of the Act.

3. Per contra, Shri Manish Gupta, representing the department vehemently defended the impugned order and prayed for dismissing appeal of the assessee. The ld. DR submitted that the case of the assessee does not fall within the exceptions provided under Rules 6DD of the Income Tax Rules, 1962. He further submitted that the assessee has been changing its stance before different authorities.

4. Both sides heard, orders of the authorities below examined. The short issue in appeal before us is the addition made u/s. 40A(3) of the Act. The assessee is a trader of liquor, the assessee has made cash purchases to the tune of Rs.3,96,80,635/- from M/s. Ganga Wines, Narnaul. On the said purchases TCS Rs.3,96,806/- was collected. The contention of the assessee is that the cash purchases were made on account of business exigencies as the seller was not allowing the assesee to lift the stock without payment. As per section 40A(3) of the Act where the assessee incurs any expenditure in respect of which payment or aggregate of payments made to a person in a day other