RAMESH CHAND Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The assessee is in appeal under Section 260A of the Income-tax Act, 1961 (for short 'the Act') against the order dated 14.11.2011 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short 'the Tribunal') in ITA No. 1454/CHD/2011 for the assessment year 2007-08. Though the appellant framed six substantial questions of law, but on 06.12.2012, the appellant made a statement before this court not to press questions Nos. (A) and (C). Therefore, the following substantial questions of law arise for consideration only:-

(2.) In respect of question No. B above, the appellant is said to have purchased wheat from Shri Sai Baba Rice Traders, Naya Bazaar, Delhi for a sum of Rs. 39,25,680/- out of the said amount, Rs. 8,44,934/- was found to have been paid though cheques. The Assessing Officer found that the payment of Rs. 30,80,746/- was made by assessee otherwise by account payee cheque. Therefore, for the violation of Section 40A(3) of the Act, 20% of the above amounting to Rs. 6,16,150/- was disallowed and added to the income of the assessee. Such order was affirmed by the Commissioner of Income-tax (Appeals) and the Income Tax Appellate Tribunal.

(3.) Learned counsel for the appellant has vehemently argued that the appellant has sold the wheat through M/s. Shri Ganesh Trading Co., Naya Bazaar, Delhi and such firm has made the payment. For the said amount, the cheques were issued from the bank account of the said firm to the seller i.e. Shri Sai Baba Rice Traders and therefore, the said amount has been wrongly said to be in violation of Section 40A(3) of the Act. In support of such contention, learned counsel for the appellant relies upon the certificate (Annexure A-5) by Shri Sai Baba Rice Traders in respect of receipt of the six cheques of Rs. 30,80,746/- and also a copy of the ledger account of M/s. Shri Ganesh Trading Co. showing the issuance of the cheques of the aforesaid amount.