COMMISSIONER OF INCOME TAX Vs. THE SOLUTION

JUDGEMENT

(1.) Instant Income -tax Appeal under Sec. 260A of the Income -tax Act, 1961 (for short "Act"), is directed against the order dated September 5, 2014, passed by the Income -tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, "Tribunal") and relates to the assessment year 2008 -09. Brief facts noticed are that the respondent -assessee is engaged in the business of supplying diesel at various sites of M/s. Idea Cellular Company and is stated to have maintained regular books of account consisting of cash books, ledgers, vouchers and accounts are audited under Sec. 44AB of the Act.

(2.) During the course of assessment proceedings, on having perused the books of accounts, the Assessing Officer (for "AO") noticed that the asses -see has debited huge expenses of Rs. 3,32,22,178 on account of purchase of diesel and on a further enquiry about the details of purchases of the aforesaid diesel, it was noticed by the Assessing Officer that the assessee had made payment in cash exceeding Rs. 20,000 to various suppliers throughout the State and the cash purchase through the said suppliers was Rs. 2,40,85,381. The assessee also claimed cash payment of Rs. 29,189 under the head vehicle running and maintenance expenses and dissatisfied with the aforesaid cash payments exceeding Rs. 20,000, the Assessing Officer issued a show -cause notice as to why the said amount under Sec. 40A(3)(a) may not be disallowed as it is in violation of the said provision. However, it was contended by the respondent that the assessee is engaged in the business of supply of diesel at various sites of M/s. Idea Cellular Company through the agents appointed for this purpose and agreements with the various agents were also furnished. It was further contended that the agents purchase diesel from the local petrol pumps and supply it to the sites of M/s. Idea Cellular Company in that area and the assessee deposits the amount in the bank account of the agents, who are located at various locations including interior and remote places in Rajasthan and contended that as per rule 6DD(k), it is covered by the said definition and provisions of Sec. 40A(3)(a) are inapplicable. However the Assessing Officer was dissatisfied and made disallowance of the entire amount of Rs. 2,41,14,570.

(3.) On an appeal, the Commissioner of Income -tax (Appeals) for short, "CTT(A)") allowed the claim of the assessee and deleted the entire disallowance under Sec. 40A(3)(a). On an appeal by the Revenue before the Tribunal, the view of the Commissioner of Income -tax (Appeals) was upheld and the appeal of the Revenue was dismissed.