unaccount purchase disallow U/s. 40(3) possible

Tax queries 1095 views 3 replies

i have disclosed 50 crore sales(unaccount) then ito said you have purchase 45 crore in cash so its disallowed it is possibleu/s. 40A(3)


 

Replies (3)
You can raise the following arguments: Additon u/s 40(A)(3) is in respect of deemed profit . The deeming provisio is to be strictly construed . An amount can be brought within the ambit of of deeming provision only if condition precedent is fulfilled . There must be defininte finding by AO that payment exceeding Rs 20,000/- has been made based on evidennce or materials on record . Simply saying that such payments have been made is not sufficient . In your case if no such material is there on record to conclusively prove the fact of payment exceeding Rs 20000/- in cash the provision of section 40(A)(3) can not be invoked .CHECK OUT YOUR FACTS.
Also check the following judgment: ITO should adopt practical and not a technical approach - The ITO should take a practical approach to problems and strike a balance between the direction of law and hardship to the assessee. He should not enmesh himself in technicalities. After all, the object is not to deprive the assessee of the deduction which he is otherwise entitled to claim - Girdharilal Goenka v. CIT
aLSO CHECK : INTERPRETATION OF STATUES-TAXING STATUTES-LITERAL INTERPRETATION-NOT TO BE ADOPTED IF IT LEADS TO DISCRIMINATROY OR INCONGRUOUS RESULT-LANGUAGE CAN BE MODIFIED TO ACCORD WITH INTENTION OF PARLIAMENT AND TO AVOID ABSURDITY-CWS (INDIA) VS. CIT. (1994) 208 ITR 649 (SC)


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