Question And Answer
Subject: cash purchase of animals from producers
Querist: ca praveen bansal
Answered by:
Tags: ,
Date: March 16, 2023
Query asked by ca praveen bansal

hi every one

the assessee is a trader and supplies live stock (buffalo cattle) to the various meat factories.

the sales are confirmed by the respective customers and payments are also received in bank account, but cash withdrawn from the bank account for making the payments to the respective suppliers (farmers/producers) in cash, because all the purchases are made from the farmers/producers of buffalo and the payment has to be made in cash. this cash purchase is allowed as per the conditions of Rule 6DD and section 40B. now the assessing officer is doubting about the purchase.

now i need some case laws in favour of the assessee, where the sales are confirmed but purchases are in cash and not from any registered person.

thanking you


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It is a well-settled position in law that once the sales are accepted as genuine the purchases cannot be doubted. In the case of PCIT v. Batliboi Environmental Engineering Ltd. (2022) 446 ITR 238 (Bom) (HC) when sales are accepted purchases cannot be disallowed.

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