1. The assessee is aggrieved of the order dated 21-12-1981 of the learned Commissioner (Appeals).
2. The assessee, Ingenieurs & Agents, Halwasiya Court, Lucknow, is a registered firm which enjoys income from civil work, supply, erection, installation and commissioning of Ash Handling Plant of Thermal Power Station. During the year under consideration, the work done was at Tata Iron and Steel Company Ltd., Jamshedpur and at Guru Nanak Thermal Power Station, Bhatinda (Punjab). In the Bhatinda set, the first ground of appeal relates to the disallowance of Rs. 16,000 under Section 40A(3) of the Income-tax Act, 1961 ('the Act'). The addition comprises of the following payments : (i)Rs. 5,000 paid to Union Timber Stores in three amounts of Rs. 2,000, Rs. 1,500 and Rs. 1,500 on the same day, i.e., 3-3-1972.
(ii) Rs. 4,000 in two amounts of Rs. 2,000 each on 8-3-1972 to Union Timber Stores.
(iii) Rs. 4,000 on 13-12-1972 again to Union Timber Stores in one lump sum.
(iv) Rs. 3,000 on 31-5-1972 in two amounts of Rs. 1,000 and Rs. 2,000 for purchase of Tibri sand to Din Dayal Raj Kumar.
The explanation furnished by Ihe assessee not having been accepted by the ITO, addition was made under Section 40A(3).
3. In appeal, the learned Commissioner (Appeals) confirmed this addition on the following grounds : (a) The application of Section 40A(3) cannot be circumvented by breaking the payment to a particular party in amounts which are less than Rs. 2,500. As the facts stated above would show, the payments have been made on the same date and most probably at the same time but to avoid the application of Section 40A(3) these have been broken into smaller amounts.
(b) In the cash book and in the vouchers that have been produced before me, there is mention about 'bills' submitted by the respective parties but no such bills have been shown to me at the time of the hearing of the appeal. It is very likely that the parties concerned might have submitted consolidated bills for amounts of Rs. 5,000, Rs. 4,000, Rs. 4,000 and Rs. 3,000 but payments have been made to them in smaller amounts just to bypass Section 40A(3).
(c) The learned representative has not been able to satisfy me that the payments made fall within the purview of Rule] 6DD and CBDT's Circular No. 220. There is no evidence that the recipient desired that the moneys be. paid to them in cash and the appellant's business would have been adversely affected if such requests from the recipients would not have been accepted.
4. Shri D.B. Bhargava, learned counsel for the assessee, submitted that there were separate vouchers for these payments. Relying upon the decision of the Hon'ble Orissa High Court in the case of CIT v. Aloo Supply Co.  121 ITR 680, he pointed out that since the amounts were paid on different occasions on the same day, the assessee could not be subjected to the statutory restriction contained in Section 40A(3) unless any one payment was above Rs. 2,500. He pointed out that the word 'sum' in Section 40A(3), second proviso of the Act, is used only to indicate an amount of money and does not refer to the totality of the expenditure. So far as the payment of more than one sum of less than Rs. 2,500 at one time on the same day is concerned, Shri Bhargava pointed out that law permitted tax avoidance to the assessee. He pointed out that there were different vouchers and different entries.
Referring to the orders of the income-tax authorities on this point, Shri Bhargava alternatively submitted that regarding the circumstances under which cash payments were made of sums exceeding Rs. 2,500, opportunity was not afforded to the assessee and that the matter could be sent back to the ITO for the purpose.
5. On the other hand, Shri Satya Prakash, learned departmental representative, placed reliance on the orders of the income-tax authorities. He also referred to the decision of the Hon'ble Allahabad High Court in the case of Ideal Tannery v. CIT  117 ITR 34, for the proposition that it was for the assessee to establish facts entitling it to the relief under Section 40A(3) read with Rule] 6DD of the Income-tax Rule]s, 1962.
6. We have considered the rival submissions as also the decisions referred to above. So far as the three payments aggregating to Rs. 5,000 and made on 3-3-1972 are concerned, the order of the learned Commissioner (Appeals) records the fact that the three vouchers bore Nos. 385 to 387, i.e., they were continuous showing that the payment was made at one and the same time. The order of the Commissioner (Appeals) also records the fact that the receipts were also dated 3-3-1972. The recipients are well established suppliers of wood at Bhatinda because on their receipts, the learned Commissioner (Appeals) found sales tax number and sales tax. reference numbers to be quoted (sic). It is also significant to note that the learned Commissioner (Appeals) observed that there was no evidence to show that the recipient party insisted that the payments should be made in cash and that too in three segments on that day. The second payment made on 8-3-1972 also consisted of two sums of Rs. 2,000 each. In reply to a query from the learned counsel for the assessee, we were told that their voucher Nos. 438 and 439, i.e., they were again continuous showing that the payments were made at the same time though shown as two payments. The third payment of Rs. 4,000 was made in one lump sum on 13-12-1972 and in that connection the contention raised on behalf of the assessee before the learned Commissioner (Appeals) was that Union Timber Stores desired money urgently. However, there was no evidence to that effect. The learned Commissioner (Appeals) has also observed in para 4 of his order that on the dates when payments were made, the assessee withdrew sums of Rs. 10,000 each on 3-3-1972 and 8-3-1972, respectively from its local bank account. He also observed that on 30-12-1972 the assessee started with an opening balance of Rs. 4,000 and got a sum of Rs. 5,000 from its head office at Delhi and the closing balance on this day with the bank was more than Rs. 24,000.
There is no explanation on behalf of the assessee in regard to the same. So far as the fourth payment of Rs. 3,000 on 31-5-1972 is concerned, the voucher Nos. were disclosed to us by Shri Bhargava as 1037 (Rs. 1,000) and 1038 (Rs. 2,000). The entries regarding the two payments on the same dates were to the following effect : Cash paid to Din Dayal Raj Kumar towards the cost of Tibri sand supplied at site including cartage in full and final settlement of their bills.
The two vouchers and the two receipts in this regard were identically worded. No doubt the principle laid down in the case of Aloo Supply Co.
(supra) by the Hon'ble Orissa High Court cannot be taken exception to.
However, the question is whether that decision can be availed of by the assessee, on the facts of the present case. In that case, the amounts were paid on different occasions on the same day and the payments were made as and when the agents approached. The assessee in that case had no idea that he had to pay to the same person on more than one occasion. It is, therefore, on those facts that the Hon'ble Orissa High Court upheld the view that the assessee could not be subjected to the statutory restriction contained in Section 40A(3), unless any one payment was above Rs. 2,500. In the present case, the amounts were not paid on different occasions on the same day. In fact, the continuity of the voucher Nos. clearly shows that the payment was one and only the vouchers and receipts passed were more than one in order to escape the provisions of Section 40A(3). No doubt tax avoidance and tax planning are permissible, but not tax evasion. The learned Commissioner (Appeals), was, therefore, justified in holding that the application of Section 40A(3) could not be circumvented by breaking the payment to a particular party in amounts which were less than Rs. 2,500. The learned Commissioner (Appeals) had also found that in the cash book and the vouchers produced before him though there was a mention about the bills submitted by the respective parties, no such bills were shown to the Commissioner (Appeals) at the time of the hearing of the appeal. Thus, it cannot be said by the assessee that there were separate bills for the splitted amounts. Having regard to the above facts, we are, therefore, clearly of the view that expenditure incurred by the assessee was in sums exceeding Rs. 2,500 which were paid otherwise than by a crossed cheque or crossed bank draft. The learned departmental representative is right in pointing out that it was for the assessee to establish the facts and circumstances entitling it to the benefit of Section 40A(3) read with Rule] 6DD. The assessee cannot, therefore, turn round and contend now that it had no opportunity in that regard or that the matter should be remitted to the income-tax authorities for that purpose. The result is that the assessee had failed to establish that the payments were made in cash under circumstances recognised under Rule] 6DD and the CBDT's Circular No. 220 [F. No. 206/17/76-IT (A-II)], dated 31-5-1977 [see Taxmanrts Direct Taxes Circulars, Vol. 1, Edn. 1980, p. 273] referred to in the order of the learned Commissioner (Appeals). In the result, we find no justification for any interference with the order of the learned Commissioner (Appeals) in this regard which we, accordingly, uphold.7 to 17. [These paras are not reproduced here as they involve minor issues.]