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Commissioner of Income-tax Vs. Sawaran Singh Balbir Singh - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Case No. 41 of 1976
Judge
Reported in(1981)20CTR(P& H)131; [1982]136ITR595(P& H)
ActsIncome Tax Act, 1961 - Sections 40A(3); Income Tax Rules, 1962 - Rule 6DD
AppellantCommissioner of Income-tax
RespondentSawaran Singh Balbir Singh
Appellant Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Respondent Advocate R.S. Bindra, Adv.
Excerpt:
.....with the said firm and dealings were in cash as well as by cheques. the assessee pleaded that cash payments were made due to exceptional and unavoidable circumstances as it was impracticable to cope with the supply of rice as ordered by the district food and supplies controller. rules, 1962, stood fully satisfied, as it was in view of the exceptional circumstances that the assessee had to make cash payments in order to get bardana and new gunny bags. as is clear from the facts and circumstances of the case, the aac as well as the appellate tribunal, after having placed reliance on the affidavit of jaswant singh and also on the statement made by him before the aac, came to the conclusion that the ingredients of rule 6dd(j) of the said rules stood fully complied with and it was..........80,0002. the ito required the assesses to state as to why the above cash payments, each being in excess of rs. 2,500, should not be disallowed as required under the provisions of section 40a(3) read with rule 6dd of the i.t. rules. the assessee pleaded that cash payments were made due to exceptional and unavoidable circumstances as it was impracticable to cope with the supply of rice as ordered by the district food and supplies controller. it further pointed out that the payments were genuine and the identity of the payee was not doubted. the ito did not agree with the explanation furnished by the assessee and disallowed the amount. 3. the assessee went up in appeal and the aac held that the ingredients of rule 6dd(j) of the i.t. rules, 1962, stood fully.....
Judgment:

B.S. Dhillon, J.

1. The assessee-firm owns a rice huller and is engaged in husking of paddy. During the course of the examination of accounts for the assessment year 1972-73, relevant to the accounting period ending on September 30, 1971, the ITO found that the assessee made purchases of bardana and new gunny bags from M/s. Mehar Singh Jaswant Singh, Kanak Mandi, Amritsar. The assessee had a running account, with the said firm and dealings were in cash as well as by cheques. Their records showed that the following payments each exceeding Rs. 2,500 were made in cash :

Date

Amount paid in cash

Rs.

3-11-1970

10,000

4-11-1970

15,000

10-11-1970

5,000

20-11-1970

20,000

30-11-1970

17,000

8-12-197013,000

Total 80,000

2. The ITO required the assesses to state as to why the above cash payments, each being in excess of Rs. 2,500, should not be disallowed as required under the provisions of Section 40A(3) read with Rule 6DD of the I.T. Rules. The assessee pleaded that cash payments were made due to exceptional and unavoidable circumstances as it was impracticable to cope with the supply of rice as ordered by the District Food and Supplies Controller. It further pointed out that the payments were genuine and the identity of the payee was not doubted. The ITO did not agree with the explanation furnished by the assessee and disallowed the amount.

3. The assessee went up in appeal and the AAC held that the ingredients of Rule 6DD(j) of the I.T. Rules, 1962, stood fully satisfied, as it was in view of the exceptional circumstances that the assessee had to make cash payments in order to get bardana and new gunny bags. This finding was affirmed by the learned Tribunal on an appeal filed by the revenue. The revenue approached the Tribunal for referring the following question of law to this court for opinion :

'Whether, on the facts and in the circumstances of the case, on a proper interpretation of Section 40A(3) of the Income-tax Act, 1961, and Rule 6DD of the Income-tax Rules, 1962, the Appellate Tribunal was justified in law in endorsing the view of the AAC that the case fell under Rule 6DD(j) thus deleting the addition of Rs. 80,000 made by the ITO ?'

4. The learned Tribunal having declined the prayer of the revenue, the latter has approached this court under Section 256(2) of the Act for necessary direction being issued to the Tribunal for referring the above question to this court for opinion.

5. After hearing the learned counsel for the revenue we are of the view that there is no merit in this petition. As is clear from the facts and circumstances of the case, the AAC as well as the Appellate Tribunal, after having placed reliance on the affidavit of Jaswant Singh and also on the statement made by him before the AAC, came to the conclusion that the ingredients of Rule 6DD(j) of the said rules stood fully complied with and it was because of exceptional circumstances that the assessee had to make payments in cash beyond the amount of Rs. 2,500. Nothing could be pointed out to show that the Tribunal did not take into consideration, the relevant evidence or relied upon irrelevant evidence while arriving at the said finding.

6. The learned counsel for the revenue contends that the affidavit of Jaswant Singh should not have been accepted as the agreement to make payments in cash was an oral one. We are unable to agree with this contention. It is open to an authority to place reliance on an affidavit if it is found to be truthful.

7. For the reasons recorded above, there is no merit in this petition which is hereby dismissed with no order as to costs.


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