Cash payment exception under rule 6DD(j) upheld where concurrent factual findings showed justified payments and no question of law arose.

Cash payments were accepted as falling within the exception in rule 6DD(j), because the assessee's explanation was supported by the facts found on record. The Commissioner (Appeals) and the Tribunal reached concurrent factual conclusions, and the High Court treated the issue under section 40A(3) as one of fact rather than law. As no question of law arose from those findings, the court declined interference in the reference under section 256(1) and upheld deletion of the disallowance.

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Issues: Whether the Tribunal was justified in deleting the disallowance made under section 40A(3) of the Income-tax Act, 1961, in view of the assessee's cash payments and the applicability of rule 6DD(j) of the Income-tax Rules, 1962; and whether the reference raised any question of law.

Analysis: The authorities below accepted the assessee's explanation that the cash payments were fully justified on the facts proved on record. The finding that the payments fell within the permissible exception was one of fact, and the Commissioner (Appeals) and the Tribunal reached concurrent conclusions on the material before them. In a reference under section 256(1) of the Income-tax Act, 1961, the court declined to interfere where no legal question arose from such concurrent factual findings.

Conclusion: The deletion of the disallowance under section 40A(3) was upheld and the reference was answered in favour of the assessee.

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