Rule 6DD(j) turns on factual inference when dishonoured cheques and cash insistence are accepted as the underlying facts.

Where an assessee's cheques were dishonoured and the sellers insisted on cash, the question whether those facts constituted exceptional or unavoidable circumstances under rule 6DD(j) of the Income-tax Rules was treated as an inference from accepted facts, not a pure question of law. The Punjab and Haryana High Court distinguished the cited precedent on its facts and followed the view that applicability of rule 6DD(j) in such situations depends on factual determination. As the issue did not raise a referable question of law, the petition under section 256(2) of the Income-tax Act, 1961 was dismissed.

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Issues: Whether the circumstances pleaded for cash purchases, namely dishonour of cheques and the sellers' insistence on cash, constituted exceptional or unavoidable circumstances within rule 6DD(j) of the Income-tax Rules, 1962, and whether that question gave rise to a referable question of law.

Analysis: The explanation that cheques issued by the assessee had been dishonoured and that the sellers insisted on cash payment was accepted by the appellate authority and the Tribunal. On those accepted facts, the determination whether such circumstances were exceptional or unavoidable for the purpose of rule 6DD(j) was held to be an inference from facts rather than a pure question of law. The court distinguished the cited precedent on its facts and followed the view that the applicability of rule 6DD(j) in such a situation turns on factual inference.

Conclusion: The question did not warrant reference as a question of law, and the petition for direction under section 256(2) of the Income-tax Act, 1961 was dismissed.

Ratio Decidendi: Where the facts regarding dishonour of cheques and insistence on cash are accepted, the question whether those facts amount to exceptional or unavoidable circumstances under rule 6DD(j) is one of factual inference, not a pure question of law.

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