1979 (7) TMI 148

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....made under s. 40A(3) of the IT Act of cash payment in respect of two parties, are challenged. 2. The assessee is a partnership firm doing business as hundy merchants at Tiruvannamalai. In the original assessment made there was no disallowance under s. 40A(3) of the Act. Since the Revenue audit party found that there were cash payments in excess of Rs. 2,500 and such payments amounted to merely ....

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....e the confirmation letter in respect of a sum of Rs. 3,902. It is the item of Rs. 3,902 that is disputed in ITA. No 443 of 1978-79. 3. For the asst. yr. 1971-72 in reopening the assessment the ITO issued notice to the assessee as to why the disallowance should not be made in respect of Rs. 12,26,322 as it is hit by s. 40A(3) of the Act. After considering the explanations furnished by the assess....

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....reference to this amount of Rs. 4,500. 4. Since the disallowances in both the years with reference to the two parties are almost similar they are taken up together. The Circular No. 220 dt. 31st March, 1977 in paragraph 4 stated that in six circumstances the conditions and requirement laid down in r. 6DD(j) was met. One of the circumstances is "the transactions and payments are made at a place ....

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....ies. So far as the Madras party is concerned, it is pointed out as the transactions were more than seven years old and the party could not be contacted. At the same time the Madras party had sales-tax registration number and the payment to this party could not be doubted. In respect of the Bangalore party even though there is no sales tax registration number of that party it was stated to be a gen....