2009 (10) TMI 550

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ee had made total sales of lottery tickets to the tune of Rs. 1,02,26,070 and no profit was declared by the assessee from the said sales of Rs. 1,02,26,070. The Assessing Officer found that the assessee had purchased lottery tickets from the Government organisation by making payments in cash exceeding Rs.20,000 amounting to Rs. 45,93,810. The explanation of the assessee was called for and the assessee submitted that the payments were made to Mysore Sales International Ltd., a Government organisation and since the agents of MSIL were coming for collection of cash regarding the tickets pur- chased from MSIL, he was forced to pay the amount in cash. The Assessing Officer being not satisfied with the explanation offered by the assessee in accor....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... make payment immediately as it is only on receipt of payment, lottery tickets will be given to the distributors. It was also explained that payment that has to be made depends upon the number of lottery tickets purchased and MSIL does not accept bearer cheques and wherefore, applying the provisions of rule 6DD(b) of the Rules, the Tribunal confirmed the order passed by the appel- late authority and being aggrieved by the said order dated August 3, 2006, passed by the Tribunal, the Revenue has preferred this appeal.   3. The appeal was admitted on February 21, 2009, for considering the following substantial question of law :   "Whether the payment made in cash in excess of Rs. 20,000 contrary to section 40A towards the purch....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Rules, 1962, is per- verse and arbitrary and calls for interference in this appeal ?"   7. We answer the substantial question of law in favour of the Revenue and against the assessee for the following reasons :   8. The fact that payment in excess of Rs. 20,000 on various occasions have been made by the assessee in cash to the tune of Rs. 45,93,810 is not in dis- pute. However, the assessee claims exemption under rule 6DD(b) of the Rules. It is clear on scrutiny of the order passed by the Tribunal and also the order passed by the appellate authority-Commissioner of Income-tax (Appeals), Hubli, that both the authorities have proceeded on the basis that payment made to MSIL is payment to the Government in accordance with the R....