TaxTMI 
TaxTMI 
2006 (7) TMI 149
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....and the identity of the payee which has admittedly not been done in the present case in order to claim exemption under section 40A(3) of the Act and rule 6DD(j) of the Rules? (iii) When admittedly the assessee had made payments through cheques to the extent of several lakhs of rupees, whether he is entitled to the relief claimed in respect of those payments where he has made cash payment to severallakhs of rupees?" The facts as narrated in the appeal are as under: The assessee is a firm. It carries on the business of manufacture of sheet metal machinery. During the relevant year 1986-87 the assessee made cash purchases to the tune of several lakhs of rupees and the Department sought an explanation from the assessee: The explanation was no....
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....ment got a case on the merits, even then according to him the appeal cannot be allowed in its entirety. After hearing, we have carefully perused the material on record. The assessing authority has passed three assessment orders. For the assessment year 1985-86, the assessing authority has chosen to add back a cash transaction for the purpose of levy of tax in the case on hand. For the assessment year 1986-87, the Assessing Officer has again chosen to add back the cash transaction. For the assessment year 1987-88, the Assessing Officer noticed the genuineness of the expenditure in the light of the material on record. Aggrieved by these assessment orders, the assessee filed three separate appeals. For the assessment year 1985-86, the Appel....
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....nal in the light of the order of the appellate authority notices section 40A(3) and also rule 6DD(j) of the Rules. After noticing the Tribunal has ruled that there is no doubt about the fact that in general the onus lies on the assessee to prove that the cases of cash purchases above the limit of Rs. 2,500 come within the ambit of rule 6DDQ) by producing relevant evidence. He further noticed that the assessee indeed made some cash purchases from certain small unregistered dealers at rates lower than at which it made other purchases from the registered dealers. The Tribunal noticed that the small dealers of scrap, who themselves are unregistered businessmen, would insist on receipt of payments in cash and would not also issue proper invoices....
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....i [2002] 255 ITR 258 has chosen to notice with regard to the legislative powers in the matter of income-tax provision. The apex court ruled that the object of introducing section 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he makes some false entries, he shall not escape by giving false explanation for the same. During search and seizures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and its easy for the so-called lender also to manipulate his records to suit the plea of the taxpayer. The main object of section 269SS was to curb this menace of making false entries in t....