1997 (7) TMI 26

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....es of the case, the learned Income-tax Appellate Tribunal was right in law in deleting the addition of Rs. 81,596 made under section 40A(3) of the Income-tax Act, 1961, under the non-existent nature of the exceptional circumstances for making the payment in cash ? and 2. Whether there can exist any exceptional and unavoidable circumstances for one single unledgerised payment to a party with whom the assessee is having a running account and making all other payments by cheques ? 3. Whether mere genuineness of payment is enough to take the case out of the purview of section 40A(3) ; and 4. Whether the Income-tax Appellate Tribunal can substitute its own satisfaction, when the law requires the satisfaction of the Assessing Officer for....

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....tablished because certificates obtained from the parties concerned had been filed by the assessee. Shri B. S. Gupta, learned senior counsel for the Department, has argued that referable questions of law do arise from the controversy in hand and from the order of the Tribunal. He has argued that no exceptional circumstances existed, so as to permit cash payments exceeding Rs. 2,500. It is pointed out that the assessee was having running accounts of several parties, to whom cash payments had been made, in its books of account and many payments had been made to those parties by cheques. Therefore, there was no justification in making cash payments in those cases. His further plea is that the genuineness of the party or transaction was not s....

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....iled by certain parties, that was also a factor which weighed with the Tribunal. Certain payments were made after bank hours also. All these circumstances were treated to constitute exceptional circumstances permitting cash payments. It would appear from a perusal of the Board's circular referred to above that the seller's refusal to accept the payment by crossed cheque or draft may permit the assessee to make payment in cash. But, at the same time, it should also be shown that the assessee's business interest would have suffered due to non-availability of goods otherwise than from that particular seller. Sub-clause (iv) of clause 4 of the circular requires the fulfilment of both the conditions as aforesaid. In this light, the factum of ....