1995 (11) TMI 65

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....68 under section 40A(3) of the Income-tax Act, 1961 (for short "the Act"). On appeal, the Commissioner of Income-tax (Appeals) deleted the addition on the conclusion that the payments were made under exceptional circumstances provided under the law. The Tribunal upheld the finding of the Commissioner of Income-tax (Appeals), by order dated September 9, 1993. The applicant (Commissioner of Income-tax, Bhopal), then filed the application, RA No. 290/IND of 1993, in connection with the aforesaid order for the assessment year 1987-88 seeking reference of the case to this court, but the Tribunal rejected the application by order dated December 12, 1994. The applicant has, therefore, filed this application in this court. By the aforesaid applicat....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tly appreciated the assessee's nature of business and deleted the disallowance. After all, the provisions of section 40A(3) are not revenue gathering sections, but are intended to check the evasion of tax. The assessee in the material produced before us has produced the identity of the payee and also exigencies of business necessitating cash payment. Under these circumstances, in our view, the disallowance had rightly been deleted, we decline to interfere." The aforesaid conclusion was upheld by the Tribunal. Section 40A(3) provides as under : "Where the assessee incurs any expenditure in respect of which payment is made, after such date (not being later than the 31st day of March, 1969) as may be specified in this behalf by the Ce....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... compulsions, in the opposite direction. The provision on hand is intended to destroy intentions of dealing with unaccounted moneys the purpose behind insistence on cross-cheque or cross-draft is to assure and ensure "genuineness" of dealing and proper assessment of taxable income. Even this provision has a proviso to mitigate the hardships. We notice from the appellate order that the appellate authority found that all the purchases were duly entered in the register through inwards and the production has been accepted. It further found that the genuineness of the payment was not exposed to any doubt. Payments in cash were duly signed by the payees and the insistence on making the cash payments is founded on the fulcrum that the payees di....