1991 (1) TMI 77

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....REDDY C. J.-Heard counsel for the Revenue. None appears for the assessee. Under section 256(1) of the Income-tax Act, 1961, two questions are referred by the Tribunal, one at the instance of the assessee and the other at the instance of the Revenue. The question referred at the instance of the assessee reads : "Whether, on the facts and in the circumstances of the case and in law, the Tribun....

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....de by the assessee in a sum exceeding Rs. 2,500 in cash and that is why they were disallowed by the Income-tax Officer relying upon sub-section (3) of section 40A of the Income-tax Act. We have perused the order of the Tribunal. The Tribunal has found as fact that the payment of Rs. 3,800 made by the assessee to Agra Steel Traders on March 31, 1975, has not been established to have been made under....

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....s. 25,000 in cash to Agra Steel Traders on December 10, 1974, towards consideration of the goods which were actually supplied to him on December 11, 1974. The Tribunal held that since the payment was made before delivery of the goods, it is in the nature of an advance and does not fall within the meaning of the expression "expenditure" occurring in subsection (3) of section 40A of the Act. In so f....

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....should be made only by way of a crossed cheque drawn on a bank or by a crossed bank draft. In the context of the language employed in the section, the Tribunal is not justified in saying that since the payment was made prior to delivery of the goods, it constitutes an advance and not an expenditure. Admittedly, the payment was made towards consideration of the goods which were supplied on the next....