1991 (3) TMI 130

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....Under section 256(2) of the Income-tax Act, the Income-tax Appellate Tribunal has stated the following two questions : "1. Whether the Tribunal was justified and had material for holding that the assessee's case was covered by the provisions of rule 6DD(j) of the Income-tax Rules, 1962 ? 2. Whether the Tribunal's decision was vitiated in law having ignored the material fact that the assessee....

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....were genuine. The Income-tax Officer rejected the assessee's explanation, but on appeal, the Appellate Assistant Commissioner held that the genuineness of the payments and the identity of the payees were established. He also found that one of the three payees, Shyam Fabrics, did not have bank account and, therefore, the assessee's case was covered by clause (j) of rule 6DD of the Income-tax Rules.....

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.... is made otherwise than by a crossed cheque or by a crossed bank draft, it shall not be allowed as a deduction. This bar applies to all and any expenditure incurred by the assessee. However, the second proviso to that sub-section says that no such disallowance shall be made if the payment is made in the circumstances as may be prescribed by the Rules. Rule 6DD has been framed in pursuance of this ....

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....so the genuineness of the payment. That was indeed the finding of the Appellate Assistant Commissioner of Income-tax. The only question was whether the assessee has established that the payment in cash was made in exceptional or unavoidable circumstances or for the reasons specified in sub-clause (2) of clause (j). The Tribunal has found that the amount paid in cash is quite small compared to the ....