TaxTMI 
TaxTMI 
1984 (2) TMI 5
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.... detailed in para. 12 of the Tribunal's order?" The assessee, M/s. Bhilai Motors, is a partnership firm dealing in Tata Mercedez Benz chassis vehicles and spare parts having its head office at Tatibandi, Raipur, and a spare parts shop at K. K. Road, Raipur. It has also a branch at Jagdalpur dealing in spare parts and a petrol pump at Tatibandi. The assessee showed income of Rs. 52,626 for the assessment year 1975-76 for the accounting year 1974. The Income-tax Officer added Rs. 34,396 under section 40A(3) of the Income-tax Act consisting of certain purchases on cash payments on bills exceeding Rs. 2,500. The only explanation was that the sellers were insisting on cash payments Which was not accepted. The Income-tax Officer disallowed Rs.. 15,621 towards motor car expenses. The Income-tax Officer, out of a total claim amounting to Rs. 58,116 towards car expenses, found that only Rs. 27,524 could be considered to be expenditure, out of which Rs. 9,175 was deducted as personal expenditure of the partners not incidental to the business of the firm and a sum of Rs. 6,086 did not pertain to the business of the assessee. The Income-tax Officer also added Rs. 50,000 in the income on acc....
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....oney and the Income-tax Officer took upon himself the responsibility of proving something which is not possible to prove. The sale price realised by the assessee is fully verifiable, the assessee is not a small dealer or a grocer and the finding of the Income-tax Officer is based on surmises and conjectures and it cannot be sustained. Therefore, the addition of Rs. 50,000 was deleted and the Income-tax Officer was directed to revise the assessment accordingly. On further appeal by the assessee to the Tribunal, a cross-objection was preferred by the department regarding deletion of income of Rs. 50,000 by the Commissioner on account of on money received by sale of chassis out of turn to the customers. The addition of Rs. 24,110 under section 40A(3) of the Act was held to be justified. Though some of the bills on cash payments were less than Rs. 2,500 each, it was evident that the bills were split up in order to avoid the rigour of section 40A(3) of the Act because the bills bore consecutive numbers, being purchases of the same date. Regarding disallowance of Rs. 15,621 in the matter of car expenses account, it has been found that the motor car was also used for the personal use o....
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....be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors. The rigour of the section was further relaxed by framing rule 6DD of the Rules. Clause (j) of this rule provides that no disallowance shall be made where the assessee satisfies Income-tax Officer that the payment could not be made by a crossed cheque (i) due to exceptional or unavoidable circumstances, or (ii) because payment in the manner aforesaid was not practicable or would have caused genuine difficulty to the payee and also furnishes evidence to the satisfaction of the Income-tax Officer as to the genuineness of the payment and the identity of the payee. According to Shri H. S. Shrivastava, learned counsel for the assessee, section 40A(3) and rule 6DD(j) have been misconstrued and purchases on cash payments even below Rs. 2,500 have been disallowed because there were a number of purchases on the same day and the total purchases for the day exceeded Rs. 2,500. He also submitted that the rigour of the section has been further relaxed by various circulars issued by the Central Board of Direct Taxes. It is not sufficient for the ....
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.... any evidence but on suspicion [Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 (SC)] and a criminal practice of selling at prices in excess of the controlled price cannot be attributed to the assessee in the absence of any evidence to show that the assessee followed such a practice A. S. Sivan Pillai v. CIT [1958] 34 ITR 328.] He further contended that the observations already made in this regard by the Tribunal left no scope to the Income-tax Officer to come to his own conclusion after the reconsideration of the matter and the Tribunal has made too sweeping a statement by concluding that if the assessee has shown one day's favour to a customer, the Income-tax Officer would be justified in estimating suppressed profits. We are unable to accept the contentions. The finding of the income-tax Officer was based neither on surmises nor on conjectures nor on suspicion. He had drawn certain inferences in view of the serious irregularities found in the books of account of the assessee coupled with out-of-turn supplies to some customers when there was acute shortage of truck chassis. The Commissioner was not justified in brushing aside the finding of the Incometax Officer on wrong pr....