1990 (11) TMI 175

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....ai while M/s Khedut Traders had no bank account at Manavadar and the said party was being assessed to income-tax. 25th Sept., 1982 was Saturday on which day the bank worked for two hours only and it was not possible to obtain demand draft on that day. The said party who was transport owner and who had to receive track hire charges from the assessee was in a hurry and demanded cash payment. Consequently on account of compelling reasons payment was made in cash. According to the assessee, the cash was covered by Explanation to r. 6DD as explained in circular of the Board dt. 18th April, 1969. It was further pointed out that M/s Khedut Traders had credited the amount in the books of accounts to the truck hire charged account. The assessee file....

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....ounsel for the assessee has reiterated the above reasons and submitted that provisions of r. 6DD(j) were fully satisfied and that in view of the circular of the Board No. 220 dt. 31st May 1977 no disallowance should have been made. The submission on behalf of the Department, on the other hand, was that disallowance under s. 40A(3) was obligatory unless the assessee proved that his case fell in any of the clauses under r. 6DD of the Rules. His submission was that the amount had become due in the month of May and payment was made in September and there was no compelling reason for making payment in cash. He relied on the reasons given in the assessment order and pleaded that disallowance was liable to be confirmed. 4. I have considered the....

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....6DD(j). one of the circumstances is that the transactions were made at a place where either the purchaser or the seller did not have a blank account and another and another circumstances is that transactions and payments were made on a bank holiday. In the present case, M/s Khedut Traders were earning on business at Dhoraji while the assessee was carrying on business at Manavadar. M/s Khedut traders had no bank no bank account at Manavadar while the assessee had no bank account at Dhoraji. Representative of M/s Khedut Traders had to go to Manavadar receive the amount. He had gone to settle the entire account. The total amount payable was Rs. 11,000. The day on which he came was Saturday and the bank had worked only for two hours. Consequent....