1983 (4) TMI 75

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....or purchasing the drums from the hawkers, then the hawkers go to another dealer and in this way the assessee would not be in a position to procure the business immediately an thus the business would go down. Accordingly, the assessee was required to payments hard cash to the hawkers. 3. The ITO computed the income of the assessee at Rs. 3,00,660 and Rs. 1,71,471 for the assessment years under consideration. The ITO disallowed a sum of Rs. 2,30,404 u/s 40A(3) of the IT Act which includes Rs. 66,000 paid in cash to M/s United Scrap Traders and a sum of Rs. 1,64,404 paid to hawkers in the asst. yr. 1976-77. Similar disallowances of Rs. 29,790 u/s 40A(3) is made in respect of the asst. yr. 1977-78. Being aggrieved with the orders of the ITO,....

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....here is no reason why reliance should not be placed upon such confirmation. The cumulative effect of the circumstances has to be taken to consider the issue. The assessee has also relied upon the Circular No. 220 dt. 31st May 1977 issued by the CBDT. 8. The word "expenditure" appearing in s. 40A(3) does not cover the payment made for the purchases of stock-in-trade an not hit by the said section. The assessee has also relied upon the decisions of the Tribunal in ITA No. 1170/(Del)/1976-77 for the asst. yr. 1975-76, ITA No. 5040/(Del)/1975-76 for the asst. yr. 1972-73, ITA No. 133/(Jab)/1976-77 for the asst. yr. 1974-75, ITA No. 1100/(Chandi)/1975-76 for the asst. yr. 1973-74, ITA No. 2317 (Ahd)/1975-76 for the asst. yr. 1972-73. It was t....

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....16,000 in cash to the said traders cannot be doubted as the said traders have confirmed this fact and they have been assessed by the IT Department. There is nothing wrong to believe the confirmation made by M/s United Scrap Traders and to allow the deduction by giving benefit of r. 6DD(j). The department has not touched this point before us. 10. So far as the cash payment of Rs. 1,64,404 is concerned, there is no dispute between the department and the assessee that the assessee purchased drums from the different hawkers on different dates by making cash payments exceeding Rs. 2,500. Practically this fact is admitted. There is also no dispute that the purchasers are not bona fide. There is further no dispute that the accounts are not main....