1990 (6) TMI 95

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....ee to explain why the above payments should not be disallowed under s. 40A(3) of the Act. 3. It was explained that in its foundry the assessee had only 50 permanent labours. Others labours were supplied by M/s Bhagwati Casting Co. As M/s Bhagwati Casting Co. Was required to make payment of daily wages in cash it insisted on cash payments. Likewise, M/s Dubay Transport Agency, as transporters, had also insisted on cash payment since they needed cash for making payment to the drivers going on trips. The assessee filed confirmations from the payee to the effect that that cash payments were made to them on their insistence. It was further explained that both the payees were regular income-tax payers. The ITO summoned both the parties under s....

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....this appeal. 5. Before us, Shri B. Biswas, learned Departmental Representative submitted that under s. 40A(3), case in respect of each payment exceeding Rs. 2,500 is to be seen. Otherwise, the requirement of the above section would not be satisfied. The CIT(A) in the impugned order deleted the additions with a general observation without examining the case with respect to each payment. The assessee had made payments through cheques to both the parties and, therefore, it was for the assessee to show that the cash payments were justified. According to the learned Departmental Representative, the assessee failed to establish that cash payments were made under exceptional and unavoidable circumstances mentioned in r. 6DD(j) of the IT Rules. ....