TMI Blog2003 (10) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... Jain, husband of the assessee. The assessee was a Government contractor and supplier of tubular trusses. It was submitted that the seller insisted on payment in cash and in order to safeguard the interest of the assessee's business, the terms of the seller were accepted as the purchases from other distant places would have been expensive and any delay in the execution of the contract would have cancelled the contract. The assessee was ignorant of law and the case of Motilal Padampat Sugar Mills Co. Ltd. vs. State of U.P. (1979) 118 ITR 326 (SC) was quoted for the proposition that there was no presumption that every person knows the law. The transactions were genuine, both the parties were regular assessees and the payment made covered under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance, scrutiny of books of account reveals that Rs. 22,000 were utilized by the assessee on 23rd July, 1990. The remaining amount was not utilized till 31st July, 1990. 2. 31st Oct., 1990 Rs. 2,10,000 A sum of Rs. 18,494 was utilized by the assessee till 7th Nov., 1990. Further a sum of Rs. 1,40,000 was paid through draft on 8th Nov., 1990, to M/s R. Engg. Works, Ghaziabad. It has been contended that the delay in payment to M/s, R. Engg. Works was beyond the assessee's control as the supplier did not come to collect the payment due to communal riots and on health grounds. However, it is seen that the sum of Rs. 1,58,494 was utilised by Shri Arvind Jain within a week, i.e. upto 8th Nov., 1990. A sum of Rs. 1,70,000 was deposited in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3). The seller had not refused to accept the payment by crossed cheque/draft as on certain earlier occasions the seller had accepted the payment by crossed cheque/draft. It is thus submitted that the CIT(A) was not correct in law in deleting the impugned disallowance. 4.1 Learned authorized representative, on the other hand, submitted that no doubt the assessee and the supplier were both having bank accounts, the husband who was the proprietor of the concern which supplied the goods had already expired, the supplier was having the bank account at Sadhaura; while the assessee was having bank account at Sarwan, it takes 15-20 days for realization if the cheque is deposited with PNB, Sadhaura. For this, our attention is drawn to p. 3 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (iv) Goenka Agencies vs. CIT (2003) 184 CTR (Cal) 104 : (2003) 263 ITR 145 (Cal). 5. We have carefully considered the rival submissions, perused the orders of the tax authorities, gone through the material available on record as also the case law cited by the assessee. We find that in this case the assessee has made payment in excess of the limit prescribed under s. 40A(3) to a concern, the proprietor of which was her husband. The assessee and the supplier were having bank accounts but at different places - Sadhaura and Sarwan. As per the certificate of the bank, clearing of the cheque normally takes 15-20 days for realization, if the cheque is deposited at Sadhaura. The assessee pleaded that she had to make the payment due to excepti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able or would have caused genuine difficulty to the payee. It is also open to the assessee to identify the person who has received the cash payment. If the payment is made by a crossed cheque drawn on a bank or a crossed bank draft, then it will be easier to ascertain, when deduction is claimed, whether the payment was genuine and whether it was out of the income from disclosed sources. In interpreting a taxing statute, the Court cannot be oblivious of the proliferation of black money which is under circulation in our country. Any restraint intended to curb the chances and opportunities to use or create black money should not be regarded as curtailing the freedom of trade or business." In the case of Nikko Auto Ltd., after referring to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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