2012 (7) TMI 557

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..... and circumstances of the case, the Tribunal was right in holding that payment of cash amounting to Rs.3,80,083/- by the assessee to the supplier's bank account is not a violation of the provisions of Section 40A(3)?"   The T.C.(A).Nos. 1430 and 1431 of 2005 were admitted on the following substantial question of law:- "Whether in the facts and circumstances of the case, the Tribunal was right in holding that payment of cash amounting to Rs.3,14,600/- by the assessee to the supplier's bank account is not a violation of the provisions of Section 40A(3)?"   2. The assessee herein admittedly made cash payment exceeding Rs.10,000/- in respect of certain business expenditure incurred by him. On the proposal to apply Section 40A(3) of .....

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..... grieved by this, the Revenue went on appeal before the Income Tax Appellate Tribunal, who confirmed the assessee's case in a single line that after hearing the parties and on going through the order of the Commissioner of Income Tax (Appeals)'s, the order could not found fault with. We may record herein that absolutely there is no recording of the reasons independently by the Tribunal as a finding fact body by considering the provisions under Section 40A(3) of the Act to the facts of the case. Aggrieved by the view of the Tribunal, the Revenue has come on appeal before this Court.   4. Section 40A(3) as it existed relevant to the assessment year under consideration reads thus, Section 40A(3) Where the assessee incurs any expenditure i .....

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..... s.10,000/- may be made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft. In fact on a representation made by a Trade, the Central Board of Direct Taxes has also issued circular No.1 dated 11.1.1979, wherein in considering difficulties in clearance of cheques issued on banks, the Central Board of Direct Taxes stated that, "............... Accordingly, any payment for business expenditure made during the period when the cheque clearing operations are suspended or other similar circumstance as aforesaid exists, will not be covered by the provisions of Section 40A(3) of the Income Tax Act provided the assessee furnishes evidence to the satisfaction of the Income Tax Officer as to the genuineness of the payment and .....

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