2006 (10) TMI 71

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..... ion 40A(3) of the Act. Even though the petitioner claimed benefit of exemption with reference to rule 6DD(j) of the Income-tax Rules, the petitioner could not establish the facts required to grant benefit of exemption. Thereafter, the disallowance of exemption was contested in two rounds of statutory appeals but confirmed by all authorities including the Tribunal. In order to grant exemption of expenditure over Rs. 10,000, section 40A(3) requires that such payments should be made through account payee cheques or demand drafts. However, rule 6DD(j) during relevant year provided for certain exception to this provision. The provision relied on by the petitioner, namely, sub-rule (j) of rule 6DD is extracted hereunder for easy reference "6DD. .....

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..... Therefore, the burden of proving the above conditions required under the rule by adducing evidence is obviously on the appellant. However, it is seen from the order of the Assessing Officer and that of the appellate authorities that in many cases details of payees and transactions were not furnished and in cases where payees' addresses were furnished notices were sent by the Department. But the notices were returned by the postal authorities stating that such party does not exist or with endorsement that the addressee is not known, In fact we are of the view that when the burden is on the assessee to identify the payee and prove genuineness of the transaction, there was no necessity for the Department to try to trace the address of the sup .....

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..... stationed. However, it is seen from the details narrated by the officer in his order that all, except the few purchases suppliers are institutions, and the transactions with each of them exceeded lakhs of rupees. These suppliers of the petitioners are admittedly traders and are not manufacturers or small weavers and the petitioners have no dealings with the manufacturers or small weavers. The suppliers are only traders and volume of their business disclosed from records, shows that they had no difficulty to arrange transactions through bank. The facts on record clearly establish that the petitioner had no dealing with the weavers and the petitioner had not made any payment to weavers in the so-called villages. So the claim of exemption und .....

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