TMI Blog2002 (10) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ht in disallowing an amount of Rs. 46,32,449 from the expenditure incurred - - - - - Dated:- 17-10-2002 - Judge(s) : G. SIVARAJAN., K. BALAKRISHNAN NAIR. JUDGMENT The judgment of the court was delivered by G. SIVARAJAN J. -This appeal is filed by the Commissioner of Income-tax, Central-I, Chennai, challenging the order of the Income-tax Appellate Tribunal, Cochin Bench, in I.T.A. No. 83 (Cochin) of 1996. The matter arises under the Income-tax Act, 1961 (for short "the Act"). The assessment year concerned is 1992-93. The respondent-assessee is engaged in the manufacture and sale of various spices. The raw materials for the manufacture of the said products are mainly chilly, corriander, turmeric, etc. The appellant purchased those r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment took up the matter in appeal before the Tribunal and the Tribunal after due consideration of all relevant matters confirmed the order of the Commissioner of Income-tax (Appeals), Cochin. Shri P.K.R. Menon, learned senior Central Government standing counsel appearing for the appellant, submits that the assessing authority was perfectly justified in disallowing the deduction of expenditure to the tune of Rs. 46,32,449 incurred by the assessee for the purchase of the raw materials from parties outside the State by making cash payment. The senior counsel submits that under section 40A(3) of the Act read with rule 6DD(j) of the Rules though the assessing authority has the discretion to allow such expenditure under the circumstances spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the orders of the Tribunal and the authorities below. The assessee had offered an explanation to the effect that they have started the business only during the financial year 1991 and that since the suppliers were new, they were not prepared to accept the cheques and the appellant was perforced to make cash payments for such purchases. The assessing authority had observed that there is no evidence in support of the claim that the sellers of raw materials insisted on cash and that cash receipts also do not in any way indicate that the sellers insisted on cash payments. The first appellate authority has observed that, on verification of the accounts, it was found that these raw materials were purchased by payment in cash to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. According to the Tribunal the facts of the present case are similar to the facts of the decided case. The Tribunal in the above circumstances upheld the order of the Commissioner of Income-tax (Appeals), Cochin. In this case, the remand report sent by the assessing authority to the Commissioner of Income-tax (Appeals) reads as follows: "As directed, the bills and sales tax documents relating to the purchases detailed in annexure I to the audit report in Form No. 3CD were called for and examined. It is noticed that all the items purchased are agricultural produce like, chillies, turmeric, corriander, etc. All the items listed in the annexure are supported by regular bills. All the bills bear the stamp of the sales tax check post. All th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from the assessee's suppliers that they had refused to receive cheques and that payments should be made in cash. According to us, nothing will turn out by obtaining a letter from the suppliers to the effect that they are not prepared to accept cheques. It is a matter for inferences to be drawn from the facts and circumstances of each case. Having regard to the fact that the assessee had started the business only during the financial year 1990-91, that the assessee has clearly stated that the suppliers were not inclined to receive payment by cheque and the further fact that the Assessing Officer had observed that all the purchases are genuine, we are of the view that the two appellate authorities are justified in holding that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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