TMI Blog1999 (10) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ee would amount to exceptional or unavoidable circumstances under sub-clause (1) of clause (j) of rule 6DD of the Income-tax Rules, 1962 ?" Heard Dr. A. K. Saraf, learned counsel appearing for the assessee, and Shri K. P. Sarma, appearing for the Revenue. The dispute relates to the assessment years 1987-88 and 1988-89. At the very outset it may be indicated that in so far as question No. (i) is concerned, learned counsel for the assessee made a statement that the said question is not pressed. That being the position, it would not be necessary to go into the merits of that question to record any finding. The brief facts for the purposes of answering the second question are that in the assessment year 1987-88 the assessee is said to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. The Assessing Officer while disallowing deduction had observed that in many of the payments the name of the payee was not indicated in the voucher. The appellate authority on examining the said vouchers upset the finding of the assessing authority. Thus, on the facts, accepting the explanation of the assessee that its financial position was stringent compelling to make payment in cash, which according to it constituted one of the mitigating circumstances within the meaning of rule 6DD of the Income-tax Rules, 1962. Hence, it was held that disallowance of deduction by the Assessing Officer was not justified. The Revenue filed appeal against the judgment of the Commissioner of Income-tax (Appeals) before the Income-tax Appellate Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch expenditure shall not be allowed as deduction. Rule 6DD of the Income-tax Rules provides that no disallowance under sub-section (3) of section 40A of the Act shall be made where any payment of more than Rs. 2,500 is made in cash in the circumstances which have been enumerated in different clauses out of which clause (j) provides where the assessee satisfied the Income-tax Officer that payment could not be made by crossed cheque due to exceptional and unavoidable circumstances or because payment in that manner was not practicable or due to some genuine difficulties, and furnish evidence to the satisfaction of the Income-tax, Officer as to the genuineness of the payment and the identity of the payee. From the above provisions it is clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not indicated in the vouchers. In respect of the said finding it has already been indicated earlier that the Commissioner of Income-tax (Appeals) has held in its appellate order that it had examined each and every voucher submitted by the assessee and it was found that each voucher disclosed the name of the payee. Thus, the reason as disclosed by the Assessing Officer for not accepting certain transactions was found to be incorrect. The Commissioner of Income-tax (Appeals) was thus satisfied with the explanation submitted by the assessee about its financial stringency and the circumstances under which payments had to be made in cash. So far as the Appellate Tribunal is concerned, it has not upset the finding recorded by the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l is that the payment was made in many of the cases, in respect of old bills also, that is to say, deferred payments. In connection with the above, learned counsel for the assessee has placed reliance upon a decision in Shri Mahabir Industries v. CIT [1996] 220 ITR 459 (Gauhati). A Division Bench of this court has held that by the reason that there has been long gap between submission of bill and making of payment, the conclusion cannot be drawn that payment would not be covered by rule 6DD(j) of the Rules. It has further observed that exceptional and unavoidable circumstances may vary depending on the facts of each case. The Appellate Tribunal, in our view, erred in drawing the inference that in no circumstance deferred payment would be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t where the genuineness of the payments has been established and the default was only technical, the assessee would be entitled for benefit of exemption under rule 6DD. Learned counsel appearing for the Revenue has submitted that the payments have not been genuine, on the basis of the finding of the assessing authority where it has observed that on some of the vouchers the names of the payees were not indicated, As indicated earlier, this finding of fact has been upset by the Commissioner of Income-tax (Appeals) on checking each voucher and it was observed that the names of the payees were indicated. From a perusal of the decisions of different High Courts referred to above, it clearly emerges that the purpose of section 40A(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
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