TMI Blog1996 (7) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... intained by the assessee showing that each payment made for purchasing bricks, etc., was of less than Rs. 2,500 though the aggregate of such payments made during the day exceeded the statutory limit of Rs. 2,500, was the Income-tax Appellate Tribunal correct both on facts and in law in sustaining the additions made under section 40A(3) of the Income-tax Act, 1961 ? 3. Whether on a proper interpretation of the provisions of section 40A(3) of the Income-tax Act, 1961, does it apply to a case where assessment is made on an income determined on the basis of estimate/best judgment by applying gross profit rate and not computed in accordance with the provisions of the Act relating to computation of income under the head 'Profits and gains of business or profession' ? 4. Whether, in view of the fact that assessment was made on an income or profits determined on the basis of estimate by applying a gross profit rate, was the Income-tax Appellate Tribunal right in law in invoking the provisions of section 40A(3) of the Income-tax Act, 1961, and sustaining the addition of Rs. 1,58,965 thereunder ? " The assessee-firm derived its income from the execution of contract work. The net profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation of section 40A(3) in the manner denies equal remedial rights to the applicant by making it impossible for him to enjoy the relaxation of rigour of section 40A(3) read with rule 6DD of the Income-tax Act, 1961 ? 3. Whether, the Tribunal was justified in law in not providing a reasonable opportunity of being heard to the applicant who is pursuing a matter under a bona fide mistake of law as to the applicability of the provisions of section 40A(3) ? 4. Whether, the learned Tribunal was justified in law in believing and disbelieving the evidence under similar set of circumstances ? " The case of the assessee is that the Assessing Officer as well as the appellate authorities failed to look into the entries of the cash book showing cash payments by the assessee-firm. As per those entries, cash payments were made in one transaction at less than Rs. 2,500 though in the aggregate in a day the cash payments exceeded the said limit prescribed in section 40A(3) of the Act. The assessee-firm had purchased bricks from truck-drivers and operators and steel from the open market. Those suppliers did not maintain bank accounts and, therefore, it became necessary for the assessee-firm to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowed. The claim was disallowed. The assessee raised an alternative contention before the High Court that the claim is allowable as business expenditure. It was held that the question whether the claim was allowable under section 10(2)(xv) of the Indian Income-tax Act, 1922, could be raised before the High Court though it was not raised before the Tribunal inasmuch as it was not a different question but only another aspect of the question whether the deduction was permissible, which was raised before and considered by the Tribunal with reference to section 10(2)(iii) of the Indian Income-tax Act, 1922. In a similar matter, the Bombay High Court had again an occasion to examine a question which was sought to be raised before the High Court. In CWT v. Purshottam N. Amersey [1969] 71 ITR 180 (Bom), it has been observed that a new aspect of the question which was argued before the Tribunal could be considered by the High Court in a reference. The Madras High Court in C. P. Venkataraman v. CIT [1970] 75 ITR 65, was examining a question whether the levy of penalty was justified. It was noticed that one aspect of that question would be whether the factual elements to attract section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al nor considered by it, it will not be a question arising out of its order, notwithstanding that it may arise on the findings given by it. Learned counsel for the petitioner before us has taken support from the observation of the Supreme Court, which read as under : " Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal, and it will be an over-refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 66(1) of the Act. " Learned counsel for the respondent has, on the other hand, sought aid from the observations of the Supreme Court that where a question is neither raised before the Tribunal nor considered, there would be no question arising out of its order. In the case of the petitioner here, no question was raised at all that section 40A(3) of the Act was not applicable where profit is determined on estimate basis after rejecting the book results of the assessee. The assessee did raise the question that no addition could be made under section 40A(3) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before the Tribunal and further presumed that they were deliberately or inadvertently ignored by it in dereliction of the duties laid by law. Therefore, merely taking a point of law in the grounds of appeal or revision by itself cannot per se amount to raising it before the Tribunal. " In CIT v. Krishna and Sons [1968] 70 ITR 733, the Supreme Court was examining a matter regarding its own jurisdiction in appeal. It was observed that the jurisdiction of the Supreme Court arising in appeal over the judgment of the High Court on a reference under the Income-tax Act was also advisory and the Supreme Court can only record its opinion, on questions which are referred, not on questions which could have been, but have not been referred. A similar view has been expressed by the Supreme Court in Agha Abdul Jabbar Khan v. CIT [1971] 82 ITR 872, and learned counsel for the respondent has contended, on the basis of the following observations of the Supreme Court, that a new question of law cannot be allowed to be raised : " In our opinion the High Court had no jurisdiction to raise new questions of law. The questions raised by it do not flow from the question referred to it for its opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea was not accepted by the Assessing Officer because the names and addresses of the recipients had not been mentioned in the books of account. Supporting vouchers were also not produced. There was no evidence to show that bricks had been purchased by the assessee-firm from truck drivers or operators. Details of payments were also not shown. Iron and steel had been purchased from the open market but here also no details were furnished. No exceptional circumstances were shown to justify cash payments exceeding Rs. 2,500. The Tribunal also did not accept the plea after noticing that the plea was not supported by any evidence. The assessee had admittedly not maintained any vouchers. Since the assessee's plea that payments were made in cash because the recipients did not have bank accounts and were mere truck drivers and operators was not supported by sufficient material or evidence, the Tribunal gave a finding of fact that there was no reasonable ground to allow such payments. The assessee did not prove payments in cash under exceptional circumstances also. In the absence of vouchers and on account of non-availability of the names and addresses of the recipients, the Tribunal reach ..... X X X X Extracts X X X X X X X X Extracts X X X X
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