TMI Blog1991 (5) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... ls in the sale and purchase of items like ghee, sugar and maida. During the relevant assessment year, it purchased ghee of the aggregate value of Rs. 55,00,000 and odd from Messrs. Amrit Banaspati Company on as many as 189 different occasions. These payments included payment of a total sum of Rs. 4,47,000 in cash on 15 occasions each of which involved payment of a sum exceeding Rs. 2,500. It is the case of the assessee that these payments in cash were made on account of the urgent demands made upon it by the supplier company. This explanation was, however, not accepted by the Income-tax Officer who, consequently, included this amount of Rs. 4,47,000 in the taxable income of the assessee. On appeal, on the other hand, the Appellate Assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made by a crossed cheque drawn on a bank or by a crossed bank draft (1) due to exceptional or unavoidable circumstances, or (2) because payment in the manner aforesaid was not practicable, or would have caused genuine difficulty to the payee, having regard to the nature of the transaction and the necessity for expeditious settlement thereof, and also furnishes evidence to the satisfaction of the Income-tax Officer as to the genuineness of the payment and the identity of the payee. " In clarification of the provisions of section 40A(3) of the Act and clause (j) of rule 6DD of the Rules, the Central Board of Direct Taxes issued Circular No. 220, dated May 31, 1977, where, in paragraph 4 thereof, it was stated that though all the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration number, if any, for the purposes of proper identification to enable the Income-tax Officer to satisfy himself about the genuineness of the transaction. It was further added that the circumstances indicated in paragraph 4 of the circular were merely illustrative and not exhaustive, but the underlying idea was that if the seller's identity can be established, it would be possible for the Income-tax Officer to cross-check whether the transaction had, in fact, taken place as stated and was of a genuine nature. A similar view is expressed by the High Court of Calcutta in Giridharilal Goenka v. CIT [1989] 179 ITR 122, where it was observed that (at p. 128) : "The circular of the Board is not exhaustive, it is only illustrative and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it by crossed cheque or draft would have delayed payment and caused unnecessary hurdles in the proper conduct of the company's business. These circumstances, seen in the context of the aspect of business expediency, which as noticed earlier, has been held to be one of the important relevant factors in dealing with such matters, cannot but lead to the irresistible conclusion that the payments made by the assessee, in cash, to the Amrit Banaspati Company Ltd. clearly fell within the exemption provided in clause (j) of rule 6DD of the Rules. Faced with this situation, Mr. Ajay Mittal, counsel for the Commissioner of Income-tax sought to rely upon Hari Chand Virender Paul v. CIT [1983] 140 ITR 148 (P H), where payment of Rs. 28,000 and odd, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
