TMI Blog1984 (8) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... s made for purchase price of stock ? 2. Whether, on the facts and in the circumstances of this case, the Tribunal was correct in holding that the case is covered by rule 6DD(j) of the Income-tax Rules, 1962 ?" The facts of the case may be briefly stated as found in the statement of the case. The assessee is a registered firm and the assessment year involved is 1970-71, for which the accounting period is from October 1, 1968, to September 16, 1969. During the year under reference, the assessee made payments amounting to Rs. 45,799 by cash on account of purchase of goods. Out of the amount of Rs. 45,799, payments to the extent of Rs. 35,682, were made in respect of purchases made prior to April 1, 1969. The Income-tax Officer added the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he deletion by the Appellate Assistant Commissioner. It was argued on behalf of the Revenue that the payment to the extent of Rs. 35,682 in respect of purchases made prior to the April 1, 1969, only should have been deleted. It was also submitted that for payment of the balance amount by cash, the assessee could not produce any satisfactory reason for non-payment through the banks, in spite of availability of banking facilities at places like Bettiah and Muzaffarpur from where purchases were made. It was also claimed on behalf of the Revenue that rule 6DD(j) of the Income-tax Rules, 1962 (hereinafter referred to as "the Rules"), was not applicable to this case and so the deletion was not justified. The Tribunal held that at the material per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this behalf by the Central Government by a notification in the Official Gazette, in sum exceeding two thousand five hundred rupees otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, such expenditure shall not be allowed as a deduction. The argument of Mr. B. P. Rajgarhia is to the effect that as all the payments were made after April 1, 1969, they will be covered by section 40A(3) of the Act. Under such circumstances, I have only to see whether the amount of Rs. 45,799 is covered by the provisions of rule 6DD(j) of the Rules. If once it is held that the entire amount of Rs. 45,799 is covered by the provisions of rule 6DD(j), then the first question will become purely academic. It is under these circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he identity of the payee." In the instant case before us, the genuineness of the payments and identity of the payees are not disputed. The only question which has to be considered is whether the payment was made in exceptional and unavoidable circumstances and that the payment by a crossed cheque drawn on a bank or by a crossed bank draft would have caused a genuine difficulty to the payee and the payment in that manner was not practicable. The Income-tax Officer has only said that banking facilities are available at Bettiah as also at Muzaffarpur. The assessee is of Bettiah. The Appellate Assistant Commissioner has held in paragraph No. 8 of his judgment that it was asserted on behalf of the assessee that no doubt banking facility wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank draft and the purchaser's business interest would suffer due to non-availability of goods otherwise than from the particular seller, in such cases, the provisions of rule 6DD(j) of the Rules would apply. No doubt, this circular was issued by the Central Board of Direct Taxes in May, 1977, but it can be used as a clarification laying down circumstances in which the provisions of rule 6DD(j) of the Rules would be attracted. Under such circumstances, the Tribunal as also the Appellate Assistant Commissioner, were right in accepting the case of the assessee that the sellers insisted on cash payments and that the assessee had no bank account during the relevant period. In view of this finding, the Tribunal came to the conclusion that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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