TMI Blog1983 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... was in violation of the provisions of s. 40A(3) of the Act. The assessee-company filed an appeal and the learned Commissioner of Income-tax (Appeals), Rajasthan, held that cash payments in this case were covered by exceptions given clause (j) of r. 6DD of the I.T. Rules and the clarification issued by the Board as per instructions dated 31st May, 1977. The Commissioner took the view that the appellant-company had taken over all the assets and liabilities of the firm and the firm was in the process of closing down its business. In these circumstances, the Commissioner held that it would have not been practicable for the appellant to make payments by cheque to the firm which was in the process of closing down its business. Reliance was plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the essential conditions was that an exceptional circumstance should exist before the payment was permitted to be made in cash. Thus, the learned Members of the Tribunal held that the payments were in contravention of s. 40A(3) of the Act and had rightly been disallowed by the ITO. Learned Members of the Appellate Tribunal also distinguished the case of the Gujarat High Court in Hasanand Pinjomal's case [1978] 112 ITR 134. The assessee-company then submitted an application under s. 256(1) of the I.T. Act for drawing up statement of the case and to refer the following questions of law to the Hon'ble High Court: "1. Whether, the Tribunal was right in holding that the cash payments in question relating to the acquisition of goods from the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word 'expenditure' under section 40A(3) of the Income-tax Act, 1961 ?" It may be mentioned at the outset that an application was submitted by the assessee-company under s. 256(1) of the I.T. Act for referring only questions Nos. 1 and 2 and the same was dismissed by the Appellate Tribunal holding that the said questions were purely questions of fact. In the application before us, the assessee-company has added one more question as question No. 3 mentioned above. Mr. Gupta, learned counsel appearing for the assessee-company, was unable to convince us that questions No. 1 and 2 were questions of law in the facts and circumstances of this case. The question " Whether the payment of Rs. 62,270 made in cash was covered by the exceptions give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law as held by their Lordships of the Supreme Court in Janta Metal Supply's case [1977] 110 ITR 672 (SC). However, this question does not arise in the facts and circumstances of this case. Firstly, as already mentioned above, this question was not mentioned in the application submitted under s. 256(1) of the Act before the Appellate Tribunal. That apart, we asked Mr. Gupta, learned counsel for the assessee company, to show anywhere from the record right from the order of the ITO to the Appellate Tribunal that such question was ever raised or argued before these authorities. Mr. Gupta was unable to show from any material on record or from any of the orders of the ITO or the Commissioner of income-tax (Appeals) or the Income-tax Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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