Law:

Section:

Section 40A(3) of the Income-tax Act, 1961, read with rule 6DD of the Income-tax Rules, 1962 - Business disallowance - Cash payment exceeding prescribed limits - Assessment year - 1985-86 - Assessing Officer having found that certain cash payments made by assessee held that said payments were hit by section 40A(3) and as no evidence had been produced to show that there was exceptional or unavoidable circumstances justifying payments in cash, made addition - Commissioner appeals confirmed Assessing Officer's order - Tribunal, however, deleted addition - Whether unless Tribunal had arrived at a finding of fact that exceptional circumstances existed to warrant payments in cash or that payment by crossed cheque was not practicable or would have caused genuine difficulty to payee, aforesaid order ought not to have been interfered with, and, therefore, order of Tribunal deleting said addition was not justified - Held, yes Circulars and Notifications - CBDT's Circular No. 220, dated 31-5-1977 FACTS The Assessing Officer having found that the assessee had made certain payments in cash held that the said payments were hit by the provisions of section 40A(3) and further, on the basis of the CBDT circular held that the provisions of rule 6DD(j) could not be applied. Accordingly, he disallowed the sum and made addition to the income of the assessee. On appeal, the Commissioner (Appeals) confirmed the order of the Assessing Officer. On second appeal, the Tribunal deleted the addition. On reference: HELD The Commissioner (Appeals) in his order had considered evidence on record in the light of rule 6DD and the guidelines laid down by the CBDT in its Circular No. 220, dated 31-5-1977. [Para 8] The Assessing Officer as also the Commissioner (Appeals) held that no evidence had been produced to show that there were exceptional or unavoidable circumstances justifying the payments in cash. The Tribunal as a final fact-finding authority had not arrived at any findings of fact to the contra, instead it proceeded on the basis that what was to be seen was whether the claim was excessive or fictitious. It took the view that where the turnover was more than Rs. 1 crore, the expenditure…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492