Law:

Section:

Section 40A(3) of the Income-tax Act, 1961, read with rule 6DD(i) of the Income-tax Rules, 1962 – Business disallowance – Cash payment exceeding prescribed limits – Tribunal after considering several circumstances held that assessee's case was covered by provisions of rule 6DD(j) – Whether sufficiency of materials before Tribunal could not be gone into by High Court in reference under section 256 and, hence, no question of law could be said to arise out of Tribunal's order – Held, yes FACTS Considering the circumstances namely, that this was the very first year of the business of the assessee, that the assessee was not known in the market and, hence, could not make payments by cheques, that in the fertilizer business supplies were made mostly against cash payments for sales made to consumers and that because of the special nature of the business cash payment was unavoidable, the Tribunal held that the assessees case was covered by the provisions of rule 6DD(j). On application under section 256(2) : HELD The sufficiency of the materials considered by the Tribunal could not be gone into by the High Court in reference under section 256. Hence, no question of law could be said to arise out of the order of the Tribunal. Note : The case was decided in favour of the assessee. JUDGMENT Chandrashekhar, J.—This is an application by the revenue under section 256 of the Income-tax Act, 1961, praying for a direction to the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal) to…

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