Law:

Section:

section 40a(3) of the income-tax act, 1961 read with rule 6dd of the income-tax rules, 1962-payments not deductible-payments exceeding rs. 2,500 made in cash-disallowance of cash payments for over rs. 2,500 by ito was confirmed by aac though assessee produced certificates from recipients that they were not willing to accept cheques-whether tribunal was justified in holding that assessee's case fell under rule 6dd and board's circular and in deleting disallowance-held, on facts, yes Facts Cash payments for over Rs. 2,500 made by the assessee were disallowed by the ITO. The AAC confirmed the disallowance by rejecting the certificates from recipients produced by the assessee to show that they were not willing to accept cheques. The Tribunal, however, deleted the disallowance by holding that, on a proper examination of the certificates and the circumstances of the case, the assessee's case fell within the four corners of rule 6DD and Board's Circular No. 220, dated 31-5-1977. Held The Tribunal had examined each certificate and found the circumstances in which the payment was made in cash instead of by cheque. The certificates were neither vague nor of a routine nature. In the circumstances, the Tribunal did not commit any error in accepting them, nor in believing one of the cases as an exceptional circumstance under rule 6DD. The Tribunal's order required no interference. JUDGMENT SAHAI, J.-On the direction of this Court, the Tribunal, Delhi, Bench 'B' has submitted the following question of law for opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in deleting the addition of Rs. 15, 590 made by the Income-tax Act, 1961?" 2. Facts in brief, giving rise to this reference are that the assessee, an individual, derived income from sale of paper, stationery, copies, etc. In course of the assessment proceedings, the ITO found that four payments in cash beyond Rs. 2,500 were made. As assessee failed to explain the circumstances in which these payments were not made either by crossed cheque or bank draft, the ITO disallowed it under section 40A(3) and added these in its income. In appeal before the AAC, the…

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