Law:

Section:

Section 256(1) of the income-tax act, 1961-Reference-Question of fact-Order of ITO regarding (i) disallowance under section 40A(3) qua purchases made by cash payments on bills exceeding Rs. 2,500, and (ii) disallowance of amount towards motor car expenses which was not incurred for business of assessee, was affirmed by tribunal, but regarding addition of Rs. 50,000 in income of assessee on account of suppressed profit, case was remanded to ITO-Whether any question of law arose from order of tribunal-Held, on Facts, No Facts The ITO made certain additions in the income of the assessee-firm, a dealer in chassis of trucks. The first addition of Rs. 34,396 was under section 40A(3), consisting of certain purchases on cash payments of bills exceeding Rs. 2,500. He rejected the assessee's only explanation that sellers were insisting on cash payments. The second disallowance of Rs. 15,671 was towards motor car expenses, which were incurred for the business of the assessee. The ITO also added Rs. 50,000 in the income on account of on money for out of turn supplies of truck chassis, which were on short supply. The ITO found certain irregularities in the books of account which supported his findings that the assessee was taking on money and not accounting for the same. The ITO also noticed that certain documents had not been produced by the assessee. The Commissioner (Appeals) found that out of Rs. 34,396 disallowed under section 40A(3), two purchases of Rs. 10,277 could have been accepted since these purchases had been made on a bank holiday but regarding the remaining amount, the ITO's order was sustained as the assessee could not produce evidence in support of the contention that sellers were insisting on cash payments. Disallowance regarding motor car expenses was also upheld. But addition of Rs. 50,000 was deleted, holding that though the discrepancy pointed out by the ITO was pretty serious but the ITO did not, in any way, establish that the assessee was charging on money and, therefore, the finding of the ITO was based upon surmises and conjectures. On further appeal, the Tribunal upheld the order of the Commissioner (Appeals) regarding the first two points but…

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