Law: Income Tax Act, 1961

Section: 256,40(a)(3),256(2)

Income-tax---Reference---Business expenditure---Payment in cash exceeding Rs.2,500-- Disallowance---Assessment done estimating income and separate addition for cash payments above Rs.2,500 under S.40(A)(3)---Claim that payment was due to exceptional circumstances or each payment was less than Rs.2,500--¬Not accepted by Tribunal in absence of evidence---Finding of Tribunal based on appreciation of evidence---No question of law arises---Whether disallowance of cash payments permissible where income estimated---Does not arise out of Tribunals order---Application under S.256(2) rejected--¬Indian Income Tax Act, 1961, Ss.40(a)(3) & 256(2). The assessee-firm executed contract works. As vouchers for expenditure or muster rolls were not produced the Assessing Officer determined the profit at a percentage of the gross receipts and also made a separate addition on account of payments made in cash in excess of Rs.2,500 under section 40(a)(3) of the Income Tax Act, 1961. The appeal against the addition was dismissed by the Tribunal and it declined to make a reference to the High Court. On a reference application under section 256(2) of the Income Tax Act, 1961: Held. (i) that the assessee did not produce any material to show that the plea that section 40(a)(3) was not attracted where profit was determined on estimate basis after rejecting the book results of the assessee, had been raised before the Commissioner of Income-tax (Appeals) or the Tribunal. These questions were distinct and different questions not considered by the Tribunal. They were not merely different aspects of the questions raised before the Tribunal. No reference thereof could be directed. (ii) that when the pleas of the assessee that cash payments in excess of Rs.2,500 had been made on account of certain exceptional circumstances or that each-cash payment was below Rs.2,500 though in the aggregate in a day, total payments did exceed that amount, were- not supported by sufficient evidence, the finding given by the Tribunal was based on appreciation of the evidence and no question of law arose for reference to the High Court for its opinion. Agha Abdul Jabbar Khan v. CIT (1971) 82 ITR 872 (SC); CIT v.…

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