Law: Income Tax Act, 1961

Section: 40,40A(3)

Income-tax----Business expenditure---Amounts not deductible---Payments in cash for purchases of stock-in-trade on credit---Addition under S.40A(3)---C.I.T. (Appeals) and Tribunal finding justification for cash payments---Addition deleted---Question of fact---Justified---Indian Income Tax Act, 1961, S.40A(3). The assessee was a dealer in grains, kirana, etc. Its purchases of stock-in-trade were made on credit and payments were made in cash. Therefore, the Income-tax Officer made an addition under section 40A(3) of the Income Tax Act, 1961. The Commissioner of Income-tax (Appeals) and the Tribunal allowed the claim of the assessee on the facts. On a reference: Held, that the Income-tax Officer found the payments in cash were unjustified in view of the provisions of section 40A(3) of the Act and rule 6DD(j) of the Income Tax Rules, 1962, on the basis of evidence led by the assessee. On the basis of the same evidence, the Commissioner of Income-tax (Appeals) concluded that all the cash payments were justified and the said finding of fact had been affirmed by the Tribunal. The question which had been referred was a question of fact. The view taken by the Tribunal was correct. JUDGMENT This is a reference under section 256(1) of the Income Tax Act, 1961, at the instance of the Revenue and the following question has been referred by the Tribunal for answer by this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the disallowance of Rs.13,68,060 which had been made by Abe Income-tax. Officer under section 40A(3) of the Income Tax Act, 1961?" The brief facts giving rise to this reference are that the assessee deals on a semi-wholesale basis in grains, kirana and edible oils. Its total purchases during the year exceeded Rs.13,50,000 and purchases were made on credit from dealers. The Income-tax Officer observed that the payments were made in cash and, therefore, he made an addition of Rs.13,68,060 under section 40A(3) of the Act of 1961. The assessee went in appeal before the Commissioner of Income-tax (Appeals) who, after considering…

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