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[2008] 307 ITR 87 (GUJ.) HIGH COURT OF GUJARAT Commissioner of Income-tax v. Parle Sales And Services (P.) Ltd. Y.R. MEENA C.J. AND MS. ABHILASHA KUMARI, J. TAX APPEAL NO. 22 OF 2007. OCTOBER 11, 2007. Section 40A(3) of the Income-tax Act, 1961 - Business disallowance - Case payment exceeding prescribed limits Where village concerned did not have banking facility and, consequently, neither assessee nor supplier had any banking accounts, and payments were otherwise held to be genuine, payments made by assessee in cash were covered by exceptional circumstances as prescribed by rule 6DD(j) [A/Y : N/A] (In favour of assessee) CIT v. Parle Sales & Services (P.) Ltd. [2008] 307 ITR 87 (Guj.) The question as to whether there were compelling reasons to make payment in cash or not is basically a question of fact. Where both the Commissioner (Appeals) and the Tribunal found that the village concerned did not have banking facility and, consequently, neither the assessee nor supplier had any banking accounts and payments were otherwise held to be genuine. The payments made by the assessee in cash were covered by exceptional circumstances as prescribed by rule 6DD(j) of the Income-tax rules, 1962. Manish R. Bhatt for the Appellant. JUDGMENT Heard learned counsel for the appellant. Following question is proposed for admission in this appeal. "Whether the Appellate Tribunal has correctly appreciated the facts on record in confirming the order passed by the Commissioner of Income-tax (Appeals) in deleting disallowance made under section 40A(3) of the Act holding the same to be covered by rule 6DD, for an amount of Rs. 4,75,000 ?" While confirming the order of the Commissioner of Income-tax (Appeals), the Tribunal has observed in paragraph 5 as under : "We have heard rival submissions and perused material available on record. As facts are similar in all the cases, it has not been disputed that village Vanivali does not have banking facility and consequently, neither the assessee nor supplier has any banking accounts, payments are otherwise held to be genuine. In our considered view, the Commissioner of Income-tax (Appeals) was justified in holding that payments made by the…

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