Law:

Section:

Section 40A(3) of the Income-tax Act, 1961, read with rule 6DD(j) of the Income-tax Rules, 1962 - Business disallowance - Cash payment exceeding prescribed limit - Assessing Officer made addition to income of assessee on ground that assessee had made cash payment in violation of section 40A(3) for purchases - Stand of assessee was that he had made payments in cash on insistence of seller and if he had not acceded to request, supply of goods to it could have been terminated as payment schedule of assessee had gone beyond relaxation period of 15 days and supplier had also confirmed that it had insisted on cash payment since assessee, on earlier occasions, had failed to make payment in time - Tribunal on finding that cash payment was made on insistence of seller, deleted addition - Whether cash payment in instant case was protected by exceptions provided under rule 6DD(j) - Held, yes - Whether, therefore, no question of law arose from order of Tribunal for interference - Held, yes Circulars & notifications - CBDT Circular No. 220 dated 31-5-1977 CASES REFERRED TO CIT v. Nikko Auto Ltd. [2002] 256 ITR 476/ 122 Taxman 874 (Punj. & Har.) [Para 5] and CIT v. Avtar Singh & Sons [1992] 194 ITR 80/ 61 Taxman 142 (Punj. & Har.) [Para 5]. R.P. Sawhney and A.S. Tewatia for the Appellant. JUDGMENT N.K. Sud, J. - The Revenue has filed this appeal under section 260A of the Income-tax Act, 1961 (for short "the Act"), against the order of the Income-tax Appellate Tribunal, Chandigarh Bench-A, Chandigarh (for short the "Tribunal"), dated April 24, 2002, whereby its appeal against the order of the Commissioner of Income-tax (Appeals) for the assessment year 1993-94 has been dismissed. 2. During the course of assessment proceedings, the Assessing Officer noticed that the assessee had made purchases against cash payments from one M/s. Sawan Plastics to the tune of Rs. 3,55,490 vide nine bills of different dates, This, according to the Assessing Officer, was in violation of the provisions of section 40A(3) of the Act for which explanation of the assessee was sought. The assessee explained that the payments had been made in cash at the insistence of the seller who had…

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