High Court Of Allahabad
CIT & Anr. vs. Suresh Kumar Agarwal
Sections 40A(3), 260A
Sudhir Narain & Bhagwan Din, JJ.
IT Appeal No. 167 of 1999
22nd January, 2001
Surendra Kumar Garg, for the Revenue : Raghubir Saran Agarwal, for the Assessee
BY THE COURT
The appellants have filed the appeal on the following question of law : “Whether on the facts and circumstances of the case, the Tribunal is right in holding that the case of the assessee falls in the second proviso to s. 40A(3) and rightly deleted the disallowance of Rs. 14,58,691 ?”
2. The Honâble Supreme Court [Attar Singh Gurmukh Singh, etc. vs. ITO (1991) 97 CTR (SC) 251 : TC18R.444âEd.] considering the second proviso to s. 40A(3) of the IT Act, 1961, observed as under : “The payment by crossed cheque or crossed bank draft is insisted on to enable the assessing authority to ascertain whether the payment was genuine or whether it was out of the income from undisclosed sources. The terms of s. 40A(3) are not absolute. Considerations of business expediency and other relevant factors are not excluded. Genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the AO the circumstances under which the payment in the manner prescribed in s. 40A(3) was not practicable or would have caused genuine difficulty to the payee. It is also open to the assessee to identify the person who has received the cash payment. Rule 6DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft in the circumstances specified under the rule. It will be clear from the provisions of s. 40A(3) and r. 6DD that they are intended to regulate business transactions and to prevent the use of unaccounted money or reduce the chances to use black money for business transactions.”
In view of the said decision, we do not find that any substantial question of law arises in this appeal. The appeal is accordingly dismissed.
[Citation : 249 ITR 113]