High Court Of Punjab & Haryana
CIT vs. Ashoka Steel Industries & Flour Mills
Section 40A(3), Rule 6DD
Asst. Year 1980-81
M.M. Kumar & Rajesh Bindal, JJ.
IT Ref. No. 43 of 1990
1st February, 2007
Counsel Appeared : Yogesh Putney, for the Revenue JUDGMENT
Rajesh Bindal J. :
The Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, “the Tribunal”), has referred under s. 256(1) of the IT Act, 1961, the following question of law which emerges from its order dt. 22nd Aug., 1988, in ITA No. 924/Chd/1984 for the asst. yr. 1980-81 : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the order of the CIT(A) with regard to the holding that the provisions of s. 40A(3) were not applicable to the said addition of Rs. 35,800.” The facts as noticed by the Tribunal in the statement of case are that the assessee has claimed expenditure of Rs. 35,800 on account of purchase made in cash, which were disallowed by the AO under s. 40A(3) of the IT Act, 1961 (for short “the Act”), as the AO was not satisfied with the reasons given by the assessee for non-compliance of the provisions of s. 40A(3) of the Act. In appeal the assessee succeeded in persuading the Commissioner of Income-tax (Appeals) [for short “the CIT(A)”], to accept its explanation furnished. The order of the CIT(A) was upheld by the Tribunal in further appeal by the Revenue. We have heard Mr. Yogesh Putney, learned counsel for the Revenue, and with his assistance have perused the paper book. Mr. Putney has vehemently argued that the findings recorded by the CIT(A) as confirmed by the Tribunal are perverse in so far the explanation furnished by the assessee for explaining the cash payment was not sufficient and acceptable. He further submitted that there being a clear violation of the provisions of s. 40A(3) of the Act, the assessee was not entitled to deduction of the amounts so spent by him. On a perusal of the order passed by the Tribunal, we find that the clear finding has been recorded that the assessee purchased coal from truck owners, who supplied the same at their factory premises on F.O.R. cash basis.
It has been concluded that the assessee used to pay to the truck owners in cash for the goods as truck owners generally did not have any bank accounts and that the amount was paid after banking hours because coal had been in very short supply those days. It was under such special circumstances that the assessee had to make payment in cash. The genuineness of the transactions was not in dispute. Referring to r. 6DD of the IT Rules, 1962, which relaxes the rigours of s. 40A(3) of the Act, the Tribunal accepted the explanation submitted by the assessee. Even if there is a second opinion possible on reappreciation of the facts as found and accepted by the CIT(A) and the Tribunal, this Court would not substitute its own opinion simply for the reason that the other view is also a possible view. Accordingly, the question referred is answered against the Revenue and in favour of the assessee. Reference is disposed of accordingly.
[Citation : 293 ITR 192]
