1978 (4) TMI 115 - AT - Income Tax

Summary

Issues:
1. Condonation of delay in filing appeal.
2. Addition of Rs. 3,000 to the assessee's income under Section 40A(3) of the Income Tax Act, 1961.
3. Application of Rule 6DD(j) regarding cash payment.

Detailed Analysis:
1. The judgment dealt with the issue of condonation of delay in filing the appeal. The appeal was filed one day late due to a delay in the post. The Member accepted the explanation provided and decided to condone the delay, allowing the appeal to proceed despite being filed out of time.

2. The second issue involved the addition of Rs. 3,000 to the assessee's income under Section 40A(3) of the Income Tax Act, 1961. The Income Tax Officer (ITO) disallowed this payment as a deduction, citing a contravention of the provisions of the Act and Rule 6DD of the Income Tax Rules, 1962. The assessee contended that the payment was genuine and provided a letter from the payee certifying the same. However, the ITO upheld the addition, stating that the exceptional circumstances for cash payment were not proven. The Appellate Authority Commissioner (AAC) also upheld the addition based on the lack of evidence regarding the necessity of cash payment.

3. The final issue revolved around the application of Rule 6DD(j) concerning cash payments. The assessee argued that the payment in cash was made after banking hours under unavoidable circumstances, supported by a circular from the Central Board of Direct Taxes. The Departmental Representative contested the submission of fresh material and the establishment of exceptional circumstances for cash payment. The Member referred to a judgment of the Kerala High Court for guidance and concluded that the borrowing of funds after banking hours constituted an exceptional circumstance, satisfying the requirements of Rule 6DD(j. Consequently, the addition of Rs. 3,000 was deleted, and the appeal was allowed.

In conclusion, the judgment addressed the issues of delay in filing the appeal, the addition of income under Section 40A(3), and the application of Rule 6DD(j) regarding cash payments, ultimately ruling in favor of the assessee based on the exceptional circumstances surrounding the cash payment.