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TMI Blog1982 (9) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... ent before time prior to the examination of the books. The assessee on this point stated that since he was having discount facilities from the purchasers the amount was paid in cash. In view of s. 40A(3) the assessee must make the payment by cheque to the purchasers otherwise the payment is not deductible from the income. In view of the above fact, the assessee's contentions not acceptable. I, therefore, disallow Rs. 54,800 being in expenses or the payment not deductible under s. 40A(3) and add it to the total income". 3. Against the order of the ITO the assessee went in appeal before the AAC and made written submission. However, the AAC was not satisfied with explanation rendered by the assessee that the payment in cash was made as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. Shri Shah also called on Board Circular which states that if seller insists on cash payment it has to be made in that manner only and therefore though the amount may exceed Rs. 2,500 the assessee's claim for deduction cannot be disallowed. Reliance was placed on CIT vs. Swaran Singh Balbir Singh (1981) 20 CTR (P H) 131: (1982) 136 ITR 595 (P H) and CIT vs. Aloo Supply Co. (1980) 121 ITR 680 (Ori). 5. The ld. Deptl. Rep. on the other hand, supported the orders of the authorities below. The Deptl. Rep. Made a point that maximum purchases are made by the assessee in the month of January 1977 and earlier and the assessee made payments to the seller after 8 to 10 months except on one occasion. According to the Deptl. Rep. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, merely because the payment exceeds Rs. 2,500 it cannot be straight away stated that the payment made by the assessee is not genuine. Such hasty conclusion or inference in uncalled for. At the cost of repetition it must be said that the party who supplied the goods is living person, the person has got a shop in Sadashiv Peth, Pune that person has also in his books of accounts entries of blouse piece sold to the assessee and that the son of the assessee in fact received the amount of Rs. 54,800. Taking the cumulative effect of all these things one has to come to the conclusion and that too, irresistible one, that payment made by the assessee is a genuine one. Therefore, we delete the addition made by the ITO and sustained by the AAC. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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