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TMI Blog2012 (2) TMI 307X X X X Extracts X X X X X X X X Extracts X X X X ..... siness opportunity, if had failed to make cash payments. These were relevant and material aspects which were required to be considered and examined by the tribunal but have been overlooked. Therefore dis-allowance is deleted – Decided in favor of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Rs.15,000/- on 22.05.1993 to M/s. Film Jagat 4. Rs.30,000/- on 01.06.1993 to M/s. Film Jagat 5. Rs.12,500/- on 22.05.1993 to M/s. MKD Film Enterprises 6. Rs.11,831/- on 03.03.1994 to M/s. Ekta Films 7. Rs.38,000/- on 23.06.1993 to M/s. Honey Enterprises0 Total : Rs.1,60,831/- 5. The issue raised is whether the aforesaid cash payments made by the appellant-assessee violated provisions of Section 40A (3) of the Income Tax Act, 1961 („Act‟, for short) read with Rule 6 DD (j) of the Income Tax Rules, 1962. 6. It is an admitted position that the Circular No.220 dated 31.05.1997 was applicable to clause (j) of the said Rule, which reads as under: - "Clause (j) of rule 6 DD of the Income-tax Rules, 1962, provides that no di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment to be made by way of cash. 5. It can be said that it would generally satisfy the requirements of rule 6DD (j), if a letter to the above effect is produced in respect of each transaction falling within the categories listed above from the seller giving full particulars of his address, sales tax number/ permanent account number, if any, for the purposes of proper identification to enable the Income-tax Officer to satisfy himself about the genuineness of the transaction. The Income-tax Officer will, however, record his satisfaction before allowing the benefit of rule 6DD(j). 6. It is further clarified that the above circumstances are not exhaustive but illustrative. There could be cases other than those falling within the above catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was an amount borrowed from someone. In case the assessee had obtained the amount as loan in cash for making payment to the principals, then the assessee has again violated provisions of S.269 SS by obtaining loan in cash and not by account payee cheques or account payee bank draft. 12. From the facts explained hereinabove, it is evident that in fact the assessee never genuinely intended to make the payments initially by crossed cheques/ drafts in compliance with the provisions of Sub-Sec. 3 of S.40A read with Rule 6 DD and simply adopoted this route to get protection under clause (j) of Rule 6DD of I.T. Rules by ultimately succeeding in making the payments in cash to the principals, which appears to be the real intention of the assessee r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank account statement shows that whenever cash deposit was made in the bank account, it was immediately thereafter utilized to issue cheques towards the expenditure. The explanation of the appellant-assessee was that payments were made in cash, as preparation of a bank instrument or issue of cheque would have resulted in a missed opportunity or failure of a favourable or good business deal with the third parties. The provisions of Section 40A (3) and Rule 6 DD (j) have been incorporated in the Act in order to check the incurring of bogus and fictitious expenses to non-existing parties. In the present case, the appellant-assessee had furnished explanations on the basis of the bank statements as well as the ledger accounts of the payees ..... X X X X Extracts X X X X X X X X Extracts X X X X
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