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TMI Blog2006 (10) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... asing massive quantity of fabrics during 1994-95 from various persons made payments of above Rs. 10,000, other than through account payee cheques and by demand drafts which attracted disallowance under section 40A(3) of the Act. Even though the petitioner claimed benefit of exemption with reference to rule 6DD(j) of the Income-tax Rules, the petitioner could not establish the facts required to grant benefit of exemption. Thereafter, the disallowance of exemption was contested in two rounds of statutory appeals but confirmed by all authorities including the Tribunal. In order to grant exemption of expenditure over Rs. 10,000, section 40A(3) requires that such payments should be made through account payee cheques or demand drafts. However, ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payee having regard to the nature of transaction which the assessee should prove with evidence to the satisfaction of the Assessing Officer and establish genuineness of the payment and identity of the payee. Therefore, the burden of proving the above conditions required under the rule by adducing evidence is obviously on the appellant. However, it is seen from the order of the Assessing Officer and that of the appellate authorities that in many cases details of payees and transactions were not furnished and in cases where payees' addresses were furnished notices were sent by the Department. But the notices were returned by the postal authorities stating that such party does not exist or with endorsement that the addressee is not known, In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs. One difficulty expressed by the petitioner in transacting business other than through cheques and demand drafts is want of banks and banking facilities in far away villages where the real manufacturers are stationed. However, it is seen from the details narrated by the officer in his order that all, except the few purchases suppliers are institutions, and the transactions with each of them exceeded lakhs of rupees. These suppliers of the petitioners are admittedly traders and are not manufacturers or small weavers and the petitioners have no dealings with the manufacturers or small weavers. The suppliers are only traders and volume of their business disclosed from records, shows that they had no difficulty to arrange transactions throug ..... X X X X Extracts X X X X X X X X Extracts X X X X
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