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TMI Blog2017 (6) TMI 831X X X X Extracts X X X X X X X X Extracts X X X X ..... orities under Section 40A(3) of the Act read with Rule 6DD(h) of the Rules. - Decided against assessee. - Income Tax Appeal No. 3 of 2002 - - - Dated:- 9-6-2017 - M.S. Sanklecha And Manish Pitale, JJ. Mr. N.S. Bhattad, Advocate for Appellant (Assessee) Mr. A.J. Bhoot, Advocate for Respondents JUDGMENT ( Per M.S. Sanklecha, J.) 1. This appeal from the order dated 18.08.2000 of the Income Tax Appellate Tribunal (Tribunal) under Section 260-A of the Income Tax Act, 1961 (Act) was admitted on 26.04.2002 on the following substantial question of law:- Can the Tribunal, without deciding whether the claim of appellant is covered is covered by Rule 6 DD(h) of the I.T. Rules, on merit, proceed to adjudicate the claim under Rule 6 DD (j) of I.T. Rules ? 2. At the joint request of the Counsel, the substantial question of law is being reformulated for consideration as under:- Whether on the facts and in the circumstances of the case and in law, the Tribunal was correct in applying Rule 6DD(j) of the Income Tax Rules,1962 (Rules) to disallow the claim of the appellant in respect of ₹ 21.37 lakhs in respect of payments made in excess of ₹ 10,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 30.03.1993 of the Assessing Officer. 7. Being aggrieved, the appellant filed a further appeal to the Tribunal. By the impugned order dated 18th August, 2000 which incidentally is a common order, passed for Assessment Year 1986-87 and 1991-92, the order of the CIT(A) for the subject assessment year was upheld. The impugned order holds that payments made in cash by the appellant -assessee to persons residing in village Devada were exempted from complying with Section 40A(3) of the Act by virtue of Rule 6DD(h) of the Rules. However, the payments which were made to transporters, contractors etc. who had business establishments at places outside the village Devada where banking facilities were available, were not entitled to the benefits of Rule 6DD(h) of the Rules. In these circumstances, the payments made to transporters, contractors, suppliers etc. was tested on the touchstone of Rule 6DD(j) of the Rules. On examination of the claim it found that the appellant-assessee was unable to prove the identity of the people or the genuineness of the transaction, as the necessary bills in support of the payment were also not produced. As a result, for the subject assessment year, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made where any payment in a sum exceeding ten thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft in the cases and circumstances specified hereunder namely:- (a) .. (b) . (c) .. (d) . (e) . (f) (g) .. (h) where the payment is made in a village or town, which on the date of such payment is not served by any bank, to any person who ordinarily resides, or is carrying on any business, profession or vocation, in any such village or town; (i) . (j) in any other case, where the assessee satisfies the Assessing Officer that the payment could not be made by a crossed cheque drawn on a bank or by a crossed bank draft (1) due to exceptional or unavoidable circumstances, or (2) because payment in the manner aforesaid was not practicable, or would have caused genuine difficulty to the payee, having regard to the nature of the transaction and the necessity for expeditious settlement thereof, and also furnishes evidence to the satisfaction of the Assessing Officer as to the genuineness of the payment and the identity of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the appellant on touchstone of Rule 6DD(j) of the Rules. On the above test, the appellant had failed to establish the genuineness of the payments. Consequently no interference with the order of the Tribunal is called for and the substantial question be answered in favour of the respondent-Revenue. 11. We find that in terms of Section 40A(3) of the Act no expenditure would be allowed as a deduction, where the payment in excess of ₹ 10,000/- is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft. However, second proviso thereto provides that the payments made in excess of ₹ 10,000/- otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, would be allowed as an expenditure under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available at the place where payment is made. The prescribed conditions which allows an expenditure in excess of ₹ 10,000/-, otherwise then by way of a crossed cheque drawn on a bank or by a crossed bank draft, are provided in Rule 6DD of the Rules. Therefore, only on satisfaction of the same, will such a payment be allowed. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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