1995 (2) TMI 5

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..... reference are that the assessee had borrowed some money on hundis and repaid the same during the previous year ended March 31, 1978, corresponding to the assessment year 1978-79, through demand drafts. The Income-tax Officer noted that section 69D provides for disallowance of any amount repaid otherwise than through an account payee cheque drawn on a bank. He was of the opinion that repayment by .....

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..... stions have been referred : " (1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is justified in holding that the assessee had ful filled the requirements of section 69D by making repayment through demand drafts ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in deleting the addition of Rs. 11,600 from the t .....

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..... bank draft cannot be equated to an account payee cheque. The respondent, though served, has not appeared either in person or by counsel. We have perused the provisions of section 69D as well as the objects and reasons for the introduction of this section. The reference there is only to the Wanchoo Committee report which had made reference to unearthing black money and preventing its prolifera .....

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..... into effect from April 1, 1984. The provisions of section 69D came into effect in between, on April 1, 1977. A perusal of the analogous sections shows that they were also concerned with the transparency of transactions because section 40A(3) refers to expenditure incurred in the course of business above Rs. 10,000 ; section 269T with reference to repayment of deposits ; and section 269SS with refe .....

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..... lowance under section 69D is only in the event of the transaction being unverifiable. When it is seen that the repayment by an account payee demand draft is equally efficacious in verifying the identity of the payee, we share the view of the Tribunal that an account payee demand draft also should be treated as an account payee cheque drawn on a bank for the purpose of the provisions of section 69D .....

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