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TMI Blog1987 (1) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... timber falls within the purview of the Circular of the CBDT No. 220 dated May 31, 1977 ? " The Income-tax Officer disallowed the expenditure of Rs. 27,379 on the ground that such payments were made in cash in contravention of section 40A(3) of the Income-tax Act, 1961. The Income-tax Officer negatived the plea of the assessee that the payments were made due to unavoidable circumstances and further the genuineness of payment and the identity of the payee are proved on appeal, the Commissioner of Income-tax (Appeals) and, on further appeal, the Income-tax Appellate Tribunal confirmed the order of the Income-tax Officer. Learned counsel for the assessee raised a two-fold contention, viz., the payments made for the purchase of stock-in-trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cash payments were made as the assessee had no bank accounts at those places, viz., Bavarsha and Damanpet, and further the sum of Rs. 3,881 paid to M/s. Abul Kareem & Co. represented consolidated payment of the small amounts made on different dates. The Income-tax Officer, in the course of the order, stated that the payment and the identity of the parties who sold the goods were established, and the payments were made by hundis mostly, and the C.S.T. number and the S.T. numbers of the vendors were furnished. It is also further stated by the Income-tax Officer that the assessee might have paid because he has no bank account in those places but, however, he did not accept this version as the assessee on other occasions paid to the same pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also held by the Income-tax Officer as well as the Income-tax Appellate Tribunal that the identity of the persons to whom the payments were made is established, and as a matter of fact, their sales tax registration numbers are also available. In so far as the amounts paid to M/s. Abul Kareem & Co., are concerned the first appellate authority pointed out certain inconsistent entries, but, however, the Income-tax Officer found only one infirmity, viz., that credit entries are only found, and, as such, the transactions are not correct. Therefore, it is evident that the authorities did not approach the issue from a correct perspective and the findings are not supported by a rational approach. In the circumstances, we are satisfied that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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