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TMI Blog1978 (10) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... x Rules, 1962 ?" The following question has been referred at the instance of the Revenue. "Whether the Tribunal was right in law and on facts in holding that the payments of Rs. 9,791 made to M/s. Yogeshchandra Co. of Bombay are covered by rule 6DD(j)(i) and (ii) of the Income-tax Rules, 1962 ?"' The facts leading to these two references are as follows: "We are concerned with assessment year 1970-71. The assessee is a registered firm which derives income from a spinning mill. It purchases cotton waste and manufactures yarn which is used in manufacturing rough clothes, mats, carpets, etc. At the time of the assessment, the Income-tax Officer, while scrutinising the accounts, found that the assessee had made cash payments aggregating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to accept cheques from the assessee-firm could not be accepted and it, therefore, disallowed the claim for Rs. 48,939. As regards payments made to M/s. Yogeshchandra Co., the Tribunal found that all along in the past as well as during the year under appeal, the payments, past as well as during the year under appeal, were made only in cash and therefore the explanation put forth by the assessee had some merit. The Tribunal again took the fact into consideration that Yogeshchandra Co. was a Bombay party and their insistence on cash payments in the light of the facts stated by the assessee could not be ruled out. The Tribunal therefore held that the payments made to Yogeshchandra Co. must be held to be covered by rule 6DD(j)(i) as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Central Government specified, by notification in the Official Gazette, that 31st March, 1969, was the specified date under section 40A(3). Rule 6DD of the Income-tax Rules, 1962, provides for cases and circumstances in which payment in the sum of Rs. 2,500 may be made otherwise than by crossed cheque or a crossed bank draft and the rule says that no disallowance under sub-section (3) of section 40A shall be made where any payment in sum exceeding two thousand five hundred rupees is made otherwise than by crossed cheque drawn on a bank or by crossed bank draft in the cases and circumstances specified therein, namely: "(j) in any other case, where the assessee satisfies the Income-tax Officer that the payment could not be made by a cross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er due to non-availability of goods otherwise than from this particular seller ; or (v) The seller, acting as a commission agent, is required to pay cash in turn to persons from whom he has purchased the goods ; or (vi) Specific discount is given by the seller for payment to be made by way of cash," The circular makes it clear that these are merely illustrative instances of cases in which rule 6DD(j) would be applicable. The circular also points out that the requirements of rule 6DD(j) can be satisfied 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 pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 ITR 365, be restricted to the evidence on the record and may not be entitled to take additional evidence. That may result in injustice. In the circumstances, we think it appropriate to decline to answer the question. . . . . ". We are unable to answer the questions referred to us because we feel that it would work out injustice if the assessee and the department are not allowed an opportunity to lead evidence on the point of applicability of rule 6DD(j) as meant to be applied by the Circular of the Board dated May 31, 1977. It will be open to the Tribunal to dispose of the appeal pending before it under section 260(1) of the Income-tax Act, 1961, in the light of the observations made by Its after determining the question which ought t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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