9911796707
TMI Blog1983 (1) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed by the CIT (Appeals). 2. The assessee is now in appeal before us. The submissions placed before the lower authorities were reiterated before us. In our opinion, the assessee cannot succeed. Proviso to s. 40A(3) of the Act states that even if a payment is made in excess of Rs. 2600 otherwise than by crossed cheque or by crossed bank draft, it shall not be disallowed in such cases and in such circumstances as may be prescribed. There is no dispute before us that the exemption can fall only u/r 6DD (j). This rule states that the exemption will be allowable in any other case, where the assessee satisfies the ITO that the payment could not be made by a crossed cheque or by a crossed bank draft due to exceptional or unavoidable circumstances or 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 ITO as to the genuineness of the payment and the identity of the payee. The circular referred to above also states that it would generally satisfy the requirements of r. 6D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct statement, which was also substantiated by actual payment in cash. In our opinion, a person, who does not come out with the truth, should not normally be believed. In any case, subsequent denial was not by Smt. Sushil Kaur herself, who had signed the letter on 7th February, 1979, but by her husband Shri Jasbir Singh, who was only a manager of the concern. We, therefore, hold that the assessee is entitled to the exemption u/r 6DD(j) of the IT Rules. The addition of Rs. 14,400 is, therefore, deleted. 5. The ITO found that the assessee had shown a credit of Rs. 25,000 in its cash book on 26th November, 1975. The credit was shown as withdrawn from the State Bank of India vide cheque No. 919048. This money was utilised on the same date for meeting various expenses to the extent of Rs. 17,093, leaving a closing cash balance of Rs. 8474. On cross reference in the assessee's account with the bank, it was found by the ITO that the above cheque had, in fact, been cashed on 29th November, 1975. He also found that the cheque was issued on the same date i.e. 29th November, 1975. In other words, the cheque did not exist on 26th November, 1975 and, therefore, the question of its encashment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on 26th November, 1975 represented its own income and included it in the assessment. The inclusion was also confirmed by the CIT (Appeals) in the following words: "13. I have considered the evidence and in my opinion, the addition made is fully justified. The appellant's cash book is supposed to be written from day to day and is supposed to state the factual position about the various entries recorded therein. If the appellant had not received the amount of Rs. 25,000 from encashment of cheque on 26th November 1975 it is not clear why he stated so in the cash book 26th November, 1975 not only putting the cheque number but also stating that the amount was received from bank through Shri Priya Saran Garg. If it was really correct that the amount was received from M/s Goverdhan Das Sons as a dasti loan then obviously this fact would have been stated in the cash book of the appellant firm also from 26th November, 1975 onwards and the absence of such an entry makes it absolutely clear that the story of receiving the amount from M/s Goverdhan Das Sons is entirely false, and after thought and shows the falsification of accounts of M/s Goverdhan Das Sons with a view to support a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. It was submitted before him that the sale price of granules had fallen from Rs. 16.58 per Kg. in the asst. yr. 1975-76 to Rs. 11.94 per Kg. in the year under appeal. It was further pointed out that in the asst. yr. 1975-76, the average purchase price was Rs. 11.75 per Kg. and the average sale price was Rs. 16.58 per Kg. which had fallen to Rs. 13.50 per Kg. and Rs. 11.94 per Kg. respectively. The CIT (Appeals) agreed with the ITO that the provisions of s. 145 of the Act were attracted to the case. He, however, applied a gross profit rate of only 15% on the estimated turnover of Rs. 4 lacs. He, thus, reduced the addition to Rs. 56,206 as against Rs. 86,576 made by ITO. 10. The assessee is now in appeal before us. We have heard the parties. We find that the figures as pointed out to the CIT (Appeals) regarding the fall in the purchase and sale prices are more or less correct. We also find that the assessee had been maintaining quantitative details in granules account. The ld. departmental representative pointed out to us that Shri B.C. Sinha, Advocate, who had appeared before the ITO on 6th February, 1979 had admitted that no records to show quality-wise purchases of granules ..... X X X X Extracts X X X X X X X X Extracts X X X X
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