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Judgment
The appellants have filed the appeal on the following question of law :
"Whether, on the facts and circumstances of the case, the Tribunal is right in holding that the case of the assessee falls in the second proviso to section 40A(3) and rightly deleted the disallowance of Rs. 14,58,691 ?"
The Supreme Court, considering the second proviso to section 40A(3) of the Income Tax Act, 1961, observed as under (see Attar Singh Gurmukh Singh v. ITO, (1991) 191 ITR 667 (SC)
"The payment by crossed cheque or crossed bank draft is insisted on to enable the assessing authority to ascertain whether the payment was genuine or whether it was out of the income from undisclosed sources. The terms of Section 40A(3) are not absolute. Consideration of business expediency and other relevant factors are not excluded. Genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the Assessing Officer the circumstances under which the payment in the manner prescribed in section 40A(3) was not practicable or would have caused genuine difficulty to the payee. It is also open to the assessee to identify the person who has received the cash payment. Rule 6DD provides that an assessee can be exempted from the requirement of payment by a crossed cheque or crossed bank draft in the circumstances specified under the rule. It will be clear from the provisions of Section 40A(3) and Rule 6DD that they are intended to regulate business transactions and to prevent the use of unaccounted money or reduce the chances to use black money for business transactions."
In view of the said decision, we do not find that any substantial question of law arises in this appeal.
The appeal is accordingly dismissed.