Commissioner of Income Tax vs Rhydburg Pharmaceuticals Ltd.

Counsel for the Revenue submits that the Tribunal has seriously erred in observing : In the case of Commissioner of Income Tax Vs. Nikko Auto Ltd., , that acceptance of payment by account payee cheque or account payee draft would be hazardous and cumbersome procedure and, Therefore, the case of the assessed was fully covered by the exceptions provided u/s 40A(3) r/w r. 6DD(j) and the Board''s circular.

We may note that we are not of the view that obtaining a cheque or a bank draft is hazardous and cumbersome procedure. Suffice it to say that in the present case, the Tribunal was of the opinion that the payee insisted for cash payment as observed by the learned CIT(A) and further that the transactions were found to be genuine. We may also note that in M/s. Attar Singh Gurmukh Singh, etc. Vs. Income Tax Officer, Ludhiana, etc., ; it is pointed out that 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 up to the assessed to furnish to the satisfaction of the AO the circumstances under which 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 assessed to identify the person who has received cash payment.

In view of the fact that the Tribunal has arrived at a conclusion on the question of fact, we are not inclined to interfere. Hence, the appeal is dismissed.