Evershine Platers vs Commissioner of Income Tax

Heard Shri Pawan Shri Agrawal with Shri R. P. Agrawal in support of this appeal.

The petitioner seeks to challenge the order of the Income Tax Appellate Tribunal whereby the Tribunal has restored the order passed by the assessing officer. The assessing officer has added an amount of Rs. 5,34,323 in the income of the appellant-assessee for the assessment year 1992-93. The case of the assessee was that the assessee has made payment in cash to four contractors who were in turn making payment to their employees in cash.

Section 40A(3) requires all payments exceeding Rs. 10,000 to be made by cheques otherwise it is permissible to the assessing officer to disallow such payments. Rule 6DD(j) of the Income Tax Rules, 1962, makes exception in certain circumstances.

Learned Counsel for the appellant relied upon the judgment of the apex court in Attar Singh Gurmukh Singh v. ITO, (1991) 191 ITR 667 (SC) and another of a Division Bench of this Court in Commissioner of Income Tax Vs. Chaudhary and Co., The first judgment lays down the proposition that the terms of Section 40A(3) are not absolute. In the case of Commissioner of Income Tax Vs. Chaudhary and Co., there were certain solitary payments which were explained to the Division Bench of this Court. The Division Bench of this Court has taken this view that there was sufficient explanation and, therefore, the payment will not be hit by Section 40A(3).

In the present case, what we find that for more than 15 years the payments were made in cash to the contractors in the city of Mathura where banking facilities are available. The regular payments cannot be by such mode otherwise, this section will be redundant.

In our opinion the learned Tribunal was right in restoring the order passed by the assessing officer. There is no reason to interfere with the order of the Tribunal.

The appeal is dismissed.