Commissioner of Income Tax vs S.B. Saini Brothers

D.S. Tewatia, J.—The Revenue has approached this court u/s 256(2) of the Income Tax Act, 1961 (for short, "the Act") for a direction to the Tribunal to refer the following questions formulated in the petition for the opinion of this court:

" (i) Whether, on the facts and in the circumstances of the case, the Tribunal''s finding that the payments amounting to Rs. 2,12,109 could not be made by bank drafts is sustainable on the basis of the material placed on record ?

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that cash payments amounting to Rs. 2,12,109 are covered by Rule 6DD(j) of the Income Tax Rules, 1962?"

The Tribunal had dismissed the Revenue''s petition u/s 256(1) of the Act on the ground that no question of law arises out of its order dated May 31, 1976. The question that falls for consideration in this case is as to whether a given circumstance established on the record is an exceptional or unavoidable circumstance in terms of Rule 6DD(j) of the Income Tax Rules, 1962 (hereinafter referred to as " the Rules").

Mr. Ashok Bhan, senior advocate, appearing for the Revenue, has contended that the question that falls for consideration is a mixed question of law and fact and sought to sustain his contention from the decision of this court Commissioner of Income Tax Vs. Avtar Singh and Sons, . In our opinion, the ratio of this case is not attracted to the facts and circumstances as found by the Tribunal in the present case. That was a case in which the Appellate Assistant Commissioner, while deciding the applicability of Rule 6DD(j) of the Rules, had taken into consideration the reputation of the supplier company and the fact that it did not charge any interest; and had held that the provisions of Rule 6DD(j) were applicable to the facts of the case. This decision, in that regard, was upset by the Tribunal. The assessee approached this court u/s 256(2) of the Act and made a grievance of the fact that the Tribunal while reaching its conclusion that the provisions of Rule 6DD(j) of the Rules were not attracted to the facts and circumstances of the case, had ignored the material circumstance which had been taken into consideration by the Appellate Assistant Commissioner, i.e., the reputation of the supplier company and the fact that it did not charge any interest.

In the present case, the explanation offered by the assessee is that for effecting purchases, cash payments were made as a large number of cheques issued by the assessee were being dishonoured by the bank and that the sellers insisted upon cash payment. In the certificates that had been filed by the assessee from the sellers, it had been admitted by the sellers that they had insisted upon cash payment. This evidence and the explanation offered by the assessee has been accepted by the Appellate Assistant Commissioner as also by the Tribunal. Whether the circumstances of dishonouring of the cheques and the insistence of the sellers to make payment in cash constituted an exceptional or unavoidable circumstance, in our opinion, is an inference of fact and not of law. In this regard, we are supported by an earlier decision of this court in Commissioner of Income Tax Vs. Sawaran Singh Balbir Singh, . Similar view has been repeatedly taken by the Allahabad High Court in Addl. CIT v. Friends Straw Board and Commissioner of Income Tax Vs. Kohli Khan Bhandar, and Commissioner of Income Tax Vs. Satish Chandra, .

For the reasons aforementioned, we find no merit in this petition and dismiss the same.