Income Tax Appellate Tribunal - Delhi
M.R. Soap (P) Ltd. vs Iac (Asst). on 1 January, 1800
Equivalent citations: (1988)32TTJ(DELHI)505
ORDER
OF ASSESSMENT--Notice under section 148 issued mistakenly Ratio :
Where notice under section 148 was issued mistakenly the same would not make the assessment invalid as a valid return had already been filed.
Held :
In this case, no valid action under section 147 was ever initiated and no reasons were ever recorded for initiating action under section 147. The assessee never filed a return in pursuance of the notice under section 148 and never raised any point before the assessing officer about the invalidity of the proceedings on this ground. The mere fact that by some mistake a notice dated 15-1-1986 purporting to be under section 148 was sent to the assessee and served on it on 16-1-1986 would not mean that the assessment is based on proceedings under section 147. A return had already been received in the income-tax office before the notice was served. There was no cause for the issue of notice under section 147/148 and, therefore, the so-called notice dated 15-1-1986 is a piece of waste paper in no way affecting the legality of the proceedings.
Application :
Not to current assessment years.
Income Tax Act 1961 s.143 Income Tax Act 1961 s.144B Business disallowance under s. 40A(3)--APPLICABILITY OF R. 6 DD(j)--Identity of payee and genuineness of payment established.
Ratio :
Rule 6 DD(j) was applicable where identity of payee and genuineness of payment established.
Held :
The assessee has also filed some documents to show that at times the goods were delivered after the banking hours against cash payments and it was, therefore, not possible to procure a bank draft, etc. The evidence produced by the assessee indicate that payments in question were made in cash because it was not practicable to make payments by cheque or bank drafts and the genuineness of the payments having been established, these payments were saved by rule 6 DD(j)(ii) as well.
Application :
Not to current assessment years.
Income Tax Act 1961 s.40A(3) Business disallowance under s. 40A(3)--APPLICABILITY OF R. 6 DD(j)--Insistence of sellers to make balance payment in cash.
Ratio :
Insistence of sellers to make balance payment in cash was an exceptional circumstance under rule 6DD(j).
Held :
The assessee has filed a letter from one S, the seller, in respect of the payment of Rs. 6,524.70. The certificate further states that the assessee purchased goods worth Rs. 1,09,524.70 and a sum of Rs. 1,03,000 by a bank draft and the balance was paid in cash. The certificate states that if the balance has not immediately been paid, the goods would have been with held. Therefore, about this item, exceptional circumstances are quite evident. Regarding B also, a certificate was filed stating that goods worth Rs. 46,287.56 were purchased from which a draft of Rs. 40,000 was given and a credit balance of Rs. 15,699.92 was adjusted and the balance of Rs. 4,723.34 was insisted upon to be paid in cash and was paid as such before the goods were allowed, to be removed. In this case, also therefore, exceptional circumstance is made out. These two instances show that the assessee went to purchase the goods and obtained drafts for the estimated price, but as the actual value of the goods was a little more, the balance was paid in cash. These are circumstances which clearly bring the assessee's case under rule 6DD(j).
Application :
Not to current assessment years.
Income Tax Act 1961 s.40A(3) Business disallowance under s. 40A(3)--CASH PAYMENT EXCEEDING PRESCRIBED LIMIT--Payments to Government of India undertaking.
Ratio :
Payments to Government of India undertaking were genuine and could not be disallowed under section 40A(3).
Held :
As regards purchases from G, the assessee's contention is that it is a Government company and no disallowance can be made for payment to it in cash. The assessee further contended that this party too insisted for cash payment. The certificate from the said party states that payment in cash/bank drafts was a condition of contract with the assessee. An assessing officer cannot, therefore, be said to be exercising his discretion judiciously if even payments made to a Government of India undertaking, which are otherwise undisputed are disallowed, under the cover of section 40A(3). Therefore, the Government of India undertaking, the genuineness of which is no way in doubt, could not be disallowed under section 40A(3).
Application :
Also to current assessment years.
Income Tax Act 1961 s.40A(3)