COMMISSIONER OF INCOME TAX Vs. RHYDBURG PHARMACEUTICALS LTD

JUDGEMENT

(1.) COUNSEL for the Revenue submits that the Tribunal has seriously erred in observing : In the case of CIT vs. Nikko Auto Ltd. (2002) 175 CTR (PandH) 154 : (2002) 256 ITR 476 (PandH), that acceptance of payment by account payee cheque or account payee draft would be hazardous and cumbersome procedure and, therefore, the case of the assessee was fully covered by the exceptions provided under s. 40A(3) r/w r. 6DD(j) and the Board's circular.

(2.) 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 Attar Singh Gurmukh Singh vs. ITO (1991) 97 CTR (SC) 251 : (1991) 191 ITR 667 (SC), it is pointed out that terms of S. 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 assessee to furnish to the satisfaction of the AO the circumstances under which payment, in the manner prescribed in s. 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 cash payment.