COMMISSIONER OF INCOME TAX Vs. UNION AGENCIES

JUDGEMENT

(1.) THESE are two petitions under S. 256(2) of the INCOME TAX ACT, 1961, before us for the asst. yrs. 1976 -77 and 1978 -79, concerning the same assessee, M/s Union Agencies, New Delhi. The appeal relating to the year 1978 -79 was decided on August 1, 1983, whereas the appeal for 1976 -77 was decided on April 20, 1981. The reference applications were also separately decided, one on September 17, 1981, and the other on January 20, 1984. The two income -tax cases were directed to be listed together because of the admission order in the second case. This judgment relates to the asst. yr. 1976 -77 (ITC No. 176 of 1982). The question sought to be referred is as follows:

(2.) IT was urged by learned counsel for the Department that there was a clear question of law arising out of the Tribunal's order. But, equally, it was contended for the assessee that it was a pure question of fact. The Tribunal has also refused to make a reference in its order under s.256(1) of the Act on the ground that a pure question of fact was involved.

(3.) THE assessee was asked to explain why these payments were being made in cash, in answer to which the counsel filed a letter dated January 25, 1979, stating that the cash payments were made due to exigencies created by the principal and a letter of M/s Om Parkash & Co. was also filed. M/s Om Parkash & Co. had stated in that letter: (a) that no guarantee had been provided regarding the payments and so they had insisted on cash payments against goods, (b) M/s Om Parkash & Co. had stated that they do not accept cheques before supplies were made. The ITO rejected the case of the assessee on the ground that sometimes cheques had been issued and credit granted.