COMMISSIONER OF INCOME TAX Vs. MRINALINI V SARABHAI

JUDGEMENT

(1.) AT the instance of the Revenue, the following question of law, arising from an order passed by the Tribunal, Ahmedabad Bench 'C', has been referred to this Court under the provisions of s. 256(1) of the IT Act, 1961 (hereinafter referred to as 'the Act') for its opinion :

(2.) SENIOR standing counsel Shri M.R. Bhatt has appeared for the applicant-Revenue whereas learned advocate Shri R.K. Patel has appeared for the respondent-assessee.

(3.) IN pursuance of the aforesaid arrangement made by the firm, the firm used to look after the financial affairs of the assessee. For the asst. yr. 1981-82, with which we are concerned, the assessee had given certain instructions to the firm for making some payments and in pursuance of the said instructions or 'pay orders', the firm had made payments to several persons including M/s Sikhar INvestments (P) Ltd., Utpal INvestments (P) Ltd. and M/s. Vividh INvestments (P) Ltd. The said companies used to render certain services to the assessee. It is not in dispute that the firm had made payments to the above-named companies and other persons by account payee cheques and no cash transaction had ever taken place either between the assessee and the firm or between the firm and the other persons to whom payments were made by the firm on behalf of the assessee.