COMMISSIONER OF INCOME TAX Vs. MAHAVIR STORES

JUDGEMENT

(1.) THIS is a reference, under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue and the following question has been referred by the Tribunal for answer by this court :

(2.) THE brief facts giving rise to this reference are that the assessee deals on a semi-wholesale basis in grains, kirana and edible oils. Its total purchases during the year exceeded Rs. 13,50,000 and purchases were made on credit from dealers. THE Income-tax Officer observed that the payments were made in cash and, therefore, he made an addition of Rs. 13,68,060 under Section 40A(3) of the Act of 1961. THE assessee went in appeal before the Commissioner of Income-tax (Appeals) who, after considering the facts of the case, allowed the claim of the assessee and held that all the payments were made in accordance with law. Aggrieved by this order, the Department went in appeal before the Tribunal and the Tribunal also found that there is enough justification pleaded by the assessee and, therefore, the addition made under Section 40A(3) of the Act of 1961 was deleted and the appeal of the Department was dismissed. THEreafter, the Department approached the Tribunal for making a reference under Section 256(1) of the Income-tax Act and the aforesaid question has been referred by the Tribunal for answer by this court.