SAJOWANLAL JAISWAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal has stated this case and referred the following question for opinion of the court on an application of the assessee made under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as " the Act,"):

(2.) THE assessee is a firm carrying on business in grocery articles on wholesale basis at Jharsuguda in the district of Sambalpur. In the assessment year 1970-71, corresponding to the accounting year ending on March 31, 1970, the assessee returned a net income of Rs. 34,41.2. THE Income-tax Officer while examining the books of account found that there were two payments in cash being on January 21, 1970 for a sum of Rs. 2,734 and on 30th of March, 1970 for a sum of Rs. 6,000. THE Income-tax Officer called upon the assessee to explain why payments of these amounts had been made in cash and not by crossed cheque or a crossed bank draft as required by Section 40A(3) of the Act. THE assessee in his explanation dated September 21, 1970, claimed that payment of Rs. 2,734 was towards price of sugar purchased in a cash memo dated January 21, 1970, from M/s. Jagannath Hariram and payment of Rs. 6,000 on 30th of March, 1970, was to M/s, Kishore Traders for satisfaction of business dues of the said dealer. It was further claimed that since those payments were made for purchase of goods and the assessee had not claimed such purchases as deductions, Section 40A(3) was not attracted and the statute required Section 40A(3) to be complied with only in respect of expenditure claimed as deduction under Section 37 of the Act. THE Income-tax Officer did not accept the explanation and, therefore, added a sum of Rs. 8,734 to the income of the assessee.