ATTAR SINGH GURMUKH SINGH Vs. INCOME-TAX OFFICER

JUDGEMENT

(1.) THE petitioner in this petition under Articles 226/227 of the Constitution of India is a firm carrying on business of buying and selling electroplating material. The petitioner-firm submitted a return for the year 1971-72 before the ITO. The ITO asked the petitioner to show and furnish a list of items where purchases in excess of Rs. 2,500 were effected, otherwise than by crossed cheques. The copy of this notice is appended as annex. P-l to this petition. In compliance with the above-mentioned notice, the petitioner produced the account books before the ITO, The notice, annex. P-1, pertains to the assessment years 1970-71 and 1971-72. Thereafter, the ITO issued another notice dated March 7, 1974 (annex. P-2), under Section 143 (3) of the I. T. Act, 1961 (hereinafter referred to as "the Act"), stating therein that the assessee having been requested to file the details of items of cash purchases above Rs. 2,500 as per his ledgers and the said details having not been filed, it was pointed out that purchases to the tune of Rs. 3,70,344 representing items above Rs. 2,500 were effected during that year which are also unvouched. He expressed the opinion that the said purchases were inadmissible items of deduction under the provisions of Section 40a (3) of the Act. The notice said that the ITO proposed to disallow the same and, with a view to allow an opportunity to the petitioner, he was asked to appear before the ITO. At this stage, the petitioner filed the present writ petition, challenging the aforesaid notice dated March 7, 1974, mainly on the ground that the provisions of Section 40a (3) of the Act are ultra vires.

(2.) THE provisions of Section 40a (3) of the Act are as follows :

(3.) AS is clear from the second proviso to Section 40a (3) of the Act, Rules have been framed providing for such circumstances so as not to allow disallowance under this Sub-section where any payment in a sum exceeding two thousand five hundred rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft. Consequently, in pursuance of the power referred to above, Rule 6dd of the I. T. Rules, 1962 (hereinafter referred to as "the Rules"), has been framed. This rule has a number of Clauses (a) to (j ). Rule 6dd of the Rules is as follows: