COMMISSIONER OF INCOME TAX Vs. MAHENDRA COMPANY LIMITED

JUDGEMENT

(1.) THIS is an application under Section 256(2) of the Income-tax Act requiring the Appellate Tribunal to state the case and to refer the following question of law :

(2.) WE have heard learned counsel for the parties and perused the record of the case. Learned counsel for the Revenue has vehemently argued that the assessee firm and M/s. Kishore Trading Company were sister concerns and belonged to the Bangad Group and that the assessee in the first instance had denied that any payment in cash above Rs. 2,500 was made during the assessment year 1975-76 and thereafter, when the cash book and account books were scrutinised and examined by the Income-tax Officer, the assessing authority, it was found that a payment of Rs. 35,000 was made in cash to M/s. Kishore Trading Co. on May 14, 1974, and the letters produced by the assessee, non-petitioner firm do not bear any reference number and is merely an after-thought and the evidence has been manufactured for the purpose of showing that it was on account of unavoidable circumstances that the payment was made in cash of Rs. 35,000. Therefore, it is contrary to Section 40A(3) and amounts to evasion of tax. On the other hand, learned counsel for the assessee has also very vehemently argued that there is no question of law arising out of the order of the Tribunal and the question whether the payment was made under exceptional circumstances is a finding of fact and, therefore, the application should be dismissed. He has placed reliance on a decision of this court Registhan Pvt. Ltd. v. CIT [1984] 146 ITR 620, wherein it has been held that no question of law arose which could be referred in that case wherein the Tribunal after taking into consideration the material on record had found that there was no exceptional circumstance for making payment in cash and that was a finding of fact. He has further placed reliance on CIT v. Greaves Cotton and Co. Ltd. [1968] 68 ITR 200 in which the Supreme Court has observed as under (headnote) :