Rastogi, J. - (1.) As directed by this court the Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, has referred the following question to us: "Whether, on the facts and in the circumstances of the case, Section 40A(3) of the Act is applicable to the facts of the present case ?"
(2.) The brief facts are these. M/s. H.A. Nek Mohd. & Sons, a registered firm, was engaged in the business of purchase and sale of Banarasi sarees. During its assessment for the assessment year 1970-71, the ITO found that the assessee had made the following payments exceeding Rs. 2,500 at a time to 12 parties for purchase of resham, etc.: JUDGEMENT_40_TLALL0_1981Html1.htm
(3.) Some of the payments had been made by post-dated bearer cheques, received from the customers and some in cash. When called upon to explain the circumstances in which these payments were made, the assessee explained that it was ignorant of the relevant provisions of the I.T. Act and Rules. It did not produce any evidence in this behalf and hence the ITO added the total amount of such payments amounting to Rs. 49,902, in round figures, under Section 40A(3) of the Income-tax Act.;