RAJIVE BHALLA, J. - (1.) THE revenue, impugns order dated 20.06.2002,passed by the Income Tax Appellate Tribunal, ChandigarhBench 'A' (hereinafter referred to as 'the Tribunal'), on the following substantial questions of law: - "(i) Whether, on the facts and in the circumstancesof the case, the ITAT was right in law in holdingthat the amount of Rs.44,80,490/ - retained bythe authorities from contract payments receivable by the assessee on accrued basis could not be treated as assessee's income for the year inspite of the fact that income wasbeing assessed on accrual basis? (ii) Whether, on the facts and in the circumstancesof the case, the ITAT was right in holding that thecash payments exceeding in amount ofRs.10,000/ - at a time amounting toRs.1,27,989/ - were made under exceptionalcircumstances as listed in Rule 6DD(j) andhence were not disallowable u/s 40A(3)?"
(2.) COUNSEL for the revenue as well as counsel for the respondent, agree that the first question of law is covered against the revenue, vide judgment dated 06.05.2013, passed in ITA No.720 of 2008 ("Commissioner of Income Tax Chandigarh -IIv. M/s SAB Industries Limited, Sector -26, Chandigarh"). The first question of law is, therefore, answered against the revenue in terms of the aforesaid judgment. Counsel for the revenue submits that the second question of law may be re -framed and a third question of law also arises for consideration in the following terms: - "(ii) Whether the Income Tax Appellate Tribunal,exercising powers of an Appellate Authority wasright in reversing findings recorded by theAssessing Officer on facts that were neitherpleaded nor raised before the Assessing Officeror the CIT (Appeals)? (iii) Whether the Income Tax Appellate Tribunalcould have reversed the order passed by theAssessing Officer and the CIT (Appeals), withrespect to cash payment to M/s Munak International Private Limited, without reversingthe findings recorded by the Assessing Officeras well as the CIT(Appeals) that purchases of Marble Chips and Alluminium products cannot be said to be an emergency purchases,justifying payment in cash?"
(3.) COUNSEL for the appellant submits that the Assessing Officer disallowed Rs.1,27,979/ - under Section 40A(3) of theIncome Tax Act, 1961 (hereinafter referred to as 'the 1961 Act'),with respect to payments, made in cash to different parties, inexcess of Rs.10,000/ -. The payments disallowed pertain to payment of Rs.40,000/ - and Rs.12,684/ - made to parties at Calcutta. The appellant's defence was that parties insisted on cash payments and their letters are appended. The defence was rejected on the ground that it does not satisfy requirementsof Rule 6DDJ of the Rules, or CBDT's circular No.220, dated31.05.1997 and as letters demanding cash payments are not appended. The finding was affirmed by the CIT(Appeals) but has been reversed by the Tribunal, on a fact that was neither raised before the Assessing Officer nor before the CIT (Appeals),namely, that the respondent did not have a bank account at Calcutta. The payment of Rs.75295/ - to M/s Munak International Private Limited was disallowed as the explanation that payment was made for emergency purchase of marble chips and alluminium products was rejected. The finding was affirmed by the CIT(Appeals) but has been reversed, by the Tribunal, without assigning any clear and cogent reason and without reversing the finding rejecting the explanation of emergency purchases. It is argued that as impugned findings raise substantial questionsof law they may be answered in favour of the revenue.;