M.M.KUMAR, J. - (1.) THE Revenue claimed that a substantial question of law would arise for determination of this Court from the order dt. Accordingly, the Tribunal under s. 256(1) of the IT Act, 1961 (for brevity 'the Act') has referred the following substantial question for the opinion of this Court :
(2.) "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that various cash payments made to one party on one day were not required to be clubbed and treated as one cash payment and, for that reason, total cash payments exceeding Rs. 2,500 in a day to that party were not to be held as violative of s. 40A(3) of the IT Act - in cash exceeding the amount of Rs. 2,500. On that basis, the aggregated amount of Rs. 3,24,257 was added to the assessee's income on the ground that cash payments in violation of s. 40A(3) of the Act were made to ten firms.
(3.) THE respondent assessee was successful in persuading the CIT(A) to accept its contention to the effect that several payments had been made on one day in small instalments and each instalment/payment has to be treated as an independent cash transaction, therefore, s. 40A(3) of the Act could not be applied because in no transaction one individual cash payment has exceeded Rs. 2,500. The appellate authority took the view that clubbing of several cash payments, made to two parties on one day was unwarranted and different entries recorded in the books of account on a particular day were required to be treated as independent entries. Each entry was found to be below Rs. 2,500. The appellate authority placed reliance on a judgment of the Orissa High Court in the case of CIT vs. Aloo Supply & Co. (1980) 121 ITR 680 (Ori). On further appeal to the Tribunal, Chandigarh Bench, the order of the CIT(A) was upheld and the cross -objection filed by the respondent assessee were dismissed. The view of the Tribunal is discernible from para Nos. 12 and 13 of the judgment which reads as under : "12. We have considered the rival contentions and we are of the view that the matter has been examined in detail by the CIT(A) in respect of each of the payees and, therefore, we do not intend to interfere with the finding of fact. It has been noted by the CIT(A) that certain payments had been made by the assessee in the bank account of the payee and, therefore, such payments were not found to be cash payments. Though these were not by way of crossed bank draft or crossed cheque, looking to the nature of payment and bank account of the payee, the payments were rightly allowed. Similarly, payments made after banking hours are also found to be appropriate looking to the exigencies of the business. Payments made on a particular day in instalments for less than Rs. 2,500 are also found to be allowable in the light of the decision of the Orissa High Court in the case of Aloo Supply and Co. (supra). So far as the cross -objection is concerned. We find no force therein because no confirmation was at all filed to show that genuineness of the parties. The plea taken by the assessee that all the three parties had left Ahmedgarh is not based on any definite material or evidence on record. Therefore, in the absence of any evidence on record, regarding the genuineness of the transactions, these additions are found to have been rightly made. The assessee has failed to file confirmations from the three parties in question. Simply because certain purchases have been recorded by the assessee, the transactions cannot be said to be genuine in the absence of confirmations. Looking to the entire facts of the cases, we find no force in Revenue's appeal as well as the cross -objection of the assessee. 13. Therefore, the Revenue's appeal as well as assessee's cross -objection stand dismissed." ;