- (1.) THIS appeal at the instance of the assessee is directed against the order of the Income -tax Appellate Tribunal, Jodhpur Bench, Jodhpur, dated January 31, 2002, arising out of Income -tax Appeal No. 45/(Jdpr)/2000 for the assessment year 1993 -94.
(2.) THE assessee was appointed as a sub -dealer of M/s. Ganesh Automobiles, Udaipur, for the sale of Bajaj scooters and mopeds in the region. The questions as have been framed at the time of admission of the appeal read as follows: (1) Whether the Tribunal was justified in holding that addition of Rs. 40,13,000 under Section 40A(3) of the Act was wrongly deleted by the learned Commissioner of Income -tax (Appeals) for the assessment year 1993 -94 and the case was not covered by the exceptions to Section 40A(3) contained in Rule 6DD of the Income -tax Rules, 1962? (2) Whether the Tribunal was justified in holding that the addition of Rs. 6,98,000 on account of peak of cash credits was justified in the facts and circumstances of the case whereas the sale of scooters and fact of collection of cash against sale of scooters from the customers and the payment of such cash to the selling dealer M/s. Ganesh Automobiles, Udaipur was not in doubt? (3) Whether the provisions of Section 40A(3) of the Act read with Rule 6DD were at all applicable to the purchase of goods, viz., scooters and whether the terms 'deduction for expenditure' in the scheme of Section 40A(3) is applicable to the purchase of very goods for the business on a harmonious reading of the scheme of the Act for computation of income under the head 'Income from business or profession' under Sections 28 to 43 of the Act? The aforesaid three questions read together give a picture that the principal question which falls for consideration is that the assessee has made certain payments of sale price of scooters/mopeds, which exceeded in each case Rs. 10,000 to the principal agent M/s. Ganesh Automobiles, Udaipur in cash instead of through crossed cheques or bank draft and his case fell under Section 40A(3) of the Income -tax Act, 1961, and such payments in cash exceeding Rs. 10,000 were disallowed as deduction from purchases of mopeds/Bajaj scooters. The Income -tax Officer has held that there were no exceptional circumstances falling under Rule 6DD existed which could avoid the consequences of the provisions of Section 40A(3).
(3.) THE Commissioner of Income -tax (Appeals) on appeal found in favour of the assessee that such exceptional circumstances did exist. The Commissioner of Income -tax (Appeals) found that as per the assessee's explanation he had opened a bank account at Udaipur where the principal dealership existed with clear stipulation with the dealer that the remittances of the cash received by him from the customers of such dealer will be paid firstly in the bank account of the assessee. Signed cheque book was given to the principal dealer so that he could get payment of purchase price from the assessee through cheques with him by withdrawing the amount of sale price from bank. The Commissioner of Income -tax (Appeals) also found that the assessee was only to purchase the vehicles from the principal agent as a sub -dealer and she has no option to buy the vehicles from other dealers. In these circumstances, the Commissioner of Income -tax (Appeals) was of the opinion that the assessee has discharged her burden and additions should not be sustained on technical ground, if the principal dealer has retained cash payment with him without routing it through the assessee's bank account at Udaipur, whenever such situation has arisen.;