- (1.) HEARD learned Counsel for the parties.
(2.) THE following substantial question of law arises in this appeal: whether in the facts and circumstances of the case, the Assessing Officer was justified in disallowing the addition of Rs. 8,84,531/ - on account of disallowance under Section 40A(3) of the Income Tax Act, 1961. Learned Counsel for the Appellant drew our attention to the reasons given by the Assessing Officer as well as by the Commissioner of Income Tax (Appeals) Ranchi in the order dated 31.3.1997 and the appellate order passed by the Commissioner of Income Tax dated 15.12.1997 and it has been pointed out that the Assessee was found to have paid amount in cash of Rs. 10,000/ - on various occasions as entered in the books of account for the relevant year. The Assessing Officer observed that all those payments have been made to defeat the provision of Section 40A(3) of the Income Tax Act, 1961 and therefore, no deduction was allowable. However, that deduction has been allowed by the Tribunal by interpreting that since there is a specific word used in Section 40A(3) of the Act which reflects that in case Assessee pays more than an amount of Rs. 10,000/ - "in a day" then no disallowance will be there. The Tribunal held that the Assessing Officer and the Appellate Authority have committed error of law in interpreting Section 40A(3) of the Act in mechanical manner and they have denied the benefit to the Assessee.
(3.) LEARNED Counsel for the Appellant drew our attention to the fact that in fact the relevant provision of law i.e. Section 40A(3) of the Income Tax Act, 1961 as it was in forced in the year 1993 -94 contained no such word like "in a day" and therefore, only on this ground alone the order passed by the Tribunal is liable to be set -aside. It is also submitted that the reasons given by the Assessing Officer and the Appellate Authority fully justified the disallowance of such expenditure which has been claimed by the Assessee.;