COMMISSIONER OF INCOME TAX Vs. RAM AGYA SHYAM NARAIN

JUDGEMENT

(1.) Under Section 256(2) of the Income-tax Act, the Income-tax Appellate Tribunal has stated the following two questions :

(2.) Whether the Tribunal's decision was vitiated in law having ignored the material fact that the assessee had no bank account and had made purchases to the tune of Rs. 4 lakhs from Messrs. Shyam Fabrics but the cash payments towards the said purchases which attracted Section 40A(3) were only to the extent of Rs. 47,000 and odd ?"

(3.) The Tribunal agreed with the Revenue that Shyam Fabrics did have a bank account but yet dismissed the appeal holding that the facts of the case established that payments to two of the payees, namely, Shyam Fabrics and P. P. Yarn Traders, were made in exceptional circumstances and with a view not to strain the relations with their suppliers. So fax as the payment to the third party, Shashikala Textiles, is concerned, the Tribunal rejected the assessee's explanation and allowed the appeal to that extent