M/S.MICHAEL JOSEPH & CO., PALAI vs. THE COMMISSIONER OF INCOME TAX, COCHIN

JUDGMENT Ramachandran Nair, J. This reference case arises from the order of the Tribunal disposing of the appeal for the assessment year 1987-88. The only question referred is whether the disallowance of Rs.65,500/- under Section 40A(3) of the Income Tax Act is justified or not. We have gone through the Tribunal's order and have heard Standing Counsel appearing for the department. It was the contention of the assessee that after rejection of books of accounts and after estimation of gross profit, there was no justification for making disallowance under Section 40A(3) of the Income Tax Act. We do not think this argument can be accepted because the payment in cash in excess of Rs.2,500/- during the relevant assessment year calls for disallowance under the Act, which has nothing to do with estimation of profit or adoption of profit from accounts. We, therefore, reject this contention. So far as quantum of addition is concerned, we find the Tribunal has granted substantial reduction in terms of the prayer. We, therefore, find no ground to interfere on this aspect of the question also. Accordingly I.T.R. is 2 disposed of answering the questions referred in favour of the Revenue and against the assessee. A copy of this judgment under the seal of the High Court and signature of the Registrar shall be forwarded to the Income Tax Appellate Tribunal, Cochin Bench.

C.N.RAMACHANDRAN NAIR Judge V.K.MOHANAN Judge pms