ARUN KUMAR GOENKA vs. INCOME TAX OFFICER

IN THE HIGH COURT OF DELHI AT NEW DELHI . ITA 289/2013 . ARUN KUMAR GOENKA ..... Appellant . Through: Mr Pankaj Bhatia, Advocate . . . versus . . . INCOME TAX OFFICER ..... Respondent . Through: Mr Sanjeev Sabharwal, Advocate . . . CORAM: . HON'BLE MR. JUSTICE BADAR DURREZ AHMED . HON'BLE MR. JUSTICE VIBHU BAKHRU . O R D E R . 31.05.2013 . CM No. 9194/2013 . Exemption is allowed subject to all just exceptions. . ITA No. 289/2013 and CM No. 9193/2013 . This appeal preferred by the assessee is directed against the order dated 16.01.2013 by the Income Tax Appellate Tribunal, New Delhi in ITA No. 2925/Del/2011 relating to the assessment year 1996-97. The issue relates to cash payments aggregating ` 6,90,119/- which had been made by the assessee for purchase of scrap from Hindustan Wire Ltd and cash payments to transporter companies towards freight to the extent of ` 21,16,408/-. Certain other cash payments were also made to the extent of ` 10,210/-. The Assessing Officer had disallowed 20% of the above amounts by invoking the provisions of Section 40A(3) of the Income-tax Act, 1961 read with Rule 6DD(j) of the Income-tax Rules, 1962. The Tribunal was deciding the case in the second round. On the earlier round, the Tribunal had remanded the matter to the Assessing Officer for examining as to whether exceptional circumstances had existed in order to justify the payments of the said amounts in cash. The Assessing Officer in the second round also held against the assessee and so did to the Commissioner of Income Tax (Appeals). These findings were confirmed by the Tribunal. The Tribunal noted that the Commissioner of Income Tax (Appeals) had concluded that no exceptional or unavoidable circumstances existed so as to justify the payments made in cash. Hindustan Wire Ltd had bank accounts at Faridabad and the assessee / appellant also had regular business with the transporter companies. . The Tribunal after hearing counsel for the parties concluded as under:- . ?We have heard both the sides on this issue. In the first round of the appeal the Hon?ble ITAT set aside the matter back to the file of the AO to examine afresh whether exceptional circumstances as provided in Rule 6DD were in existence or not. The person to whom the payments were made were known to the assessee and were having regular transactions on earlier occasions also and the payments were being made by cheques to them. In view of these facts we are unable to agree with the contention of the assessee that the payments have been made in the exceptional circumstances. The assessee cannot create an exceptional circumstances by stating that there was a demand in the market and the quality of scrap was superior. Such statements cannot be considered as an exceptional circumstances when the person with whom the transaction was done were well known to the assessee and were having regular transactions on earlier occasions. The ration laid down in the case-laws relied upon by the assessee are of no help to the assessee. Genuineness of transaction and bonafide of the transaction is not taken out of the sweep of the section. The exceptional circumstances has been provided in Rule 6DD for exemption from the requirement of payment by cross-cheque or cross bank draft. No exceptional circumstances were in existence. Therefore in our considered view there is no merit in the appeal of the assess.? . . . We find that the above conclusions are on facts and no substantial question of law arises for our consideration. The appeal is dismissed. . . . BADAR DURREZ AHMED, J . . . . . VIBHU BAKHRU, J . MAY 31, 2013 . SU . $ 4 .