Income-tax---

----Business expenditure---Disallowance---Cash payment exceeding limit prescribed in S.40-A(3) made otherwise than by crossed cheque or crossed bank draft---Finding of CIT (Appeals) that assessee failed to substantiate existence of exceptional and unavoidable circumstances---Tribunal deleting addition without considering finding of CIT (Appeals)---Not justified-- Indian Income Tax Act, 1961, S.40-A(3)---Indian Income Tax Rules, 1962, R.6-DD(j)---C.B.D.T. Circular No.220, dated 31-5-1977.

The assessee made certain payments in cash exceeding the limit prescribed under section 40-A(3) of the Income Tax Act, 1961. The Income- tax Officer disallowed such payment. The Commissioner of Income-tax Appeals) dismissed the app-al by the assessee on the ground that the assessee failed to prove the exceptional and unavoidable circumstances prescribed in rule 6-DD(j) of the Income Tax Rules, 1962, though the genuineness of the transaction and identity of the payee were established. On further appeal, the Tribunal held that the addition was not justified having regard to the explanation offered by the assessee. On a reference:

Held, that the findings of fact arrived at by the Tribunal were final. Therefore, it was the duty of the Tribunal to see that the conclusion arrived at was based on proper appreciation of facts and in accordance with law. The Commissioner of Income-tax (Appeals) held that the assessee failed to substantiate the case by cogent evidence regarding the existence of exceptional and unavoidable; circumstances that could be reversed by the Tribunal only after proper appreciation of facts. However, the Tribunal had arrived at its conclusion without considering the finding of the Commissioner of Income-tax (Appeals). The Tribunal also had not taken into consideration some of the exceptional circumstances laid down in paragraph 4 of Circular No.220, dated May 31, 1977, issued by the Central Board of Direct Taxes. Therefore, the Tribunal was not justified in deleting the disallowance of Rs.25,962 made under section 40-A(3) of the Act.

Dr. A.K. Saraf for the Commissioner.

R.K. Joshi for the Assessee.

JUDGMENT

D. N. BARUAH, J. ---At the instance of the Revenue, the following question has been referred to this Court by the Income-tax Appellate Tribunal under section 256(1) of the Income Tax Act, 1961 (for short, "the Act"), for opinion of this Court:

"Whether, on the facts and in the circumstances' of the case and in view of rule 6-DD(j) of the Income-tax Rules, 1962 the Tribunal did not err in law in deleting the disallowance of Rs.25,962 made under section 40-A(3) of the Income Tax Act, 1961, for cash payment made by the assessee for expenditure incurred in purchasing from Tarachand Pushraj?"

The facts for the purpose of answering this question may be stated as follows:

The respondent is an assessee under the Act. It made certain payments in cash beyond the limit prescribed under section 40-A(3) of the Act. The Income-tax Officer disallowed such payment. On appeal, the commissioner of Income-tax (Appeals) observed that though the genuineness of the transaction and identity of the payee were established, the assessee failed to prove the urgent and exceptional circumstances which were conditions precedent for invoking the power under rule 6-DD(j) of the Income-tax Rules and, therefore, dismissed the appeal. On further appeal the Income-tax Appellate Tribunal allowed the appeal with the following observation:

"The assessee has offered explanation as to why cash payment had to be made. Therefore, we have to consider the explanation of the assessee as dealt with by the learned Commissioner of Income-tax (Appeals) in the impugned order. Thus, having regard to the various facts for this payment we are of the opinion that the addition was not justified having regard to the explanation offered by the assessee. The addition is, therefore, deleted. "

Hence, the present reference at the instance of the Revenue.

We have heard Dr. A. K. Saraf, learned special counsel appearing on behalf of the Revenue, and Mr. R. K. Joshi, learned counsel appearing on behalf of the assessee.

Dr. Saraf submits that the judgment of the Tribunal is a non -speaking order inasmuch as the Tribunal has not given any reason in support of its finding. Mr Joshi, on the other hand, disputes this.

In various decisions of this Court it has been made clear that the Tribunal is the last authority so far the facts are concerned and the finding of facts arrived at by the Tribunal is final. Therefore, it is the duty of the Tribunal to see that the conclusion arrived at is based on proper appreciation of facts and to accordance with law. The Commissioner of Income-tax (Appeals) having held that the assessee failed to substantiate the case by cogent evidence regarding the existence of exceptional circumstances, it can be repelled by the Tribunal only after proper discussion. However, from the observation of the Tribunal quoted above we see that the Tribunal rushed to the conclusion without first considering the finding of the Commissioner of Income-tax (Appeals). The Tribunal also has not taken into consideration Circular No. 220 (see (1977) 108 ITR (St.) 8), dated May 31, 1977, issued by the Central Board of Direct Taxes in paragraph 4 of which some of the exceptional circumstances have been laid down. We feel the Tribunal rushed to the conclusion without proper appreciation of the facts. At least the judgment of the Tribunal does not indicate so: Therefore, we are constrained to hold that the Tribunal's judgment is somewhat cryptic.

In view of the above, we are of the opinion that the Tribunal was not justified in coming to the conclusion. Accordingly, we answer the question in the negative, in favour of the Revenue and against the assessee.

A copy of this judgment under the signature of the Registrar and the seal of the High Court shall be transmitted to the Income-tax Appellate Tribunal, Guwahati.

M.B.A./1290/FCReference answered.