Commissioner of Income-tax Vs. Satyam Ginning Pressing and Oil Mills - Court Judgment

Excerpt:
- indian penal code, 1890.section 306 :[dalveer bhandari & harjit singh bedi,jj] abetment of suicide deceased, a married woman, committed suicide - allegation of abetment of suicide against appellant husband and in-laws - ocular evidence was sketchy - dying declaration recorded by tahsildar completely exonerated all accused in-laws of any misconduct dispelling any suspicion as to their involvement - letter of threat allegedly written by appellant to father of victim was concocted piece of evidence held, though presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. - it was found that the payment of the sum exceeding the limit was made under exceptional and unavoidable circumstances. the tribunal on appreciation of facts applied this proviso and held that disallowance of payments made to the trust and consequent addition of an equivalent amount to the income as returned were steps hostile to the purpose and object and that the assessee was required to be given the benefit of such payments made in exceptional circumstances. we are, thus, satisfied with the correctness of the view taken by the appellate tribunal.a.r. tiwari, j.1. this is an application under section 256(2) of the income-tax act, 1961, seeking direction to the income-tax appellate tribunal, indore, to state the case and refer the question of law to this court arising out of its order dated july 15, 1993, passed in ita no. 182/ind/ 1989, for the assessment year 1986-87.2. the facts lie in a narrow compass.3. the assessee is a registered firm. it procured a ginning and pressing factory on lease from a charitable trust on a monthly rent of rs. 35,000. the assessing officer noted that the assessee made payment to the trust by way of rent in violation of section 40a(3) of the income-tax act, 1961, to the extent of rs. 1,90,248 and added the same to the income of the assessee. in appeal, the commissioner of income-tax (appeals) deleted the amount of rs. 67,248 being payments made on saturdays after banking hours. the tribunal, however, deleted the entire addition and held that the trust was duly identifiable and the payments made by the assessee are manifestly verifiable. the assessment order for the assessment year 1986-87 was passed under section 143(3) of the income-tax act by the income-tax officer on march 28, 1988, disallowing the payments allegedly made otherwise than by crossed cheque or by crossed bank draft. the total sum of rs. 1,90,248 was disallowed, the assessee filed an appeal (i.t. no. 324/88-89) which was allowed by the commissioner of income-tax in part on december 22, 1988. the assessee then filed an appeal before the income-tax appellate tribunal. the tribunal allowed the appeal registered as i.t. no. 182/ind/1989, on july 15, 1993. the applicant filed an application no. 194/ind/1993, seeking reference of the case. that was rejected on may 27, 1994. the applicant has, therefore, filed this miscellaneous civil case.4. on december 16, 1994, this court had directed issuance of notice to the non-applicant.5. we have heard shri d.d. vyas, learned counsel for the applicant and shri nazir singh, learned counsel for the non-applicant, on the question of admission.6. section 40a(3) provides as under :'where the assessee incurs any expenditure in respect of which payment is made, after such date (not being later than the 31st day of march, 1969), as may be specified in this behalf by the central government by notification in the official gazette, in a sum exceeding ten thousand rupees otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, such expenditure shall not be allowed as a deduction.'7. it contains the proviso as under :'provided further that no disallowance under this sub-section shall be made where any payment in a sum exceeding ten thousand rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors.'8. the appellate tribunal found that the genuineness of the payee has not been doubted by the assessing officer. it was found that the payment of the sum exceeding the limit was made under exceptional and unavoidable circumstances. placing reliance on porwal udhyog (india) v. cit : [1982]135itr591(mp) it was found that no disallowance was permissible.9. why should every exercise begin with mistrust or no trust in 1979, ireland abolished wealth-tax, germany, substantially lowered it. the u.s.a. cut capital gains tax and the u. k. reduced its maximum rate of personal tax from 83 to 60 per cent. in 1982, sweden reduced its marginal rate of personal income-tax from 85 to 50 per cent. in this country, the government purports to simplify the income-tax law but pursues the course, may be due to compulsions, in the opposite direction. the provision on hand is intended to destroy intentions of dealing with unaccounted moneys. the purpose behind the insistence on cross-cheque or cross-draft is to assure and ensure 'genuineness' of dealing and proper assessment of taxable income. even this provision has a proviso to mitigate hardships. now, in the case on hand, the assessee had to pay rent to the trust. the payments, at times were made in cash. the payer and the payee are thus, identifiable, so is the purpose. an assertion is verifiable from the records of both the sides. in the face of the proviso and in view of these facts and features, disallowance was illogical and illegal. the tribunal, in accepting the assertion as a fact, has not committed any error of law.10. it is in the area of legislative ambiguities, yet not receding, that courts have to fill gaps, clear doubts and mitigate hardships. in the words of judge learned hand, spoken in cabell v. markhan [1945] 148 f 2d 737, we get enough light to locate the correct path.'it is one of surest indexes of a mature and developed jurisprudence ... to remember that statutes always have some purpose or object to accomplish whose sympathetic and imaginative discovery is the surest guide to their meaning.'11. there is no doubt about the purpose or object of the relevant provision. to accomplish it, we cannot ignore the second proviso engrafted to fill gaps and mitigate hardships. the tribunal on appreciation of facts applied this proviso and held that disallowance of payments made to the trust and consequent addition of an equivalent amount to the income as returned were steps hostile to the purpose and object and that the assessee was required to be given the benefit of such payments made in exceptional circumstances. law lives on logic and as such illogicality, resting on technical view, is to be spurned.12. this finding of fact, not shown to be perverse or perishable, reached by the tribunal did not, as held in cit v. ashoka marketing ltd. : [1976]103itr543(sc) and in cit v. kotrika venkataswamy and sons : [1971]79itr499(sc) , give any rise to the question of law and as such the tribunal rightly rejected the reference application. recourse to section 256(2) of the income-tax act is thus not justified and is acarpous.13. in the circumstances, we find that the finding of the tribunal is based on an appreciation of facts and does not give any rise to the question of law. we are, thus, satisfied with the correctness of the view taken by the appellate tribunal. we thus find that this application deserves to be rejected summarily.14. accordingly, we reject this application, but without any orders as to costs.