D.N Baruah, J.:— At the instance of the assessee, the following two questions have been referred under section 256(1) of the Income-tax Act, 1961, for opinion of this court:

“1. Whether, on the facts and in the circumstances of the case and on a proper interpretation of section 40A(3) of the Income-tax Act, 1961, read with rule 6DD(j) of the Income-tax Rules, 1962, the Appellate Tribunal was justified in law in holding that the disallowances by the Income-tax Officer in respect of cash payment of Rs. 61,200 made on various dates to Sharma Enterprises, Gauhati, was proper?

2. Whether, on the facts and in the circumstances of the case and in view; of the decision of the Gauhati High Court on identical issue in the case of Paul Brothers v. Commissioner Of Income-Tax., [1990] 186 ITR 356, the finding of the Tribunal was not erroneous in law?”

2. The questions relate to the assessee's assessment year 1985-86. For the said assessment year, the assessee claimed deduction under rule 6DD(j) of the Income-tax Rules, 1962 (for short, “the Rules”).

3. The case of the assessee, inter alia, is that it made payment in cash for repair of truck, etc., to Sharma Enterprises, A.T Road, Guwahati, on different dates amounting to Rs. 61,200. The assessee claimed deduction of the said amount under rule 6DD(j) of the Rules. Before the Income-tax Officer the assessee stated that the repairing works, etc., of major items were undertaken by Sharma Enterprises, A.T Road, Guwahati, in whose workshop the assessee was a regular customer. The Income-tax Officer disallowed the claim on the grounds that the workshop was located in the heart of the city at Guwahati and on March 16, 1985, and March 30, 1985, payments were made by the assessee by cheques and that most of the bills did not contain proper letter head and, therefore, in respect of such payment, section 40A(3) would come into play. He also noted that rule 6DD(j) would not apply.

4. The assessee took up the matter before the Commissioner of Income-tax (Appeals) contending that the confirmatory letters from Sharma Enterprises given on January 3, 1989, would show that it insisted on cash payment and, therefore, the payment was so made. The assessee further contended that the identity of the party, genuineness of transaction as well as factual circumstances had been established and, therefore, no disallowance ought to have been made. However, the Commissioner of Income-tax (Appeals) affirmed the order of the Income-tax Officer and sustained disallowances. While affirming the order passed by the Income-tax Officer, the Commissioner of Income-tax (Appeals) held that the assessee had been able to establish the identity of the party and genuineness of payments, but the assessee had failed to establish the exceptional and unavoidable circumstances under which payment had to be made in cash exceeding Rs. 2,500, that there was a wide gap between the date of raising the bill and the date of payment by the assessee and that it was not the case of the assessee that there had been urgency for which payment had to be made in cash nor was it the case of the assessee that both the parties did not have bank accounts. As regards the confirmatory letter from Sharma Enterprises, the Commissioner of Income-tax (Appeals) held that it could not be admitted within the meaning of rule 46A of the Rules.

5. The assessee being aggrieved further took up the master before the Income-tax Appellate Tribunal, Guwahati. The Tribunal, after hearing the parties, passed order holding that the claim of the assessee could not be accepted. Thereafter, the assessee submitted an application under section 256(1) of the Income-tax Act, 1961 (for short, “the Act”), for referring the following two questions for opinion of this court:

“1. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in not accepting the confirmatory certificate of Sharma Enterprises, A.T Road, Gauhati, who is a regular income-tax assessee at Gauhati under G.I.R No. R-796.F-I(4) Ghy. If the Income-tax Officer has decided the case without giving sufficient opportunity to the assessee to adduce evidence then, the Commissioner of Income-tax (Appeals), Gauhati, has not admitted the confirmatory letter of the party under rule 46A(1)(d) of the Income-tax Rules, 1962?

2. Whether, on the facts and in the circumstances of the case, the Tribunal is correct in holding that no material to say that there were exceptional and unavoidable circumstances or any other material to support the claim of the assessee under rule 6DD(j) of the Income-tax Rules, 1962, read with the Central Board of Direct Taxes Circular No. 220, dated 31st May, 1977, clarifying the provision of section 40A(3) of the Income-tax Act, 1961, as well as rule 6DD(j) of the Income-tax Rules, 1962?”

6. At the time of hearing of the said application under section 256(1) of the Act, counsel appearing on behalf of the assessee submitted two new sets of questions quoted earlier and referred by the Tribunal.

7. We heard Mr. J.P Bhattacharjee, learned counsel appearing on behalf of the assessee, and Dr. A.K Saraf, learned special counsel appearing on behalf of the Revenue.

8. Dr. Saraf submitted that the finding regarding existence of exceptional and unavoidable circumstances by the Tribunal was a question of fact and this court in exercise of the power under section 256(1) might not answer such question of fact. Dr. Saraf further submitted that if the challenge was against the finding of the Tribunal on the basis that it was unjustified or perverse or not based on reasonably acceptable evidence, that could be the subject-matter of a reference and in the absence of such challenge the finding of fact by the Tribunal was-binding on the High Court. In support of his submission, Dr. Saraf relied on the following two decisions:

(1) P.C Sharma and Sons v. CIT, [1979] 116 ITR 758 (Cal);

(2) CIT v. Bijoy Kumar Pandya, [1993] 200 ITR 667 (Gauhati).

9. Mr. Bhattacharjee, on the other hand, submitted that always the findings arrived at by the Tribunal regarding existence of exceptional and unavoidable circumstances might not be findings of fact. If the conclusion was arrived at by the Tribunal without looking to the relevant provisions of law, rules or circulars issued by the authorities which were binding on the income-tax authorities, then it would not remain a question of fact and it would, definitely, be a question of law. In support of his submission, Mr. Bhattacharjee relied on the following decisions:

(1) CIT v. Scindia Steam Navigation Co. Ltd., [1961] 42 ITR 589 (SC);

(2) CIT v. Indian Molasses Co. P. Ltd., [1970] 78 ITR 474 (SC).

10. On hearing counsel for the parties, we are of the opinion that the findings arrived at by the Tribunal may not always be findings of fact if such findings are not in accordance with law. Mr. Bhattacharjee drew our attention to the order of the Commissioner of Income-tax (Appeals). We find that while coming to the conclusion, the Commissioner of Income-tax (Appeals) observed thus:

“I am of the opinion that appellant has been able to establish identity of party and genuineness of transaction but has failed to establish exceptional or unavoidable circumstances under which payment has to be made in cash exceeding Rs. 2,500.”

11. Before coming to a decision regarding failure to establish exceptional and unavoidable circumstances, the authority must give reasons why it came to such conclusion. On a perusal of the order of the Commissioner of Income-tax (Appeals), we find that no specific reason has been given. Mr. Bhattacharjee also drew our attention to the order passed by the Tribunal. On a perusal of the order passed by the Tribunal, we do not find any ground why the Tribunal held that the assessee failed to prove exceptional and unavoidable circumstances. The Tribunal, held thus:

“The findings of the Commissioner of Income-tax (Appeals) had not been dislodged. We find no material to say that there were exceptional and unavoidable circumstances or any other material to support the claim of the assessee….”

12. The Tribunal is the last authority so far as 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 facts and in accordance with law.

13. Exceptional and unavoidable circumstances may vary depending on the facts of each case. Merely because the parties have bank accounts and that there is long gap between submission of the bill and making payment, conclusion cannot be arrived at that the assessee failed to show exceptional and unavoidable circumstances. Mr. Bhattacharjee drew our attention to Circular No. 220 (see [1977] 108 ITR (St.) 8), jdated May 31, 1977. In paragraph 4 of the said circular some of the circumstances which may be taken as exceptional or unavoidable have been mentioned. We quote paragraph 4 (page 9):

“4. All the circumstances in which the conditions laid down in rule 6DD(j) would be applicable cannot be spelt out. However, some of them which would seem to meet the requirements of the said rule are:

(i) The purchaser is new to the seller; or

(ii) The transactions are made at a place where [either the purchaser or the seller does not have a bank account; or

(iii) The transactions and payments are made on a bank holiday; or

(iv) The seller is refusing to accept the payment by way of crossed cheque/draft and the purchaser's business interest would suffer due to non-availability of goods otherwise than from this particular seller; or

(v) The seller, acting as a commission agent, is required to pay cash in turn to persons from whom he has purchased the goods; or

(vi) Specific discount is given by the seller for payment to be made by way of cash.”

14. The circular itself indicates that these are not the only circumstances which can be said to be exceptional and unavoidable. There may be some other exceptional and unavoidable circumstances which may not be put in writing.

15. In this case, the Income-tax Officer disallowed deduction on the ground that clauses of rule 6DD(j) of the Rules did not apply to the case of the assessee. The Commissioner of Income-tax (Appeals) upheld the order of the Income-tax Officer on the ground that the assessee failed to establish exceptional and unavoidable circumstances under which payment had to be made in cash exceeding Rs. 2,500, that there was a wide gap between the date of raising the bill and the date of payment and that it was not the case of the assessee that both the parties did not have bank accounts. Therefore, we are of the view that the Income-tax Officer and the Commissioner of Income-tax (Appeals) did not take into consideration the aforesaid circular. This has also not been considered by the Tribunal. As such, we are constrained to hold that the order passed by the Tribunal is somewhat cryptic. The Tribunal reached the conclusion without giving any reason whatsoever as to the non-existence of exceptional and unavoidable circumstances. Therefore, question No. 1 is answered in the negative, in favour of the assessee and against the Revenue.

16. So far as question No. 2 is concerned, we have gone through the decision of this court in Paul Brothers v. Commissioner Of Income-Tax., [1990], 186 ITR 356. This court in the said decision observed thus (page 358):

“The Indian Parliament incorporated the above provisions to check evasion of taxes. Even in genuine cases where payments are shown to have been made in cash, the assessee is put to the necessity to prove that in the area of business, banking facilities are not adequate. Therefore, impelled by genuine difficulty, the assessee had to make payment in cash. The same idea is writ large in the Rules. The assessee will have to show that there was no way left for the assessee except to pay in cash. In the nature of things whether in the statute, rules or circulars, all the contingencies cannot be enumerated exhaustively. Parliament referred to the inadequacy of facilities in section 40A. The rule-making authorities illustrated some of the circumstances in the Rules. The Revenue supplemented the further circumstances when exemptions can claimed and allowed.”

17. From the decision, it appears that there may be various circumstances which can be regarded as exceptional and unavoidable. Therefore, in our opinion, in view of the decision of this court in Paul Brothers' case, [1990] 186 ITR 356, the finding of the Tribunal was erroneous. Accordingly, we answer question No. 2 also in negative, in favour of the assessee and against the Revenue.

18. 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.

N.S Singh, J.:— I agree.