1. The assessment year with which we are concerned in this reference is assessment year 1970-71, the relevant previous year being the financial year commencing from April 1, 1969, and dealing with March 31, 1970. The assesse, a partnership firm, is a dealer in sugar. It carries on business on wholesla e basis at Bantwa in Junagadh district. During the relevnat previous year the assessee purchased about 4,554 bags of sugar for Rs. 9,77,523. Amongst the purchases so made were included the purchases made at auctions held by two co-operative societies, viz., the Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd. at Kodinar, an the Una Taluka Sahakari Khand Udyog Mandali Ltd. at Una. Part of the payment of purchase price to both the said co-operative societies was made in cash. The first named co-operative society was paid purchase price in cash to the tune of Rs. 2,49,359 and the second named co-operataive society was paid purchase price in cash to the tune of Rs. 1,08,316. The amount of purchase price paid in cash as aforesaid was made up of payments made on various dates exceeding Rs. 2,500 individually.

2. During the course of assessment to income-tax, the fact that payments as aforesaid were made on various dates in cash, although the amount involved was more than Rs. 2,500 on each occasion, came to the notice of the Income-tax Officer. The Income-tax Officer felt that, in the facts and circumstances of the case, section 40A(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), was attracted and he, therefore, issued a notice to the asessee on September 21, 1972, to show cause why such payments should not be disallowed. The assessee by his reply dated October 21, 1972, raised, inter alia, the following contentions : (1) the payments having been made for the purchase of the stock-in-trade and not for expenditure incurred for the purpose of carrying on of business in respect of which deduciton coudlbe claimed under the relevant provisions of the Act, provisions of section 40a(3) were not applicable; (2) the payment had to be made in cash because sugar was purchased at the auctions held by the two co-operative societites in question and the value of the goods purchased was not known in advnace since it depended on the highest bid offered at the auction; it was even uncertain whether on a given date sugar would be purchasesd at the aucitons, having regard to the highest offer at the bid; (3) auction was usually held by the two co-operative societies at 3 p.m. and since the travelling distance from Bantwa to Kodinar or Una was about 7 to 8 hours, it was not possible to wait till the banks opened on the date of the auction and ot obtain draft and to reach the place of auction in time; and (4) since the announcement about sugar auction was made by the concerned co-operative societies only or two days in advance, on certain occasions when there was no sufficient bank balance, it became necessary to collect the requisite amount in cash from the customers of the assesse at short notice late in the evening and to go directly to the place of auction. The assessee contended thta having regard to the aforementioned circumstances, it was not necessary and convenient to make payments in question otherwise than in cash and that, under the circumstances, the provisions of section 40a(3) should not be applied. On February 7, 1973, the assessee sent a supplementary reply drawing the attention of the Income-tax Officer to the amended provisions of rule 6DD(j) of the Income-tax Rules, 1962 (hereinafter referred to as the "Rules"), and urged that, in the circumstances of the case, the benefit of the said provisions was requried to be given to it.

3. The Income-tax Officer found that the circumstnces pleaded by the assessee did not justify the payments in cash and that the expenditure incurred on such payments was required to be disallowed under section 40A(3). In reaching this conclusion, the Income-tax Officer relied, inter alia, upon the fact that as a result of the enquiry made by him be had learnt that payments for the purchases made at the auction could be made even on the next day and that, therefore, the circumstances pleaded by the assessee did not justify the applicability fo rule 6dd(j) of the rules. The Income-tax Officer, therefore, disallowed the expenditure to the tune for Rs. 3,57,675 and added it back to the income of the assessee.

4. The assessee carried the matter in appeal to the Appellate Assistant Commissioenr. Before the Appellate Assistant Commissioner the same contentions, which were advanced before the Income-tax Officer, wer retierated on behalf of the assessee. The assessee pointed out that it had no roots at the place where the two co-oeprative societites in question were carrying on their businesss and thta, therefore, it was not afforded any facility in the nature of making payment at a later date. Furthermore, the assessee pointed out that out of the payments, which were disallowed, a sum of Rs. 67,330 and another sum of Rs. 59,579 were paid to one of the two co-operative societies, namely, Una Taluka Sahakari Khand Udyog Mandali Ltd., by paying into the current account of hte said co-operative society in th eformer case and by paying the same in cash after 6 p.m. on the given date in the latter case. In support of this contention, the assessee produced evidence before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner was of the view that, in the facts and circumstances of the case, the provisions of section 40a(3) were attractd and that no relief could be given to the assessee under rule 6DD so far as a substantial part of the payments in question was concerned. In reaching this conclusion, the Appellate Assistant Commissioner relied upon the fact that one of the conditions of the auction which took place was that payment had to be made by a draft drawn in favour of a branch of the District Co-operative Bank and that this condition indicated that there must be facilities for obtaining bank draft. In the opinion of the Appellate Assistant Commissioner, having regard to all the circumstances of the case, it was not possible to reach the conclusion that it was impracticable for the assessee to make the payments of purchase price by way of bank drafts. So far as the payments of Rs. 67,330 and Rs. 59,573 referred to above are concerend, however, the Appellate Assistant Commissioner was of the view that those payments could be said to have been made in exceptional or unavoidable circumstances. The Appellate Assistant Commissioner, therefore, applied the provisions of rule 6DD(j)(1) and held that the assessee was entitled to the allowance of those amounts in computing its income. A total sum of Rs. 1,26,909 was accordingly allowed to be deducted from the total income computed by the Income-tax Officer and, in the result, a sum of Rs. 2,30,766 was directed to be added back to the income of the assessee.

5. The assessee carried the matter in further appeal to the Income-tax Appellate Tribunal. Before the Tribunal also the same contentions, which were urged before the lower authorities, were advanced on behalf of the assessee. In particular, it was urged that rule 6DD(j) was in any case, applicable and that relief ought to have been granted to the petitioner under the said provision. In this connection, the assessee pointed out thta 10% of the purchase price had to be paid on the spot once the bid was accepted at the auction and that it was impossible to know in advance as to what amount would be required to be paid accordingly and, therefore, no bank draft could have been obtaiend earlier. It was also urged before the Tribunal that having regard to the time and distance factors and the transport difficulties, the assessee used to go to the place of auction with a truck and immediately on conclusion of the auction, he used to take delivery so that the goods could be transported by truck without wastage of time and that, therefore, even the balance of the purchase price had to be paid in cash. The Tribunal did not accept any of the contentions advanced on behalf of the assessee. The Tribunal held that the word "expenditure" in section 40A(3) was wide enough to take in expenditure incurred on acquisition of stock-in-trade and that, therefore, the provisions of section 40a(3) were applicable to the payments in question. So far as the applicability of rule 6DD(j) is concerned, the Tribunal held that there was no dispute that the payments in question were, in fact, made to the two co-operative societies for the purchase of sugar at various auctions and, to that extent, the provisions of rule 6dd(j) were satisfied. However, in the opinion of the Tribunal, except to the extent of the deposit of 10% of the purchase price immediately after the auctions were held, it was not shown thta the payments had to be made in exceptional or unavoidable circumstances. The Tribunal observed tha merely because the assessee took a truck for his convenience and wanted to transport the goods on the same day, it could not be said that the payment in cash was unavoidable. The payment by cheque or draft was also not shown to have been not practicable or a occasioning any difficulty to the payee. Having regard to these findings, the Tribual accepted the appeal only partly, that is to say, with regard to the payments made to meet the obligation of deposit of 10% of the purchase price immediately after the auctions were held and it dismissed the appeal, so far as the balance payment was concerned.

6. The assessee felt aggrieved by the decision of the Tribunal and at his instance, the Tribunal has referred the following three questions of law arising out of its order for the opinion of this court :

"(1) Whether the Tribunal was right in holding that the cash payments in question relating to purchases fell within the mischief of section 40A(3) of the Income-tax Act, 1961 ?

(2) If the answer to question No. 1 is in the affirmative, whether the Tribunal was right in holding that the said payments were not covered by the exemption granted under rule 6DD(j) of the Income-tax Rules, 1962 ?

(3) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the disallowance of payments to the two co-operative societies (after excluding 10% paid for deposits) was proper ?"

7. In our opinion, in the facts and circumstances of the present case, the first question is entirely academic, for, even if it is answered in favour of the revenue, the assessee must still succeed, so far as the other two questions are concerned. We, therefore, do not propose to enter upon consideration of the first quesiton and decline to express any opinion on the same. We shall proceed, so far as the decision of this reference is concerned, on the footing that the payments made by the assessee for making purchases of sugar at the auctions in question were covered by the expression "any expenditure in respect of which payment is made" occurring in section 40A(3) of the Act and on that basis we will proceed to answer questions Nos. 2 and 3.

8. In order to appreciate the controversy between the parties, it will be convenient to refer to the relevant provisions of law at the outset. Income from business or profession is classified for the purposes of charge to income-tax udner teh head "Profits and gains of business or profession" under section 14. Section 28 enumerates the various types of income which are required to be brought to tax under the head "Profits and gains of business or profession". Under section 29, the incoem referred to in section 28 is required to be computed in accordance with the provisions contained in sections 30 to 43A. From sesciton 30 onwards are found some of the sections which provide for deductions. Section 40 deals with amounts which are not deductible. Then comes section 40A with which we are concerned in the present reference and the relevant portion thereof may be set out :

"40a. (1) the provisions of this section shall have effect notwithstandign anything to the contrary contained in any other provision of this Act relating to the computaiton of income under the head 'Profits and gains of business or profession'...

(3) 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 bebalf by the Central Government by notification in the Official Gazette, in a sum exceeding two thousand five hundred rupees otherwise than by a corssed cheque drawn on a bank or by a crossed bank draft, such expenditure shall not be allowed as a deduction :

Provided that where an allowance has been made in the assessment for any year not being an assessment year commencing prior to the 1st day of April, 1969, in respect of any liability incurred by the assessee for any expenditrue and subsequently during any previous year the assessee makes any payment in respect thereof in a sum exceeeding two thousand five hudnred rupees otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, the allowance originally made shall be deemed to have eben wrongly made and the Income-tax Officer may recompute the total income of the assessee for the previous year in which such liability was incurred and make the necessary amendment, and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the assessment year next following the provious year in which the payment was so made :

Provided further thta no disallowance udner this sub-section shall be made where any payment in a sum exceeding two thousand five hundred 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.....'

9. In pursuance of sub-section (3) of section 40A, the Central Government has specified 31st day of March, 1969, as the date for the purposes of that section by a notification issued on February 14, 1969. As a reuslt thereof, the provisions of section 40a(3) became appliable in case of any expenditure in respect of which payment is made after the 31st day of March, 1969. In pursuance of the power conferred by the second proviso to sub-section (3) of section 40a, the competent authority has enacted rule 6DD in the Rules. The said rule, in so far as it is material for the purpose of this reference, reads as under :

"6DD. No disallowance under sub-section (3) of section 40a shall be made where any payment in a sum exceeding tow thousand five hundred rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bankd draft in the cases and circumstances specified hereunder, namely : - ..

(j) in any other case, where the assessee satisfies the Income-tax officer that the payment could not be made by a crossed cheque drawn on a bank or by a crossed bank draft -

(1) due to exceptional or unavoidable circumstances, or (2) because payment in the manner afroesaid was not practicable, or would have caused genuine difficulty to the payee, having regard to the natur e of the transaction and the necessity for expeditious settlement thereof, and also furnishes evidence to the satisfaction of the Income-tax Officer as to the genuineness of the payment and the identity of the payee."

10. Before entering into an analysis of the relevant statutory provisions, it would be necessary to consider the object behind the enactment of section 40A. In the course of business or profession, the assessee has to incur expenditrue involvign payments made from time to time to different person udner various circumstances. The legislature found from experience that the existing provisions of the Act were inadequate to deal with evasion of tax under the cloak or guise of permissible deductions and also that many paymetns were made with unaccoutned money possessed by the assessee and deductions were claimed in respect of such payments. In order to remedy such situation, section 40A was added by the Finance Act of 1968 and it came into force with effect from April 1, 1968. While introducing the Bill in the Lok Sabha for its consideration, the Finance Minister made a speech on April 29, 1968, in which he pointed out that the provision in question was intended to serve the objective of checking tax evasion. Though the Finance Minister did not elaborate, it is obvious that the intention of the legislature in enacting section 40A(3) particularly was to ensure that payments exceedign the sum specified are made by a crossed cheque drawn on a bank or by a crossd bank draft so that it will be easier to ascertain, when deduction is claimed, whether the payment was genuine and whether it was made out of income from disclosed sources. While interpretign the provisions of this section, the above mischief which was sought to be remedied will have to be borne in mind.

11. Turning now to be interpretaion of the relevant provisions of section 40a, it is clear that sub-section (1), which contains a non-obstante clause, is an overriding provision which operates to set aside as no longer valid anything to the contrary contained in any other provision of the Act relatign to the computation of income under the head "Profits and gainsof business or profession". In other words, the legislature has made it clear that the provisions of section 40a will apply in supersession of the other contrary provisions of the Act relating to the computation of income under the aforesaid head. Sub-section (3) deals with one of the cases in which an expenditdrue incurred by an assessee has to be disallowed even if it is allwoable udner the other provisions of the Act. The said sub-section, in effect, provides that where any expenditure is incurred by the assessee in respect of which payment is made after March 31, 1969, in a sum exceeding Rs. 2,500 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. This is a mandatory directive given by the legislature to the taxing authoryt and, so its plain terms, it commands such authority to disallow all expdenditure, even if it is otherwise admissible, if the payment in respect of such expenditure, in case when it exceeds Rs. 2,500, is made otherwise than in the manner specified. There is no discertain left with the taxing authority under this sub-section to allow such expenditure. The rigour of the rule contianed in this sub-section to allow such expenditure. The rigour of the rule contained in this sub-section is, however, relaxed to some extent by the second proviso to the said sub-section which provides that no disallowance under the said sub-section shall be made where any such payment 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. As pointed out by hte Finance Minister in his speech in the Lok Sabha while introducing the Finance Bill of 1968, this proviso was introduced in order to obviate any difficulteis in payment by cheques or bank drafts in rurla areas and in certain other cases and circumstances. For that prupose, power was cocferred to enact rules ot prescribe cases and circumstnces in which no disallowance under sub-section (3) shall be made where any payment in a sum exceeding Rs. 2,500 is made otherwise than by a a crossed cheque drawn on a bank or by a crossed bank draft. Be it noted that while construing the provisions of the said proviso as well as the rules enacted thereunder, this object, which the legislature had in mind, will have to eb borne in mind and that any interpretation of those provisions will have to be guided by the consideration that the legislature was thereunder enacting a relaxation to the rigour of the rule contained in sub-section (3) in order to obviate harassment and hardship in genuine and bona fide cases. There was some debate before us on the question whether the concluding words of the second proviso to sub-section (3), namely, "having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors" govern the first part of the said proviso and, accordingly, it is for the taxing authority to consider whether payment otherwise than by a crossed cheque or a crossed bank draft, exceedign Rs. 2,500, should not be disallowed, having regard to the factors mentioned therein, or whether the concluding portion was enacted with a view to providing a guideline to the rule-making authority, who had to prescribe cases and circumstances, bearing in mind the said factors. It is unnecessary for us in the present case to resolve this controversy, because, in our opinion, whichever way one looks at the matter, it cannot be gainsaid that the legislature has indicated the factors which must weigh in not disallowing any expenditure in a sum exceeding Rs. 2,500 when payment is made otherwise than by a crossed cheque or a crossed bank draft. Even if it is held that the relevatn expression is a mere guideline to the rule-framing authority, then also those guidelines will have to be borne in mind while interpreting the provisions of the relevant rules enacted by the competent authority, so that by a constricted or artificial construction of these rules, the very object of the legislature is not frustrated. It is pertient to note in this connection that the consideration of business expediency is brought in by the second proviso to sub-section (3) of section 40a and if any such payment is made otherwise than by a crossed cheque or a crossed bank draft on considerations of business expediency, the legislature thought that such payment should not be disalllowed.

12. Turning now to the relevant provisions of rule 6DD against the aforesaid background, it would appear that clause (j), which is the material provision, is in the nature of a residuary clause. It provides that if in a case covered by section 40A(3), the assessee satisfies the Income-tax Officer that the payment could not be made accordingly, (1) due to exceptional or unavoidable circumstances, or (2) because payment in the said manner was not practicable, or would have caused genuine difficulty to the payee, having regard to the nature of the transaction and the necesstiy for expeditious settlement thereof, and also furnishes to the satisfaction of the Income-tax Officer evidence as to the genuineness of the payment and the identity of the payee, no disallowance under sub-section (3) of the section 40a shall be made. An analysis of clause (j) of rule 6DD would reveal that it sets out four circumstances in which the rigour of hte rule contained in sub-section (3) has to be relaxed, namely, where the assessee satisfies the Income-tax Officer that the payment could not be made by a crossed cheque or by a crossed bank draft due to, (1) exceptionla circumstances, (2) unavoidable circumstances, (3) because it was not practicable, having regard to the nature of the transaction and the necessity for expeditions settlement thereof, and (4) because it would have caused genuine difficulty to the payee, having regard to the nature of the transaction and the necessity for expeditious settlement thereof. Be it noted that even if these four conditions are satisfied, the rigour of the rule contaiend in sub-section (3) is not automatically relaxed. The assessee is still required to furnish evidence to the satisfaction of the Income-tax Officer as to the genuineness of the payment and the identity of the payee. It is only in such class of cases that the rule provides for no disallowacne beign made if any of the four conditions above-mentioned is satisfied. The first two conditions prescriebd in the rule deal with the inability of the assessee to make payment by a crossed cheque or by a crossed bank draft due to exceptional or unavoidable circumstances. When clause (j) to rule 6DD was originally enacted these were the only conditions prescribed. However, having regard to the experience gained after the enactment of the section and rule, the other two ocnditions were introduced in the rule on November 18, 1970. Those two conditions have obviously been introduced to cover cases where on account of business expediency or other relevant factors, payment by a crossed cheque or by a crossed bank draft is not practicable or causes genuine difficulty to the payee. We are concerned in the presnt case with the third condition, namely, where payment in the manner provided in section 40A(3) is not practicable and the question which arises is as to what is the scope and ambit of the word

"practicabel"

as used in rule 6DD(j)(2).

13. In Shorter Oxford English Dictionary, third edition, at page 1560, the following meaning is ascribed to the word "practicable" : (1) capable of beign carried out in action; feasible; (2) capable of being used or traversed, as a road, ford, etc. The first meaning is appropriate so far as present case is concerned and it would thus appear that the word "practicable", in its etymological meaning, signifies that which is capable of beign carried out in action or feasible.

14. In Corpus Juris Secundum,volume 72, at page 467, is has been pointed out that the word "practicable" has a number of significations and that it is variously defined as meaning : (1) capable of beign put into practice, done, or accomplished; capable of being done or accomplished with available means or resources; (2) capable of being performed or effected; (3) feasible; (4) feasible, fair, and covenient; (5) possible of execution or performance. It has been further pointed out that whether a thing is practicable depends on the acutalities, the very facts and circumstances of the case, and that an act is "practicabel" if conditions and circumstances are such as to permit its performance or to render it feasible; but a thing is nto practicable if some element essential to its accomplishment is lacking.

15. The meaning assigned as aforesaid to the word "practicable" in the ordinary parlance msut prevail even in teh context of rule 6DD(j), because there is nothing in the subject or context which detracts from it and justifies the giving of a constricted meaning to the said word. In fact, as earlier stated, if the object of the enactment, namely, to relax the rigour of sub-section (3) of section 40a in genuine and bona fide cases to avoid hardship and harassment, is borne in mind, the adoption of the ordinary meaning of the word which is so wide would be justified, because it would advance the casue rather than defeat it. Accordingly, the word "practicable" in rule 6DD(j) (2) must be held to signify that which is feasible, that is to say, capable of being put into practice, done, or accomplished wiht the available menas and resoruces. Besides, in determining practicability for the purposes of rule 6DD(j) (2), regard will have to be had to the facts and circumstances of each case, for, in the ultimate analysis, it is the actuality which must be the decisive factor. It is in this light that the taxing authority must approach a case which falls to be decided under rule 6DD(j) (2).

16. On more thing which requires to be borne in mind is that practicability for the purposes of rule 6DD(j) (2) msut be judged from the point of view of the businessman and not of the revenue. As earlier pointed out, the provision of section 40a is made with a view to disallowing expdnditure, which is otherwise deductible, incurred by a businessman or a professinal peroson in specified circumstances. The second proviso has, however, been enacted to relax the rigour of the rule contained in the substantive provision and while enacting the said proviso, the legislature has indicated its mind by layign down certain guidelines for the relaxation of the rigour. Now, payment by a crossd cheque or crossed draft may, under certain circumstances, be difficult or even impossible and such a case has been taken care of by the rule-framing authority by providing in rule 6DD(j) (1) that if payment could not be made in tha manner due to exceptional or unavoidable circumstances, no disallowacne should be made. However, for the purposes of carrying on his business, a businessman may have to make payment otherwise than by crossed cheque or draft in certain circumstacnes voluntarily and not out of sheer necessity. The legislature was conscious of this factor and it, therefore, gave this express guideline in the second proviso to section 40A(3) prescribing business expediency as one of the relevant factors. Taking clue from this statutory provision, the rule-framing authority inserted by a subsequenty amendment in rule 6DD(j) (2) the two other categories of cases, namely, where payment in the manner prescribed was not pracaticable or it would have caused genuine difficulty to the payee, having regard to the nature of the transaction and the necessity for expeditious settlement thereof. If the relevant provision is read in the aforesiad light, it would be clear that practicability for the purposes of rule 6DD(j)(2) has to be adjudged from the angle of the businessman and not of the revenue.

17. We may mention that it was strenuously contended on behalf of the revenue that the word "practicable" is govered by the expression "having regard to the nature of the transaction and the necessity for expeditions settlement thereof" and that, therefoer, it is only from these two points of view that the practicability or otherwise of payment by a crossed cheque or a crossed bank draft has to be adjudged. We are unable to agree. It is not possible to hold, though the expression on which exphasis has been placed on behalf of the revenue does lend itself to such suggestion, that regard should be had only to the tow matters mentioend therein, isolated from other relevant factors. Such interpretation is not warranted by the statutory language which does not say "having regard only" nor is it warranted by hte guideline contained in section 40A(3), second proviso. In Commissioner of Income-tax v. Gangadhar Banerjee & Co. (P.) Ltd., [1965] 57 ITR 176 (SC), a similar contention advanced in the context of section 23A of the Indian Income-tax Act, 1966, before amendment in 1955, which also used a similar expression, namely, "having regard to losses incurred by the company in earlier years or to the smallness of the profit made" was negatived by the Surpeme Court. The Supreme Court observed that though the object of the section was to prevent evasion of tax, the provision was required to be worked not from the standpoint of the tax collector but from that of a bsinessman and that it was not posible to accept the argument that the Income-tax Officer could not take into consideration any circumstnaces other than losses and smallness of profits. We are, therefore, not prepard to unduly restrict the scope of sub-clause (2) of claus (j) of rule 6DD by holding that in considering the practicability or otherwise of payment by a crossed cheque or a crossed bank draft, only the two circumstances enumerated therein can be taken into consideration. The correct interpretation, in our opinion, would be to give to the word "practicable" a wide and liberal meaning as we have done above and to leave it to the Income-tax Officer to judge in each case whether or not from the standpoint of the business or professional man it was practicable to make payment by a crossed cheque or a crossed bank draft.

18. Against teh background of the aforesaid statutory provisions, let us now turn to the facts of the present case. Be it noted at the outset that it is not in dispute in this case that the assessee has, in fact, made the payment of the disputed amounts to the co-operative societies in question against the purchases of sugar at auctions held from time to time. In other words, this is a case in which the last condition prescribed in clause (j) of rule 6DD is satisfied inasmuch as ht eassessee has furnished evidence to the satisfaction of the Income-tax Officer as to the genuineness of the payment and the identity of the payee. Be it noted also that though the Incoem-tax Officer disallowed all the payments exceeding Rs. 2,500 made individually totalling up to Rs. 3,57,675, the Appellate Assistant Commissioner granted partial relief to the extent of Rs. 1,26,909 holding that payments totalling up to that amount were made in cash by the assessee in exceptional or unavoidable circumstances. The Tribunal granted a further relief when it allowed the payment made in cash by the assessee towards 10% deposit which it had to make immiediately after the auction, holding that payment in cash to that extent was unavoidable inasmuch as the assessee did not know in advance the exact amount which it would be required to pay as and by way of deposit and the payment was to be made on the spot and after the bank was closed. The dispute now survies, therefore, in respect of only the balance of the purchase price.

19. The assessee, as earlier pointed out, pleaded three circumstances to invoke the benefit of clause (j) of rule 6DD. The assessee contended that, under those circumstances, it was not practicable to make payments by crossed bank drafts. In this connection, it requires to be noted that under the terms of auction the co-operative societies in question accepted either cash or bandk draft drawn only on the Girgadhad Road branch of the Junagdh District Co-operative Bank Ltd. The assessee, therefore, had no option to make the payment by crossed cheque or draft drawn on any other bank. The assessee produced evidence, which is no controverted, to show that at the factory of one of the co-operative societies in question, namely, Bileshwar Khand Udyog Khedut Sahakari Mandali Ltd., there was no branch of any bank and that the factory was situate at a distance of 2 kilometers from the nearest town. The payments which are disallowed pertain mostlyh to the said co-operative society. The assessee alos produced evidence to show that he had to cover a distance of about 183 kiloimeters from Bantwa to Una and a distance of about 146 kilometers from Bantwa to Kodinar and that it used to take him about 8 hours to reach Una and about 7 hours to reach Kodinar by a bus from Bantwa. In order to reach the place of auction in time he had to leave early in the morning from Bantwa when the banks would not be open and when he reached either Una or Kodinar, the banks would have closed. The question is whether under these circumstances it could be said thta it was not practicable for the assessee to make payment either by crossed cheque or crossed draft.

20. When we look at the order to the Tribunal, we find that it merely recited the four conditions enacted in clause (j) of rule 6DD and it has, without assigning any reasons, held thta none of these conditions are satisfied, so far as the balance of the purchase price was concerned. The Tribunal dealt with only one specific plea raised by the assessee, namely, that he used to go to the price of auction with truck andimmediately on conclusion of the auction he used to take delivery and transport the goods by truck and, under such circumstances, it was not "practicabel" for him to make the payment by a bank draft and it found that if the assessee took the truck for his convenience and wanted to transport the goods on the same day, it could not be said that the expenditure was unavoidable. The other facts which the assesse pleaded and in respect of which he produced evidence before the authorities are, however, not held to be not proved by the Tribunal. Besides, the Tribunal did not apply the test which it had to apply nor did it consider the matter from the point of view of a businessman which it was required to do. In our opinion, if all the factors which the assessee has pleaded and which are established are borne in mind and if the matter is adjudged from the point of view of a businessman, no conclusion other than that it was not practicable to make payment by a crossed bank draft is possible in the facts and circumstances of the case. The assessee made purchases at the auction which was announced only one or two days in advance and its representative had to travel a long distance to reach the place of auction. It was not possible for him to obtain the bank draft drawn on a particular bank before he left or after he reached the place of aucitn because of the time factor and absence of the branch of any bank in the factory or near about. On some of the occasions, owing to pauciyt of bank balance and short notice, the assessee had to collect cash from its customers only on the previous day in order to make payment at the auction. If a businessman wants to carry the goods purchased by him at the auction with him and to rech his usual place of business as expeditiously as possible and if he could not do so unless he made payment in cash, having regard to the circumstances mentioned above, his conduct would be justified on the ground of business expediency. It would thus appear that in the present case with the available means and resoureces it was not practicable for the assessee to make payment of the balance of purchase price otherwise than in cash which would be known only after the auction was held and the highest bid was accepted. Once the Tribunal accepted the plea of the assessee with regard to 10% amount which had to be paid by way of deposit, it could not possibly have rejected the assessee's contention with regard to the balacne of purchase price, for, in both the circumstances, the conditions governing the payment in cash were identical.

21. In our opinion, therefore, the Tribunal erred in law in not giving to the assessee, in the facts and circumstances of the present case, the benefit of rule 6DD(j) and in holding that the disallowance of payments to the two co-operative societies in question in addition to the 10% amount paid as and by way of deposit was proper.

22. As a result of the foregoing discussion, we answer the questions referred to us for our opinion as follows :

Question No. 1. - No answer is required to be given since the question is academic in the facts and circumstances of the case.

Question No. 2. - In the negative, i.e., in favour of the assessee and against the revenue.

Question No. 3. - In the negative, i.e., in favour of the assessee and against the revenue.

23. The Commissioner will pay the costs of this reference to the assessee.