1 FARAD CONTINUATION SHEET No. IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH AT NAGPUR INCOME TAX APPEAL NO. 60/2010 (Commissioner of Income Tax-I, Nagpur VERSUS Brijmohan Bhawanishankar Mandhani, Nagpur) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Office Notes, Office Memoranda of Coram, Court's or Judge's orders appearances, Court's orders of directions and Registrar's orders - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Shri Anand Parchure, counsel for the appellant. CORAM : SMT. VASANTI A. NAIK AND PRASANNA B. VARALE, JJ. DATE : JUNE 23 , 2011 . Heard the learned counsel for the appellant. By this appeal, the Department challenges the order passed by the Commissioner of Income Tax (Appeal)-II, Nagpur as also the order passed by the Income Tax Appellate Tribunal, Nagpur Bench, Nagpur on 31.07.2009 dismissing the appeal filed by the Department and holding that the deletion of addition of freight expenses made under Section 40-A(3) of the Income Tax Act was just and proper. The assessee had disputed the dis-allowance of Rs.17,95,285/- under Section 40-A(3) of the Income Tax Act. The assessee was the proprietor of a firm and had incurred an amount of Rs.4,97,50,286/- towards freight charges. There were numerous payments in cash to the drivers of the vehicles such as trucks, six wheelers and ten wheelers for the transportation of Lignite coal in Kutch/Bhuj Tribal Areas in Gujrat State to factories in or around Surat. The Lignite Coal Mines were situated in three different and distinct villages of Kutch/Bhuj of Gujrat State and the villages were in backward 2 tribal areas. It was the case of the assessee that all the three villages were not served with banking facilities. It was also the case of the assessee that neither the drivers nor the respondent-assessee had any bank accounts where these transactions were made. The drivers also refused to accept the payment by way of cross-cheques, drafts, etc. This would have had, according to the assessee, an adverse effect on the business of the assessee. In such circumstances, it was the case of the assessee that his case fell within the ambit of the provisions of Rule 6-DD of the Income Tax Rules. The Commissioner of Income Tax (Appeal)-II, Nagpur, on a consideration of the submissions made on behalf of the parties, came to a conclusion that the circumstance of payments having been made in remote villages without any banking facilities stands covered under Rule 6-DD of the Income Tax Rules. The Commissioner of Income Tax (Appeal)-II, Nagpur upheld the contention of the assessee that the cash payments made to the drivers in remote areas were, therefore, clearly covered under “Exceptional Circumstances” stated in Rule 6(DD) of the Income Tax Rules and, hence, the dis-allowance under Section 40-A(3) was not sustainable. The Commissioner of Income Tax (Appeal)-II, Nagpur relied on the decisions of the Hon’ble Supreme Court while directing the deletion of Rs.17,95,285/-. The Tribunal upheld the findings recorded by the Commissioner of Income Tax (Appeal)-II, Nagpur and found that there was no infirmity in the order of the Commissioner of Income Tax (Appeal)-II, Nagpur in deleting the addition as the case of the assessee fell within the ambit of the term “Exceptional and Unavoidable Circumstances”. While upholding the order of the 3 Commissioner of Income Tax (Appeal)-II, Nagpur, the Tribunal considered a couple of judgments and also the Central Board of Direct Taxes (C.B.D.T.) Circular No.220 dated 31st of May, 1977. The finding recorded by the Tribunal is a finding of fact based on a proper appreciation of the relevant facts and the material on record. The judgment reported in (1991) 59 Taxman 11 (SC) (Attar Singh Gurmukh Singh Versus Income-Tax Officer) supports the case of the respondent- assessee. Since no substantial question of law arises for consideration in this appeal, the same is dismissed with no order as to costs. JUDGE JUDGE APTE