This Reference is made under clause (I) of section 256 of the Income-tax Act at the instance of the assessee pertaining to two assessment orders of 1978-79 and 1979-80. The question referred reads as under s "Whether on the facts and in the circumstances of the case, the Tribunal was justified in reversing the finding of the Commissioner of Income-tax (Appeals) deleting the disallowance for the two assessment years and restoring the orders of the Income-tax Officer in this behalf ?" The assessee is a business firm at Tezpur in Assam. The assessee paid to Eastern Hardware Co. (India) the sum of Rs.9,610/-,Assam Asbestos Limited the sum of Rs. 16.000/- and Shew Prasad Mohanlal the sum of Rs. 24,959/-. The total of these three amounts is Rs. 50,559/-which were paid in cash to the three firms at Tezpur. Similarly relevant to the assessment year 1979-80 the assessee paid to M/s. Steel Stores Rs. 19.030/-and to M/s. Bajaj Engineering Co. Rs. 17.500/-. The total of these two amounts is Rs. 36.530/-. These amounts were also paid in cash at Tezpur. The payments were made to the five firms who have their principal seat at Guwahati. The assessee tendered proof before the ITO showing the amounts were paid and the ITO was satisfied that the payments were true. Since the amounts were not paid by crossed cheques or by bank drafts the payments were not allowed to be deducted. On appeal, the Commissioner of Income-tax allowed the appeal. But on a further appeal the Appellate Tribunal restored the order of the ITO on the basis of section 40A (3) of the Act. Pursuant to the provision in clause (3) of section 40-A, Rules in 6 DD were promulgated and a Circular No. 220 was issued by the Central Board of Direct Taxes on May 31, 1977. Section 40A, Rules and the Circular recite that after March 31, 1969 any payments on account of expenditure of more than Rs. 2500/-will have to be made by crossed cheque or by a crossed bank draft unless exempted by the revenue authorities. These provisions were considered times out of number by the High Court therefore it is not necessary to delve into the legislative history of these provisions in detail. The Indian Parliament incorporated the above provision to check evasion of taxes. 2500/-will have to be made by crossed cheque or by a crossed bank draft unless exempted by the revenue authorities. These provisions were considered times out of number by the High Court therefore it is not necessary to delve into the legislative history of these provisions in detail. The Indian Parliament incorporated the above provision 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. The Parliament referred to inadequacy of facilities in section 40-A. The Rule making authorities illustrated some of the circum­stances in the Rules. The revenue supplemented the further circumstances when exemptions can be claimed and allowed. The Circular recited that if a seller does not have a bank account and payments art made at a place where either the purchaser or the seller does not have a bank account or payments are made on a bank holiday or the seller is refusing to accept payment by cheque or draft or the purchaser's busmen interest is shown to suffer due to non-availability of goods the purchaser may pay m cash and claim exemption. The cases decided by the Courts show in what circumstances exemptions can be accorded In 92 1TR 519 Mudiarn Oil Co. & others vs. Income Tax Officer, the Andhra Pradesh High Court considered the vires of section 40-A and held that the Parliament had power to incorporate section 40-A (3) in the Act. There is another Andhra Pradesh High Court decision in 173 ITR 358, Jyoti Chellaram vs, CIT, where a transaction was held not proved therefore exemption was not accorded. The Gujarat High Court in 112 ITR 134, Hasanand Pinjomal vs. CIT, considered the statement of objectives for incorporation of this provision in the Act and held the statute and rules were promulgated to check tax evasion. The Gujarat High Court in 112 ITR 134, Hasanand Pinjomal vs. CIT, considered the statement of objectives for incorporation of this provision in the Act and held the statute and rules were promulgated to check tax evasion. In another case of the same High Court in 163 ITR 378, Navasari Waste Cotton Products vs. CIT, that Court remanded the subject matter for consideration under 6DD Rules as in that case when the transaction was entered the Rules were not promulgated. In 155 ITR 519, the Rajasthan High Court held the transaction in the case was genuine and the default made by the assessee was "technical" and further held that the ITO in his dis­cretion could exempt the transaction. In 136 ITR 595, CIT vs. Swaran Singh Balbir Sidgh, the Punjab and Haryana High Court held in exceptional circumstances exemptions can be recognised. In 179 ITR 122, Giridharilal Goenkavs. CIT, of the Calcutta High Court, payment made was shown in case in unavoidable circumstances therefore was exempted. The same High Court in 113 ITR 405, Rajarajeswari Weaving Mill vs. ITO, held payment was made on the "insistence" of the customer therefore payment was allowed In 163 ITR 695, Narayan Bijoy Kumar vs. CIT, the High Court at Patna found circumstances were "unavoidable" therefore exemption was granted. In 167 ITR 147, Bhilai Motors vs. CIT, the Madhya Pradesh High Court held the findings reached by the Tribunal were findings of fact therefore for that reason did not call for interference. In 104 1TR 664, U. P. Hardware Store vs. CIT, the Allahabad High Court did not accept the explanation of the assessee and exemption was not ordered. In another case 117 ITR 34 Ideal Tannery vs. CIT, the same Court held that the transactions were not proved. In a third case the same High Court in 143 ITR 330, CIT vs. Satish Chandra did not accord exemption. In the instant case the five firms to whom payments were made, were all based at Gauhati. The assessee firm is at Tezpur. Normally the transactions are made "through accounts". But in the above five instances the representa­tives of Gauhati firms "came to Tezpur" and "insisted" for cash payment (as in the Calcutta case). The assessee therefore had to pay in cash This explanation was accepted by the CIT (Appeals) but not by the ITO and the Tribunal. Normally the transactions are made "through accounts". But in the above five instances the representa­tives of Gauhati firms "came to Tezpur" and "insisted" for cash payment (as in the Calcutta case). The assessee therefore had to pay in cash This explanation was accepted by the CIT (Appeals) but not by the ITO and the Tribunal. None of the three authorities have doubted the genuineness of these payments. Once the transactions are genuine what is to be con­sidered is only the explanation offered by the assessee. We may now refer to the unconscionable delays that occur in the banking system of the country as often it is seen cheques do not bring forth cash for months, sometimes the delay is of three or four months. That explains for why cheques and drafts are not popular with the Indian businessmen. In the instant case the assessee tendered the evidence that the representatives of the five firms at Tezpur Insisted for cash payments and for the facility of the suppliers or vendors the assessee paid in cash. The Tribunal therefore was not justified in rejecting the explanation. To obviate any misunderstan­ding we may add that the acceptance or rejection of explanation under the Statute, Rules or under the Circulars is an inference therefore a question of law arises though the inference may have to be drawn on bare facts. A word more may be stated here. One of the arguments advanced before us on behalf of the assessee was that payments made for goods purchased are not to be construed as expenditure. On this question, we keep the matter open to be decided in a more appropriate case. We answer the referred question in the negative, in favour of the assessee and against the revenue. No cost.