( 1 ) AT the instance of the assessee, the following question of law has been referred to this court under Section 256 (2) of the Income-tax Act, 1961, for the assessment year 1975-76 :"whether, on the facts and in the circumstances of the case and on a proper interpretation of rule 6dd of the Income-tax Rules, 1962, read with the Central Board of Direct Taxes Circular No. 220 dated May 31, 1977 (see [1977] 108 ITR (St.) 8), the Tribunal was justified in upholding the disallowance of Rs. 22,098 in terms of Sub-section (3) of Section 40a of the Income-tax Act, 1961. "

( 2 ) THE facts leading to this reference are that the assessee, an individual, is a wholesale dealer in jaggery. Before the Income-tax Officer, it was submitted on behalf of the assessee that he started a proprietary business styled Dilip Stores on December 13, 1973. The assessee paid an aggregate sum of Rs. 37,048 consisting of amounts paid in cash in excess of Rs. 2,500. The payments in question were made to Mangilal Nathmal of 45a, Adya Sardhya Ghat Road, Calcutta, against the following bills : Bill No. Date Amount paid in cash Rs.

5590 11-9-1974 14,906

5547 5-9-1974 8,682

5592 11-9