1. - This reference application under section 256(2) of the I. T. Act, 1961, has been filed against the order of the Income-tax Appellate Tribunal dated 19th November, 1981.

2. The petitioner-assessee, M/s. Registhan Pvt. Ltd. (hereinafter referred to as "the assessee-company "), was a partner in the firm of M/s. Registhan, Jaipur. The ITO disallowed the claim of the assessee-company for an amount of Rs. 62,270/- which was paid in cash and was in violation of the provisions of section 40A(3) of the Act.

3. The assessee-company filed an appeal and the learned Commissioner of Income-tax (Appeals), Rajasthan, held that cash payments in this case were covered by exceptions given clause (j) of r. 6DD of the I.T. Rules and the clarification issued by the Board as per instructions dated 31st May, 1977. The Commissioner took the view that the appellant-company had taken over all the assets and liabilities of the firm and the firm was in the process of closing down its business. In these circumstances, the Commissioner held that it would have not been practicable for the appellant to make payments by cheque to the firm which was in the process of closing down its business. Reliance w