JUDGMENT D.M. Chandrashekhar, J.
1. In this petition under Article 226 of the Constitution, the petitioner has prayed for issue of a writ in the nature of certiorari to quash certain proceedings of the Income-tax Officer. The petitioner had also prayed for a declaration that Rule 6DD of the Income-tax Rules are void and unconstitutional, but Sri R. C. Sharma, learned counsel for the petitioner, gave up this part of the prayer of the petitioner.
2. The petitioner is a partnership firm constituted under a deed of partnership dated May 1, 1971. A minor had been admitted to the benefits of the partnership. The petitioner had made an application under Section 184 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for registration of the firm for the assessment year 1973-74. Following the decision of this court in Additional Commissioner of Income-tax v. Uttam Kumar Promod Kumar [1974] 97 ITR 730 (All), the Income-tax Officer, Circle-I (1), Kanpur, refused to grant registration to the firm under Section 185 of the Act on the ground that the deed of partnership had not been signed by the guardian of the minor admitted to the benefits of partnership.
3. Against the order of the Income-tax Officer, the petitioner had filed an appeal before the Appellate Assistant Commissioner of Income-tax, who dismissed the appeal and affirmed the order of the Income-tax Officer. The petitioner had filed a further appeal to the Income-tax Appellate Tribunal (hereinafter referred to as the Tribunal) and that appeal is still pending.
4. The assessment of the petitioner's income for the year 1974-75 is pending before the same Income-tax Officer. The petitioner appears to have apprehended that the Income-tax Officer would refuse to grant registration of the firm for that assessment year also.
5. In the course of the assessment for the year 1974-75, the Income-tax Officer called upon the petitioner to explain why payments of Rs. 47,864, Rs. 21,287, Rs. 57,436 and Rs. 32,160, stated to have been made in cash by the petitioner to certain persons, should not be disallowed and added back to the petitioner's income. In this petition, the petitioner has challenged the proposal of the Income-tax Officer to add back the aforesaid payments to its income.
6. The learned senior standing counsel for the income-tax department has raised a preliminary objection as to the maintainability of this petition. He contended that, as the petitioner has an alternative remedy, this petition had abated under Section 58 of the Constitution (Forty-second Amendment) Act, 1976. Elaborating the preliminary objection, he submitted that the Income-tax Officer has not yet passed any order regarding registration of the firm for the assessment year 1974-75 and that in case such registration is refused, the petitioner can file an appeal against such order to the Appellate Assistant Commissioner. Regarding the proposal of the Income-tax Officer to disallow certain cash payments made by the petitioner and to add back the amounts of such payments to its income, the learned standing counsel submitted that it is open to the petitioner to show cause against such proposal and that if the Income-tax Officer should disallow such payments, the petitioner can have recourse to the remedy by way of appeal to the Appellate Assistant Commissioner and further appeal to the Tribunal and ultimately a reference to this court under Section 256 of the Act.
7. In answer to the preliminary objection raised by the learned standing counsel, Shri Sharma submitted that in view of the ruling of this court in Uttam Kumar's case [1974] 97 ITR 730 (All), it is certain that the Income-tax Officer would refuse registration to the firm for the assessment year 1974-75 also and that successive appeals to the Appellate Assistant Commissioner and the Tribunal would be futile as all these authorities are bound to follow the ruling of this court. Shri Sharma further submitted that the correctness of the ruling of this court in Uttam Kumar's case [1974] 97 ITR 730 (All) has been doubted by several Division Benches of this court which have admitted several writ petitions involving the same question and have passed appropriate interim orders.
8. Later, the learned standing counsel submitted that the higher income-tax authorities have issued instructions to the Income-tax Officers to afford opportunity to the assessee who have applied for the registration of their firms under Section 185 of the Act, to remove the defect in their respective deeds of partnership, if such deeds have not been signed by the respective guardians of minors admitted to the benefits of partnership. In view of this statement made by the learned standing counsel, the petitioner's apprehension that registration of the firm would be refused for the assessment year 1974-75 does not survive.
9. As regards the proposal of the Income-tax Officer to disallow the aforesaid four cash payments, Shri Sharma submitted that the Income-tax Officer, the Appellate Assistant Commissioner and the Tribunal would naturally follow the ruling of this court in U. P. Hardware Stores v. Commissioner of Income-tax [1976] 104 ITR 664 (All) and disallow those cash pay-
payments. He maintained that the decision of this court in U. P. Hardware Stores' case [1976] 104 ITR 664 (All) requires reconsideration, that such reconsideration can be done in this petition itself and that the petitioner should not be driven to the necessity of going through the tortuous process of successive appeals to the Appellate Assistant Commissioner arid the Tribunal and a reference to this court under Section 256 of the Act.
10. We shall now briefly advert to the ruling of this court in U. P. Hardware Stores' case [1976] 104 ITR 664 (All). There, the assessee had made certain payments in cash, each exceeding Rs, 25,000, for some of its purchases of stock-in-trade. The Income-tax Officer held that, in view of of the provisions of Sub-section (3) of Section 40A of the Act, read with Rule 6DD of the Income-tax Rules, 1962, no deduction could be allowed for such payments. The correctness of this view came up ultimately for consideration before this court on a reference under Section 256 of the Act. The Division Bench of this court (consisting of R. L. Gulati and C. S. P. Singh JJ.) answered this question in favour of the revenue. Their Lordships observed thus (pages 666, 667, 668):
"But we see no justification for accepting the plea that the word 'expenditure' used in Section 40A(3) should be restricted to overhead expenses enumerated in Sections 30 to 43A including the depreciation allowance, etc. The word 'expenditure' is of wide import. It will also cover the expenses to be taken into account while determining the gross profit. The gross profit is determined by the difference between the opening stock and the purchases on the one side and the closing stock and the sales on the other. The payments made for purchases would also be covered by the word 'expenditure' and such payments can be disallowed if they are made in cash in the sums exceeding Rs. 2,500. Such disallowance will increase the gross profit and would necessarily increase the net profit.....
The learned counsel then urged that money spent on purchase of stock-in-trade, etc., represents circulating capital and cannot be included in the term 'expenditure' which means money spent away.....
it cannot be disputed that the money invested in the purchases of stock-in-
trade and Taw materials represents circulating capital and such payments ate not covered by any of the provisions contained in Sections 30 to 43A.
But the value of the stock-in-trade has to be taken in to account while determining the gross profits under Section 28 itself on principles of commer-
cial accounting.
It is no doubt true that the provisions contained in Sections 30 to 43A sometimes may cause undue hardship to an assessee inasmuch as he might have to make purchases from a place where no banking facility is available or from a person who does not maintain a bank account or he might have to make payments to certain institutions like banks, etc., which can easily be verified. In order to mitigate such hardships the Central Board of Direct Taxes has framed Rule 6DD which provides for cases and circumstances in which payments exceeding the sum of Rs. 2,500 may be made otherwise than by a crossed cheque or a crossed bank draft."
11. Shri Sharma argued that the view taken by the aforesaid Division Bench that the term "expenditure" would include money spent in the purchase of stock-in-trade or raw materials is opposed to the notion of expenditure in commercial sense and that hence the decision requires reconsideration.
If this be the meaning of the word according to common parlance, and in the absence of a statutory definition, the word would take its colour according to its common parlance use, payment for purchase of goods would certainly be an expenditure. Deduction need not also be confined to Section 37. In Sub-section (3) that word has been used in its widest amplitude and the provisions of Rule 6DD throw considerable light as to what exactly is meant to be the scope of Sub-section (3).....
The expenditure referred to in Section 40A(3) of the Income-tax Act is not confined to expenditure that could be claimed as a deduction under Section 37 and refers to any payment .made by the assessee and taken into account in computing the total income under the provisions of the Act."
13. The learned standing counsel maintained that the view taken by this court in U. P. Hardware Stores' case [1976] 104 ITR 664 (All) and by the Orissa High Court in Sajowanlal Jaiswal's case [1976] 103 ITR 706 (Orissa) is in consonance with the observations of the Supreme Court in Indian Molasses Co. (P.) Ltd. v. Commissioner of Income-tax [1959] 37 ITR 66 (SC). Our attention was drawn to the following observations of Hidaya-
tullah J. (as he then, was), who delivered the judgment of the court, at page 78 :
" 'Expenditure' is equal to 'expense' and 'expense' is money laid out by calculation and intention though in many uses of the word this element may not be present, as when we speak of a joke at another's expense. But the idea of 'spending' in the sense of 'paying out or away' money is the primary meaning and it is with that meaning that we are concerned. 'Expenditure' is thus what is 'paid out or away' and is something which is gone irretrievably."
14. Having regard to the wider meaning of the word "expenditure" so as to embrace whatever Is paid out or away, there is no reason why payments made for the purchase of stock-in-trade or raw materials should not be regarded as expenditure for purposes of Section 40A(3) of the Act. We are in respectful agreement with the view taken by this court in U.P. Hardware Stores' case [1976] 104 ITR 664 (All) and by the Orissa High Court in Sajowanlal Jaiswal's case [1976] 103 ITR 706 (Orissa). Shri Sharma has not been able to persuade us to accept his contention that the decision of this court in U.P. Hardware Stores' case [1976] 104 ITR 664 (All) requires reconsideration.
15. Hence, neither of the two grounds on which Shri Sharma contended that the petitioner should be permitted to bypass the remedies available under the Act and to approach this court directly by means of a writ petition, has any substance.
16. In the result, we dismiss this petition. The interim order made by this court is vacated.
17. In the circumstances of the case, we direct the parties to bear their own costs.