Sec 40A(3)

This query is : Resolved

R S Sharma (Querist)
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31 August 2009 Respected Sir,

I request you to give your valuable opinion with regard to Sec.40A(3) of the Income Tax Act (Cash Payment above Rs.20,000.00 during the Assessment Years 2001-02, 02-03 and 2003-04. From the careful reading of the proviso of Sec 40A(3), it appears that such cash payments, can be reassessed within a period of Four Years from the end of the Assessment years in which such cash payments were made. The relevant portion of proviso to Sec 40A(3) is reproduced below:

“ …………………………………………….. the Assessing Officer may recompute the total income of the assessee for the previous year in which such liability was incurred and make the necessary amendment, and the provisions of section 154 shall, so far as may be, apply thereto, the period of four years specified in sub-section (7) of that section being reckoned from the end of the assessment year next following the previous year in which the payment was so made : “

I request you to let me know if any payment above Rs.20000.00 made in cash be investigated after four years in a completed assessment.

With warm regards

Yours faithfully,

R S Sharma
220, Ganga, NGV Koramangala,
Bangalore-560047
Email : sharmars_2000@yahoo.com

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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31 August 2009 THE PROVISO REFERS TO A CASE WHERE A LIABILITY WAS INCURRED FOR EXPENSES BUT THE CASH IS PAID IN SUBSEQUENT YEAR ........THAN A RECTIFICATION PROCEEDINGS AND NOT REASSESSMENT PROCEEDINGS CAN BE STARTED AS PER THE PROVISO