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Section - 40a(3). splitting of cash payments.

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Querist : Anonymous

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Querist : Anonymous (Querist)
19 August 2013 Hi,

Suppose I have an invoice of Rs.80,000. I have paid it as

Day 1 - 18,000
Day 2 - 18,000
Day 3 - 18,000
Day 4 - 18,000
Day 5 - 8,000

Will it be disallowed under section 40A(3).
Can anyone give me any relevant case law for the same.

Thanks in advance.
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
19 August 2013 Section 40A(3) is applicable when payment or AGGREGATE of payments in a SINGLE DAY exceed Rs. 20,000/-.

In this case Section 40A(3) is NOT applicable.

However, you will have to prove that the payments were actually made on different days, which is quite difficult.
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CA Kumar Mukesh

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CA Kumar Mukesh (Expert)
19 August 2013 NO dis-allowance as per section 40a(3), if sufficient documents like cash vouches etc are maintained

Regards,
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Querist : Anonymous

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Querist : Anonymous (Querist)
23 August 2013 But, according to this I can pay a bill of Rs.20,000*365 = 73,00,000 in cash. Doesn't it defeat the purpose of this section?
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CA Kumar Mukesh

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CA Kumar Mukesh (Expert)
24 August 2013 You can proceed with your argument but burden of proof to show these transactions are genuine in Assessment
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Querist : Anonymous

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Querist : Anonymous (Querist)
25 August 2013 Thankyou once again to all for replying to this post.

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