read Section 40 A(3) care fully, which says that EXPENDITURE incurred which is more than Rs.20000/- the payment in respect of the same is not allowed in cash or bearer cheque but allowed through cheque, demand draft or any other electronik mode such as internet banking. read with exception of the section RULE 6DD.
The one very most important thing is that if there two expenditure incurrd and both are less than or Rs. 20000/- from the same person than you can make cash payment to the person more than Rs.20000/- in cash in same day and expenditure is allowed.
SECTION CONCETRATE ON EXPENDITURE AMOUNT