Sarvesh Kumar Singh (Student CA Final (Articled Asst.)) (170 Points)
28 November 2011An assessee made payment of Rs. 61,000/- on 14.05.2009 in cash to a party towards purchase of building repair material. Now he received notice u/s 143(1) for the A.Y. 2009-2010 from IT deptt. that he has violated rules of section 40A(3) and these expenditure would be disallowed and will be added back in income of the assessee.
I want to know that is there any way to prevent disallowance under section 40A(3) in this case. plz reply its urgent.
CA Hemang Shah
(PRACTICE)
(658 Points)
Replied 28 November 2011
Resham
(Carpe Diem !!!)
(6535 Points)
Replied 29 November 2011
There doesn't seem to be a way out of this as sec 40 A (3) clearly states that
"Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure."
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