Mitesh Shah (Self Employed-Professional) (27 Points)
24 December 2011friends,
one of my client has purchased goods worth rs.80 lakhs during fy 08-09. now during the scruitiny assessment proceedings of asst.year 09-10, a.o. is disallowing all the expenses u/s.40A(3). my client has made geniune purchase and the party from whom the purchases are made, is also available. if any friend has any material, plz help.
Regards,
Mitesh Shah
Advocate
Surat
9374881787
suchit shah
(Dy. Manager(Finance & Accounts))
(208 Points)
Replied 24 December 2011
Why he disallowed???? whether all purchases were on cash?????
Mitesh Shah
(Self Employed-Professional)
(27 Points)
Replied 24 December 2011
CA. Bikash Bogi
(Partner)
(1639 Points)
Replied 24 December 2011
Mitesh Ji
on going through your facts, it seems like that the said payment is a clear violation of Section 40A(3). As per law payment made by crossed cheque is alos not permissible.
One thing i want to know whether in your bank statement name of party has been reflected or not ?
legally your case is very weak, but on facts it can be explored.
CA. Bikash Bogi
(Partner)
(1639 Points)
Replied 24 December 2011
if required, you can get legal support from our Surat Office.
CA Ketan Waghela
(Partner at Elite Educare)
(356 Points)
Replied 24 December 2011
Mitesh ji,
Section 40A(3) provides that any expenditure incurred as a payment in sum of exceeding Rs.20,000/- otherwise of paying with payee account cheque, demand draft or any transaction made by banks like RTGS, shall not be allowed as a deduction. However if payment is being made for hiring or leasing, the limit is Rs.35,000/-.
Refering above, the Assessing Officers consent is correct as croosing of cheque does not satisfies the conditions of sec. 40A(3) and hence the said expenses are disallowed.
Mitesh Shah
(Self Employed-Professional)
(27 Points)
Replied 26 December 2011
Dear Mr.Bikasbhai, plz give me ur contact No. where i may contact u...
Regards,
Mitesh Shah,
Advocate, Surat
9374881787
Balendra Parmar
(Finance Manager)
(199 Points)
Replied 26 December 2011
Balendra Parmar
(Finance Manager)
(199 Points)
Replied 26 December 2011
Dear
(ii) Cash payments in excess of Rs. 20,000 - According to section 40A(3), where the assessee incurs any expenditure, in respect of which payment or aggregate of payments made to a person in a day otherwise than by an account payee cheque drawn on a bank or by an account payee bank draft exceeds Rs. 20,000, such expenditure shall not be allowed as a deduction.
Thanks,
Balendra Parmar
paras
((CA Final))
(43 Points)
Replied 26 December 2011
sir, chque should b a/c payee not crossed.there is different b/w a/c payee n crossed according to provision of sec 40A(3). ur case is actually weak.
Mitesh Shah
(Self Employed-Professional)
(27 Points)
Replied 26 December 2011
Dear Friends,
I know my case is weak. But my client has made genuine purchases during fy 08-09. Even the party from whom purchases are made is availabe. It is quite apperant that he has actually made mistake by paying crossed cheques but there has to be some resort to this since if these much addition is made to my assessee, he would be ruined.
Regards,
Mitesh Shah
Advocate, Surat
9374881787
CAclubindia
