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2014 (7) TMI 332 - AT - Income TaxAddition u/s 40A(3) - Payment not made in cash but paid to third parties on behalf of supplier of goods – payments have been made by way of crossed-cheques - Held that:- The purchases made by the assessee are not in dispute - The AO has not treated such purchases as not genuine, but he had invoked the provisions of section 40A(3) of the Act for making the addition - the parties from whom the goods were purchased requested the assessee-company to give payments to their suppliers/their borrowers for early and immediate settlement of their dues - the AO was not justified in invoking the provisions of Section 40A(3) of the Act, since the AO has not made any enquiry whether such payments were made at the instance of the parties from whom the assessee-company purchased the goods - there is nothing placed on record that instead of account payee cheques, the assessee-company has made cash payment to the parties from whom the goods were purchased – thus, there is no infirmity in the order of the CIT(A) holding that the AO was not justified in invoking the section 40A(3) of the Act – Decided against Revenue.
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