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2011 (7) TMI 1183 - AT - Income Tax
Disallowance of Cash Purchases u/s 40A(3) - Assessee made purchases against which payments were made in cash exceeding 20,000 rupees at a time - CIT(A) confirmed the disallowance - Contention was assessee, being old lady had made payments due to business expediency and on such ground disallowance should not be made - HELD THAT:- In the relevant assessment year, as per Rule 6DD, there is no such exception provided to section 40A(3) of the Act that the assessee could make cash payment of ₹ 20,000/- or more at a time due to business exigencies. The circumstances under which the provisions of section 40A(3) will not be applicable, where payment in cash is more than ₹ 20,000/- is provided in Rule 6DD and the ground of business expediency has been deleted by the Amendment made by the Finance Act, 1995 w.e.f. 01.04.1996.
In the case before us, there is no dispute to the fact that assessee had made purchases against which the payments were made in cash exceeding 20,000 rupees at a time - authorities are justified to make disallowance @ 20% of cash purchases. Therefore, we uphold the order of CIT(A) - Decision against Assessee.
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