2022 (6) TMI 1397 - AT - Income Tax

Disallowance u/s 40A(3) - cash payment to various suppliers exceeding specified limit - assessee could not prove that the cash payment was due to exceptional or under unavoidable circumstances - HELD THAT:- Upon perusal of documents, we find that that the assessee has not made cash payment directly to the suppliers but deposited the same directly into their bank accounts. In support, the assessee has placed on record bank deposit slips.

This is stated to have been done on the request of the suppliers and the suppliers themselves have furnished the bank account details to the assessee to ensure fast receipt of payment without delay. It could be also noted that genuineness of the payment or the existence of the suppliers is not under doubt. Assessee has placed on record complete details of suppliers along with their addresses, bank details with copies of deposits slips for each of payment transferred to them.

On the basis of all these documentary evidences, we are of the considered opinion that impugned disallowance is not justified on the facts and circumstances. Hence, by deleting the same, we allow the appeal.