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2009 (12) TMI 56 - HC - Income TaxDeducion u/s 40A(3) – whether an expenditure incurred in contravention to the provisions of sub clause 3 of Section 40A of the Act would be an undisclosed income within the meaning of sub clause (b) of Section 158 B of the Act? – Whether expenditure incurred in contravention to the provisions of sub clause 3 of Section 40A of the Act would be an undisclosed income within the meaning of sub-clause (b) of Section 158B of the Act even though, the transactions in respect thereof were found entered in the books of accounts prior to the date of search and no material in respect of such expenditure were found in course of search? - addition in relation to undisclosed expenditure treated as undisclosed income even though, the condition precedent to the exercise of jurisdiction under the provisions of Chapter XIV B of the Act were conspicuously absent – Held that - It is evident on a plain reading of the provisions that any claim for deduction exceeding rupees twenty thousand in a manner otherwise than by a crossed cheque or a crossed bank draft shall deprive the assessee of the benefit of deduction of the whole amount. We are satisfied that the transaction in question is hit by the bar of Section 40A (3) of the Act which disentitles the appellant to the claim of deduction. - that the transactions in question are violative of section 40A (3) of the Act, were acts of fraud, and are directly and clearly relatable to the materials which have been found during the course of search and seizure. The assessee had not disclosed this income in its original returns. – Decided in favor of revenue and against the assessee
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