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2021 (7) TMI 1188 - AT - Income TaxDisallowance u/s. 40A[3] - disallowance of cash payment made by assessee to various vendors for purchase of land - payments made by the appellant as the agent of housing society for purchase of lands on which residential sites were to be formed for the members of the housing society - assessee is a developer and agreed to sell residential sites to society for which it acquired lands - HELD THAT:- The necessity shown by assessee to make the payment in cash is that, the vendors insisted at the last moment in certain cases. It is also noted that the said monies paid in cash to various vendors are out of drawings made from bank accounts and therefore exigency in making the such payment in cash cannot be suspected. In the present facts of the case the reason for making the payments in cash to certain vendors by the assessee has not been found to be incorrect by any of the authorities below. There is no iota of evidence that is brought on record which could cast doubt on the reason for which the payment has been made in cash by assessee. Further it is also not the case of Ld. AO that, the transaction entered into between assessee and the Vendors towards purchase of the land is bogus. Admittedly payments made by the assessee by cheque has been accepted by the Ld. AO. As decided in M.K. Agrotech Pvt. Ltd [2019 (1) TMI 37 - KARNATAKA HIGH COURT] once the payee admits the acceptance of the monies in cash and has been credited into their respective accounts the object with which section 40(A)(3) was promulgated stands satisfied. We note that in the present facts of the case the monies received in cash has been recorded in the agreements entered into between the assessee and various vendors. There is no denial of having received the monies in cash by the vendors - Decided in favour of assessee.
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